Homeowners associations (HOAs) are typically governed by a set of governing documents that outline the rules and regulations for the community. These documents serve as the foundation for the operation and management of the HOA and provide guidance on issues such as membership, assessments, elections, meetings, and the use of common areas.
The governing documents necessary for a homeowners association (HOA) can vary depending on the state and local laws, the type of homes or businesses in an HOA, as well as the specific needs of the community.
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The Purpose of HOA Governing Documents
HOA governing documents provide the rules and regulations that govern the operation and management of a homeowners association (HOA) and the use of the property within the community. These documents serve several important functions, including:
- Establishing the legal framework for the HOA: The governing documents establish the HOA as a legal entity and provide the legal authority for the HOA to operate and enforce rules.
- Defining the rights and responsibilities of homeowners: The governing documents outline the rights and responsibilities of homeowners, including their obligation to pay assessments, follow the rules and regulations, and participate in the governance of the HOA.
- Providing guidelines for the operation of the HOA: The governing documents provide guidelines for the operation of the HOA, including the structure and responsibilities of the board of directors, how meetings are conducted, and how decisions are made.
- Regulating the use of property within the community: The governing documents establish the rules and regulations that govern the use of property within the community, such as restrictions on architectural design, landscaping, parking, and noise.
- Establishing procedures for dispute resolution: The governing documents provide procedures for resolving disputes between homeowners and the HOA, including the use of alternative dispute resolution methods such as mediation or arbitration.
HOA governing documents promote and maintain a harmonious and well-functioning community by providing clear guidelines for the operation and management of the association and the use of the property within the community.
The Different Types of HOAs
Because of the many different types of dwellings, there are several types of homeowners associations (HOAs), each with its own characteristics and governing documents. Some of the most common types of HOAs include:
- Single-family HOA: This is the most common type of HOA and is typically established for a subdivision or community of single-family homes. The HOA may be responsible for maintaining common areas, enforcing rules and regulations, and collecting assessments from homeowners.
- Condominium HOA: This type of HOA is established for a building or complex of condominium units. The HOA may be responsible for maintaining the common areas of the building, such as hallways, elevators, and parking garages, as well as enforcing rules and regulations that apply to unit owners.
- Townhome HOA: This type of HOA is established for a community of attached townhomes. The HOA may be responsible for maintaining common areas, enforcing rules and regulations, and collecting assessments from homeowners.
- Master HOA: A master HOA governs a larger community with multiple sub-communities or neighborhoods. The master HOA may maintain common areas shared by all sub-communities and enforce rules and regulations for all homeowners within the larger community.
- Commercial HOA: This type of HOA is established for commercial development, such as a shopping center or office complex. The HOA may maintain common areas, enforce rules and regulations, and collect assessments from commercial property owners.
An HOA’s specific governing documents and responsibilities may vary depending on the type of community it governs and the state and local laws that apply.
The Most Common HOA Governing Documents
The most common HOA governing documents include the Articles of Incorporation, Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, Rules and Regulations, Operating Budget, and Reserve Study. Each of these documents serves a unique purpose in defining homeowners’ rights and responsibilities, establishing the HOA’s legal framework, and regulating the use of property within the community. Understanding these documents is essential for members who wish to participate in the governance of their community and ensure that the HOA operates in a fair and effective manner.
Articles of Incorporation
The Articles of Incorporation is a legal document establishing a homeowners association (HOA) as a corporation under state law. This document typically includes the legal name of the HOA, the purpose of the HOA, the address of the HOA’s principal place of business, the duration of the HOA’s existence (usually perpetual), the name and address of the HOA’s registered agent (usually an HOA property management company or attorney), and the names and addresses of the individuals who incorporated the HOA.
The Articles of Incorporation document establishes the legal existence of the HOA as a corporation under state law. Once the Articles of Incorporation are filed with the appropriate state agency and approved, the HOA becomes a legal entity that can conduct business, enter into contracts, and own property in its name. The Articles of Incorporation are typically filed with the Secretary of State or a similar agency where the HOA is located.
Declaration of Covenants, Conditions, and Restrictions (CC&Rs)
The Declaration of Covenants, Conditions, and Restrictions (CC&Rs) is a legal document that sets forth the rules and regulations governing property use within a homeowners association (HOA). The CC&Rs are recorded with the local county recorder’s office and are binding on all current and future owners of property within the HOA.
The CC&Rs typically address several key areas, including property use, maintenance and upkeep, assessments and fees, architectural review, and enforcement. The CC&Rs may restrict the use of property, outline maintenance responsibilities for individual properties and common areas, and establish procedures for assessing fees and collecting assessments. The CC&Rs may also require that homeowners obtain approval from the HOA’s architectural review committee before making property changes to ensure consistency with the community’s overall design aesthetic. Finally, the CC&Rs establish procedures for enforcing the rules and regulations, including imposing fines or penalties for violations.
Overall, the CC&Rs serve as a critical document for the HOA, providing the legal framework for the community and establishing the basis for enforcing rules and regulations.
Bylaws
The bylaws are a set of rules and procedures that govern the operation and management of a homeowners association (HOA). The HOA’s board of directors typically adopts them and may be amended by a vote of the members. The bylaws provide guidelines for the governance and management of the HOA, including the structure and composition of the board of directors, the procedures for electing board members and officers, the powers and duties of the board of directors, and the procedures for conducting meetings and making decisions. The bylaws also establish procedures for amending the bylaws or other governing documents.
Rules and Regulations
These are additional guidelines that are established by the HOA to further clarify and enforce the CC&Rs and bylaws, such as rules for common areas or shared facilities.
The Rules and Regulations document is a set of guidelines that supplement the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and the bylaws of a homeowners association (HOA). The rules and regulations provide further detail on the restrictions and requirements for homeowners within the community. They may address issues such as the use of common areas, maintenance and upkeep responsibilities, the architectural review process, parking and vehicle restrictions, noise restrictions, and pet restrictions. The HOA’s board of directors typically adopts the rules and regulations which may be amended by a vote of the members. They supplement the CC&Rs and bylaws, providing further guidance on the restrictions and requirements that apply to homeowners within the community.
Operating Budget
The operating budget is a financial plan that outlines the anticipated income and expenses of a homeowners association (HOA) for a specific period of time, usually a year. The operating budget typically includes line items such as property maintenance, utilities, insurance, administrative expenses, and reserves.
The operating budget is a critical document for the HOA, as it provides the basis for setting assessments or dues for the upcoming year. Homeowners within the HOA may be required to contribute to the operating budget through regular assessments or dues. The HOA’s board of directors typically prepares the operating budget in consultation with the HOA property management company and other professionals as needed. The operating budget is subject to review and approval by the HOA’s members, typically at an annual meeting.
The operating budget provides a roadmap for the financial health of the HOA. It is used to make decisions regarding expenditures, including prioritizing maintenance and repair projects, determining the need for reserves, and identifying areas where cost savings can be achieved. Understanding the operating budget is important for homeowners who wish to participate in the governance of their community and ensure that the HOA is managing its finances effectively.
Reserve Study
This reserve study document is used to plan for the long-term maintenance and replacement of the common property and assets of the HOA, such as the pavilions, trails, roads, pools, clubhouses, playground equipment, and landscaping. It includes an analysis of the financial needs associated with maintaining and replacing those assets over time.
The reserve study is typically conducted by a professional specialist who provides a detailed report outlining the estimated cost and timing of major repairs and replacements. The reserve study typically includes a reserve funding plan, which outlines the recommended amount of funds to be set aside each year to cover the estimated future costs. The reserve study may also include investment strategies to maximize the returns on the funds set aside for reserves.
The reserve study document is a critical tool for the HOA, providing a roadmap for maintaining the community’s physical assets over the long term. The reserve study allows the HOA to plan for future expenses, prioritize repairs and replacements, and ensure adequate funds are set aside to cover those expenses. Understanding the reserve study is important for homeowners who wish to participate in the governance of their community and ensure that the HOA is planning for the community’s long-term health.
Conclusion
HOA governing documents are essential for effectively operating and managing a homeowners association. These documents establish the HOA’s legal framework, define homeowners’ rights and responsibilities, and regulate property use within the community. The most common governing documents for an HOA include the articles of incorporation, declaration of covenants, conditions, and restrictions (CC&Rs), bylaws, rules and regulations, operating budget, and reserve study. Understanding these documents is crucial for homeowners who wish to participate in the governance of their community and ensure that the HOA is operating in a fair and effective manner. By establishing clear guidelines and procedures for the HOA’s operation, these documents help promote a sense of community, enhance property values, and ensure the community’s long-term health.
Seek the Help of a Property Management Professional
If you’re struggling to manage your HOA or condo association, it’s worth contacting a professional management company like Innovative Management for help. With years of experience managing COA and HOA properties, Innovative Management can provide valuable guidance to association board members, ensuring that your properties are managed efficiently and effectively. We offer various services, including financial management, maintenance, and homeowner communication, making managing your association properties easier. By working with Innovative Management, you can have peace of mind knowing that your community is in good hands and managed by experienced professionals.
Contact Innovative Management to start a conversation.
