1

HOAs Generally

When a particular development has an HOA, HOA membership is mandatory for all owners within the development. An HOA is a legal entity and has the capacity to sue and be sued. This gives an HOA the power to enforce the provisions of the Declaration and Bylaws.

2

Declaration

The Declaration sets out legally required information about a common interest development. Some state laws provide that the declaration is one of the governing instruments for a common interest development, and they set out the required subject matter of those instruments. Most of the provisions that are intended to satisfy regulatory requirements typically appear in the declaration, which is recorded against title to the affected properties at the county recorder's office.

3

Bylaws

The Bylaws of an HOA specifically define the rights and duties of Officers, Directors and owners. Sometimes Bylaws are recorded with the County. The Bylaws generally have provisions for their amendment and modification.

4

Board of Directors

HOAs are governed by a Board of Directors, which is elected or appointed. The authority of the Board is derived from the Bylaws. In general, the Board has the authority to maintain common areas, address legal and safety issues, and enforce restrictions that are applicable to the development. The Board members are normally subject to removal and replacement pursuant to the terms of the Bylaws.

5

Budget

The Board is normally required to adopt a budget that indicates how assessments will be spent. Owners are generally entitled to receive a copy of the budget.

6

Assessments

The HOA collects an assessment from all owners. The Bylaws normally set a cap on the amount that assessments may be increased within a given time period. General assessments are uniformly charged to all homeowner's equally.

7

Failure to Pay Assessments

If an owner/member of the HOA fails to pay an assessment; the Board has the power to sue the owner to collect the assessment(s). There is normally not a defense to a claim for assessments by the Board. If the matter turns into litigation, the delinquent owner will likely have to pay the court costs and attorney fees of the HOA. If the unit owner fails to pay a judgment obtained by the HOA, the HOA may place a lien on the owner's property. If the lien is not satisfied, the HOA may foreclose on the owner's property.

8

Special Assessments

The budget normally requires that a portion of the collected assessments go to a reserve account. However, many times when an unexpected event occurs (e.g. major repair), the reserve account is underfunded. In this case, the Board is normally entitled to require owner/members to pay a special assessment (in addition to the general monthly or annual assessment) to pay for the event.

9

Voting Rights

HOA owner/members have certain voting rights. While the Board of Directors generally has broad authority to manage the affairs of the HOA, certain matters are subject to a vote by the owners. Generally, one (1) voter per lot or condo unit is allowed, regardless of how many owners there are of a given lot or condo unit.

10

Board Meetings

Board meetings are generally held at regularly scheduled intervals (e.g. monthly). The meetings are usually open to all owners; however, owner participation is generally very limited. Meetings are typically conducted pursuant to Robert's Rules of Order.

11

Owner Input

If an owner has an issue(s) that the owner wishes to raise with the Board, the best idea is to send a letter to the Board and request that the issue(s) be addressed at the next Board meeting. If the Board refuses to comply, the Bylaws normally allow members to formally call a Special Meeting of owners. Pursuant to a Special Meeting, owners may vote to remove Board members and/or modify the Bylaws. Copyright (C) 2009 Powers McCulloch & Bennett. All Rights Reserved. The contents of this article are intended for general information only and should not be construed as legal advice or opinion on specific facts and circumstances.