Compared to the summer's biggest thriller, community association bylaws hardly make compelling reading. Wading through the thick stack of rules and restrictions buyers get when they purchase some homes is a chore, real estate agents agree.
"It's a subject as dry and dull as you'll ever get," says Arthur E. Davis, president of the Maryland Association of Realtors.
The documents don't become interesting until new buyers find out community laws prevent them from bringing beloved Fido into their home, storing their trailered boat in the driveway or building a fence on their property.
If a house is part of a homeowners association, which many moderately priced homes are, the seller is required to give the buyer a copy of the community codes, covenants and restrictions (CC&Rs;), including association bylaws and budget, before settlement. The buyer must acknowledge they have received the documents. They have from five to seven days to review them and can back out of the sales contract if they don't receive or don't agree with the CC&Rs.;
But most real estate agents say buyers rarely read through the documents.
"It's fair to say most people do not read them but will sign anything to say they have," said Adam D. Cockey, general manager of W. H. C. Wilson & Co. Realtors in Baltimore.
"They are real thick," acknowledged Robert Ward, builder and developer of Bob Ward Homes in Harford County. "Quite honestly, few people read them."
He certainly wishes they would. Mr. Ward recalls with a sigh the buyer who didn't know a drainage and utility easement cut five feet into his new yard.
Associations are entitled to grant rights of way to utility companies and local governments. When the buyer began to build a fence along his new property line and was stopped by the association, he wasn't pleased.
Instead of enclosing his entire yard, he had to bring the fence line in behind the easement. That reduced the size of his narrow townhouse yard by five feet.
"We as the builder weren't aware of his plans for fencing, so it wouldn't occur to us to say he couldn't put a fence there," Mr. Ward said. "It didn't occur to the buyer to ask. He figured it was his property." This homebuyer would have been saved himself the surprise and aggravation if he had reviewed the engineer's ++ drawing of his property contained with the association documents he got before settlement.
Some homeowners have had more expensive shocks when they don't closely read community association bylaws to find out where their responsibility stops and management's begins. People who buy townhouses and condos may wrongly believe they are buying just their individual units, said Stanley Sersen, president-elect of the Chesapeake Chapter of the Community Associations Institute in Bowie, a national nonprofit group that represents associations.
"In fact, they are buying their pro-rated share of all the common elements," Mr. Sersen said.
Other homebuyers don't review the association budget and don't realize their associations may have no money to cover unexpected structural repairs.
Mr. Sersen tells of the owners in a Richmond, Va., condominium community who found out the concrete bridges between their units were beginning to fail. The association had no reserves in its budget for such catastrophes. The 250 people living there had to split the $250,000 cost of repairs among themselves.
At most condominium developments, problems such as these are rare, said Benjamin G. Proctor, senior vice president of Wallace H. Campbell and Co. Inc., a residential management company in Baltimore.
But grief of a different kind can come to owners who fail to read their bylaws and understand they can't install the curtain color of their choice, or can't own large dogs.
Mr. Proctor, whose company manges Quail Creek Condominiums in Hunt Valley as well as others in the Baltimore area, said there's usually little owners can do to fight the laws that govern their community.
"When they settled on that unit, they obligated themselves to abide by the documents," Mr. Proctor said.
First-time homeowners or people coming out of individual homes into townhouse developments are the people most often surprised by restrictions.
They, in particular, should review their community association bylaws carefully, Mr. Proctor said, before they settle to make sure the place won't cramp their style.
"They can rescind the contract if there's something there they don't like," he said, as long as they read about the offending rule before the property goes to settlement. Afterward, they'll have to sell if they want out.
"The way we look at it, everything that is on record, the homeowner has to comply with," said Rudolph E. DeMeo, an attorney with Alderman, DeMeo and Riggs in Towson. "The bylaws are the constitution and the private law of the community. If buyers want to change or modify it, they have to get a super-majority vote," or more than two-thirds of other association members to agree to change.
It wasn't until a California couple had moved into a new condo with their small dog that they discovered their place had a no-pet policy. The association board refused to allow the dog to stay, saying the owners should have read about the rule in their bylaws before they moved in.
Now, the couple is considering whether to sue the real estate agent who helped them find the condo. She knew about their dog, they reason, and should have told them about the no-pet rule.
Reading the restrictions and regulations is the buyers' responsibility, Mr. Cockey said, but an agent should be aware of lifestyle issues that may affect where buyers can comfortably live.
"There are reams of documents presented to buyers," Mr.
Cockey said. "Even the most experienced buyers are not going to know everything that's in there. Generally we know what restrictions various condos would have. Do we know all of them necessarily? No, we don't. But if someone tells me I'm going to buy a condo and I'm going to rent it out, I am going to make sure it can be rented" before the sale is closed.
"The lesson there is buyers need to confide in whoever they are working with," about their plans, said Herbert Davis of Herbert Davis Associates in Baltimore. "The expert or title company or whoever will be able to react and say you may think you can build an addition on your house, or keep chickens or a horse, but it can't be done."
Even when they do tell all to their agent, buyers have to be wary. Sally Bielaski, an associate broker with RE/Max Columbia Realtors in Ellicott City, said she worked with a buyer who planned to purchase an Anne Arundel county waterfront townhouse that offered boat storage to its owners.
"We thought storage was available for anyone who had a boat," Ms. Bielaski said. "Once we really researched the bylaws, we found out there was no guarantee boat storage would be available."
In fact, the storage facility was full, and the buyer would have no place to put his boat. Fortunately, he found that out during his five-day review of the association documents.
"We got out of the contract and bought elsewhere," Ms. Bielaski recalled. "It turned out to be a happy ending, although it didn't start out that way."
WHAT TO LOOK FOR
Real estate agents, attorneys and homebuilders say buyers can save themselves money, time and grief if they review their community association documents before they settle on a house or condo. Some tips:
* "If I were a new-home or first-time buyer, I'd approach it on a three-phase basis," says Adam D. Cockey, managing director of W. H. C. Wilson & Co. Realtors. "First I'd ask the Realtor to tell me as much as he knows about the documents. Then I'd review them generally for any specific concern I may have. If I'm still not comfortable, I would seek legal counsel."
* "The consumer should set some time aside and read over the majority of material," says Michael Hollins of Long & Foster Realtors in Roland Park. "If they've owned homes in the past and had problems with a neighbor, they may want to talk that over with the agent. Pay attention to those issues that have been a concern in the past."
* "When you purchase a property with a homeowners association you have about five days to review the documents, and then you can say I don't like what's in it. You have a way out," says Margaret Rome of O'Conor, Piper & Flynn in Owings Mills. "I would suggest they make use of that five-day period to have it reviewed by an attorney."
Agents can review documents with them, but most agents don't want to be responsible for interpreting bylaws, says Ms. Rome. "I don't want to read them and say to the buyer,'This is what it says.' "
* "Probably the thing a buyer should look at is if there are assessments coming up in the future, or if there are pending suits they would be responsible for," Ms. Rome says. "They won't necessarily find that written out in the bylaws or in the CC&Rs.;"
Talk to other homeowners in the development. Call the local board of Realtors or the Maryland Real Estate Commission in Baltimore (333-6230).
* "Review the bylaws and the budget," suggests Stanley Sersen, president-elect of the Chesapeake Chapter of the Community Associations Institute in Bowie. "It will tell them if there are items planned for replacement."
* "If they have an independent home inspection done, their inspection should include a general look at common elements," of the building as a whole, says Mr. Sersen.
* "Make sure any association you buy into is well managed and well funded," Mr. Sersen adds. "You want to find out if they have had a third-party analysis done of their property. Another way you can tell that is if they have regularly had an annual audit by a CPA."