What Are the Nuts and Bolts of Homeowners Associations?
What is a homeowners association and why do they exist?
Condominiums, cooperatives, planned communities and other forms of
homeowners associations ("HOA") are to allow the owners to administrate
and manage their community. One of the main purposes of the HOA is to
enforce a set of covenants (promises) that bind all owners. The
covenants are usually contained in a document called a Declaration of
Covenants, Conditions and Restrictions ("CC&Rs"). Many HOAs include
common property, such as pools, greenways and private roads and in the
case of condominiums, usually building structure, walls, roofs,
plumbing, wiring and other aspects of the building. Individual property
owners are required to pay assessments (usually monthly) to enable the
HOA to operate the association and maintain the common property.
Who serves on homeowners associations, what do they oversee and how are
such associations governed?
A board of volunteer owners elected by the remaining owners usually
governs hOAs. The board holds regular meetings to enforce the CC&Rs, to
establish a budget, authorize expenditures, collect assessments,
problem solve, and oversee maintenance of the common property. The
board acts in much the same way as a corporate board of directors. Many
HOAs also utilize committees to help administer the association. For
example, Architectural Control Committees are commonly used to maintain
architectural consistency in the neighborhood.
What kind of legal power do such associations have to enforce their
rules?
The main source of legal authority allowing an HOA to enforce its rules
comes from the recorded CC&Rs and Bylaws. Because the documents are
recorded on the county real estate records, the valid provisions of
these documents legally bind homebuyers when they purchase their homes.
Condominium and Planned Community HOAs also have the additional backing
of state law, which clarifies legal authority in many ways. HOA laws
may also provide additional legal authority not contained in the HOA's
documents. Specific state law governs all condominium HOAs and many
subdivision HOAs. HOA actions are usually upheld in court if the
authority is provided in the documents or by statute and the board acts
reasonably in carrying out the authority.
If I buy property in an area governed by a homeowners association, how
will I know the rules? And what is my recourse if I disagree with a
rule?
The CC&Rs and Bylaws are recorded documents and potential buyers should
obtain a current copy and read them before buying. The CC&Rs permit the
HOA to make rules and regulations governing the conduct of the members
and the use of the common property. The HOA should have copies of all
its current documents available for review, or sometimes you can get a
copy from a title insurance company.
Homeowners that disagree with a rule should address concerns to the
board. Rules can be amended or revoked if they are unreasonable,
unnecessary or simply unwanted by most owners. The amendment or
revocation will likely require a member vote. Voting requirements are
usually found in the documents. If owners disagree with a rule and are
unsuccessful in getting it amended or revoked after following the
proper procedures within the HOA, the owners can always bring a legal
action to declare the rule unenforceable. However, this could become
very expensive, especially if you lose since most HOA documents require
the owner to pay the HOA's attorney fees if the owner loses.
What are some of the common problems faced by HOA boards? Do you have
any suggestions for how such associations might be run more smoothly?
Rule creation and enforcement are an area of concern. Owners need
adequate notice of any alleged rule violation, including an opportunity
to be heard before any fines are imposed. When owners fail to pay
assessments, the board often struggles on how best to get payment. When
conducting meetings, it is recommended that the board use a guide like
Roberts Rules of Order. This will allow orderly participation of HOA
members and assist the board to reach decisions on important issues.
It is not uncommon for volunteer board members to have little
experience in running an HOA. For this reason, it is important that all
directors become familiar with the governing documents. While the
documents often outline the steps necessary for proper action, some
situations may require some guidance from someone with more experience.
Many HOAs hire management companies to assist with administrative
duties. Experienced attorneys also provide needed assistance in
interpreting and amending documents, assessment collection, internal
dispute resolution and other complex issues.
Finally, and perhaps most importantly, harmony can be sustained by
encouraging open communication and cooperation between owners and the
board.
Where can I get more information about homeowners associations?
Community Associations Institute (CAI) is a national organization with
many state chapters that specialize in HOA issues. CAI publications
provide a variety of interesting and relevant information, including
tips and guidelines in problem solving. CAI hosts seminars, vendor
fairs, and other activities that provide valuable education and
information.
CID (Common Interest Development) Network provides vast HOA information
including relevant state and federal legislative issues, service
provider directories and discussion groups. CID will soon premiere a
powerful new web homeowner association concept called Disclosure Line
(stay tuned).
Regenesis is the largest homeowner association resource in the world.
Among its pages, are links to all available state HOA statutes, books,
videos, software, sample policies and forms and much more.
