According to a survey conducted by Findlaw, there are over 150,000 homeowner’s associations operating in the country. They serve close to forty million residents who live in communities governed by an association. For each of those HOAs, there are rules and regulations established to create a harmonious living environment and increased property values. Of course, there are always those who feel that the rules should not apply to them or are somewhat “silly”. If you think there is a “silly rule”, you have recourse. It can be changed by the HOA board but that requires actual involvement. Should you become an HOA rule maker? There are pros and cons associated with this decision all of which can be filed under the general heading of “be careful for what you wish for.”
The typical HOA is governed by a board of elected homeowners who meet throughout the year to vote on various measures and tend to the business of their community. It is at these meetings where rule changes are made. Two of the most popular areas for rule changes are pet ownership and unit appearance. A new owner could move into a community to find a pet restriction. If you are a new owner who wants to change that rule so you can adopt a dog, you will have to bring it up at the next board meeting. A better course of action would be to actually run for a position on the board. That would put you in a stronger position of power and allow you to sway your fellow board members.
Can you target an individual with a specific rule change? Yes and no. Recently, a homeowner in California was cited by his HOA for having an unused vehicle parked in his driveway. Because this was a new rule and he was the only one “targeted” the owner took acceptation. He then took his HOA to court. The appellate court ruled that this HOA law was not discriminatory because it applied to all residents. In other words, the owner had to move his broken van.
As an HOA board member you can also pass a retroactive correction to a rule. For instance, if your previous CC&Rs prohibited hanging holiday lights on balconies but now the majority of members want the right to decorate, then the new rule can correct previous “bad behavior.”
The danger would be an abuse of power. You cannot constantly change rules on a whim. As a new board member, you might be petitioned by residents to do just that. Fortunately, there should be a system requiring a majority of votes that can stem the tide of too many rule changes. For every rule change there will always be someone who is not happy. The best approach is to build a consensus. If it looks like you are changing rules that you are always benefiting from, your tenure on the board will not last long!
We would like to hear about your experiences with rule changes in your homeowner or community association. What was the last major changed that caused debate in your community? Is there a rule you want changed? Let us know. You might be able to rally support for your cause!
Some call them the guidelines for a civil society. Others call them a nuisance. And yet others just are not bothered until they break one. We are talking about rules and regulations. Codes, if you will. Every homeowner or community management association has them printed clearly in black and white or rather in the CC&Rs. A homeowner is supposed to be well versed with these codes. In fact, those prospective buyers had to acknowledge receiving, reviewing, and understanding the CC&Rs as a condition of ownership. So, why do these rules keep getting broken? The “devil” is in the details.
Common HOA and Community Association Code Violations
It is hard to imagine any community governed by an HOA that has not at one time or another enforce a code violation. The jurisdiction for the HOA is supposed to be in the common areas shared by all the residents. However, those common areas can also be deemed as areas which might not be “shared” but “seen” such as gardens, driveways and yards.
The most common type of code violation has to do with parking. Whether someone is encroaching over the designated lines or has guests parking where they should not or they are parking something they should not (a boat or RV), these code violations frequently trigger the HOA’s or community association management’s response squad. For visitors who might not be familiar with the parking codes a “quick tow” will be on the agenda which can set off a whole range of other issues.
There are other codes which turn up on the violated list such as leaving garbage cans out longer than they should or planting more roses than what has been deemed acceptable. In any case of a code violation, it becomes the HOA’s responsibility to remedy and enforce the code. Yes, the HOA or community association will now be playing “bad cop.”
HOA and Community Association Code Enforcement
As with everything else covered by the HOA, how to handle a code violation should be spelled out in the CC&Rs. The challenge is to treat everyone fairly, active board member or not. Usually there will be a designated “hammer” on the HOA board who will inform the offender with a verbal warning. If the code keeps getting violated it will be time to bring out the big guns and fire off an official letter from the board that the offender has a certain amount of time to remedy the violation or other measures will kick in. Those measures will be fines. When that happens, things can get ugly. This is where evenhandedness comes into play. If the HOA has treated all owners the same then they will be on solid grounds if the matter escalates and ends up in court.
Keep in mind that an HOA cannot always tell a renter what to do with regard to the code violations. They will have to inform the owner and the owner will have to rectify the situation or fact those fines.
“No shirt, no shoes, no service.” “You break it you buy it.” “Handicap parking only.” “ID required for purchasing alcohol.” These are just some of the rules we encounter and adhere to outside our homes. Breaking those rules can sometimes get you in hot water, but what about breaking the rules of where you live?
A community that is governed by a homeowner’s association will have a complete set of Covenants, Conditions and Restrictions otherwise known as CC&Rs. Each prospective owner is given a copy of the CC&Rs as part of a condition of purchase. They have to acknowledge they’ve read the rules with the intent to follow them.
Here’s a little secret: most prospective buyers will skim through these rules and only focus on the ones that matter most to them – like owning a pet or having a washing machine in their unit. Everything else is brushed over that is until one of those rules is broken. Then the CC&R binder is busted out of the storage drawer. At that point it might be too late to avoid an infraction but it’s up to the HOA as to how far they will take enforcement.
Here are some methods that a HOA can use to enforce the rules:
It could all be an innocent mistake. The new homeowner probably had no idea they couldn’t hang Christmas lights from the balcony. Usually, the first step for the HOA is to issue a warning. This should be in writing and make reference to the specific CC&R rule at issue. Hopefully, the resident will decry “mea culpa” and undo the mistake.
This is the most common recourse for enforcing a CC&R. It’s also the most problematic. A person who feels they have the right to break the rule won’t necessarily feel obligated to pay a fine. When that happens, more fines come their way which involves the HOA lawyers. In addition to the fines, the rule breaker could also end up paying legal fees. The longer the fines go unpaid the more penalties get racked up.
If a HOA is forced to institute a lien, the situation is serious. This step is usually a precursor to a court battle. A lien isn’t a guarantee of payment but has the power of intent behind it. If for some reason the owner is going to pull up stakes and sell, part of the proceeds could pay back what is owed to the HOA as part of the lien settlement. This might scare off a new buyer.
Who Enforces the CC&Rs?
Hopefully, the HOA will treat every resident equally. There have been instances of HOAs running amok when it comes to rule enforcement. Both extremes of over enforcing and under enforcing are detrimental to residents’ quality of life. In some cases it might be time for the non-board members to band together and clean house. Rule enforcement is another terrific benefit of engaging the services of a professional property management team. Think of them as the “bad cop” to your HOA “good cop.” The property management staff can issue all the warnings, collect the fines or even take the resident to court.
Have you ever been sent off to bed to the tune of: “don’t let the bed bugs bite?” If only it were that simple.
Bed bug infestations are up in all 50 states, according to National Pest Management Association. In a 2010 survey the organization found that 95 % of pest control professional were called out to treat bedbugs. In 2000 that number was only 25%.
Why the sudden change? It could be that the bugs are stronger and the buggers could be growing resistant to pesticides. So when you were spraying for other pests, the bed bugs are able to shrug it off. It could be that we’re traveling farther: the little beasties can hop a ride in your luggage and set up a home in your home. And bed bugs don’t discriminate. You could be living in an million dollar home and still get a bed bug infestation.
But what happens when the bugs invade a community governed by a homeowners association? Who takes care of the bugs then? The answer depends on where the bugs are.
The Owner’s Responsibility
The boundary line that separates a homeowner from the homeowner’s association is usually the front door. Anything inside the unit is the responsibility of the owner. Outside, in the common areas, falls under the jurisdiction of the HOA. It follows then that an owner who has a bed bug problem will have to deal with that problem as they would with any other type of infestation. The key would be determining if that bed bug infestation is limited to a particular unit. If it is an isolated incident then the owner will have to call in a professional exterminator.
Keep in mind that is the only proven way to eradicate an infestation: with professional services. A bug bomb or spray won’t do the trick.
The HOA’s Responsibility
The moment it has been determined that those little critters have crossed the line from unit to unit it then means the HOA needs to step in to deal with the situation. This is because the bugs would have had to cross through “common areas” such as electrical wiring or in between walls. When that happens it might be time for a community wide extermination project. In other words, just because the bugs are cleared out from one unit doesn’t mean they won’t pop up somewhere else. Better the whole building gets cleaned once and for all.
If your community is in a bed bug hot zone an HOA can take proactive measures by adding annual or bi-annual inspections. Chances are there is already some type of exterminator inspection on the budget. It could come down to merely adding the bed bug check as part of the visits. This is a more proactive course of action then dealing with an infestation that has already occurred. When it comes to bedbugs, it’s better to nip the bug in the bud.
Cracks in the foundation caused by an earthquake. A roof torn apart after a hurricane. Flood damage left behind from a tropical storm. Those are the kinds of emergency repair situations that a community governed by a homeowner’s association can find themselves in. Even with the best planning and solid finances, an HOA’s reserve accounts can be wiped out when Mother Nature strikes and those repairs need to be made immediately. This is where the issue of the Small Business Administration (SBA) loans comes into play.
What is an SBA Loan?
An SBA loan is a low interest loan offered by the government. Because an HOA is an incorporated entity it is considered a type of small business and can apply for the loan.
Typically these loans are for disaster relief and are used to make repairs that wouldn’t be covered by a basic insurance policy. Two keywords here are floods and earthquakes. Both of those insurance perils won’t be reimbursed unless the policy has a special rider. An SBA loan can provide funds for repair up to two million dollars for common areas and personal property replacement.
Note: Individual unit owners may apply for an SBA loan to cover a onetime assessment issued by the HOA for common area repairs. However, if the SBA is already loaning the homeowner’s association funds to fix a property, it won’t be inclined to loan to the individual homeowner. In other words, they’re not going to make two loans for a single property.
The following is a list of the requirements provided by the Small Business Administration that an HOA will need to provide to process an SBA loan application:
- A completed Disaster Home Loan Application if applicable
- A completed Tax Information Authorization (IRS Form 8821).
- Information on each owner’s personal insurance coverage for their unit and personal property, and any claims that they may have filed.
- Documentation of the HOA’s insurance coverage and any recoveries it may have received or filed.
- A copy of any resolutions passed and the association’s conditions, covenants, and restrictions (CC&Rs) or Declaration and any amendments and all exhibitions.
Repayment of the SBA Loan
As with any other type of loan, the borrower will be obligated to make repayments of the principle and interest. Normally, these payments are divided proportionally among the homeowners and added to their monthly fees.
Keep in mind that if an owner sells their unit while the loan is still being paid back, they will need to disclose the terms of the loan and additional repayment fees to their seller. This means that the new owner would essentially be “inheriting” this loan.
It should also be noted that a homeowner can’t deduct the interest on a loan filed by the HOA. (The HOA should be doing that because they are the entity which has taken out the loan.)
An SBA loan can be a great benefit to a community in need. While it’s true that nobody wants to pay higher homeowners fees, the alternative of paying for the entire loan themselves would be far worse.
There is an old adage that “all politics are local.” Basically this means that government works best when it works at the grassroots level, and community associations that foster positive relationships with these government officials will find that navigating through government bureaucracy will be a lot easier when you know someone on the inside.
The Role of Local Government With A Community Association
Being part of a community association is no different than being a homeowner. There are certain services which are provided and maintained by the local government which we all benefit from. Street lights, sewer, electricity, sidewalks and garbage pickups are just some of the “to-do” services that are handled by the local government.
When any of those services aren’t performed adequately or need adjustments then your best bet is to solicit help from the local government whether that’s a city council or county board of supervisors. HOAs can turn to these official agencies for a wide variety of reasons ranging from asking for help to protect the environment to getting measures approved to be added on an upcoming ballot.
At certain times throughout the fiscal year, there are budget reserves that have been earmarked for local municipalities to use for the “public good" - funding that many reserves are almost giving away sometimes to communities in their jurisdiction. This means it's vital for HOAs to establish a relationship with local government.
The Management Trust has even had experiences where local government contacted us asking if we’d like funding for any sort of necessary fixtures for a community we were working for. It was completely unsolicited!
The Best Way To Build Rapport With Your Local Government
Every elected official has stories about “crazy constituents” who call up with all kinds of bizarre requests or demands. Don’t be one of those! You begin your working relationship by inviting your local council representative to your next HOA event such as a BBQ or potluck dinner.
With some communities this might mean a dozen or so potential voters. However, it’s not uncommon for larger complexes like a high rise or retirement community to have hundreds if not thousands of interested persons. What you’re offering a representative is a chance to meet a lot of potential voters in a relaxed setting.
Having a relationship with a local representative can also help an association as issue with protection covenants. Sometimes an HOA member won’t be in compliance and lawsuits follow.
If those cases are heard in a municipal court then the local rep could offer advice as to how to navigate that situation, and possibly direct you to an HOA ombudsperson.
Beyond the casual community gathering, a local politician will also appreciate coming to a board meeting. That’s their “wheelhouse” and it’s a great chance to interact and discuss a specific issue.
The moment you’ve established a cordial relationship you’ll find that gaining access to those reps is a lot less complicated, and you can stay top of mind with them when you need their assistance on something.
In other words, don’t wait for a problem before your HOA makes itself known to the local reps.
As you are aware, the “big picture” goal of an HOA is to insure that the property value of their complex remains at maximum high pricing levels.
This is accomplished by maintaining the structure from a maintenance perspective and the grounds from an aesthetic perspective. It is the latter that can often cause friction among residents. Some HOA’s restrict hanging beach towels over balcony railings, while others limit the amount of holiday lights that can be strung up. All of these measures were written into the CC&Rs or created by the vote of your board via the authority that is afforded to them.
If you move into one of these communities with these laws already established, your only course of action is to change the law itself, if you cannot live with them.
What makes solar energy an issue within HOA communities?
Solar energy has long been considered the pinnacle of eco-friendly technologies. Today, more businesses and homes are going green by installing solar panels to convert the sun’s always beaming power into useable energy. In some cases, a solar system can allow a home to go completely off the grid and even sell back power to the electric company.
It stands to reason that homeowners living in a HOA governed community would want those types of benefits, but aesthetics play a major role in the (perceived) value to a community.
Frankly, solar panels aren’t that pretty looking. For a viable solar energy system, you’ll need to install several large panels on a roof.
Real estate agents often cite these “add-ons” as a detriment to holding property values.
Recently a couple in Georgia took their homeowner association to court to fight for the right to install solar panels on their home. This dust-up is making its way to the state legislature as lawmakers consider whether HOAs have the right to exclude owners from installing these systems. There are many of these laws already on the books regarding the use of solar panels within an association, with the first one being instituted in California back in the 1970s.
It's likely that your HOA has had to deal with this issue and had to make a call on whether they should be permitted or prohibited in your community.
Do you know the solar rules in your HOA and your state?
Would you object to panels being put up on your roof?
Is there a working solar energy system in your community now?
We’d love to hear your comments and stories. Better yet, if you’ve got a picture of a solar energy system from your community feel free to share with the forum.
The question of whether or not it’s worth it to move to a development governed by a homeowner association is one almost all homeowners have thought of at least once.
The thought of dealing with bureaucratic red tape as part of your neighborhood can be headache inducing. But contrary to what you may see and hear in the media, an HOA is essential for every community out there seeking a healthy, organized environment to grow and become truly invested in.
Looking back, there have been publicized clashes between homeowners and HOAs that demonstrated how things can go the wrong way when an association’s management doesn’t take the best approach to addressing a given task or dispute. This does happen. However, this is true for only a nominal percentage of the total number of day-to-day duties HOAs handle that otherwise may be left up to an argument between residents
HOAs mitigate drama, and here’s how:
Advantages of an HOA
The advantages of joining a homeowners associations span across a couple of pretty broad categories
- The quick handling of all those small yet important issues that one normally sees. This encompasses a lot. For one you have the regular (often costly) chores: repainting a neglected part of an old building, removing an ill-looking tree in your neighborhoods communal space, swiftly clearing out snow after a bad storm hit the town.
- Resolving disputes between homeowners. Because there is always the possibility this type of argument can extend well beyond its small initial scale, an association is required to find a way to resolve it in favor of both parties as well as the community as a whole, and in a timely manner.
These issues do add up, and require a centralized management body– the homeowner association’s board – to assemble the resources needed to take care of them all.
After all, without the association, it would cost far more to residents.
Handling Important Paperwork
A homeowner association is considered governing body of its development, and such it’s the one capable of handling the community’s issues with maximum efficiency. This becomes especially true when more serious tasks are needed to be addressed, such as community-wide FHA insurance, serious rain damage to public facilities, or a technical issue in the local power plant. A responsible HOA that has reserves that hold the finances required to deal with scenarios like that reduces the toll on the individual homeowners’ pocket, not to mention solve these pressing issues.
Don’t Diss HOAs!
A company can be taken to the right direction and grow, or mismanaged and face problems along the way. The same can be said of large neighborhoods or communities. In principle, a board can carry out the decisions to successfully achieve the former and maintain that state, but it requires investment from them and the homeowners alike, who in turn need to elect the right officials.
At the end, the thing that matters most and needs to be sorted out first is to add good judgment- and human values-based agility to your association’s decision making.
What instances have you found your own HOA or condo association to be beneficial in solving problems and keeping your community running smoothly?
Homeowner associations (HOA) exist to maintain the welfare of their communities. To sustain such initiatives, HOA rules and regulations require a number of fees to be paid by residents.
Recently, the Federal Housing Finance Agency (FHFA) published a Notice of Proposed Rulemaking that will dramatically affect HOA’s. While the regulations cover a variety of subjects, there is much skepticism as to whether they are actually beneficial to the HOA’s themselves.
One of the most sweeping areas of reform aims to allow Fannie Mae, Freddie Mac and the Federal Home Loan Bank System to regulate transfer fees paid to investors, as well as to the associations themselves. More specifically, the FHFA seeks to implement the prohibition of investor transfer fees nationwide. These payments, made to investors whenever a house is sold in a planned community, don’t serve any true purpose in context to helping and sustaining the community and its surroundings. The Community Associations Institute (CAI) has agreed that this change would be positive for homeowners.
The FHFA is also trying to pass regulations that are not necessairily beneficial for both homeowners and homeowners associations. For example, community transfer fees have been in use for decades to minimize the financial burgeon of maintenance and any special assessments that may pop up out of the blue. Still, there is always a margin for error, and the FHFA aims to limit the use of community transfer fees solely for maintenance and improvements. This regulation, if carried out, would in theory help to reduce the effects of irresponsible actions made by HOA board members, but it would also remove a great deal of the operational flexibly necessary for an association as a whole.
Of course, not every homeowners association is the same – and some may find it more difficult to tend to their community’s needs and wants with a decrease in flexibility. More importantly, the homeowners themselves have the most influence over their HOA rules and regulations, and the benefit of this proposed limit is already supplemented by the voice of each individual resident; ineffective polices are always due to be replaced at some point or another.
Another limitation that would affect a HOA’s operational flexibility stems from regulation that would allow non-residents to use common areas for free. This decision has traditionally been up to each association to determine the best steps to address this issue, with the consideration of homeowners’ unique and specific demands taken into account. Some homeowners may be more comfortable in certain situations than others, which is why homeowner associations avoid ‘one-solution-fits-all’ policies, and instead develop policies based on their community’s needs.
The last regulation proposed by the FHFA would prevent HOAs from voting to have a transfer fee for an area move farther than 1,000 yards from their property line. Both the CAI and homeowners across the nation are vehemently opposed to this since it’s not a very logical option, especially for larger communities who often consist of a so-called master associations and a number of sub-associations.
The CAI has voiced displeasure over many of the FHFA’s proposed regulations – and for good reason. Decisions made and carried out by an HOA are based on the good judgment of the homeowners and board members themselves. This scenario represents a majority of HOAs across the nation.
If you’re a member of a homeowner association, you can send your comments about the new regulations to the FHFA via firstname.lastname@example.org with the subject line: FHFA Proposed Rule on Certain Private Transfer Fee Covenants, (RIN) 2590-AA41, or via U.S Mail.
The FAQ can be found here.