Many properties are located in areas
that are subject to protective covenants. Protective covenants outline rules
and restrictions for the neighborhood or development. The goal of the covenants
is to protect the integrity of the neighborhood and to preserve property
Covenants are generally recorded at the
county courthouse, and everyone who buys property in the neighborhood after the
covenants are recorded is subject to the covenants. Developers or neighbors
often form homeowners associations to further the goals set out in the
covenants, to collect dues from the property owners, to maintain common areas,
and to enforce rules and regulations.
At closing, unpaid association dues
from previous years are the responsibility of the seller. Association dues for
the current year are prorated between the buyer and seller. Future dues are the
responsibility of the buyer, and future dues are not typically held by the
lender in an escrow account.