|
Free Reports
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.
^ back to top
<< back to Reports Index
|
