Covenants, conditions and restrictions (CC&Rs) are generally not considered to be scintillating reading material. While it's a laborious task, it's a crucial part of the homebuying process when considering purchasing a home in a planned community. Planned development communities can come with many perks, such as neighborhood parks, trail systems, pools, tennis courts and clubhouses. With these amenities also come rules and regulations for the planned development. These are enforced by the homeowner's association and are legally binding.
CC&Rs are the rules and restrictions on properties within a planned development. They are a set of guidelines to explain what can and cannot be done with a property, with the intent of protecting property values. These are not to be confused with property zoning that is set forth by governmental entities. CC&Rs are typically created and set by the master developer and are designed to maintain a cohesive residential community while protecting property values.
It's critical when purchasing a home to take the time to review all of the CC&Rs before buying a home, as again, they are legally binding, and these rules and restriction may affect your decision to buy. Failure to comply with the community rules and property limitations can result in fines, liens and potentially adverse legal actions against a homeowner in violation.
CC&Rs are voluntary agreements between private parties. Because CC&Rs are a voluntary agreement, they can be very specific and restrictive. Some more common examples of CC&Rs are architectural guidelines, exterior aesthetics, landscaping, fencing, vehicle parking, business limitations, additional structures (like an accessory dwelling unit, shed or play structure) and noise levels. These community rules are all designed with the intent of keeping a consistent and cohesive feel in the neighborhood, while maintaining the overall property values within the development in perpetuity.
Reviewing the CC&Rs prior to closing on a property is crucial in order to make an informed decision on the neighborhood, especially because it can have a negative and potentially expensive impact on a homeowner if one is unable or unwilling to comply with the rules and limitations. The Source Weekly's feature story from May 13 detailed how a group of neighbors effectively barred short-term vacation rentals inside the Tanglewood neighborhood in Bend through a change in its CC&Rs—an example of how CC&Rs can impact the way homes in certain neighborhoods can or cannot be used.
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CC&Rs will also provide insight into the financial stability of the community, as well as specify the fees associated with owning property in the community, potential assessments for special projects, repairs or routine maintenance of community streets and roads as an example. They will also outline the fines and sanctions for non-compliance, in addition to clarifying corrective actions and means of contesting a fine or sanction.
Purchasing a home is a big decision and for most, it is the biggest purchase one will make in their lifetime. So, it is critical to know what one is signing up for and whether one can live with and under the rules before choosing to live in a planned community governed by an HOA. Take the time to read each rule, ask the questions and weigh the cost versus benefit of purchasing in a planned development. It is truly no different of an exercise than getting a professional home inspection. The inspection helps a buyer know what they are getting for their money and the CC&Rs tell a buyer what they are getting with the community and what will be required of homeowners living in that community.