How to Check Out the Rules and Regulations Before Buying a Townhome

So you’ve decided to purchase a townhome. Amidst all the factors to take into consideration for your search such as location, square footage, neighborhood and more, you also will want to consider the Rules and Regulations of any homeowner association you might move into. After all, the Board of Directors of each Association decides its priorities.

To get copies of the relevant documents, ask your real estate agent, contact the Association directly, or connect with the title company. Per Minnesota statute, a Resale Disclosure is required to be provided to the buyer during the purchase process and will include the following items:

• Articles of Incorporation
• Bylaws
• Declaration of Covenants, Conditions & Restrictions (CC&Rs, or “Declaration”)
• Rules and Regulations
• Current year’s budget
• Balance and Income/Expense information
• Replacement Reserve Plan
• Minutes from the last few minutes can be very helpful!

Once you have the large stack of documents, there are several things to look for.

In reviewing the Articles of Incorporation and Bylaws, see what can be done without the vote of members, such as raising assessments or creating rules.

In the “Declaration,” or CC&Rs, you’ll find detailed information about the development and its operation. For example, the CC&Rs would contain whether you can rent out your townhome, and if all homes must be a certain color. Double and triple check the pet restrictions! The listing information on the MLS could be incorrect and you’d hate to leave “Fluffy” behind.

The Rules and Regulations typically break down the Declaration in a format easier to read and can offer clarity on the Association’s expectations in areas that are somewhat grey.

While you know that you will have to pay assessments, look for the Association’s procedure for setting and raising assessment amounts – both regular and special assessments for emergencies or non-budgeted projects. How much does the Association have in reserves? Just like your personal savings, it’s important for an association to save for a rainy day.

The minutes of the Association will reveal any conflicts or issues that frequently come up and give you a feel for how the Association is run as well as any big projects coming up that may affect your potential new home.

By taking the time to request and review the relevant documents, you’ll be adequately prepared for your new home and life in an Association.