The Home Owners’ Association brings immediate feelings to residents, some good, and some otherwise ! In reality, the HOA is simply an extension of the the owners in a community which is designed to handle issues in common. How it works is really dependent on the involvement of the property holders. Its success, and failures, are directly related to the involvement of the property owners. In this series, I will discuss key issues everyone should know about HOA’s.
What is a Home Owners’ Association ?
When neighborhoods are developed, many builders now place all of the homes into an HOA ( Home Owners’ Association ). This is done by forming a legal corporation, and binding all of the homes in that development into that entity through their deeds. Often the association is designed to handle common areas, like slopes, parks, recreation centers, and parkways. The association is tasked with maintaining these areas which are deeded to a group of homeowners in common.
Where does the association get its authority ?
The Association gets its authority from a document commonly known as CC&R’s. This stands for Covenants, Conditions, and Restrictions. When someone purchases a home in an HOA, they sign a document agreeing to abide by the CC&R’s. This is not optional because all homes in the domain of the HOA are bound to these CC&R’s. This is a pretty large document, but to fully know your obligations you should read it. CC&R’s are usually created by the original developer and rarely change. The CC&R’s are bound to the property and transfer with it whenever ownership changes.
The Rules we live by
The specific rules that govern life in the association are in a separate Rules & Regulations document. These are also created by the original developer, but they are often modified, enhanced, or reduced, by the HOA Board of Directors. These rules can be very specific, ie. discussing acceptable landscaping, parking, color selection, property use, etc. When conflicts arise between an HOA and residents, it is about these rules.
HOA assessments
Most HOA’s have property to maintain. The actual obligation varies depending on the location, type, and size of the common areas. There are also variations in responsibilities. Gated communities have “private” streets so the association pays to pave and repair them. Condominiums have structure in common, so the association usually must pay to paint the exteriors, fix all walkways, handle termites, and more. Some gated communities hire guards. Hillside communities must maintain the slopes, which involves plainting, trimming, watering, and damage repair. HOA’s with recreation areas must maintain them, and pay for ongoing maintenance. In addition, HOA’s should set aside reserves to handle unexpected needs in the future.
All of this must be paid for by the member homeowners who actually benefit from these services. HOA’s are not profit making companies. They collect funds from the homeowners for actual and necessary expenses. As costs rise, assessments may also rise.
When people fail to pay their assessments, it harms the Association and places a burden on the other residents. The costs for the upkeep of the properties in common will not reduce or go away because someone doesn’t want to pay their assessment. To protect the interests of the residents in common, the HOA does have authority to penalize people who miss payments, and to even place leans against properties.
It is important to remember an HOA is not a voluntary membership. If you purchase a property inside a development that has an HOA, you will be bound to its rules and regulations, and will be required to pay an assessment that covers costs in common. You have no legal alternative if the property you own is governed by a Home Owners’ Association.
Next: Who runs the HOA ?
