Homeowner Associations: What do you need to know?
Those looking over the advertisements for Colorado real estate properties will occasionally come across verbiage they may have heard in the past but never really understood exactly what the term(s) may have meant. A common term that is bandied about in real estate circles is “Homeowner’s Association.” On the surface, this infers “something” about a collective of property owner. But, what does this collective do and what is its primary purpose. Most people might be unaware of the actual definition of a homeowner’s association. That can be unfortunate since there are many great benefits to being involved with a homeowner’s associated. So, let’s explore exactly what a homeowner’s association is:
Basically, a homeowner’s association can be described as a legal entity that is utilized for developing, overseeing, and facilitating the purchase of homes while they are in the development stage. All of these responsibilities are legally obligated to the real estate developer on a contractual basis. That means, for example, the developer MUST properly build the homes, oversee the employees responsible for the construction, and then take the proper steps to sell the home for its true value.
Once the home is sold, however, all of these obligations will transfer to the buyer. In other words, the person that purchases the home will be responsible for all maintenance and repairs on the property. The homeowner’s associated will no longer be required to handle anything with the property any further. After all, they are no longer of the owners of the home. However, because of their proper management and oversight, the new owners can be quite comfortable in the notion that their new property will be in excellent shape provided the homeowner’s association is known for its high quality professional reputation in the field.
Many of the homeowner associations in the United States are considered non-profit corporations. Some may wonder why they are afforded such a status. After all, what would local governments possibly gain by reducing the tax revenues on these corporations? What they have to gain is significantly more revenue than they ever would procure had their not been the existence of such homeowner’s associations. Remember when the homeowner association builds 15 residential properties all 15 become annual revenue generators for the local municipality through their payment of real estate tax. Needless to say this will more than pay for the lack of tax revenue that the municipality would be drawing from the homeowner’s association. Of course, the laws and regulations dealing with these associations will vary from state to state. Some states are more stringent on how homeowner associations can operate while others let them basically do what they want to do.
Those considering making a purchase from property being offered from a homeowner’s association can often do so without much worry. These associations are usually of high quality and can deliver properties to the specification of those making the purchase. It is this purchasing confidence that makes homeowner’s associations so popular.
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