What is a homeowners association?
A homeowners association (HOA) is a corporation that serves as the governing body of a residential community, such as a condominium, townhome, or single-family development. HOAs are created to protect the community’s property values by developing and upholding its covenants and bylaws, which define the actions homeowners may take with their properties, as well as their behavior within the community. HOAs are often formed by real estate developers during the development and sales stages, during which they assume financial and legal responsibility and retain voting and governance rights. Association ownership and all related responsibility are transferred to homeowners at turnover, which occurs after selling a specified number of units.
Since most HOAs are incorporated, they are subject to statutes governing homeowners associations and not-for-profit corporations, as mandated by each individual state. All community homeowners are mandatory members of the HOA, and must follow the community’s guidelines to ensure a harmonious environment and lifestyle; failure to comply can result in fines or other penalties.
What is an HOA Board?
An HOA’s Board of Directors is comprised of homeowners who have volunteered to stand for election to leadership or member roles. They can also be individuals appointed by the developer to facilitate turnover and management when the community is complete. The Board is comprised of officers, who typically include an elected president, vice-president, treasurer, and secretary, as well as non-officer Board members. Board leaders and members serve the community by making and enforcing the association’s rules and policies (see below), collecting dues, and ensuring its facilities and common areas are well managed, maintained, and attractive.
How do I become a member of my community’s HOA?
You automatically become a member of the homeowners association and a shareholder as a condition of purchasing a home within a common interest development (CID). Your HOA membership entitles you to voting rights, which gives you a voice in helping to set association rules, policies, and regulations that affect your community. In addition, all association members are required to share the costs of operating and maintaining your community’s common areas, systems equipment, and amenities. These services are covered by your homeowners’ association fees or dues, which each unit owner is required to pay. Payments are made to the association monthly, bi-monthly, semi-annually, or annually, depending on the community.
What are HOA fees and what are they used for?
HOA fees are used to pay the costs of ongoing maintenance and repairs to a community’s common areas, equipment, systems, and shared amenities (see examples below). Payments are made monthly, annually, semi-annually, or quarterly, depending on the community. As an ancillary benefit, homeowners can use and enjoy community amenities that may not otherwise be able to afford or maintain, such as swimming pools, tennis courts, gym memberships, or valet services. In addition, depending on what services are included in their HOA fees, homeowners may not have to pay separately for lawn maintenance, snow removal, cable TV, electricity, and other services.
Included services can include:
-Lawn care and landscaping
-Water, plumbing, and sewage systems
-A/C and heating systems
-Electric system and lighting
-Security system and gates
-Cleaning, painting, and upkeep of exteriors and common areas, such as hallway walls, carpeting, clubhouse, etc.
-Repairs of roofs, interior roads, pipes, elevators, etc. due to age, weather conditions, or other damage
-Maintenance of shared amenities, such as pool, fitness equipment, clubhouse, etc.
-Front desk and concierge services
-Cable TV and Internet
HOA fees are also used to pay for a master insurance policy to protect the community’s building structures, exteriors, and community property against damage, as well as other insurance riders and add-ons as required. In addition, fees cover utility payments for all common areas, such as electricity, lighting, water, heating, and air conditioning.
Fiscally sound HOAs allocate a portion of homeowner dues to a special long-term reserve account to cover planned and budgeted renovations or repairs that do not occur regularly, such as repaving interior roads or replacing elevator machinery. They also set aside contingency funds each month to cover unforeseen community expenses and emergencies.
In addition, fees are used to pay for salaries and benefits for internal management, maintenance, and janitorial staff members, as well as the services of a professional community association management company to manage operations and maintenance and enforce the Board’s rules and decision.
Why does my HOA have rules?
Your association’s rules and regulations are created to protect your community’s property values, enhance its lifestyle, and promote a friendly, agreeable, and fair environment for residents. While the rules may keep you from taking certain liberties pertaining to your home or community, they also prevent your neighbors from performing nuisance or disruptive actions or behavior as well. As a homeowner, and member of your association, you are obligated to obey its rules, so be sure you fully understand them, ideally before you buy a home in the community.
How do I know my HOA’s rules?
Your HOA’s specific rules and policies are clearly spelled out in the Governing Documents (Articles of Incorporation, Declaration, Bylaws, etc.), which provide comprehensive information about the association’s operations, as well as the Covenants, Conditions & Restrictions (CC&Rs), which detail its policies and procedures on architectural guidelines, pets, parking, noise, amenity usage, rentals, fee schedules, non-compliance fines and much more.
What are CC&Rs?
Each community association is governed by its own unique rules and policies. These are created by the Board and itemized in the Covenants, Conditions, and Restrictions (CC&Rs) and bylaws, which clearly define the behavior and actions homeowners can and cannot take regarding their homes and communities. These rules and policies are designed to protect property values by keeping the community clean, safe, and beautiful, and ensuring a harmonious living environment for all residents. The CC&Rs are enforced by the HOA’s Board of Directors, or by a property management company hired by the association to uphold the Board’s decisions. Homeowners are required to follow all of the community’s rules, even if they do not agree with them, and non-compliance can result in fines or legal action.
What does a Management Company do?
Many homeowners associations (HOAs), community associations, and condo associations hire property management companies to enforce their directives and handle the day-to-day operations and management of their building or community. The management company works closely with the association, Board members, and/or developer to oversee the management, maintenance, upkeep, and repairs of the common areas, working either on-site or from an office location. The management company’s duties include a combination of business and property-related responsibilities, including managing the budget, hiring and managing vendors and staff, scheduling and overseeing maintenance and repairs, managing renovations and large-scale projects, inspecting the property, attending association meetings, working with homeowners to handle requests and resolve issues, and more.
What is an annual meeting?
All HOAs and condo associations are required to hold annual meetings that are open to all association members. Annual meetings are often your association’s most important meeting of the year because it’s where homeowners are informed and updated about important board business and key association issues, such as finances, the status of current projects, and plans for upcoming capital improvements. The annual meeting is also when homeowners have the opportunity to participate in the community’s decision making.
What is typically on a condo or HOA annual meeting agenda?
Although every association is different, some of the activities that both condo associations and HOAs may have on their annual meeting agenda include:
-Presentations by the board, its committees, and professionals involved in community business like accountants, contractors, and vendors announcements about staff or management changes
-Proposals requiring residents’ approval
-Approval of the annual budget
Most condo associations and HOAs also carve out space on their annual meeting’s agenda for homeowners to participate in open discussions, raise concerns, and ask questions about important association business – hopefully, amicably and productively. Having these open forums on the agenda provides a structured way for community members to be heard. Open forums must be well controlled to prevent them from taking the annual meeting off track. Seasoned board members or the community’s property manager often apply effective techniques to keep discussions focused and on topic.
Board member elections are another important item on a condo or HOA annual meeting agenda as they are usually conducted to coincide with annual meetings. Board members are elected by a majority vote of homeowners. Depending on your state or provincial laws and your community’s governing documents, you may have the option of voting in person at the annual meeting, electronically, by mail, or by naming a proxy (an individual named by the homeowner to cast a vote on their behalf). With several options, there’s no reason not to make your vote count!
Who can attend an annual meeting?
Annual meetings are open, meaning all owners (and shareholders) can (and should!) attend and vote. In addition, homeowners’ legal guardians, trustees, personal representatives, and those with power of attorney may attend and vote on behalf of the homeowner. Beyond that, each community’s attendance rules and requirements are defined by its governing documents and state or provincial statutes. This means that attendance by non-owners, such as tenants, potential homebuyers, and proxies may vary.
What about vendors, attorneys, and other professionals? Although they may be invited to attend specific meetings to provide information or make presentations to homeowners, your association can restrict their attendance otherwise.
Do board member elections require a quorum?
When it comes to electing board members or voting to approve policy changes, bylaws or state/provincial statutes usually require associations to obtain a quorum – a specified number or percentage of homeowners or their proxies present to vote.
Do annual meetings have notification requirements?
Associations must provide homeowners with advance notice of their annual meeting, including the date, time, and location of the meeting, as well as the agenda. How far in advance and the method by which notices must be delivered to homeowners varies and will be specified in your association’s governing documents and in your state or provincial statutes. Generally, associations are required to deliver notices by postal mail or personally, many communities are also permitted to deliver them electronically. Most communities will also post notices in common areas.
What is a special meeting?
Special meetings are unscheduled meetings that may be called to handle a specific issue or problem that cannot wait for a regularly scheduled meeting or that is important enough to require an entire meeting by itself. Special meetings must be focused on a single issue. Any other issues that arise are not open to discussion at the special meeting.
Do condo and HOA special meetings require advance notice?
As with other meetings, the board is required to send everyone in the condo association or HOA a special meeting notice. Again, the specifics of that notice (timeframe, content, and method of delivery) are determined by state/provincial statutes and your association’s bylaws, but it should always include the date, time, and location of the meeting and the issue to be discussed.
Who can request a special meeting?
In most cases, a board member will call for a special meeting, but most associations also allow homeowners to petition for them. Your bylaws will spell out the requirements, such as the number or percentage of homeowner signatures you must obtain and the process for presenting the petition to the board. If you meet all requirements, the board must hold the meeting.
Annual meetings and special meetings are both necessary and integral parts of governing an association – and valuable ways to ensure smooth operations, enhance the lifestyle of residents, and position your community for success. And, of course, they provide great opportunities for open communication between residents and board members.
What are the main HOA Board officer positions?
The main Board officer positions include President, Vice-President, Treasurer, and Secretary.
What does an HOA Board President do?
The president leads the Board and is responsible for overseeing and handling many of its procedural duties. In order to succeed in this role, the Board president must be knowledgeable about the community’s CC&Rs and governing documents and understand how to run an effective meeting. He or she serves as the authority on all association rules and governing documents and appoints committees if dictated by the bylaws. The president also leads community and association meetings, handling such responsibilities as calling the meeting to order, announcing the agenda and ensuring adherence, maintaining attendee order and decorum, proposing questions, calling for votes and announcing the results, and recognizing others to speak on the floor.
What does an HOA Board Vice-President do?
The Board vice president shares many of the leadership and procedural duties with the president, including assuming the leadership role when the president is unable to do so. The vice president’s responsibilities include ensuring the order is maintained during meetings and parliamentary procedures, ensuring a smooth flow of business, and serving as an informed source about association rules, bylaws, and governing documents.
What does a Board Treasurer do?
The Board Treasurer is responsible for the association’s funds, securities, and financial records. He or she oversees billing, collections, and disbursement of funds, and coordinates the development of the association’s proposed annual operating budget and reserve allocations. In addition, the treasurer is responsible for monitoring the budget and reporting on the association’s financial status throughout the year, as well as for overseeing year-end reporting and any required audits. In self-managed communities, in which many of the day-to-day financial responsibilities are handled by a property management company, the treasurer is responsible for ensuring that all association funds are collected, disbursed, invested, and reported accurately and remain in compliance at all times with the association’s by-laws and governing documents.
What does a Board Secretary do?
The HOA secretary maintains the association’s meeting minutes and official records, reviewing and updating documents as required and ensuring they are stored safely and accessible to association members. He or she is responsible for providing proper notice of meetings, as well as distributing documents, such as official records, agendas, and meeting minutes, on a timely basis to association members and/or their authorized representatives. In addition, as the custodian of the association’s official records and documents, the secretary ensures the association meets all legal documentation requirements, such as annual filing deadlines.
How are Board members elected?
Corporations, community associations, and HOAs need strong leadership to make decisions and direct their operations. These leadership roles are fulfilled by Board members and officers. To ensure the community’s ongoing success, it’s important to continually bring in new leadership, and most associations hold Board elections every few years, usually during the annual meeting. While the procedures and rules governing Board elections vary by both state laws and the association’s by-laws, nearly all include providing all eligible homeowners who wish to stand for election an equal opportunity to run, properly notifying all homeowners in advance about the time, date, and location of the upcoming election, and ensuring the voting process remains anonymous and private. Homeowners may vote for Board members in three ways – by attending and casting their votes at the meeting, by mailing their votes before the election is held, or by voting by proxy, which involves allowing another member to attend the meeting and vote on their behalf.