Become an HOA (Homeowner Association) Guru
The official definition from the Community Associations Institute (CAI) is “A community association provides a communal basis for preserving, maintaining, and enhancing homes and property. All community associations have three essential, defining characteristics:
A Community Association, commonly referred to as an HOA, COA, or POA, is a corporation registered with the state and managed by an elected Board of Directors. Its purpose is to govern the community’s affairs per the provision of the governing legal documents. All members of the neighborhood financially support the corporation. Associations also set out specific rules that all residents must follow called covenants, conditions, and restrictions (CC&Rs). Membership is both automatic and mandatory and conveyed with the purchase of the property.
Yes. Most associations have Articles of Incorporation and are registered as nonprofit corporations.
When you purchase a new property, the closing documents reference the fact that the property is in an association and that the buyer will abide by the rules and regulations in that community. Membership in the association is both automatic and mandatory and conveys with the deed and ends with the sale of the property. The buyer is ultimately responsible for discovering if the property they purchase is inside an association and following the rules governing that community.
The association’s purpose is to manage the business services and common areas for the association per the requirements of the governing documents. The governing documents also outline a standard that helps preserve the property’s look, feel, and sense of community through covenants and a system of governance. Most neighbors maintain that the most significant benefit of their association is preserving the value and integrity of their individual investments.
The Board of Directors is a group of people just like yourself who volunteer to participate in the leadership activities of the association. In the same way, our elected officials uphold our Constitution, the Board upholds and enforces the community’s governing documents as their fiduciary, legal, and ethical obligation.
The powers and duties of the board include setting and collecting annual assessments; using and expanding the assessments collected to operate, maintain, repair, replace, modify, care for, manage, and preserve the common areas; procuring, maintaining, and paying premiums for insurance; contract for management of the association; amend and add to the rules and regulations governing the use of the common areas; purchase equipment; and more.
The four primary functions of the Board, as defined by CAI, are to:
The day-to-day operations of most associations are so detailed and involved that they go far beyond the scope, time, and attention that most volunteers can provide for the community and its members. Most Boards recognize the need to hire a professional residential property management firm that can provide experience and expertise. The management company can also serve as an objective third party for neighbor-to-neighbor disputes.
Our goal at Spaces is to provide a partnership with your Board of Directors and the homeowners in your community. Ultimately, we strive to protect and enhance the value of your investment. Our position and authority are often misunderstood. Associations are governed by their own set of documents called covenants and bylaws. The elected Board of Directors enforces these documents, and they work to represent the needs of the whole community. To better understand Spaces’ role in your community, take a look at the things we handle and the things we don’t handle:
SPACES HANDLES
SPACES DOES NOT HANDLE
When you purchase a property in an association, you become part of a joint interest development. All owners must share in the everyday expenses to maintain and operate your community’s common areas, equipment, and shared amenities.
Each year, the Board of Directors for your community meets to discuss expenditures from the past years, fund the reserve or savings account, and take into consideration any planned projects for the coming year. The Board of Directors sets assessments and covers the Association’s business and finances. Each owner’s assessment amount is determined based on the percentage allocation of the projected annual expenses as set out in the governing documents. Board members are owners, too, and as such, are obligated to pay assessments just like any owner. Board members are volunteers and do not profit from the community’s business.
Each community is managed by governing documents called articles of incorporation, bylaws, covenants, conditions and restrictions (CC&Rs), rules, and regulations. Since each community has specific governing documents, the budget and finances are regulated in these documents. Depending on the community’s documents, assessments are due annually, semi-annually, quarterly, or monthly.
Most community assessments cover some or all the following expenses with the homeowner’s dues: ongoing maintenance, insurance policies, utility payments, reserve funds, personnel, and professional management fees. Additionally, the association, depending on the document requirements and the level of services desired by the members, budget items may also include security guards, social events, and much more.
Yes. Many homeowners still receive coupon books once a year at the association’s expense. Every year, more and more of our communities elect to go “paperless” to save their association the added cost of these coupon books. Additionally, homeowners can go “paperless” by signing up for eStatements instead of receiving a coupon book.
Spaces offers easy and convenient payment options:
When the Board of Directors determines the need for a capital expense that is above and beyond the average budget for the community, a special assessment may be required. Special assessments can cover additional costs such as unexpected property loss, deferred maintenance concerns, and additional community enhancements.
If there is non-payment on an owner’s account, the covenants expect a late payment fee and interest to be assessed on the account. Additional collection fees will be applied to the owner’s account if the account continues to go unpaid.
Should an owner’s account go unpaid, the owner may receive up to three letters mailed to the mailing address on file over 90 days. The first letter is a Payment Reminder, then a Second Notice, and finally, an Intent to Lien is mailed to the addressee. Should owners receive an Intent Lien Notice, they are given 15 days to make payment arrangements. If no payment arrangements are made, the account will be turned over to the association’s collection attorney.
The goal of every association is to preserve the value of the community’s assets and the property values for each homeowner. When assessments go unpaid, homeowners are negatively impacted because the financial responsibilities of the community are equally shared among all neighbors. Delinquent accounts can mean unpaid bills and put the community in jeopardy. The Association will take all legal means necessary to collect the monies owed including filing a lien on the property and procuring a personal judgement through the court.
The Resale Certification charge is an industry-standard charge to the title company that covers the costs associated with the paperwork required to transfer ownership from seller to buyer within an association. Rush fees may also apply based on the timing of your attorney’s request.
When you rent your property in an Association, you are still responsible for paying dues and ensuring the home complies with the association’s rules and regulations. Even if you make arrangements with a tenant to handle these tasks (payment of dues, landscaping, etc.), you are legally responsible if the tenant neglects them or does not complete them correctly. If you live in a condo association, you must provide the association with the tenant’s contact information and a copy of the lease agreement. Additionally, you must provide the Association with the Tenant’s contact information and a copy of the lease agreement.
Yes, because Spaces may need to get in touch with your tenant from time to time, especially in an emergency situation. Please keep tenant records and lease information updated here so we may best serve your needs.
According to the Community Association Institute (CAI), a community association provides a communal basis for preserving, maintaining, and enhancing homes and property. All have three basic defining characteristics:
Associations manage common areas of the property, manage community associations and property interests of owners, provide services for owners, and develop a sense of community through social activities and/or amenities.
The Board of Directors comprises your fellow homeowners, each of whom is elected to terms of one or more years. The Board is responsible for making decisions for the community and delegating to sub-committees and the management company.
Meetings are scheduled and can have two parts: an Open Session, which all homeowners are entitled and encouraged to attend, and a closed Executive Session, in which sensitive matters such as delinquent accounts are discussed.
The Management Company works at the direction of the Board of Directors and performs the community’s day-to-day business. This includes overseeing community funds, assisting homeowners with information and service requests, and touring the community to ensure CC&R compliance.
Vendors perform specific functions for the community, such as landscaping, painting, and pool maintenance. Many vendors are contracted to perform a service regularly, while others perform work item-by-item. Work orders are sent to vendors electronically, and once the work is completed, the vendor notifies management.
Every vendor recommended by Spaces Management must be licensed, bonded, and insured.
Congratulations, you’ve just been elected to serve as an officer within your HOA Board! Volunteering to serve your time in the community where you live can be an exciting and overwhelming experience. When accepting an officer position, it’s essential to know that you are taking on many responsibilities, which can be extremely fulfilling to serve your community. Use CAMS as your guide to break down the various roles and duties of each officer within the Board.
The duties of each officer depend on the person’s title. What brings them all together is their obligation to make decisions and actions in good faith for the community’s best interest. Here is an overview of the different responsibilities of each HOA officer. See your Association by-laws for specific information about your HOA’s officer requirements and powers.
The association President serves as the CEO of the community, taking on very similar responsibilities and powers. Most of the time, HOA Presidents are expected to preside at all Board meetings and execute orders, contracts, and documents in the association’s name. The President also oversees the association’s day-to-day administration and ensures all duties are carried out. The President is the spokesman for the Board in most matters. They can also be removed at any time with or without cause from the officers by majority vote.
Get additional information from CAI about the Board President.
If the HOA President must be absent for any reason, the Vice-President is tasked with taking on all powers assigned to the President. The Vice-President only possesses these powers in the absence of the President.
The Secretary’s responsibilities include keeping and maintaining all Board meetings, membership, and official HOA records. It is important to note that the Secretary is more than a clerk for the association; they also file corporate annual reports and act as custodians of the records. Legal documents executed on behalf of other HOAs often need the President’s signature and to be attested by the Secretary.
The Treasurer’s duties include acting as the HOA’s custodian of securities, funds, and financial records. All reports and financial records are the responsibility of the Treasurer. They also coordinate how the proposed annual budget will be developed and the preparation of the annual financial information on the HOA’s financial status. They cannot bind the HOA or directors in deals with third parties unless given authority. Preparation of monthly financial statements and many financial transactions, such as collecting assessments and paying the association’s expenses, are often assigned to a professional management company; however, the Treasurer and Board retain the responsibility.
The membership within an association elects board members, and this typically occurs at the annual membership meeting. The association’s bylaws determine board member term lengths, usually one to three years. They may be re-elected if the bylaws allow.
The main goals of the Board of Directors are to:
While property owners are responsible for maintaining their individual property, the Association’s Board of Directors maintains common areas such as private streets, entrance signage, and amenities such as a clubhouse, pool, playground, or fitness center. Common areas are maintained by developing and enforcing rules for using the amenities, repairing and re-paving streets, entering into a contract with a vendor, and addressing other issues as they arise.
Ensuring compliance with governing documents is another component of successful association management. Board members must be familiar with their association’s governing documents and local, state, and federal statutes pertaining to association management and community governance. The requirements held within an association’s governing documents should always be clearly communicated to the association’s members.
Some tips for ensuring that communication is handled appropriately are:
For further information on ensuring compliance with your Association’s governing documents, please see the articles below:
Guidelines for Creating Community-Friendly Association Rules
Yet another function of the Board is managing the Association’s finances. Financial Management includes collecting assessments, paying the Association’s expenses, and many other possible tasks.
Those who are tasked with managing the Association’s finances may be responsible for some or all of the following:
For more information on managing your Board’s finances as well as conducting other Association business, consider the following resources:
Much like hiring a professional contractor for household maintenance items, a professional management company is integral to ensuring that your Association is in good working order. Several critical components of any Association can be made better by hiring the right management company.
The management company assists in:
… to name a few, they have connections with area specialists to ensure your Association receives the top-notch service it deserves.
Here are some of the service obligations a professional management company will have to your Association.
Conduct property inspections every two weeks.
Arrange for maintenance and repair of the limited common elements, common elements, and other maintenance and repairs as required by the associations’ governing documents
Review vendor performance and ensure contract compliance
Assist in the enforcement of the Rules and Regulations of the Association
Maintain staff for live answers to homeowner phone calls
Answer homeowner questions on:
Follow-up on collections issues and concerns
Process individual mailing and group mailing pieces.
Interview, hire, and oversee personnel, if required or requested, on behalf of the association to work on-site.
As we discussed in the Duties of Management Company section, the purpose of the management company is to ensure that your Association is in good working order and functioning as smoothly as possible.
Your community manager is tasked with ensuring this objective is carried out daily. Your community manager is your point of contact within the management company for anything and everything related to your Association according to the specifics of your contract.
The community manager is responsible for your Association’s general administrative tasks, ensuring standard area maintenance is kept up with and that you have access to the best contractors for the best price possible, and managing the financial aspects of and insurance policies for your Association.
One key to the success of any association is the formation of committees. Through committees, work can be specialized so that essential tasks can be accomplished more efficiently versus depending on the Board of Directors to handle all issues that may arise.
Committees are comprised of non-board association members. Committee participation allows for new ideas and a broader sampling of community opinions; the more significant number of association members who actively participate in committees decreases the workload for each individual and, thus, the likelihood that association members will get burnt out with community decision-making.
Typically, each committee will have a Board Member liaison, and each committee will have a chairperson who reports the committee’s activity to the Board. Written reports regarding committee activity are often circulated to Board Members alongside the agenda and are more expeditious than verbal reports given during meetings.
Though the authority over the association remains with the board, committees are beneficial in creating community activities and providing feedback and recommendations to the Board.
1. Standing Committees
Responsible for performing ongoing tasks such as handling financial matters, social activities, and maintaining facilities.
2. Ad-hoc Committees
Are formed for specific purposes and periods. These purposes may include nominating Board Members or providing an in-depth study of a community issue.
It is essential to be sure that your association’s insurance covers volunteers and to recognize those volunteers – everyone wants to feel appreciated!
Architectural Guideline: An architectural guideline is a rule that applies to the appearance of an owner’s lot or the exterior of their unit or improvements. Development of architectural guidelines should begin with a review of the governing documents to determine in what areas the board can allow a change. Usually, a community association’s declaration, CC&Rs, or master deed provides for architectural changes. It is in the community’s best interests for a board to establish written architectural guidelines for two reasons: Written guidelines indicate to owners what changes will be allowed under normal circumstances; written guidelines are a way to avoid claims of arbitrary or selective treatment of owners.
Annual Budget: A 12-month estimate of income and expenses; the financial plan of operation that the association adopts. The budget determines assessments, purchases, and savings strategies; it is a tool for measuring financial performance and is also called an operating budget.
Annual Meeting: A once-a-year mandatory assemblage of unit owners to conduit condominium or homeowners association business as required by the governing. Documents. The board gives its annual report to the members, elects a board of directors for the upcoming year, and presents the new budget for ratification, if necessary.
Architectural Control Committee (ACC): A volunteer committee that preserves the community’s architectural integrity.
Articles of Incorporation: A community association’s corporate structure is established when a developer sets up the association. The developer files articles of incorporation—sometimes called a corporate charter—with the appropriate state corporation agency. The articles of incorporation bring the corporation into existence and define its primary purposes and powers.
Assessments: In community associations, these are amounts charged against each owner to fund the community’s operation, also called dues, maintenance fees, or regular evaluations.
Board of Directors: The homeowners or condominium association is a corporation and, therefore, a governing body required to oversee its business. The property owners elect the board of directors or as otherwise specified in the bylaws. The association’s governing documents outline the limitations and restrictions of the delegation of directors’ powers.
Bylaws: The bylaws are the guidelines for the operation of the homeowners or condominium association. The bylaws define the duties of the various offices of the board of directors, how elections will be handled, the terms of the directors, the memberships’ voting rights, required meetings and notices of meetings, and the principal office of the association, as well as other specific items that are necessary to run the association as a business.
Committees: Role and Responsibilities of Committees Usually, a community association’s bylaws—and sometimes its declaration—will name certain committees required to allow for the appointment of other committees that may be necessary occasionally. Community association committees typically consist of owners appointed by the board of directors. The role of these committees is to assist the board in meeting its responsibilities, broaden the community’s input on decisions by serving as a means of gathering owners’ opinions and attitudes, training ground for future leaders, explaining board actions to the community, perform research and prepare recommendations for the board. The number and type of committees will depend on the size of the community and the complexity of its activities. The more actions a community is involved in, the more a board may need additional groups to collect information, develop recommendations, and carry out activities.
Common Area: A common area is designated on the recorded plat of the community as land and community assets that are not sold to an individual owner. In a planned community, the common areas are owned by the association, whereas in a condominium association, the common areas are owned by all owners in undivided interest. You will also see the term “limited common areas.” A limited common area is a common area that is for the exclusive use of fewer than all the owners of an association.
Community Association: A type of housing that combines individual ownership of individual dwellings with shared ownership of the common elements by the entire group of community owners. Respective owners, through compulsory association membership, share in the decisions affecting those areas of the association common to all who live in the community. Encompasses, among others, the planned unit development (PUD), condominium, cooperative, and homeowners association (HOS).
Community Associations Institute (CAI): A professional trade association that offers courses and professional designations respected in the industry. This membership organization includes condominium and homeowners associations, cooperatives, and association-governed planned communities; individuals and firms that manage these properties; and other individuals and organizations that work with or provide services to community associations.
Condominium (Condo): A multiple-unit structure in which the units and pro-rata shares of the common area are owned individually; a unit in a condominium property. Also, the absolute ownership of an apartment or unit, generally in a must-unit building, is defined by a legal description of the unit’s air space, plus an undivided interest in the common elements that are owned jointly with other condominium unit owners.
Covenants, Conditions, & Restrictions (CC&R): The community association’s most crucial document to govern itself. A legal document that establishes how everyone and everything is to operate within the organization; it commits land to community association use, creates a community association and serves as its constitutional law, defines the method of determining each unit owner’s share of the common area, and includes restrictions and covenants. The declaration defines individual ownership rights as well as the association’s rights. The CC&R was recorded by the original developer in the county where the property is located and is included in the title to your property and also called the Declaration.
Courtesy Letter and Violations: Occasionally, a rule or covenant may be violated in an association. This violation is spotted during a routine community inspection or reported by another homeowner. A Courtesy Letter is always issued on the first occurrence of any breach. This attempts to discover possible reasons for the violation and requests that the homeowner address the breach reasonably. If the infraction is not addressed, a second violation letter with a fine will be sent to the property owner. If no response is made and the infraction still exists, additional penalties will be imposed per the policy set by the Board of Directors.
Declarant: The person (usually the developer) under whose control the association exists for a defined initial period before it is transferred to the association members.
Declaration: Also called the covenants, conditions, and restrictions (CC&R).
Dues: Another name for assessments.
Easements: Legal rights afforded a person to use land owned by another person or business for a specific purpose.
Governing Documents: The purpose of a community association’s governing documents is to provide for the legal structure and operation of the community. The documents define the rights and obligations of both the community association and its owners, create a binding relationship between each owner and the community association, establish the mechanisms for governing and funding the community association’s operations, set forth rules and standards for the protection of both owners and the community, enhancement of property values and promotion of harmonious living. These documents include declarations or covenants, conditions and restrictions (CC&R), bylaws, and articles of incorporation.
Homeowners Association (HOA): An organization of homeowners in a condominium, cooperative, or housing subdivision whose primary purpose is to maintain and provide for owners’ rights to have easements in common areas.
Limited Common Area: That portion of the community association defined its declaration as devoted to the exclusive use of one or more members but not to all of them.
Lot: A district portion of land, an individually owned part of a homeowners association, typically consisting of a piece of land and everything on it.
Management Company: A professional management company is contracted by the board of directors to properly maintain the common areas and conduct the association’s business affairs. A management company provides services such as the collection of assessments, overseeing of subcontractors, obtaining bids for subcontracted services, providing financial statements and collection reports, as well as serving as a general clearinghouse for problem-solving, communicating with property owners and the board of directors; and serving in an adviser capacity. The management company reports directly to the board, and a majority vote of the board of directors makes all decisions. (Please note that services provided by a management company will depend on the individual agreements between a community association management company and the client association.)
Minutes: An official record of a meeting’s proceedings. Minutes
Proxy: A person authorized to act for another, an agent or substitute.
Quorum: The number of members required in attendance to transact business legally. Business cannot be conducted unless a quorum is present.
Reserves: Funds set aside continuingly for future expenditures; monies set aside to allow the association to meet nonrecurring and/or significant expenses (e.g., roof replacement, painting, asphalt sealing, etc.).
Reserve Plan: The document that identifies all standard area maintenance components and establishes a funding plan to address their necessary maintenance. An analysis of the standard area components expected to wear out in 3 to 30 years is conducted (typically by a professional company), and the reserve plan is the written report that results—also called a reserve study.
Rules and Regulations: A rule is a specific statement of required behavior whose violation carries a penalty. In a community association, rules and regulations outline expected behavior, identify limitations, and govern the community in three areas. These areas include:
Special Assessments: Amounts charged to each owner to meet a specific community need, generally one-time or short-term payments. The governing documents include a provision for imposing special assessments.
Source: Community Associations: A Guide to Successful Management, published by the Institute of Real Estate Management
