Depending on who you ask, Neighborhood Association Covenants are either the best thing to happen to property values, or a burdensome system that deprives home owners of free choice. The truth, as with most things, probably lies somewhere in the middle.

For the past 20 years or so, most new and planned communities are governed by a set of rules and regulations known as 'covenants'. These covenants (also known as CC&Rs- covenants, conditions and restrictions) are the governing documents that dictate how the homeowners association operates and what rules the owners -- and their tenants and guests -- must obey. These legal documents might also be called the bylaws, the master deed, the houses rules or another name. These documents and rules are legally enforceable by the homeowners association, unless a specific provision conflicts with federal, state or local laws.

Covenants can set the flavor and tone to your community, mandating standards for house color and design, exterior maintenance and upkeep, lawn care and ornamentation and other components that can influence the perceived value of a neighborhood and the resale value of homes in that community.

Penalties might include fines, forced compliance, a lawsuit by the association, the misery of being at odds with your neighbors and emotional distress. For example, suppose an owner wants to paint his or her house orange. In many covenant-guided communities, he or she would have to present that color choice to an architectural committee that would have approval over that color choice, even though the house belongs to the owner. If the committee rejects the color choice, and the owner proceeds to paint the house that color anyway, he or she might be forced to get repaint thehouse an association-approved color in addition to facing fines and a lawsuit. Read the rules thoroughly before you buy an association-governed home.

• At a minimum, you should be able to answer the following questions before you buy:
• How much are the assessments? When are payments due? How much are they likely to increase? What do they cover? What don't they cover?
• Does the community have a viable reserve fund for major projects in the future?
• Are there restrictions on renting?
• Do the architectural guidelines suit your preferences?
• What are the rules with respect to pets, flags, outside antennas, satellite dishes, clotheslines, fences, patios and home businesses?
• If you're considering an age-restricted community, what is the policy on underage residents?