Not just for condo living anymore, Homeowners Associations are sprouting up all over the U.S. as residential subdivisions are being developed in the hopes of maintaining order, upkeep, and most importantly, property values. What do homeowners need to know if they’re living under the jurisdiction of an HOA, or considering purchasing a home or lot governed by an HOA? Here’s the scoop:

The numbers

The Community Associations Institute estimates that nearly 62 million U.S. residents were living in 309,600 association-governed communities in 2010. Homeowners associations and other planned communities account for 52-55 percent of the totals above, condominiums for 38-42 percent and cooperatives for 5-7 percent.

The rules that govern: Covenants, conditions & restrictions (CC&Rs)

Also known as simply, “the covenants,” this is the HOA’s lawbook, which contains all of the guidelines and restrictions for homeowners who have chosen to live in a particular development or subdivision. Covenants can mandate when landscaping must be completed on new homes, how many trees should be on the lot (and of which variety!), what colors the houses may use on their exterior, and even the shape and size of a pole building or shed. If you are purchasing a house in a community with an HOA and/or covenants, generally your realtor or the title company will provide you with a copy of the covenants prior to the sale. Covenants can be enforced by any member of the HOA (i.e., an individual homeowner) or through the HOA. Non-compliance to the covenants can result in fines or even lawsuits if the infractions are large enough.

Pat Keesler, a developer with MEK Development in Neenah, says that having covenants can help provide certain assurances to homebuyers.

“When you buy a lot or a home that has empty lots around it, you want to know how it’s all going to work out,” he says. “What assurances do I have that the guy next to me isn’t going to build unsuitably on that lot?” And that’s where the covenants come in.

But while covenants may seem like they’re written on stone tablets that may have descended from a developer’s mountain, they are not written in stone, and can generally be changed with a majority or 2/3 vote from the vested homeowners.

Why do they exist in the first place? Two reasons, according to Keesler. First, in the case of rural subdivision development, towns can mandate that plats of land may only be developed if an HOA is in place to collect the taxes on shared property or outlots, he says. Keesler says this is exactly what happened with the rural, residential subdivision he developed in Neenah. But other times, it may be to make undeveloped lots more appealing to prospective buyers.

“We definitely felt that by having the HOA and covenants that the lots would be more saleable,” Keesler said.

Who governs the HOAs?

Generally HOAs are governed by a Board of Directors that is staffed by volunteer homeowners from within the subdivision. Each HOA determines how often the Board should meet and will likely hold an annual meeting to set fees and discuss any new issues.

Are covenants hard to enforce?

If the thought of telling your neighbors that you don’t like something they’re doing makes you uneasy, then a residential area governed by an HOA or covenants probably isn’t for you. Each homeowner has the right to enforce covenants that are detailed in the CC&Rs that govern the subdivision – and may even take a neighbor to court to do so.

“You can get some really stubborn people and if the infraction is significant enough, you don’t have any choice but to take legal action,” Keesler said.

Some argue that covenants are not enforceable in a court of law. But if covenants are drafted by an attorney, and updated often to reflect current town or city ordinances, chances are they almost certainly will be enforceable.

Each HOA, however, has a personality of its own. Some HOAs will be suggestive and soft-spoken about rules and regulations, shying away from fines and fees while trying to persuade homeowners into compliance. Others may be militant, jumping straight into litigation after the first infraction. It is in the best interest of the homeowner to research the HOA’s history prior to purchasing a property, either searching court records or talking with current homeowners about what type of prevailing philosophy exists.

What does it cost?

The price for providing maintenance and upkeep on shared assets (pools, lots, streetlights, etc.) and the promise of higher property values when it comes time to sell is charged via the collection of annual dues. Homeowners Associations generally charge their homeowners a one-time fee set by the Board of Directors to cover hard core expenses plus a small reserve for future, unforeseen expenses. This can cost homeowners less than $100 a year to thousands a year. If homeowners fail to pay their dues, they may be subject to late fees or fines, lawsuits, and even liens placed on their homes.

The bottom line

Is buying into an HOA a good deal for the homeowner? Unfortunately, it’s too early to tell. They simply haven’t been around long enough to measure against similar properties that fall outside of HOA jurisdiction in side-by-side sale prices. In theory, HOAs seem to provide some intangible sort of insurance that life is better where you can protect yourself against your neighbor’s desire to stockpile old cars, tractors, etc., or leave his boat/camper/etc. out year round, or grow his grass too tall, etc. For now, though, the best thing a homeowner can do is good, thorough research before purchasing a home or lot under the jurisdiction of an HOA or covenants, and to actively participate in one if they already own a home or lot governed by one.