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Home Owners Associations Home
Owners Associations The
common question is “why dues?” In most subdivisions there is what is
called “Common Area”, which consists of land not owned by individual
homeowners and for the use and benefit of the entire subdivision. This
property must be maintained, in some cases, after all of the homes have been
built, street lighting maintenance is a cost to the subdivision, as well as
snow removal landscaping and mowing. The officers of the board of the
subdivision need insurance coverage against any law suits for their serving
on the Board. That is called Directors and Officers Insurance a/k/a D&O
Insurance. These are just a few of the costs that need to be covered by the
dues. Generally each year the costs are reviewed and the dues are adjusted at
that time if needed. The duties and operations of the board are generally
addressed in the Indentures. In most
cases when a subdivision plat is recorded in the recorders, office of the
appropriate county, a document sometimes referred to as the “Indentures” or
the “Conditions, Covenants, and Restrictions” (CCR’s) is also recorded for
that subdivision. This document spells out the rules and regulations of the
subdivision so homeowners know what they can or cannot do with their
property. The popular sentiment “I can do anything I want, it is my property”
is not entirely true these cases, however there is seldom any restriction
that gives any owner too much problems. This
Indenture or CCR’s generally refer to, as examples, the homeowners ability to
put up a fence, the size and what material to be used, the homeowners ability
to put an addition on their home, (location, size, materials they can use,
etc.). Some Indentures will restrict what kind of vehicle can be parked at a
home, e.g., campers, commercial vehicles and the like. It is a good idea to
obtain a copy of that document prior to closing. It can be acquired from the
County Recorders Office, or your title company can likely get one for
you. I might also suggest a Realtor obtain a copy at listing so they
will have this document handy for potential buyers to review. So,
when you see Subdivision Dues on a closing statement, you will understand
what the fee represents. Benchmark Title Company or your lender obtains that
information from the Board of Trustees of that subdivision. Also, in the
event the dues are not paid current for that property, the subdivision can
file a lien against the property. Many times Boards do not record these liens
at the Recorders Office. As your title company it is our job to protect you
against these potential liens.
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