Typically a Homeowners' Associations or an "HOA" is a non-profit corporation or unincorporated association that is assigned the responsibility of maintaining the quality of living in a private area or neighborhood that is owned by a collective group of property owners. An HOA may consist of individual condominium owners whose goal is to maintain the upkeep of the property, building and structures.
What types of real estate developments have Homeowners' Associations?Homeowners' Associations are created to manage common real estate developments, multiple owners who are part of a single development. The HOA is a small group that manages the common and private areas. Typical developments that have Homeowners' Associations include the following:
- apartment building condominiums
- residential developments with separate condo homes
- cooperative based developments where owners obtain long term leases for the units
- planned residential real estate development project
- community projects such as community apartment buildings
What parts of a development are managed by a Homeowners' Association?A Homeowners' Association is supposed to represent the individual interests of the owners of the development as a whole. It's coverage includes (i) common areas of real estate owned by all the condominium owners (which they have rights) such as the common entrances, walkways and elevators, and (ii) the separate ownership rights of the condo owners, which are the private condominium units. A Homeowners' Association is usually responsible for all of the following:
- proper maintenance and management of common areas, including improvements and upkeep
- collection, appraisal and enforcement of assessments of unit owners
- administration of rules and regulations regarding any on-site facilities
- making decisions that concern the policies of the development and anything contained within the covenants, including conditions and restrictions
Who is required to be a member of a Homeowners' Association?It is common that every owner of a unit be a member of the development's Homeowners' Association and a unit owner automatically becomes a member of the Homeowners' Association at the time of purchase of the unit. Each unit is assessed a proportionate amount to the whole, which may also be commonly referred to as the "maintenance fees" for the unit. If the homeowner does not pay the required fees or assessments, collection can be enforced by the Homeowners' Association against the owner and the unit.
How are Homeowners' Associations formed?Homeowners' Associations created pursuant to state law. Homeowners' Associations that are non-profit corporations are created based upon state laws governing non-profit corporations. If a Homeowners' Association is an unincorporated association, it is created pursuant to an agreement of member owners. Like other corporations, the agreement of the Homeowners' Association is contained within the articles of association and bylaws of the entity. A meeting of the members of the HOA is conducted and the board that will govern the activities of the HOA is elected from those property owners present at the meeting. The board may elect officers and agree how to run the association, carry out its activities and duties, determine budgets and assume a term of their service that is contained within the bylaws. Rules governing the election of board members and officers is contained within the bylaws. The Homeowners' Association is required to have meetings (including at least one annual meeting) and must keep adequate records, record meeting minutes and have on file all correspondences concerning both internal and external matters of the development.
Who regulates Homeowners' Associations?State law governs and regulates Homeowners' Associations and some states require developers to provide and report certain information about the development. State's generally have an entity that reviews the arrangements of developers as to the management of the development, such as the Nevada Real Estate Division and the Colorado Division of Real Estate. However, in reality, most states are not involved in the regulation of Homeowners' Associations after formation. Many people complain that there isn't enough government regulation of Homeowners' Associations and, as a result, many homeowners find themselves almost powerless to act against an abusive Homeowners' Association. Complaints are usually handled by state attorney generals, such as filing out a Co-Ops, Condos & Homeowners Association Complaint Form with the New York State Attorney General. Unfortunately the process of review and prosecution may be slow. Homeowners seeking an expeditious remedy are usually left with the choice of taking formal legal action against a Homeowners' Association.
In the event you have a dispute with your Homeowners' Association, you may wish to review your case with an experienced real estate attorney. In some instances, this may unfortunately be the only practical solution. While Homeowners' Associations can be beneficial, they may also present a challenge to the enjoyment of your home. It is highly advisable that you perform your own research, review and due diligence of a Homeowners' Association's operations and conduct prior to purchasing a home.
- Real Estate Law:
- Homeowners' Associations
HOA, Boards Homeowners' Associations: Answers to Frequent Questions
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