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4 questions to ask before buying property in an association

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Buying new property comes with a lot of choices: where to build, when to start and should we go with the white cabinets or the natural color.

When buyers consider building on land that falls within an association, the questions they ask should give them a firm understanding of what is involved.

While associations can save property owners time and hassle, they also come with a fee.

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Randy Mann, principal broker and owner of Great Lakes Land Co., said there are four essential questions buyers should ask to help them make important decisions during a land transaction.

What are the fees and where do they go?

At their heart, associations cover maintenance and protect landowners in a development. Mann, whose company owns Paradise Ranch Estates in Kingsley, said the association clears the roads of snow, mows ditches and maintains the blacktop roads.

For that, the association collects dues.

When considering property within an association, buyers should ask about dues before they buy. How much will be paid each year? What services are provided? How often are dues raised?

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Potential buyers can also find out what happens for failure to pay. In extreme cases, an association board of directors can ask a court to put a lien on a property for failure to pay dues.

Where can I find the bylaws?

According to Mann, knowing what goes into an association is a simple matter of reading it.

Michigan law mandates that association documents — including its declaration of covenants, conditions and restrictions (DCCR) — must be filed in the county recorder’s office.

“So it’s a matter of public record,” Mann said. “That means anybody can go take a look at it.”

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Mann said that associations are obligated to make sure that buyers have a copy of the association’s DCCR as a full disclosure document at the closing table. However, there is nothing preventing a prospective buyer from logging onto the county recorder’s website to read those documents before a purchase.

How are the rules created?

Most associations have a board of directors — a president, vice president, treasurer and secretary — made up of residents and whose bylaws are filed within the state.

“They’re like a mini corporation,” Mann said. “In fact, many of them are nonprofit incorporated entities.”

Like the U.S. Constitution, corporation rules can be created and amended. As long as rules don’t violate state law, associations are free to make and enforce as many rules as they like.

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Potential buyers should understand how association rules are created. Are there subcommittees? How are rules enforced? What is required to have rules changed?

Before a major property transaction, buyers can learn how they can enact their own change within the association.

What is the type of association?

When buying into an association, land owners either own the land their home sits on or a portion of it. Because associations split land differently, understanding how much and what is owned is essential before buying property.

Paradise Ranch, for instance, is a planned unit development, or PUD, in which the buyers of each parcel own a “fee simple.” Each buyer has complete ownership of the land and all properties on it.

Another type of land division is known as a “land site condominium” in which buyers own a share of the total number of lots. Mann describes a site condominium as similar to a common, multi-unit condominium apartment building.

Like a multi-unit condominium building, which has common hallways and areas like a pool or gym, the association of a site condominium is responsible for the upkeep of common areas, which can include walkways, roads, tennis courts or a golf course.

Understanding the type of association helps buyers realize what portion of land they’ll be able to own and where they can plant flowers or a garden, or add a shed.

Know your association rights before you buy

Most buyers have heard horror stories of associations that limit decorations or levy heavy fines.

Savvy property buyers take advantage of the rights within an association when they know more before they sign the first check. Asking the right questions at the start can save surprises and hassles before they pop up.

Learn more about property options and available spaces from Great Lakes Land Co.

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