HOA Annual Report: How To Make One For Homeowners

Some associations must submit an HOA annual report to homeowners. But, what is the purpose of this report? And what should it include?

 

Is an HOA Annual Report Mandatory?

For a large chunk of homeowners associations, filing an annual report with the Secretary of State is nothing new. But, did you know that some HOAs must also prepare an annual report for homeowners?

HOA laws can vary dramatically from one state to another, so not all associations need to do this. In Minnesota, for instance, homeowners associations are required to provide members with annual reports. You will find this requirement under Minnesota Statutes 515B.3-106, which states that HOAs must prepare an annual report and give each homeowner a copy of the said report.

On the other hand, California law does not require homeowners associations to provide a full annual report to members. Instead, associations must give homeowners some financial details. Additionally, there are some states, such as Oregon, that do not require associations to prepare an HOA annual report for members at all.

Because not all states have the same requirements, it is important that your HOA board examines the laws in your state. It is a good idea to seek help from an experienced HOA attorney or a management company. This way, you can protect your association and board from possible liability arising from noncompliance.

 

The Purpose of the HOA Annual Report

condo annual report While it may seem tedious to prepare, the annual report remains an important part of community governance. For one thing, the homeowners association annual report is a way to exercise transparency within your community.

It keeps homeowners informed of the state of the association’s finances. It lets them know that the board is using their dues well and for the benefit of the community as a whole. This, in turn, sows trust between the board and the homeowners. Additionally, it helps prevent fraud and embezzlement within your association.

Apart from that, the HOA annual report is a way for the HOA board to highlight its own achievements. Serving on the board is difficult and often thankless. People expect you to perform miracles for no pay, gratitude, or accolade. Presenting a positive annual report gives you an opportunity to tell homeowners that you did a great job managing the association’s finances the past year. If nothing else, the HOA or condo annual report is a reward in and of itself.

 

What to Include in an HOA Annual Report

An annual report basically provides homeowners with a picture of the association’s finances. Therefore, it should include all pertinent financial information. Again, state laws vary in this arena, so make sure to check yours first.

In Minnesota, for instance, annual reports should include the following:

  • The balance sheet for the end of the fiscal year
  • A statement of revenue and expenses for the latest fiscal year
  • Approved capital expenditures that exceed 2 percent of the current budget or $5,000, whichever is greater, for the current fiscal year or next two fiscal years
  • The total reserve fund amount of the association as well as the components for which the reserve funds are intended and how much of the reserves are allocated for each component
  • A complete summary of the association’s insurance coverage
  • The status of any pending judgments or litigation the association is involved in
  • The total outstanding dues of all units within a given period

 

What Is an HOA President’s Report?

Given how state laws can vary, there are many homeowners associations that don’t need to provide members with an annual report. However, it is wise to do so. Some homeowners associations present an HOA president’s report, which has a similar function as the annual report.

The president’s report generally consists of the same financial information. In addition, it can also contain any significant actions the board took and other updates regarding the community. The board president usually delivers such a report during the annual meeting. Most associations experience a higher attendance rate for annual meetings compared to board meetings, so it is the perfect time for such a presentation.

Keep in mind that the annual report is meant to communicate HOA matters to residents and recognize what the board has accomplished. If it is not mandatory for your HOA to deliver an annual report to homeowners, consider doing it anyway. Of course, a president’s report works just as well.

 

Don’t Forget About Confidentiality

Just because it is called an HOA annual report does not mean it should include every single detail related to the association. Some information is inessential, while others are confidential. Do not disclose any protected or sensitive information about the association or its members. Going against this golden rule is a surefire way to get yourself embroiled in legal trouble.

Unless state laws say otherwise, it is best to withhold the details of any pending litigation your association is involved in. In Minnesota, you are required to provide the status of the litigation, but more detailed information is not necessary.

Minnesota law also requires you to include the total past due assessments in your annual report. Take note that this requirement only asks for the total amount of unpaid dues. The report should in no way list down the names of delinquent owners and how much they owe.

 

Working Towards a More Transparent Community

homeowners association annual reportThe HOA annual report serves several functions. It keeps homeowners in the loop regarding the financial condition of the association as well as gives board members a subtle pat on the back.

While it may not be required for all associations, it is a good idea to practice issuing annual reports to homeowners in your community. This way, you can remain transparent and protect your board from liability.

Staying on top of a homeowners association’s finances is hard to do; adding an extra layer of reporting makes it even harder. Make life easier for your HOA board by hiring an HOA management company. Start looking for the best one in your area with the help of our online directory.

 

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Property Management Fees vs HOA Management Fees: How Different Are They?

Are property management fees the same as HOA management fees? If not, what is the difference between the two? Understanding these two fee types is imperative for every homeowner.

 

The Difference Between Property Management Fees and HOA Management Fees

Many people confuse property management and HOA management, but the two are starkly different. Property management is the daily supervision and management of a rental property — be it residential or commercial. HOA management, on the other hand, refers to the management of homeowners associations.

The tasks of property managers include but are not limited to the following:

  • Advertising vacant rental units
  • Conducting property showings
  • Overseeing tenant applications
  • Screening potential tenants
  • Handling the lease agreement
  • Ensuring compliance with lease terms
  • Collecting and depositing rent
  • Coordinating maintenance, cleaning, repairs
  • Resolving tenant complaints

The tasks of HOA managers include but are not limited to the following:

  • Ensuring the maintenance of common areas
  • Coordinating with vendors
  • Attending board meetings
  • Collecting dues
  • Helping with budget planning and execution
  • Sending notices on behalf of the board
  • Communicating with homeowners
  • Ensuring compliance with the law and governing documents
  • Advising the HOA board

That being said, the difference between property management fees and HOA management fees has to do with the service being paid for. Typical property management fees cover property management services, whereas HOA management fees cover HOA management services. Both types of services, though, can be performed by a company or an independent manager.

 

Factors That Affect Property Management Company Fees

Property management is not a one-size-fits-all type of service. When it comes to property management fee calculation, there are a number of factors that can increase or decrease the amount.

  • Location. A luxury apartment located in a high-end neighborhood will naturally command a higher rental rate. As such, a property manager may adjust their fees accordingly.
  • Size. It is harder to manage a large rental property, so the fee tends to be more expensive the bigger the place.
  • Type. Some companies or managers charge a different rate depending on the type of property — single-family home, commercial property, condo unit, apartment, etc.
  • Condition. Older properties usually require more maintenance and repairs, thus equating to a higher fee.
  • Services. Companies and managers offer a wide variety of services. If you only need select services, you may end up paying a lower fee. The reverse is true if you need a more comprehensive extent of services.

All of these factors, except maybe the condition of the property, can also affect HOA management fees. Homeowners association management can come in the form of full-service management, remote management, or simple consulting services. Obviously, full-service management is more expensive than the other two.

Companies also tend to charge a lower price if you have more properties for them to manage. This is because of how certain administrative tasks scale, allowing companies to charge a discounted price for 10 properties or more.

 

What Is the Average Property Management Fee for Rental Properties?

How much you ultimately pay each month for property management services will also depend on the company’s fee structure. Some companies or managers charge an ongoing flat fee, while others take a portion of the monthly rent.

 

Percentage of Rent

This is the most widely used structure among property management companies. In exchange for their services, a company will charge you a certain percentage of the rent. Average property management fees structured this way sit between 8 and 12 percent of the gross rent.

For instance, if the monthly rent for one rental property is $10,000 and the rate is 6 percent, then according to the property management fee calculator, the company gets to keep $600.

Of course, there is a difference between charging a percentage of the rent collected and rent due. Rent collected is the actual amount the company collected from tenants, while rent due is the monthly rent that tenants should pay. Your contract should specify that the fee is for rent collected. Otherwise, you would need to pay your property manager even if tenants fail to pay their rent.

 

Flat Fee

In contrast, there are some companies or managers that charge a flat rate. When you go with flat fee property management, you will need to pay a set amount every month. A single-family home may command $100 a month, though it will really depend on the extent of the services, the size of the property, and other factors.

 

Other Home or Condo Property Management Fees to Know

Apart from the actual management fee, companies and managers may also charge separate sums for extra services. Some will try to hide this breakdown from you and intentionally skirt the topic. Many homeowners only find out about these extra fees after they have signed the contract. Thus, it is essential to ask each candidate for their full property management price list.

Here are the other fees you should look out for:

 

Initial Setup Fees

Some companies will charge you an initial fee designed to cover the costs of setting up an account with them, inspecting the property, and notifying tenants of the change in management. You should expect to pay about $500 or less for the initial setup fee.

 

New Tenant Placement Fees

Tenant placement fees cover the costs of marketing your vacant property, screening tenants, constructing the lease agreement, and so on. As with the ongoing management fee, this can come in the form of a flat rate or a percentage of the rent — usually 50 to 100 percent.

 

Vacancy Fees

If you hire a property management company to manage a vacant unit, they may charge you a vacancy fee. This can range from $50 per unit to as much as an entire month’s rent.

 

Maintenance Fees

Some management companies have in-house workers who perform maintenance work. In that case, look out for a maintenance fee in your contract. This fee can cost you $20 to $45 per person, typically not including the cost of materials and supplies.

 

Eviction Fees

Evictions are common in the rental property realm. But, if you want the company or your manager to evict a tenant for you, it will cost you a few hundred dollars. That does not include any court expenses, too.

 

Early Termination Fees

Contracts have set lifespans. If you try to end your contract earlier than specified, the company may charge you an early termination fee. This can range from the cost of one month’s services to the cost of the services for the remainder of the contract. Some companies may even take legal action against you for breach of contract.

If you want to avoid such a situation, make sure to check your agreement thoroughly before signing it. See if you can negotiate your way out of an early termination fee. You should also consider shortening the length of your contract to one year. That way, you have the option of renewing it annually.

 

How Much Are HOA Management Fees?

If you plan on hiring an HOA management company, here are the fees you should keep in mind.

 

Initiation Fees

Similar to property management companies, an HOA management company may charge you an initiation fee to get the ball rolling. This can cost you a few thousand dollars up to a whopping $30,000. Of course, it really depends on the size of your association and the services you require.

 

Monthly Management Fees

Since managing associations usually means managing communities with numerous properties, monthly fees typically rely on a rate per unit. On average, an HOA management company will charge you $10 to $20 per unit per month. They may offer you a discounted price, though, if you meet a certain number of units.

 

Early Termination Fees

This works similarly to early termination fees in property management contracts. The key to avoiding having to pay this sum is to lock yourself into a shorter contract period. Instead of signing a management contract good for multiple years, start with one and renew from there.

 

Other Fees

Some companies don’t offer all-inclusive packages. This means they will charge a separate fee for certain services, such as a fixed amount for each time a manager attends a board meeting. There is also something called a transition fee, which covers the cost of transferring from one company to another.

 

Is Paying Property Management Fees Worth It?

Property management is certainly a difficult undertaking for many homeowners. As such, many choose to outsource the task to a professional. And, with professional services come professional fees. Property management fees may seem unaffordable to you now, but they can be worth it in the end.

As for HOA management, it can be an equally challenging endeavor. If your HOA board wants to seek expert help, start looking for an HOA management company in your area today. Use our comprehensive online directory for fast and accurate results!

 

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13 Common Homeowners Association Problems And How To Address Them

Running an HOA community is no walk in the park. As a member serving on your HOA board, homeowners association problems just come with the territory. But, that doesn’t mean you should leave these problems to fester.

 

How to Solve the Most Common Homeowners Association Problems

Most HOA boards consist of volunteers from the community. Hence, it’s likely that not all board members will have the same level of expertise or background necessary to manage the association. Moreover, boards are usually made up of members with differing values and varying approaches to management. But, that doesn’t give boards an excuse to simply allow problems to arise and worsen.

Here are the most common homeowners association problems and how you can address them:

 

1. Legislative Changes

There are many federal, state, and local laws that can affect how you run a community association. And these laws can change from time to time, requiring your HOA to adapt all over again.

Fortunately, keeping up with changes in legislation isn’t all too difficult when you have a background in law. But, unfortunately, not all boards are lucky enough to have a member with legal experience. As a solution, it’s a good idea to seek the help of an HOA attorney. This will allow your board to remain in the loop on homeowners association laws and avoid breaches.

 

2. Financial Problems

Financial challenges | homeowner association problemsEvery homeowners association goes through some form of financial trouble or another. Many boards struggle with preparing the budget and setting dues.

Others, though, find the execution difficult — staying on budget and collecting dues. Considering how important finances are to an HOA, you can’t afford to let even a single aspect slack.

There is always a way to prevent or solve financial issues. If you suffer from a high delinquency rate, for instance, you might benefit from hiring a collection agency or setting up payment plans. A high delinquency rate can also signal to you that a lot of members are struggling financially. In that case, you might consider cutting down on non-essential expenses and adjusting the budget.

As for budget preparation, it always helps to review past financial reports and itemize your expenses. This way, you can specify anticipated costs in detail and have an actual basis for your projected amounts. It also helps to talk to your contractors and vendors about any expected increases in fees.

Above all, your HOA board should practice communication and transparency when it comes to financial matters. Members have a right to know how the association is using their dues. Plus, exercising transparency forges trust between the board and the residents.

 

3. Inadequate Maintenance

Homeowners associations exist to maintain the community. And, as a board member, it’s part of your job to ensure all common areas receive proper care and maintenance.

Inadequate maintenance can lead to all sorts of issues such as pests, mold, algae, and overgrown vegetation. These things can not only cause harm but also negatively affect the curb appeal of your community which, in turn, brings down property values.

A good way to ensure proper maintenance is to construct and follow a schedule. It’s also best to hire professional help in the form of landscapers, exterminators, and maintenance companies. Don’t forget to factor in maintenance expenses, broken down specifically per line item, when planning your budget.

 

4. Exceeding Board Authority

The HOA board is not some all-powerful body with unlimited authority. State statutes and governing documents give the board its powers, and these powers are never boundless. Sometimes, though, a rogue board member can let their position get to their head, resulting in abuse of power. In this case, it’s your duty as a fellow member of your board to keep that person in check.

There are some unlucky HOAs that suffer because of an entirely corrupt, negligent, or apathetic board. For such a problem, homeowners should not sit back in silence. Owners should voice their complaints and urge the board to act in a dutiful manner. If this fails, there is always the option of taking legal action.

 

5. Inconsistent or Biased Enforcement

Homeowners associations have rules that maintain order in the community. The board is responsible for enforcing these HOA rules in a consistent and fair manner. Selective enforcement, though, happens a lot and is one of the most common HOA problems there are.

The board may not enforce rules in a uniform manner, changing the specifics and procedures from one situation to another. Board members can fall victim to their own prejudices, whether it’s intentional or otherwise. They may not penalize some of their neighbors simply because they’re friends. There may even be times when board members would bend the rules to suit their own interests.

As a board member, the best way you can ensure consistent and fair enforcement is to strictly follow your governing documents. Don’t play favorites or enforce only the rules you feel like enforcing. And never think for one moment that you’re immune to the rules yourself just because you’re on the board. If there’s any conflict of interest, be mindful enough to recuse yourself.

 

6. Unjustified Fines

Fines | hoa problemsIt’s normal to impose fines when members violate a rule or covenant. But, there are some cases wherein fines are unjustified.

For instance, if state statutes or your governing documents don’t allow you to charge fines, then you shouldn’t do it. You also can’t charge fines simply because it suits your fancy.

As a board member, it’s your responsibility to adhere to your bylaws and CC&Rs. Don’t impose any penalties when you have no right to do so. Remember that going against your documents can result in complaints from homeowners. Worse yet, some owners may even file a lawsuit against the association or the board itself.

 

7. Poor Communication

Many communities suffer from poor or a lack of communication altogether. This mainly stems from the fact that most board members have personal and professional lives outside of the HOA to tend to. As such, they can’t always stay on top of association matters and communicate with residents regularly.

But, effective communication doesn’t mean you should talk to residents 24/7. It simply means keeping them informed of any updates or changes to the HOA’s rules, finances, and other matters. It also helps to solicit feedback from members of the community to see what you can improve upon. Perhaps there’s a pervading issue you don’t know about or a policy everyone disagrees with.

Communication also means sending the proper notices and reports at the right time. Send meeting notices and agendas according to requirements and make minutes and financial reports available to members for inspection.

Use the different (and approved) communication channels you have at your disposal. This will help foster a sense of belonging among residents. After all, no one likes being kept out of the loop.

 

8. Poor Handling of Complaints

When residents come to you with a complaint, you may feel tempted to simply shrug them off. With so many duties to fulfill, the last thing you’d want is to hear someone whine, but you should think of this from the member’s perspective.

They feel passionately enough about an issue to bring it to your attention. The least you should do is listen to them. Who knows? The issue may turn out to be urgent and shared by a lot of people.

Of course, it’s hard to make yourself available all the time. As a compromise, use communication tools such as email or websites to collect complaints. Granted, some residents do complain about trivial things, but that doesn’t mean you should make them feel bad about it.

 

9. Lack of Member Involvement

A lot of associations find it challenging to increase member participation. While some people simply have no interest in community matters, others are just too shy and unsure. Sometimes, people need a little nudge in the right direction.

If you want to encourage resident involvement, social events are a good place to start. Plan simple gatherings or events built around holidays to get members mingling. Even the offer of free food and drinks can be enough to entice people to attend meetings. You can also motivate members to join committees as a more active way to get involved.

 

10. Pet Problems

Pet Problems | homeowners problemsIt’s not unheard of for associations to enforce pet restrictions. After all, pets can be a nuisance in more ways than one.

As a response, HOAs may restrict the size, breed, and number of pets you can have, among other things. Some communities even go as far as to prohibit them altogether. This is one of the most common homeowners problems, though, as many consider their pets as part of the family.

For some associations, a no-pets policy is simply not an option. California law, for instance, protects the right of members to keep at least one pet. Many states, though, allow you to place restrictions concerning the size, breed, and number of pets. Additionally, associations can require owners to keep their pets on leashes when in public and clean up pet waste.

 

11. Parking Issues

Homeowners associations have to deal with a myriad of parking problems as well. From people abandoning their cars in common area parking lots to residents parking bulky or unattractive vehicles out in the open — these parking issues can all contribute to lower curb appeal and property values.

Many associations already have parking rules in place to control such problems. For instance, residents may not park their vehicles in common area lots for more than a set number of hours or park unsightly vehicles (RVs, trailers, commercial vehicles, etc.) in their driveways.

 

12. Violation of Rights

This is another one of the homeowners association problems you must watch out for. Homeowners have rights, and some of your homeowners association rules may violate those rights.

For instance, you can’t have a rule prohibiting members from installing satellite dishes on their roofs. This is according to the federal OTARD rule. Additionally, some states protect residents’ right to dry, which means you can’t legally restrict them from hanging their clothes outside on a line.

The best way you can avoid violating homeowners rights against HOA is to familiarize yourself with them. Again, just like ever-changing laws, it’s a good idea to seek counsel from an attorney.

 

13. Technological Changes

Far too many associations rely on outdated modes of communication to disseminate information across hundreds, even thousands, of members. The solution, though, is already right in front of you: technology. Associations shouldn’t be afraid to use technology to their advantage. One form of this is an HOA website.

Websites make it easy for residents to view information and stay up-to-date on events. It’s also a way for your HOA to advertise itself to potential homeowners. In fact, you can address a handful of homeowner association problems — such as poor communication, member involvement, and poor handling of complaints — using a website.

 

The Role of HOA Management Companies

homeowners association problemsWhen faced with a problem, homeowners should take it up with their board first before resorting to legal action.

Boards, on the other hand, should always uphold their duties and responsibilities with care and due diligence. This way, you can avoid running into homeowners association problems.

Of course, this is easier said than done, which is why plenty of communities have turned to HOA management companies for help. With professional assistance, you can easily address these homeowners association problems and obtain advice on hundreds more. Start looking for an HOA management company in your area today using our online directory.

 

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7 Reasons Why HOA Board Training Is Fundamental

Without sufficient knowledge of how to do your job, it is nearly impossible to do it well. The same principle applies to board members of a homeowners association. HOA board training, while often overlooked, is an essential aspect of successful association management.

 

Why Is HOA Board Training So Important?

Homeowners associations are run by a set of members known as the HOA board. The board is responsible for a number of things including but not limited to planning the budget, communicating with homeowners, handling disputes, enforcing rules, and overseeing maintenance projects. Its members, volunteers from the community who are elected or appointed, must maintain curb appeal and protect property values.

The success of the community largely hinges on the abilities of its board. Because of this, it is imperative that board members are qualified to deal with the multitude of tasks and problems that arise regularly.

Most associations don’t require board members to possess certain degrees or certifications, though they can be helpful. If your board lacks a background in community management or its equivalent, then it is up to you to better yourself by pursuing training.

 

1. Handle Funds Well

budget handling | Hoa board member trainingAs a board member, it is part of your job to take care of the association’s finances.

You must plan the annual budget, track your spending, approve expenditures, record all transactions, and prepare financial reports. The burden of collecting dues and settling delinquent accounts also falls on your shoulders.

At a glance, these financial tasks may not look difficult. But, once begun, many board members quickly find that handling an association’s financials is not as simple as it initially seemed.

What goes into planning a budget? Is there a right way to record your financial transactions? How do you even begin to create a financial report? How can you collect unpaid dues? These questions and more typically populate the minds of inexperienced and untrained board members.

And it is not like you can just leave it up to chance. An association’s funds are the lifeblood of the community. Poor management of your HOA finances can lead to detrimental consequences in the form of a shortage or even bankruptcy. And when the association is low on funds, the logical alternative is to turn to special assessments or loans. In any case, homeowners will not be happy.

 

2. Communicate Better

Communication is an essential tool in any homeowners association. Board members must constantly keep in touch with the members of the community.

You must inform them of important updates and announcements. This includes meeting notices, rule changes, planned fee increases, and other notices. Providing owners with proper notice is not only common practice but also typically required by state statutes or governing documents.

But, it does not stop there. Communication is a two-way street. And just as you would disseminate information to members, you must also keep an open channel for the reverse. It is important to have a method in place that will allow residents to reach out to you when needed. Let them express their concerns, opinions, and feedback. Email, suggestion boxes, written letters, and surveys are good ways to do this.

Many association boards, though, don’t know how to set up the proper communication channels. They also lack experience in creating policies that control how these communication channels are used. Sufficient HOA board member training can address all this and more.

 

3. Deal With Disputes Properly

Homeowners associations are made up of members — board and otherwise — with differing viewpoints, values, and personalities. As such, it is not uncommon to have squabbles and conflicts within the community. Neighbors fight, residents argue, and board members can disagree on decisions. Left to worsen, though, disputes can erupt. Before long, personal attacks, violence, and even lawsuits can enter the mix.

Dispute resolution is not something just anyone can do. It requires some background or training to accomplish successfully. Hence, it is important to train HOA board members in the ways of association management. This includes dispute resolution, whether it occurs within the board or outside of it.

 

4. Preserve Property Values

Preserve Property Values | train hoa board membersIt is easy to say that it is the board’s responsibility to protect the property values of the community. But, what actually goes into achieving this objective?

In truth, preserving property values is a never-ending task. The board does it by continually performing the duties expected of them. This includes financial management, homeowner communication, dispute resolution, rule enforcement, and more.

Without board training, completing all of these tasks can be an uphill battle. You need proper guidance and education to effectively carry out your responsibilities. This, in turn, will help keep the community afloat. Remember that an ineffective board can bring down property values and ultimately hurt the association.

 

5. Avoid Liability

Board members have certain fiduciary duties to uphold. This means acting in good faith, with care, and within the best interests of the community.

When you make a bad decision that ends up costing the association, residents can claim a breach of your fiduciary duty because you failed to put the community’s interests first. This can result in owners banding together to remove you from your position or, worse yet, file a lawsuit against you specifically.

Additionally, running an association demands more than just a passing knowledge of the law. There are so many statutes that can affect homeowners associations. For instance, per the OTARD rule, it is unlawful for HOAs to prohibit the installation and use of certain reception devices. You must also pay attention to the federal Fair Housing Act, the Americans With Disabilities Act, and much more.

Apart from that, states also have their own set of laws that apply to HOAs. For instance, the FHA has many state equivalents, and it is required to adhere to both the federal FHA and state fair housing laws. You may also have local ordinances to follow.

Liability exists in almost every aspect of association governance. And if you want to avoid the risk of liability, HOA board training is a big part of the answer.

 

6. Avoid Conflicts of Interest

You might think it is common sense to avoid conflicts of interest, but you would be surprised at how many HOA boards fail to do so. Many board members hire their friends, relatives, or even themselves as the association’s vendors. This can upset residents because, from their viewpoint, the decision seems unfair. Pretty soon, they will start to question whether the decision was made within the community’s best interests or within yours.

Boards must work to avoid conflicts of interest or even the appearance of it. If you have a potential conflict of interest, it is imperative to disclose it and recuse yourself from the vote. HOA board training teaches you how to abide by a code of ethics, including staying away from conflicts of interest.

 

7. Make Informed Decisions

decision making | Hoa board trainingAs a board member, you make decisions for the association on a regular basis. Most decisions, though, can pose challenges and require you to perform adequate research.

Some decisions even call for professional advice. Not all boards know how to approach the decision-making process, which is why proper training is necessary. When it comes down to it, board education just helps you become a better board member.

 

A Worthwhile Investment

Even though it should be, HOA board training is not a priority for a lot of associations — and it is easy to see why. Because board members are just volunteers from the community, they don’t always have a lot of free time on their hands to attend training sessions. Some seminars and workshops also require payment and not all associations have room in their budget for such things.

Considering how important it is, though, every association should allocate time and money on adequate board education. Board training is not a waste of resources; rather, it is an investment that will yield rewards in the form of effective and successful association management.

Several HOA management companies offer board education as part of their services. If you want professional assistance while simultaneously learning from seasoned managers, hire a management company today. Start looking for the best one in your area using our comprehensive online directory.

 

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Can Your HOA Require COVID-19 Vaccination For All Residents?

Vaccinations for COVID-19 are underway, but homeowners associations all have the same concern. Can an HOA require the COVID-19 vaccine for residents? Find out below.

 

Can Your HOA Require COVID-19 Vaccine?

The coronavirus outbreak affected homeowners associations nationwide, making them temporarily shut down common areas and move meetings to digital mediums. As government-imposed restrictions continue to relax, so have homeowners associations. But, the glaring question on most board members’ minds remains largely unanswered — can your HOA require COVID-19 vaccine?

Homeowners associations may want to require residents to show proof of vaccination before allowing them to use or even enter common facilities. This, though, is not exactly within the scope of every board’s authority. Most governing documents lack the provisions for it, so it is presumably outside of the board’s powers to enact such a requirement. Additionally, enforcing the rule comes with its fair share of challenges, as some residents are likely to have objections.

 

4 Reasons Not to Require Vaccination

hoa require covid-19 vaccineHaving the authority to require COVID-19 vaccination is one thing, but you must also consider whether or not you should proceed with such a requirement. While ensuring the health of residents is the obvious upside, you must not let it blind your decision-making. There are downsides to requiring the vaccine as well.

 

1. Residents Have a Right to Use All Common Spaces

When someone becomes a homeowner in an HOA, they immediately receive an easement and a right to use the community’s common areas and amenities. Preventing unvaccinated residents from accessing these spaces is a breach of that right. Worse yet, residents are not afraid of involving the law when their rights are violated. Therefore, imposing a vaccination requirement can lead to lawsuits for your association.

 

2. It Might Breach HIPAA

According to the federal Health Insurance Portability and Accountability Act, people have a legal right to keep their medical records private. Under the eyes of the law, asking residents for proof of vaccination may be deemed an infringement of this Act. Again, this can result in a possible lawsuit for your homeowners association.

Moreover, the privacy of medical records is not only protected by federal law. Many states have their own legislation that offers similar protection.

 

3. It Opens Your HOA to Discrimination Claims

Apart from medical issues, there are also religious exemptions to consider. Some residents might claim that it goes against their religious beliefs to get vaccinated. Thus, forcing them to receive the vaccine could make your association vulnerable to claims of religious discrimination.

Beyond that, granting vaccinated and unvaccinated residents different rights is also discrimination. And some states have outright declared it illegal to create classes within a community.

 

4. The Government Does Not Require It

In some states, it is prohibited for businesses to discriminate against unvaccinated persons. For instance, Florida governor DeSantis has issued an order banning agencies and businesses from requiring proof of vaccination. Because HOAs are organized as non-profit corporations in many states, they must comply with restrictions and orders that apply to businesses as well.

If the federal, state or local government does not require vaccination, it would not make sense for HOAs to make it mandatory. Then again, some counties and cities have previously asked HOAs to enforce public health regulations such as wearing masks or risk a fine. There is no guarantee, though, that local governments will do the same for vaccinations.

 

Options for Homeowners Associations

As you can see, there are several reasons why it is ill-advised to require COVID-19 vaccination. But, that does not mean homeowners associations are left with no options to help ensure the health of their residents.

The first thing you can do is recommend that community members get the vaccine. Send out a letter with helpful vaccine information and the advantages of getting the vaccine. This will educate residents and perhaps even convince those who are still on the fence. To prevent issues with liability, you can ask an attorney or your management company to help you with the wording.

You can also make it easier for residents to receive the vaccine by allowing your local public health department to use your clubhouse as a vaccination site. This comes with some risks, though. If a resident contracts COVID-19 after visiting the clubhouse, they might blame the association and pursue legal action.

To further protect your residents, it is also advisable not to halt health protocols. Continue to urge residents to wear masks, practice social distancing, and wash their hands frequently. You should also clean and disinfect common areas often.

While requiring residents to get the vaccine may be out of reach, it might be possible to require vendors and contractors to show proof of vaccination. If your current vendors refuse to get the vaccine, you can always choose a new (and vaccinated) vendor upon the expiry of your contract.

 

Deciding to Make Vaccination a Requirement

hoa require covid-19 vaccineMost experts agree that homeowners associations have no authority to make vaccinations a requirement. But, if your HOA still pursues this route, you must then, at a minimum, amend your governing documents to coincide with the decision. In most states and associations, though, amending your governing documents will require membership approval.

Additionally, you should prepare to address complaints and protests from some of your residents. It is also a good idea to talk to a lawyer about the potential risks involved and how you can shield the association from them.

 

Know the Limits of Your HOA

As a member of your HOA board, it only makes sense for you to worry about the general health and well-being of your residents. Making vaccination a requirement, though, is not necessarily the best solution. When it comes down to it, the pitfalls of requiring residents to receive the vaccine outweigh the benefits. All you can do at this point is to recommend that residents get the vaccine and continue practicing health protocols within your community.

Many homeowners associations need professional help when it comes to issues with the law, limitations on authority, and other management aspects. Start looking for an HOA management company near you using our comprehensive online directory.

 

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What Are The Changes In The HOA Board’s Role During The Pandemic?

There are some changes to the operations of an HOA board and the pandemic has definitely had its effects. Learn how boards have been forced to adapt and what the future likely has in store for homeowners associations.

 

The HOA Board and the Pandemic

When the COVID-19 outbreak spread to the United States, homeowners associations were not left unaffected. The pandemic has put HOA boards to the test, with varying results. Some boards collapsed when faced with a health crisis, with inconsistency playing a huge role in their failure. Other boards, though, remained strong and unwavering. These are the boards that were consistent in their messages and came up with a firm plan of action.

Now is the time to assess your strengths and weaknesses as an HOA board. Lean on your strengths and take advantage of them. As for your weaknesses, learn to confront them head-on and improve upon them. This is your chance to identify areas for growth so that, when faced with another crisis, you can tackle it without hesitation.

 

Does the HOA Board Have Emergency Powers?

emergency plan | hoa board and the pandemicHomeowners associations share many similarities with government bodies. However, when it comes to authority, HOAs don’t hold absolute power.

The government can access emergency powers when needed, but homeowners associations can’t impose this power upon themselves. Your association’s authority is limited by state laws and your governing documents.

Granted, there are some states that give homeowners associations additional authority in times of emergency. One example is Florida, with Chapters 718 and 720 of the state statutes detailing this very power. But, in most cases, you will find that your board holds no expanded authority over the association and its members.

If your association does earn emergency powers, though, you must remember to abide by your fiduciary duties. It is your top priority to make decisions that will yield the best results for the community. Taking advantage of this power will undoubtedly give rise to legal issues for your association and board.

 

HOA Board and the Pandemic: Amending Your Governing Documents

Due to the unprecedented nature of the pandemic, most homeowners associations found it hard to adapt when the crisis first hit. For many HOAs, nothing in their governing documents offered guidance for how to handle this kind of situation. There were no instructions for amenity closures, dues postponement, and virtual board meetings. Most association businesses had to be put on pause because officials asked citizens to remain at home.

Now that you have gone through a pandemic, you know firsthand how important guidelines and procedures are. Boards should, therefore, take this time to amend their governing documents to include such procedures. As for how to amend governing documents, it changes depending on the association. Make sure to check state laws and your current governing documents for instructions. In many cases, you will need approval from a majority of owners.

 

Communication During and After the Pandemic

Communication has always been essential to managing a community successfully. Boards must distribute information in a timely manner, ensuring that all homeowners are made aware of any important developments. And the need for communication further heightens during a health crisis like the COVID-19 pandemic.

Boards must consistently keep members in the loop as rules and policies evolve on a regular basis. Amenity closures, operating hours, occupancy limits, and other restrictions — all of these are pertinent information that many homeowners continue to wonder about. It is your board’s responsibility to keep an open line of communication with members at all times. Use every communication channel available to you, from text messages to email.

There are, of course, some associations that still mandate traditional mail. If yours is the same, consider using more efficient modes of communication in addition to traditional mail. As electronic communication becomes the standard in many industries, it is likely that homeowners associations will continue to use such forms even after the pandemic.

 

Are Virtual Meetings Here to Stay?

Before the pandemic, it was common practice (and even state-mandated) for HOA boards to discuss issues and make decisions at in-person meetings that members can attend. Many associations’ governing documents also require this in the name of transparency. Because of social distancing requirements, though, holding such meetings is out of the question.

To continue with operations, homeowners associations have turned to virtual platforms. The beauty of online meetings is that people can join them remotely and use a variety of devices to access them. Many states have even issued executive orders granting associations the ability to hold meetings virtually.

Online meetings have plenty of advantages, too. They allow for a more systematic approach to meetings thanks to features like mute, hand-raising, and chat boxes. There is also no need for HOAs to look for a physical location that can accommodate the entire membership. To top it all off, the convenience remote meetings offer promotes increased attendance.

When conducting virtual meetings, it is important to use the following approaches:

  • Use programs with screen-sharing features;
  • Provide sufficient notice of the meeting along with a meeting agenda;
  • Let members view and listen to the discussion;
  • Record minutes of the meeting;
  • Abide by the same guidelines as face-to-face meetings (i.e. stick to the agenda, motion procedures, etc.)
  • Allow time for comments or open forums; and,
  • Encourage members to turn their cameras on because it helps develop a sense of community.

Association boards can also meet in executive sessions using a virtual platform. Make sure to follow the proper procedures as you would for in-person executive meetings.

Considering the advantages of remote meetings, it wouldn’t be surprising for states to adopt new legislation allowing HOAs to use them permanently. The future of board meetings, though, will likely be a mix of online and face-to-face meetings.

 

What Financial Adjustments Should You Make?

financial strategy | hoa board and the pandemicCountless people found themselves suddenly lacking a source of income thanks to businesses closing down or cutting costs.

To make matters worse, utility bills also started to go up as a result of people staying home more. And while you might think it wise or thoughtful to cancel HOA dues, this will only inflict more harm to the community.

As you know, member dues are an HOA’s primary source of funds. Suspending dues, even temporarily, will lead to your board scrambling for money to pay for operational expenses. The best way to deal with this situation is to make certain financial adjustments. You can waive late fees or offer payment plans to give homeowners some breathing room. It is also a good idea to pause any foreclosures and delay non-critical projects.

To prepare for the future, you must also draw up a plan detailing your association’s financial priorities. This plan should also include your budget for such emergencies (with actual numbers) and a strategy for how to earn these additional funds.

 

HOA Board and the Pandemic: Looking Into the Future

Homeowners associations faced many struggles due to the COVID-19 pandemic. And it is likely that HOA boards will continue to feel its everlasting effects. While all you can do at the moment is to adapt, you can make it easier for future board members by learning from this experience and making necessary preparations.

An HOA management company can help your board deal with all sorts of emergencies. Start looking for the best one in your area today by browsing through our online directory.

 

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The Duties Of An HOA President

As with any organization, homeowners associations have a set of board members that run the community. And, at the helm of every HOA board, there sits an HOA president.

 

What Are the HOA President Responsibilities?

hoa president responsibilitiesHomeowners associations are governed by a board of directors. Each of these board members has a specific title and set of duties. The HOA president sits at the very top and is responsible for a multitude of tasks.

Whether you are the current president of your HOA board, are running for the position, or are simply a regular member of your HOA, it is imperative to know the duties of the HOA president. As president, familiarity with these duties can help you fulfill your role in a successful manner. On the other hand, as a regular HOA member, understanding these duties will allow you to determine whether your current president is effective.

But, what exactly are these HOA president duties?

The president of the HOA board typically shoulders the same duties as those of any leader of a corporation. Though, it is worth noting that the exact nature of these duties can vary from association to association. To know the president’s duties specific to your community, it is important to check your governing documents.

More often than not, though, the president takes on the following roles:

  • Acts as the mouth or spokesperson of the association
  • Presides over all board and annual meetings
  • Initiates meeting agendas
  • Calls for votes
  • Serves as liaison between the board and other third parties (management, attorney, vendors, etc.)
  • Oversees the day-to-day operations of the community
  • Signs association documents
  • Co-signs checks with the secretary or treasurer
  • Designate committees

 

Small Associations, Community Managers, and Expenditures

The HOA president usually runs the day-to-day operations of a homeowners association. This is more common in small associations with fewer owners. Larger associations, though, tend to demand more time and work from the board. Considering the positions of board members are filled on a volunteer basis, it is understandable for the president to lack sufficient time to fulfill the more tedious aspects of their job.

This is where community managers come in. Many associations hire a community manager or an HOA management company to handle the day-to-day operations of the community. This includes talking to vendors, answering phone calls, and approving small expenditures.

But, what exactly constitutes a small expenditure? Again, this can vary from association to association. HOA boards usually permit the president or community manager to authorize spending of up to a certain amount. Such expenditures should still be reported to other board members as well as appear in monthly financial statements.

 

How Much Does an HOA President Make?

Many homeowners find an interest in running for HOA board president or some other board member role because of the pay. But, this is a common misconception. While some associations do offer paid board roles, most do not. A majority of associations clearly state in their governing documents that paying board members is prohibited.

Board members are volunteers — meaning owners volunteer to run for such positions. Associations that pay their board members take on higher risks, especially when it comes to conflicts of interest. Unsatisfied owners may also bring up a variety of issues, claiming that board members are incompetent, self-serving, or overcharging. Moreover, paid board members lose protection from the HOA’s D&O insurance. In that case, they will need to take out their own policy.

Of course, paying board members is generally legal. Though, it is worth checking your state laws and governing documents to make sure you stay on the right side of legal issues. Additionally, full disclosure to the membership must take place and any fees charged must remain below market price.

 

How Can I Be a Good HOA President?

The role of an HOA president is often paved with challenges, but asking how you can be a good one is the first step in becoming an effective leader. A good HOA board president typically possesses the following qualities:

  • Knows How to Lead. An obvious quality every board president should have is leadership. The president is responsible for presiding over meetings, delegating tasks, and guiding other members.
  • hoa president dutiesWilling to Learn. While the president is expected to understand the governing documents in every way, they are not perfect. Thus, a willingness to learn — be it from the law or professionals — is imperative in every good president.
  • Consistent. The president can’t make and enforce rules in an arbitrary manner. Uniformity and consistency are key when it comes to leading any community.
  • Knows How to Mediate. Homeowners associations experience disputes all the time, whether it involves board members, homeowners, or both. It is the president’s job to remain objective, mediate between parties, and make decisions in an impartial way.
  • Honest. Homeowners associations are not exempt from embezzlement, fraud, and other illegal acts. But, the president must stay honest and fulfill their job with integrity at all times.
  • Has Excellent Communication Skills. Talking to board members, owners, vendors, and management is a normal part of the president’s job. As such, the president must be a good communicator and remain responsive, especially when it comes to time-sensitive matters.
  • Prioritizes the Community Above All Else. A commitment to serving the community and a passion for the job is integral to successful leadership. Everything the president does must be within the association’s best interests.

 

Running for HOA President

If you are interested in becoming the president of your HOA board, there are a few things you must do first. It is essential for every president to know the community like the back of their hand. Therefore, you should take the time to attend community events, go to meetings, and understand the governing documents of your association. Talk to fellow owners and see what issues they are concerned about.

Once election season comes rolling in and the announcement for candidates goes out, express your interest. Many associations allow self-nomination, but make sure to refer to your governing documents to clarify. It is also best to check state laws for guidance. For instance, in California, Corporations Code 7213 states that fellow board members — not the membership — elect the president unless the governing documents say otherwise.

 

A Demanding Yet Fulfilling Role

As you can see, the HOA president takes on many duties and responsibilities. The job is not only time-consuming, but it also requires a lot of patience, communication, and effort. But, considering how much the president contributes to the community, the position is certainly a rewarding one.

Is your HOA board struggling to stay on top of day-to-day operations? Perhaps it is time to seek the help of an HOA management company. Start your search for the most reputable ones in your area using our online directory.

 

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Everything You Need To Know About HOA Fees

If you are moving into a neighborhood governed by a homeowners association, then you need to know about HOA fees. What exactly are these fees? And is there a way you can avoid paying them?

 

What Are HOA Fees? HOA Fees Meaning Explained

Before you can understand what these fees are, you must first learn how homeowners associations work. A homeowners association is a governing body that creates and enforces rules within a planned community. An HOA is also responsible for maintaining the community, usually in the form of hiring vendors to perform repairs and maintenance work or rendering other types of services.

This is where homeowners association fees come in. HOA fees, otherwise known as HOA dues, are sums that associations charge to homeowners to pay for various expenses. These fees are deposited directly to an association’s operating fund, with a portion of it going to the reserve fund. How often members must pay these fees depends on the association, but it is usually charged on a monthly or annual basis.

 

What Do HOA Fees Cover?

expenses | average hoa feesNot all homeowners associations are created equal. Thus, the exact items and expenses that dues cover can vary from community to community. Though, the typical HOA fee includes coverage for maintenance services, professional fees, and insurance premiums. Some examples are management fees, landscaping costs, seasonal services like snow removal, and pool maintenance.

As mentioned above, reserve fund contributions also account for a portion of HOA dues. Every homeowners association should have a reserve fund for the purpose of covering unanticipated expenses as well as major replacements and repairs in the future. Some examples of reserve fund expenses are roof replacements, road repaving, and pool retiling.

 

How Much Are HOA Fees?

Because every association is different, there is no universal amount when it comes to HOA dues. The location, type, and size of an association, as well as the nature of its amenities, will influence the calculation of these fees. But, average HOA fees can range from $200 to $400. Some communities, usually higher-end ones, even charge monthly dues in the thousands.

 

How an Association Determines HOA Dues

The HOA board is responsible for calculating HOA dues. This process typically starts with budget preparation, anticipating all the needs and expenses of the community for the coming year. They will then factor in reserve fund contributions. Once the board has determined the total amount, they will then divide this among the members of the community, themselves included.

For example, if an association’s anticipated expenses total $300,000 and there are 100 members in the community, then according to the HOA fee calculator, that would amount to $3,000 per member for the year. The association can divide that further into 12 monthly payments to arrive at $250 per member per month.

 

Why Are HOA Fees So High?

salary and wages | what do hoa fees coverThere are a number of factors that can affect the cost of HOA dues. Economic factors such as inflation, the rising cost of materials, and increased wages can all play a role since they influence vendor fees. The location of your community can also have an effect. If you live in a rich area, your HOA fees will also tend to be higher.

If you believe that your HOA fees are much higher than they should be, talk to your HOA board. Perhaps there are certain expenses your association can cut back on without sacrificing quality. Most HOA boards are required to present the budget to the membership during the annual meeting. A budget ratification meeting is even mandatory in some states (like North Carolina).

In some cases, high HOA fees can signal mismanagement of funds. To avoid fraud and embezzlement in HOAs, make sure your HOA board is being transparent with all of the association’s finances. Having a professional perform regular HOA audits can also discourage or identify fraud.

 

Limitations on Increasing HOA Dues

Homeowners association fees don’t remain the same forever. In fact, it is normal for an association to increase HOA dues every now and then. This usually happens when the cost of goods and services rises. An HOA board may also be forced to raise fees if unbudgeted or unexpected costs come up that the reserves can’t cover.

Although an association can raise its dues, that does not mean its ability to do so is limitless. Certain state laws and provisions within its governing documents bar associations from making HOA fees too high. For instance, in Arizona, HOAs may not raise dues by more than 20 percent of the previous fiscal year’s dues without obtaining approval from a majority of their members.

It is important to understand that limitations like this are not always beneficial to the association. For example, if your HOA’s governing documents prevent the board from raising dues by more than 5 percent, then your association might face an inability to meet its annual budget. This could lead to serious cuts and poor maintenance of the community, ultimately resulting in lower property values.

 

The Consequences of Refusing to Pay HOA Dues

Before you start Googling “how to get out of paying HOA dues,” let us save you the trouble. The short answer is, you can’t. Members agree to abide by the association’s rules (including paying monthly fees) when first buying their homes.

Possible consequences of non-payment include:

  • Late Fees. Depending on state laws and your governing documents, your HOA might charge a late fee on top of your unpaid balance. In some cases, this fee can compound over time.
  • Suspension of Privileges. Some associations can suspend your member privileges for refusing to pay fees. That means you will no longer have access to your community’s amenities and facilities. While this can prove effective for some non-paying members, it is not really a good penalty for members who don’t use the amenities in the first place.
  • Lawsuits. Your association may file a lawsuit against you and take you to small claims court in an effort to seek compensation.
  • Liens. Many associations have the ability to attach a lien to your property if you fail to pay your HOA fees. Liens make it hard for you to sell your property and can even lead to the next item on this list.
  • Foreclosures. Once your association has filed a lien on your property, it can then choose to foreclose on that lien.

Defaulting on your payments has an unfair impact on other homeowners. When an association experiences a high delinquency rate, it will fail to cover the cost of necessary services, leading to a poorly maintained community. It may even be forced to levy special assessments. Therefore, in essence, when you refuse to pay your HOA fees, other homeowners will have to pay more to cover for you. If you are struggling financially, you can always ask your board for a payment plan.

 

Are HOA Fees Worth It?

property value | hoa feesSome people dislike joining homeowners associations because of the very idea of having to pay HOA fees. But, since these fees come in exchange for amenities and services, they are definitely worth the added cost. Always remember that HOA dues ultimately go toward the beautification and maintenance of the community. This, in turn, leads to higher property values.

Many homeowners associations have a hard time collecting HOA fees, especially when they become past due. An HOA management company can help with this, though. Start looking for the right management company in your area today using our online directory.

 

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What Are HOA Restrictive Covenants?

Anyone who has ever belonged to a homeowners association knows what restrictive covenants are. If you are thinking about purchasing a home within an HOA community, you must understand what these covenants are and how they affect you.

Understanding the Definition of Restrictive Covenants

What is a restrictive covenant? A restrictive covenant is a type of agreement or obligation that restricts the actions a buyer can make. The term can also apply to real estate. Restrictive covenants in real estate are written legal obligations found within a property’s deed.

Within the context of a homeowners association, the definition of a restrictive covenant remains the same. These are agreements homeowners make with the HOA that restricts how you can use your property. It can cover what you can’t do as well as what you are obligated to do, i.e. maintenance.

 

The Benefits of HOA Covenants

Benefits of HOA CovenantsTo an outsider, it might seem like these covenants serve no function, but the truth is far from it.

What is the main purpose of restrictive covenants? To understand that, you must first understand what homeowners associations do.

Homeowners associations exist to maintain the community with the overall goal of preserving property values. Part of its job is to make sure the neighborhood looks appealing and is a good place to live in. This is where restrictive covenants come in.

Restrictive covenants help make the community a better place by outlining how you should and should not use your property. Let’s take one of the most common restrictive covenants and apply it here. Many associations have covenants limiting what color paint you can use for your house exterior. At first glance, it might seem absurd that your HOA would want to control something as trivial as that.

But, house color is not trivial at all — at least not when it comes to curb appeal. When rows of houses have a coordinated look, it can add to the aesthetic appeal of the neighborhood. This, in turn, can lead to higher property values.

Another benefit of a restrictive covenant agreement is it allows for easy dispute resolution. Most associations clearly define what kind of behavior is allowed in the community. A neighbor with a barking dog or who loves to throw all-night ragers can disrupt your quiet enjoyment of your property. Luckily, your HOA can step in to handle the situation.

 

The Problem With HOA Covenants

The disadvantages of HOA covenants, though, are also obvious. As a homeowner, you naturally want to have control over your own property. But, the existence of these covenants can impede that. If you move into a community run by an HOA, you will have to follow these covenants or face penalties.

In a few cases, an association may even have the authority to enter your property without permission. This usually happens when there is a covenant violation you refuse to remedy.

 

Restrictive Covenant Types

There are two primary types of association covenants you might encounter as a homeowner — property use restrictions and required maintenance. Let’s take a closer look at each one below.

 

1. Property Use Restrictions

Property use restrictions are the most common type of restrictive covenants. In fact, a majority of HOAs have at least one restrictive covenant that refers to property use. These covenants tell you what you can and can’t do with your property.

Again, this all circles back to how your property looks as part of a bigger picture. Homeowners associations want to maintain a certain aesthetic, and restricting property use is the way they accomplish this goal.

Many associations establish Architectural Control Committees that help maintain the uniformity of the community. These committees inspect properties for violations, update architectural guidelines, and oversee the architectural review process. If you want to change the color of your house or add a new shed to your property, you will likely need to go through the ACC.

 

2. Required Maintenance

Apart from limitations on property use, restrictive covenants can also cover your obligations as a homeowner. These obligations usually have to do with maintenance. Your association might require you to mow your lawn a certain number of times per week or trim your trees every now and then. Some HOAs entrust this job to homeowners, while others provide maintenance services as part of your dues.

 

Common Examples of Real Estate Covenants

pet policy | restrictive covenantsRestrictive covenants can vary from association to association. But, there are some that are more common than others. Here are some restrictive covenants examples you should know about:

  • House Color. This is perhaps the most common restriction across all associations. Some HOAs dictate specific colors homeowners can and can’t use, while others only accept varying shades of a particular color.
  • Exterior Construction. Adding a fence or new garage to your property? Wait just a minute, because your HOA might have rules concerning exterior constructions. Many associations ask you to go through an approval process, complete with submissions of your design, while others prohibit constructions entirely.
  • Rental Use. Some associations have covenants restricting a homeowner’s ability to lease or rent out their home. An HOA may only allow you to lease your property for a specific number of months or not at all.
  • Business Use. Many HOAs don’t allow members to convert their homes into a business. Of course, that does not mean you can’t work from home or use an extra room as a home office. But, if it starts bringing in more traffic, you might have a problem.
  • Pet Policy. There are associations that have strict no-pets policies, but there are also ones that only impose reasonable restrictions regulating the species, breed, weight or size, and the number of pets you can keep. Keep in mind, though, that state law may also play a role here. For instance, California law does not allow HOAs to prohibit homeowners from keeping at least one pet.
  • Vehicle Regulations. In addition to pets, your association might regulate how many vehicles you can have, what types you can keep, and where you can park them.

 

Restrictive Covenants Real Estate FAQs

 

Are restrictive covenants enforceable?

Generally speaking, homeowners associations can legally enforce restrictive covenants. But, there are certain exceptions to this rule. A covenant is unenforceable if it:

  • Was not enacted according to the proper procedures;
  • Violates of homeowners’ rights;
  • Violates federal or state laws;
  • Is enforced in an inconsistent or arbitrary manner; and/or,
  • If the HOA’s governing documents do not give it the power to enforce it in the first place.

 

How do you get around restrictive covenants?

Since covenants are binding legal agreements, there is really no way to get out of them short of leaving the association itself. If a covenant is too strict or unreasonable, homeowners can bring it to the HOA board’s attention. As a result, the board can try to amend the covenant.

 

What happens if you breach a restrictive covenant?

fine | what is a restrictive covenantHomeowners associations deal with covenant violations in differing ways.

The most common penalties you can face, though, are monetary fines, suspension of member privileges, lawsuits, and even foreclosure. It is important to check your state laws and governing documents to see what consequences you can expect as a result of breaching a restrictive covenant.

 

How long do restrictive covenants last?

In general, restrictive covenants don’t expire unless there is a written expiration date. Restrictive covenants that run with the land — meaning they are attached to the land itself and not the structure built on it — continue to live on for an indefinite period, even if the property is sold off to another owner.

 

The Pros Outweigh the Cons

Restrictive covenants can interfere with the way you use your property, but they do serve a purpose. Homeowners associations use them to maintain consistency, improve curb appeal, and protect property values. Before buying a house in an HOA community, it is imperative to first find out what restrictions lie ahead of you. But, you should also understand that these restrictions can increase the value of your property and are, thus, ultimately beneficial.

Enforcing restrictive covenants as well as rules and regulations is not always easy. This is why many homeowners associations turn to an HOA management company for help. Finding the right management company, though, is often time-consuming. Streamline your search process today with the help of our online directory.

 

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What Are Unenforceable HOA Rules? What To Do About Them?

Homeowners association rules are man-made, so it makes sense that they are not perfect. You might like to believe that all the rules in your HOA are good and enforceable. But, the fact of the matter is, unenforceable HOA rules do exist in many communities — and you may not even know it.

 

What Are Unenforceable HOA Rules?

Before you can understand unenforceable HOA rules, you must first know what HOA rules are. Simply put, HOA rules are rules that members of an HOA community must follow. These rules exist to regulate members’ behavior within the association.

Some people use HOA rules and HOA covenants interchangeably. You can find HOA covenants within your association’s Covenants, Conditions, & Restrictions (CC&Rs). These dictate the association’s and the members’ obligations and rights. In essence, both HOA rules and HOA covenants dictate what homeowners (and the HOA) can and can’t do.

You must then realize the extent of an HOA’s authority. Are neighborhood covenants enforceable? Generally speaking, yes. Both HOA covenants and rules are legally binding and enforceable. There are some exceptions to this statement, though. Some rules can be unenforceable.

But, how do you distinguish the unenforceable HOA rules from the enforceable ones? Rules are deemed unenforceable if they fall under one or more of the following categories:

  • Violates rights or breaches laws
  • No power to act
  • Enacted incorrectly
  • Enforced inconsistently or selectively

 

Unenforceable HOA Rule #1: Violates Rights or Breaches Laws

Federal and state laws, including constitutional rights, take precedence over all of an association’s governing documents. Therefore, when a rule violates the law, it is unenforceable. Typical HOA rules that fall under this category often have to do with the following:

 

Freedom of Speech

Homeowners and HOAs usually butt heads when it comes to freedom of speech. Commonly, the two areas of concern are political speech and displays of patriotism, particularly when it comes to signs.

Many associations restrict what types of signs homeowners can display, with some even banning all types. In some states, though, associations don’t have much power to do so. For example, in Maryland, HOAs may not prevent homeowners from posting political signs on their own property near election time.

The best course of action for HOAs is to only restrict the number, size, and location of political signs. Associations can also allow such displays only prior to and immediately following an election.

Flags are also a point of contention among associations and homeowners. But, thanks to the Freedom to Display the American Flag Act of 2005, HOAs generally can’t prohibit homeowners from displaying the American flag. They can, however, limit the size of the flag.

 

Discrimination

The Federal Fair Housing Act prevents associations from discriminating against homeowners and potential homeowners based on their race, religion, national origin, sex, familial status, and/or disability. Therefore, a rule banning women from the gym during certain hours directly goes against this act.

Some states have also enacted laws that provide further defense for protected classes. In California, for instance, the law extends to gender identity as well as sexual orientation.

 

Right to Bear Arms

right to bear arms | hoa rulesThe Second Amendment remains a hot topic in the United States. For homeowners associations, though, the general rule is that they can’t disallow residents from owning guns.

This is one of the homeowners rights against HOA. But, the association can restrict weapons in open or communal spaces. After all, residents have a right to feel safe within their own community.

 

Religious Freedom

The Fair Housing Act and several state laws protect homeowners’ right to religious freedom. Therefore, homeowner association rules that discriminate against a particular religion are unenforceable.

An HOA may have a rule that restricts religious displays or activities in a common area. If the language does not single out a specific religion, then it is enforceable. In this case, the rule or covenant might indirectly interfere with religious practice, but it is applied equally to all religions.

 

Other Federal or State Laws

There are several other rules that might breach federal or state laws and are, therefore, unenforceable.

  • Right to Dry. In many states, HOAs can’t prohibit homeowners from hanging laundry on a clothesline.
  • OTARD Rule. The FCC’s Over-the-Air Reception Devices Rule prevents HOAs from banning satellites or antennas.
  • Landscaping. In a few states, homeowners should have the ability to use synthetic grass or plants that don’t require much water in their landscaping.

 

Unenforceable HOA Rule #2: No Power to Act

If the HOA holds no authority to act on a certain rule, then the rule may be unenforceable. Fines are a great example to demonstrate this. Can a homeowners association fine you? Yes, in general, HOAs can impose a fine when homeowners violate a rule. But, can an association fine you just because? That is a different story. The HOA can only impose fines for violations provided the governing documents or state laws allow it.

 

Unenforceable HOA Rule #3: Enacted Incorrectly

It is also worth looking at how a rule was put in place. Typically, an HOA records its covenants and rules in the declaration at incorporation. Such rules usually don’t pose a problem.

Can an HOA change rules after purchase? If you just bought a home that belongs in an HOA community, don’t expect the rules to remain the same forever. It is not uncommon for HOAs to amend their governing documents. In fact, many associations continue to change or add to their rules.

But, there is a right way to create a new rule or change an existing one. Similar to the HOA’s authority, you will find the proper enactment procedure within state laws and the association’s governing documents. If the HOA changes a rule or makes a new one without following procedures, then it is unenforceable.

For example, Georgia law states that associations must obtain a super-majority vote from the membership to approve any amendments to the declaration. Your HOA may also have set stipulations for amending its governing documents, such as a written petition or notice requirements.

 

Unenforceable HOA Rule #4: Enforced Inconsistently or Selectively

Unenforceable HOA regulations | homeowner association rulesIs your HOA not enforcing rules equally? Does your HOA fail to follow the proper procedures and pre-requisites when enforcing a rule? Then, there is a good chance those rules are unenforceable.

State laws and most HOA governing documents outline the procedural requirements associations must comply with when enforcing a rule. Usually, this involves sending written notice and providing the homeowner with an opportunity to be heard by the board. When such procedural requirements are not met or are applied inconsistently, the homeowner can challenge the enforcement of the rule.

Selective enforcement is another problem many associations fall victim to. Some boards will apply a rule to one homeowner but not the other. This type of enforcement also happens when boards apply some rules but ignore other rules.

Can I sue HOA for selective enforcement? Homeowners have a right to take legal action against their HOA for selective enforcement. But, keep in mind that you will need to prove that selective enforcement took place, which is often difficult to do. Additionally, the litigation process can take a lot of time and cost a lot of money. HOA boards typically have insurance to cover their defense fees as well.

 

Just “Enforceable” Is Not Always Best

It is not enough to have rules that are enforceable. The rules in your HOA should also be good, which means they must exist for the betterment of the community. But, how do you determine whether a rule is good or not?

First of all, good rules must be fair and reasonable. Even without the rule in place, common sense should dictate that it is the right thing to do. Good rules are also efficient in that they achieve their purpose. HOA boards must also make sure the rules are understandable and easy to follow.

 

Stay Away from Vague Language

Unenforceable HOA rules are not just ones that blatantly go against the law. Some rules may be considered as such if they contain vague language. Vague language can create all sorts of misunderstandings. And rules with unclear terms can cause more problems for both the board and homeowners.

HOA boards should make every rule as clear and direct as possible. Use terms like “You must…” or “You shall…” to convey the mandatory nature of the rule. Don’t beat around the bush.

Additionally, some rules consist of terms such as “nuisance” or “unappealing.” Unfortunately, these terms leave much room for interpretation. To remedy this, HOAs should include language that gives the board sole discretion when it comes to deciding what are nuisances or what counts as unappealing.

 

What Can Homeowners Do?

Contrary to what some might believe, HOAs don’t possess almighty powers that make them impervious to homeowner action. When you encounter some unenforceable HOA rules, there are a number of ways you can defend yourself or bring the matter to the board’s attention.

  • Talk to the Board. Start expressing your concern regarding the unenforceable nature of the rule. You can do this in-person or by writing a formal letter. Use a professional tone and be careful not to place blame on anyone. In many cases, a sincere reaching-out can change the board’s judgment.
  • Dispute Resolution. Some state laws and governing documents require that homeowners undergo a dispute resolution process prior to filing a lawsuit. You can do this through mediation or arbitration.
  • Take Legal Action. If worse comes to worst, you may need to begin legal proceedings. You can challenge the validity of the rule/s in question in state court (or federal court if it breaches the Fair Housing Act).

 

You Can Always Ask for Help

hoa management company | hoa covenantsHomeowners associations should not have any unenforceable HOA rules. To ensure this, board members must see to it that HOA rules don’t violate any laws or homeowner rights.

They must also make sure they have the authority to enforce these rules as well as enact or amend rules according to the proper procedures set forth by state laws and the governing documents. Finally, to avoid problems, boards must always enforce rules consistently and uniformly.

Many associations experience difficulties with rule enactment, amendment, and enforcement. As such, they turn to HOA management companies to make these tasks easier. Start looking for a local HOA management company that best suits your needs with the help of our online directory today.

 

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