What is an HOA?
Often referred to as an HOA, a homeowners association is an organization of community residents with the goal of determining and enforcing rules related to the community's property. The group oversees important initiatives such as safety and handling local nuisances that the government does not address. HOA members are typically residents of a subdivision of single-family homes or of a condominium. Membership in the local HOA is often a mandatory part of purchasing property within that jurisdiction.
HOA Covenants, Conditions and Restrictions
Everything allowed under your HOA will be outlined in the Covenants, Conditions & Restrictions (CC&Rs). CC&Rs are the governing bylaws to which members of the HOA must adhere. They are legal documents that you will most likely receive along with your closing paperwork. They are legally binding rules governing modifications to your home and surrounding property.
These CC&Rs depend on the specific HOA to which you belong. In general, these guidelines apply to things like:
- Garbage cans
How to find your HOA
All legal documents surrounding your homeowners association, such as the name of the organization, the complete outline of the HOA’s CC&Rs, and the contact information of the board, are public information. If you’re in a dispute about what is under the jurisdiction of your HOA, consider looking in the county’s recorder office. All CC&R declarations will be stored there for legal reasons. However, getting access to the right documents can be a bit tricky. Fortunately, there are a couple of ways to track it all down.
First, find the name of your subdivision or community.
- If you’ve checked with your neighbors and they don’t know the name of your subdivision, check the deed of your home. The community name or subdivision for your property should be listed there.
- HOAs are often incorporated as nonprofit corporations and therefore will be found with your state’s corporation commission. Homeowners associations are required to register and file through the commission, so that’s a great place to start.
- As a last resort, use your county assessor’s website for your tax information. There you can search your name and address, as well as the name for your subdivision.
Once you have the name of your subdivision, search for your state’s corporation commission via your preferred search engine (remember HOAs are technically a nonprofit), and narrow down your search by your subdivision. The documents you are looking for are called the Articles of Incorporation. Simply referred to as “the articles”, these documents provide the name of your homeowners association, as well as the initial agent. This person is basically the point person when it comes to all legal disputes concerning an HOA.
Most articles also include the names, job descriptions, and contact information for the active HOA board members, as well as voting rules and amendments to the original agreement.
Fees: Homeowners vs. condominium associations
If you own a home or condominium, you may need to pay an association fee in addition to your monthly mortgage and insurance. The fees go toward maintaining the integrity of the property, ensuring the property is livable and repairs are taken care of.
The difference between an HOA fee and condominium fee is what the money goes toward maintaining. Homeowners associations are charged with keeping common areas of the division clean and functional. Examples of this would be public pools or playgrounds. As for condominium associations, they use the fees to maintain the building and surrounding grounds. If a pipe bursts on the front lawn of a condominium complex, the association uses the collected fees to repair the damage.
These fees are mandatory within any homeowners association and as such, HOA fees are not tax-deductible. However, there are some exceptions: if you conduct business out of your home, you may be able to deduct a small portion of the fees from your taxes. Furthermore, if the home in question is a rental property, then absolutely you are able to deduct those HOA fees from your taxes.
What does an HOA have the authority to do?
The extent of HOA authority has been the subject of dispute for as long as associations have been incorporated. However, despite the concern that individual rights are at stake, homeowners associations do carry serious legal power. While most of the power lies in the CC&Rs, the extent varies from association to association. However, there are definitely lines that an HOA cannot legally cross, so here’s a comparison of what an HOA can enforce and what it can’t:
An HOA can legally:
- Force a foreclosure
- Place a lien against your mortgage
- Force you to get rid of your dog (if there are breed/weight restrictions listed in the CC&R)
- Fine an individual if their property is not compliant
- Prevent you from selling or refinancing your home
An HOA cannot legally:
- Fine you or prevent you from moving into the community based your race
- Force you to take down your clothing line
- Fine you for anything not listed in the Covenants, Conditions & Restrictions document
- Make new rules without due process (as listed in the CC&R)
- Prevent your complaint from going to a legal court
- Force you to take down your TV Satellite dish
Again, these are general dos and don’ts. Always check your HOA's Covenants, Conditions & Restrictions before lodging a complaint.
How to fight an unfair HOA
Unfortunately, once you’re in a homeowners association, it's difficult to get out. Oftentimes, you can’t refuse membership and you can’t opt-out. Normally, this isn’t a problem: you pay your dues and the HOA makes the community a better place. However, when it comes to governing bodies, it’s easy for lines to be crossed or ignored. If your conflict with your HOA can no longer be settled between you and the association, there are steps you can take to right the damages against you.
- Determine exactly what the HOA is fining you for. In the letter requesting additional fines, the association is not required to explicitly state what rule within the CC&Rs you are violating. If that’s the case, then look through the CC&Rs yourself. Be sure to look for any ambiguous language where a court could find lenience.
- Keep track of the paper trail. Document everything the HOA sends you: letters, notices, warnings, emails, etc. This allows you to point out any contradictions in what the HOA representative said and the actual rules in the CC&Rs.
- Check your HOA’s governing status. As a corporation, if the HOA is not regularly abiding by your state’s incorporation laws, any rules the HOA is attempting to enforce are not legally binding.
- Ask for an official hearing with all the HOA board members present. Prepare all necessary evidence ahead of time. A petition with neighborhood signatures supporting your cause is an effective method to sway a large board’s opinion.
- Call for a board member’s removal. If there’s a specific board member that seems to have it out for you, you can submit a request for a recall with less than 20% of the board present. You can ask for another vote to be held to replace the board member with someone whom you feel might be more respectful of your individual homeowner rights.
- Sue the HOA in small claims court. However, there are a lot of immediate and long-term repercussions with taking the board of your homeowners association (i.e your neighbors), so take this course of action carefully. Consider small claims court only if:
- The HOA is directly rejecting its duties as set forth by the CC&Rs.
- The HOA is discriminating against you based on your race, gender, or sexual orientation.
- The HOA is blatantly misappropriating funds.
- The HOA failed to notify members of meeting times.
How does an HOA work?
Typically, there are four available positions on the board of a homeowners association. While as a whole, the board works to insure all policies fit within the guidelines of the CC&Rs, but as individuals within the board, every member has unique responsibilities. If you wish to contact any one of your board members, check with your HOA bylaws.
Much like a treasurer of any board, this member will oversee any and all financial records and reports. This often includes securities, funds, budget (and proposal), and annual reports. They do not have the authority to make any sweeping changes without the approval of the president.
An HOA secretary has much more responsibility than a mere clerk. All legal documents executed by the HOA must have the approval of the secretary before being posted, as they are the official custodian of records. They file corporate reports, as well as membership and meeting records.
Board Vice President
If your HOA has any hired employees, then they will report directly to the VP. On a day to day basis, HOA Vice Presidents oversee the grounds and buildings maintenance. However, much of their authority is activated if the president is away.
As all HOAs are technically corporations, the board president is effectively the CEO. As such, the president manages the day-to-do activities of the HOA, as well as executing contracts, orders, and documents as agreed upon by the board. They are expected to attend every HOA meeting as well as being the spokesperson for all HOA-related inquiries. If your HOA has hired an HOA management company or lawyer to deal with disputes, it is the president’s duty to directly interact with any outside third parties.
When election time comes around, the election process should be simple and straightforward. Anyone within the association can vote and put forth their name to be considered as a candidate. The term limits for any board member is relegated to the bylaws of any specific HOA, but on average term limits range from two to six years.
HOA insurance basics
In order to protect common areas from disaster or ruin, most HOAs have taken out a homeowners insurance policy on these public buildings and surrounding amenities. This is what is referred to as a master policy and it ensures that everyone has equal access to common areas. A portion of your monthly HOA fees go toward this master policy to pay for any insurance claims that may occur. This is not the same as a homeowners policy (covers your specific house) or condo insurance (covers the inside of your condo), so be sure to purchase those additional policies when buying a new property.