More than 20 percent of homes in America are part of an HOA (homeowners association), and some research suggests HOAs can help homes retain or increase in value. HOAs offer a wide range of benefits to many communities such as pools, tennis courts, playgrounds and valuable green spaces.
This growing trend toward HOA-operated communities is not without drawbacks, however. There are plenty of HOA horror stories, replete with HOA representatives suing homeowners over the type of grass they used, or for not having the correct mailbox, and in some cases, even foreclosing on homes due to unpaid HOA fees.
HOAs vary, of course, but in many cases they exert a large amount of control over what kind of changes can be made to an individual home in the community.
As a result, homeowners may find themselves required to make certain changes to the exterior or even interior of their homes. Unfortunately, many of those changes may not be covered by insurance, especially if they’re not required to make the home livable.
Can HOAs Require Changes and Upgrades From Homeowners?
Whether your HOA can require you to make changes to your home is fully dependent on a few factors:
When you purchase a home in a community with an HOA, you are required to sign and agree to that community’s Declaration of Covenants, Conditions, and Restrictions (CC&Rs). The CC&Rs for each community differ, but the CC&Rs for your community may have stipulations for what kind of changes must be made to the exterior or interior of your home.
If you’re purchasing a used home, there’s a chance that the CC&Rs were not followed by a previous owner. In this case, the HOA may require you to follow certain rules in the CC&Rs regarding changes that the previous homeowner failed to adhere to. Additionally, if you are building a new home in the community, the CC&Rs may have set requirements for what kind of materials you can use, height restrictions, and other design and land use restrictions.
Most HOAs will have an architectural review committee that is in place to ensure all homes in the community follow the rules agreed to in the CC&R. If you find your HOA is requesting you make changes to your home, it’s likely the architectural review committee has determined some aspect of your home does not meet standards required by the CC&Rs.
Trouble for some homeowners may occur when the HOA changes the CC&Rs. In some cases, the HOA can add addendums or changes to the document without requiring additional consent from homeowners. From there, the HOA may ask for any new changes as required in the amended CC&Rs.
Simply put, when you sign the CC&Rs for an HOA, you are signing a document that is legally binding. The HOA can take action against a homeowner who refuses properly enact CC&Rs requirements, or who fails to pay HOA fees, including placing a lien on the home and enacting an HOA foreclosure on the home.
Insurance Limitations on HOA Change Requirements
Your homeowners insurance may cover some changes you make to your home. For example, if your home is damaged in a fire or from a storm, your homeowners insurance will likely cover the cost of repairs. But if your HOA uses this as an opportunity to request additional changes above and beyond what your insurance would cover, or requests that you utilize certain, more expensive materials, your insurance likely won’t cover it.
A community in Centennial, Colorado, discovered this reality after a summer 2018 hailstorm. Following the storm, the HOA required some homeowners to replace the roofs with shingles that met certain “aesthetic requirements.” Unfortunately for some homeowners in that community, their insurance did not cover those types of upgrades. Based on the requirements of the CC&Rs and the HOAs legal authority to enforce its rules, some homeowners were left to cover those costs out of pocket.
When situations like this arise, much of the HOA’s argument will fall into maintaining home values.
There is currently no insurance that homeowners can purchase that will cover the aesthetic changes your HOA demands. While you could purchase Ordinance or Law coverage as an endorsement to your existing homeowners insurance policy, it won’t likely cover the changes your HOA requires. Ordinance or law will help cover repairs or upgrades that meet legal codes for your city, town or state. Your HOA’s CC&R, however, is not a legal code, even though it is a legally binding document.
How to Handle an HOA Change Requirement
If your HOA demands that you make a change to your home that is not covered by your insurance, you have five options:
1. Check to make sure the requirement is written into the CC&Rs.
Your HOA cannot make you do anything unless the requested changes exist in the CC&Rs in writing. At times, some unscrupulous HOA committee members may be trying to force changes without the actual authority to do so. If you do not have a copy of your community’s CC&Rs, make sure to ask for one and review it for the changes being requested. You may need to call in legal assistance to parse the document, as CC&Rs are at times very complex.
2. Check to see if your neighbors were similarly targeted.
If your HOA is asking you to make changes, but not requiring these same changes of your neighbors, they may be unfairly targeting you. This can constitute discrimination and may leave you some room to file a lawsuit against your HOA. Keep in mind, of course, that the cost of filing such a lawsuit may be higher than the cost of what your HOA is asking you to do, and there’s also no guarantee that such a lawsuit would be successful.
3. Demand a hearing before your HOA board.
HOAs must honor your request for a hearing before the board. If your HOA does not honor your request, you can escalate the matter to the court system. HOAs that don’t respond to individual requests for a meeting will likely respond to a court-ordered appearance—or may even back down in their upgrade request. That said, if you have a particularly difficult HOA, be prepared for a fight.
4. Become active in the HOA.
If you’re unhappy with how your HOA is run, become active in it. Attend committee meetings, and if you have the time and energy to do so, run for election to your HOA. Most HOA boards are elected from the community, so you may be able to make positive changes for your community from the inside.
5. Make the necessary changes.
Ultimately, it may be in your best interest to make the changes the HOA is requesting, even if you have to pay out of pocket to do so. If the HOA has its rules written into the CC&Rs and they’re requiring them of everyone, so long as you signed the CC&Rs you may be bound to make those changes, even without coverage from your insurance policy.
Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.
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