What is an HOA?

According to USlegal.com- A Home Owners Association (HOA) is an organization of homeowners of a particular subdivision, condominium or planned unit development. The purpose of a home owners association is to provide a common basis for preserving, maintaining and enhancing their homes and property. Most homeowners' associations are non-profit corporations. They are subject to state statutes that govern non-profit corporations and homeowner associations. The associations provide services, regulate activities, levy assessments, and impose fines. Usually, each member of a homeowners association pays assessments. Those assessments or dues are used to pay for expenses that arise from having and maintaining common property.

Why do HOA's exist?

In order to preserve, maintain and enhance the community Covenants are written and recorded in the County offices where the community exists. These covenants are the guidelines to which the community is governed. It is generally required that anyone who wants to buy a home within the area of a homeowners association must become a member, and therefore must obey the several restrictions that often limit the owner's freedoms. However, limits to certain freedoms are generally a BIG plus for the community in that it brings continuity to the subdivision, condominium or planned unit development and helps retain value to the community and the homes within them. 

Why do we have an HOA board?

When a HOA maintains an “engaged” HOA board, a community typically keeps the higher standards that the covenants lay out. The guidelines in the covenants can also protect your value and maintain a consistency in the look of the community. The ability of the HOA board to be effective also relies on the owners being involved. The owner’s input gives the board and management company direction so they can do a better job managing the HOA. HOA board members are volunteers who spend their time (without pay) for the betterment our community. In order to run it effectively, it needs input from informed homeowners. When you attend the annual meetings you get informed and understand the issues facing the neighborhood

Shared ownership?

Living in a common interest development that is operated by a homeowners association (HOA) is a form of shared ownership that offers many benefits that appeal to increasing numbers of individuals and families. Although various forms of shared ownership involving common interest developments and HOA’s have existed in the United States for over 50 years, many people who purchase properties that are part of an HOA are not familiar with the complex workings of homeowners associations. 

How is the board selected? 

An Association’s officers are chosen each year by a majority vote of the directors at their first regular meeting that follows the annual meeting of the Association’s members and the officers are subject to the control of the Association’s board of directors. The selected officers then serve until he or she either resigns, becomes disqualified to serve, is removed, or until his or her successor is elected and qualified.  Any officer can be removed with or without cause by the Association’s board of directors acting at a regular or special meeting.  An officer can resign his or her office at any time by providing written notice as specified in the Association’s bylaws (typically by delivering the notice to the board, or the president, or the secretary).  A vacancy in an office that results from any cause must be filled in the manner prescribed in the bylaws for regular appointments to the office that became vacant (typically majority vote of the directors).

What are HOA bylaws and how do they work?

The bylaws of a homeowners association (“Association”) will contain provisions pertaining to the officers of the Association.  Those provisions will specify such things as: (i) what officers the Association must have; (i) when they are elected and the length of their term; (iii) when an officer can be removed; (iv) the process for resigning; (v) the process for dealing with vacancies; and (vi) the powers and duties of each officer.

An Association’s board is typically empowered by a provision in the bylaws to appoint such other subordinate officers as the Association may require.  The powers and duties of such subordinate officers should be specified in the bylaws and/or determined by the Association’s board of directors.  Except as limited by a provision in the bylaws, it is possible for the same person to hold two or more offices (it is common for an Association’s bylaws to prohibit the same person as serving as either the secretary or chief financial officer when they are also serving as the president).. 

HOA President & Vice- President 

President
  • Has general supervision, direction, and control of the affairs and officers of the Association.
  • Presides at all meetings of the Association's board of directors.
  • Vested with the general power and duties of management usually vested in the president of a corporation.
  • Such other powers, duties and responsibilities as may be prescribed by the board or the bylaws. 
Vice President
  • Performs the role of the president in the absence or disability of the president.
  • Such other powers, duties and responsibilities as may be prescribed by the board or the bylaws

HOA Secretary & Treasurer 

Secretary
  • Maintains a book of minutes of all meetings of directors and members with:(I) the time/place of the meeting; (ii) whether the meeting was regular or special; (iii) if special, how authorized; (iv) the method of notice given of the meeting; (v) the names of those present at directors meetings; (vi) the number of members present in person or by proxy at member meetings; and (vii) the proceedings at the meeting.
  • Maintains a current record of the members of the Association with their addresses.
  • Provide appropriate notice of all meetings of the Association's board.
  • Maintains the seal of the Association.
  • Such other powers, duties and responsibilities as may be prescribed by the board or the bylaws.
Chief Financial Officer/Treasurer
  • Keeps / maintains accounts of the properties and business transactions of the Association including accounts of assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and other matters customarily included in financial statements.
  • Deposits Association funds and other valuables in the name and to the credit of the Association with depositories designated by the board of directors.
  • Disburses Association funds as directed by the Association's board of directors.
  • Render accounts as required of transactions and the financial condition of the Association.
  • Such other powers, duties and responsibilities as may be prescribed by the board or the bylaws.

What are some important HOA terms and definitions to understand?

  • “Amendment” A written statement that expresses a change or revision to a prior document
  • “Annual Report” A report that is distributed to members of the HOA every year
  • “Articles of Incorporation” A document that is filed with a governing body within a state (generally the Secretary of State) which evidences the creation of a homeowners association. Most HOA’s are created as nonprofit corporations.
  • “Association” The HOA, or entity that is responsible for the operation of the common interest development.
  • “Board of Directors” An elected body of individuals that are responsible for the management and the administration of the Association.
  • “Board Meetings” A duly noticed gathering of the Association’s Board of Directors for the purpose of conducting Association business.
  • “By Laws” A written document that describes the administrative and operational requirements of the Association including, but not limited to meetings of Members and the Board of Directors and the determination of voting requirements and quorums. 
  • “Common Area” The portion of the HOA’s property that is owned in common by all the Members of the Association and is not part of the Separate Interest of the Members.
  • “Common Expenses” All the expenses of the Association that are incurred for the benefit of its Members.
  • “Common Interest Development” A development that is governed by a Homeowners Association.
  • “Common Surplus” The excess of revenue received by the Association over the Common Expenses.
  • “Covenants, Conditions and Restrictions” (CC&R’s) Rules that govern the use of the real property which are recorded in the public records and which obligate all owners of the property to comply with said rules.
  • “Declaration” A document that is recorded in the County Recorder where a property is located which establishes the property as a condominium or some other form of a common interest development.
  • “Exclusive Use Common Area” - Those portions of an association’s common area that are outside of an owner’s separate interest, but are reserved for the owner’s exclusive use. 
  • “Governing Documents” - A collective term for an association’s internal documents that govern the relationship between the owners and the association and which provide for the legal structure and operation of the homeowners association. They include articles of incorporation, bylaws, declaration or CC&Rs, rules and policies. 
  • “Leasehold” - The interest of a tenant who occupies real property pursuant to a lease with the owner of the property.
  • “Lien” – An encumbrance on one’s property created by agreement or law in order to secure the payment of a debt or the performance of some other obligation.
  • “Limited Common Elements” - Portions of common area which are designed to serve a single unit but which are located outside of that unit—such as shutters, doors, windows, porches, balconies, and patios. 
  • “Management Company” - An organization that is retained to manage real property for the benefit of the owners of the property. 
  • “Manager” - A person who directs the day-to-day operations of a homeowners association under the supervision and control of the board of directors. 
  • “Members” - The owners of the units that make up the Association.
  • “Percentage of Ownership” - An ownership interest that is expressed as a percentage of the total.
  •  “Proxy” - An agent