So you've found your ideal rural land, one that has everything you've been searching for: beautiful views, a nearby charming small town, and a reasonable drive from your primary home. You're also feeling pretty confident about having resolved your concerns about well water and septic systems. The price is right and the terms are attractive, so you've signed the contract.
Now the sales woman hands you the binder of "community documents" and says you should review and approve them during your seven day free look or rescission period (link to a Wikipedia definition). You've just gone from four color brochures and walks in the country to the "fine print". And you're not favorably inclined towards Property Owners Associations (POAs); after all, aren't you seeking a rural get-away to get away from the hassles of the city? For better or worse, POA's are common in rural areas such as northern Arizona ranch land or horse properties. What follows is a conceptual approach to reviewing POA documents; not a checklist but a big picture introduction to issues you should consider when reviewing deed restrictions (commonly called Covenants, Conditions and Restrictions, or CCRs) and POA documents.
A POA and its CC&Rs are designed to assure a minimum community development standards and to restrict uses. The developer records them to protect the value of his unsold ranch land or remaining horse properties for sale from potential loss in value caused by the substandard development of initial owners. It's also a promise to prospective buyers that once the community association is turned over to the owners by the developer, the community will have the tools to maintain the same community character the owners understood they were acquiring.
To effectively determine if the POA and the CC&Rs are compatible with the rural lifestyle you envision, you must first think through how you plan to develop and enjoy the property. Carefully think about how you plan to use the property and compare your expectations to the restrictions and requirements of the POA. That's the only way to determine if you'll ultimately be happy with the property you're buying, because you must assume the restrictions will be enforced and won't change.
Are you buying into a high concept development with a highly evolved architectural theme? If so, expect to see detailed regulations on architecture, materials, height, square footage, and colors, as well a rigorous design review and construction management protocol. Sustaining the high concept is critical to assuring the property's enduring value. The CCRs are tools to assure the concept will be honored as the community matures and not be degraded by inappropriate development (think Quonset hut in an alpine village). For example, a certain Prescott, AZ horse property may have restrictions on what materials can be used to construct homes, roadways, fences, etc.
If the land you're considering is in a less formal and less defined community, expect to see fewer restrictions. If you are buying into a large acre rural development (where individual parcels are 5 acres or greater) with few if any community amenities, there may be little in the way of design restrictions.
You may fall in love with a community and think you have found the perfect parcel, but if you have young children and outdoor play equipment is prohibited, consider if the place is really right for your family. If your making a major investment in a dream home, see if the deed restrictions require your neighbors to build to a your same high standards, thereby protecting your investment.
Carefully look over the CC&Rs and any design guidelines to determine if the architectural standards add unseen costs you can't afford. If your community has common area amenities ask when and how the developer plans to turn over control of the amenities to the community. If the developer has already turned over control, inquire about any simmering issues between the POA board and residents.
The bottom line is that the POA exists to preserve the character and value of the community, and your investment. You should review the controlling documents carefully, and if you don't understand something consult with your broker, your seller, or your attorney. Its critical to remember that when you buy property that's part of a community association (POA), you are contractually agreeing to comply with its rules and CC&Rs. These rules can range from the simple (only site-built homes) to the comprehensive (colors, height, style, landscaping).
Understand how your family expects to enjoy the property and then determine what effect, if any, the deed restrictions will have on you achieving this dream. Is this the right community for you and your family? Are the rules compatible with how you want to develop your land? If yes then the POA should be a source of satisfaction as your community matures and grows in value.
If the rules don't fit your lifestyle, keep looking. There's plenty of rural land available in many different communities. You'll find the property that's right for you.
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