Homeowners Associations

Homeowners Associations (HOAs), also known as Community Associations or Property Owners Associations, are non-profit organizations made up of individuals who own homes in a subdivision, planned-unit development, condominium complex or cooperative apartment building. The Community Associations Institute reports that in 2006, HOAs controlled over 286,000 communities and 23.1 million houses in the United States.

Purpose

HOAs are formed primarily to preserve the property value of a shared community. Accordingly, an HOA may engage in the following activities:

• Operate, maintain and improve common areas, such as streets, pools, gyms and meeting rooms.
• Landscape common areas.
• Enforce governing covenants (known as CC&Rs).
• Bring legal claims against builders and contractors on behalf of all homeowners.
• Mediate minor disputes between homeowners.
• Organize social activities to facilitate neighborliness.
• Organize neighborhood watch committees.

Fees

When a person purchases property in an area with a homeowners association, he or she automatically becomes a member of the HOA. HOAs typically collect monthly maintenance fees from its members. HOA fees can be high, often costing residents over $300 per month, with annual increases of up to 20%. Additionally, HOAs may at any time collect a special assessment to cover additional costs incurred by the HOA. Special assessments may be collected for a number of purposes, including repairing common areas after a storm or earthquake, making improvements to a pool or spa, or to cover legal expenses for a judgment against the association. Payment of fees and special assessments is mandatory. Some states, such as California and Texas, allow an HOA to foreclose upon a member's home in order to collect fees, special assessments or fines.

CC&Rs

A primary function of homeowners associations is to enforce predetermined rules and standards—often known as covenants, conditions and restrictions (CC&Rs). Most planned communities are created with a set of rules to which every homeowner must adhere. These rules are generally recorded in the deed for each property within the community, or documented in the community's master plan or scheme. All homeowners and their guests are required to abide at all times by the community's CC&Rs. Penalties for failing to comply with a CC&R include fines and legal action. If a legal action is successful, a homeowner may be forced to comply with the restriction. If the homeowner refuses to comply, the homeowner may be evicted.

Types of CC&Rs

CC&R's may be general, such as requiring that all houses remain in good repair and maintain a tidy appearance. Other CC&Rs are very specific. The following list illustrates several areas that may be regulated by CC&Rs:

• The exterior color of a homeowner's property.
• The color of a homeowner's curtains.
• The location of the mailbox.
• The size and shape of shrubbery.
• The location of basketball hoops and swingsets.
• The times at which common areas may be used.

Opposing CC&Rs

It is unlikely that an individual homeowner will be able to change a CC&R that the homeowner does not agree with. CC&Rs may be modified under certain circumstances, however, by a majority vote of all homeowners.