HOA: A Start-To-Finish Guide for Homeowners
As with a democratic polity, power in any homeowners’ association ultimately rests with its voting members, who consist of the community’s homeowners.
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According to a Florida district judge, a community association is “a little democratic sub-society of necessity.” Hidden Harbour Estates, Inc. v. Norman, 383 So. 2d. 637 (Fla. App., 1981). And that is a pretty good description because similar to state and local governments, homeowners’ associations (HOAs) are essentially an agreement between their members to cooperate and abide by community rules in hopes of making the neighborhood a better place to live.
If everyone plays ball, the community as a whole runs more smoothly and enjoys benefits that individual homeowners would not be able to enjoy acting alone. Of course, everyone does not always agree on what is in the best interest of the community, and that is where the “democratic” part of the Florida judge’s description comes in.
Like with a government, the community has a “constitution” in the form of its declaration of covenants (or just “declaration”), but many important decisions require a majority vote of homeowners. Day-to-day functions are delegated to elected board members, but if the board members do not act in the community’s best interests, they can be defeated in the next election.
Membership within an HOA.
In all but a few states, if homeowners live in an HOA community, membership within the association—and compliance with its covenants—is mandatory. Because a community’s declaration is a public record filed in the county land records, a lot owner is deemed to have “constructive notice” of an association’s covenants, restrictions, and rules when accepting a property’s deed.
Even if a homeowner does not receive the community’s declaration and affirmatively agree to its terms, an “implied contract” arises, which binds a member of an association to comply with the community’s restrictions and covenants. Castle Point Homeowners Assn. v. Simmons, 333 Ga. App. 501, 505-506, 773 S.E.2d 806 (2015). “Because a community’s declaration is a public record filed in the county land records, a lot owner is deemed to have “constructive notice” of an association’s covenants, restrictions, and rules when accepting a property’s deed.”
Part of the deal when members join a homeowners’ association is that they agree to relinquish certain property rights in the real estate they purchased within the community in exchange for the benefits conferred by the association.
The idea is that, if all owners abide by the community’s covenants and restrictions and contribute to its budget, everyone benefits in the form of increased property values and improved quality of life.
With that in mind, covenants and restrictions are presumed to be enforceable, as long as they are rationally related to a legitimate purpose of the association. Laguna Royale Owners Assn. v. Darger, 119 Cal.App.3d 670, (1981). Some states view restrictions more skeptically than others, but, for the most part, courts assume that an HOA covenant is valid and enforceable unless there is a specific reason why it should not be.
Governing Structure of Homeowners Associations.
A homeowners’ association’s authority is derived primarily from the community’s declaration—a legal document usually executed and recorded in county land records at the time of a community’s formation.
A declaration formally creates the community association and, in most cases, declares that the association is organized under the relevant state’s law. Community covenants (promises between and among the unit owners and the association), restrictions (prohibited activities and limitations on the use of property within the development), and the general powers and duties of the association’s board of directors (or just “board”) are all outlined in the declaration.
Powers and duties delegated to the board typically include authority to collect assessments from homeowners, enforce covenants, provide for the maintenance of common elements, and act on the association’s behalf in legal, contractual, and financial matters. State laws and the declarations may grant additional, specific powers to an association, and both can also place limitations on an association’s power to act in certain areas.
The association’s bylaws are customarily recorded together with its declaration, and the two documents work in tandem. Bylaws provide rules for how an association is run, such as procedures for election and appointment of board members and officers, a protocol for the board and member meetings, and standards for amendments to the community’s governing documents.
Most associations are also organized as non-profit corporations and are therefore subject to an “articles of incorporation” detailing matters of corporate governance. Depending on the nature of the community, the bylaws and declaration may also authorize the board to adopt and implement more detailed rules and regulations intended to further the policies and objectives of the association.
In the event of a conflict between authorities, the order of priority is:
Federal and state law,
declaration,
association bylaws, and
rules, and regulations.
Key Parties in an HOA Community.
The Developer.
In most cases, the first party involved with an association is the developer that plans and builds the community. After securing necessary permits and approvals, the developer prepares and records a subdivision plat for the development in the land records of the county in which the community will be located. A plat is essentially a map of a divided parcel with a description of each newly created lot’s dimensions and a reservation of any common areas and easements.
During the development process, the developer also records the declaration establishing the new community’s homeowners’ association. The plat and declaration are often recorded alongside one another in the land records.
In most jurisdictions, land records are available for viewing in the office of the county clerk (or analogous official) and are now available online in many counties.
While development is still underway and the developer remains the principal property-owner in the community, the developer retains effective control over the association. The developer appoints board members and officers, maintains commons areas, manages the finances of the association, including the collection of assessments, and generally performs the duties that will eventually be handled by the homeowners’ association.
As development progress and more lots are sold to other owners, the developer relinquishes control of the association to the new members. The precise timing and standards for the transition are controlled by state law.
In Florida, for instance, non-developer members are entitled to representation on the board when at least half of lots have been sold. Once ninety percent of lots have been conveyed, non-developer members are entitled to elect at least a majority of board-members within three months.
At that point, the developer turns over managerial control to the elected board, and the board takes ownership of common elements and responsibility for the administration of the community. Fla. Stat. §720.307(1)–(5).
Board of Directors and Officers.
A homeowners’ association’s board of directors (a/k/a as the “executive board” or just “board”) acts on behalf of the association, exercising the association’s powers and ensuring that its duties are properly performed.
The board consists of board members elected by homeowners under election procedures established in the HOA’s governing documents and under state law. Qualifications, powers and duties, terms of office, and the mechanics for election and removal of board members are usually outlined in an association’s bylaws.
The elected board appoints officers, usually by a majority vote of board members, to carry out the board’s duties and powers. Officer positions commonly include president, vice president, treasurer, and secretary—usually (but not always in some states) chosen from among the elected board members.
A board of directors, its members, and appointed officers all owe a “fiduciary duty” to the community. When a fiduciary relationship exists, “one person is under a duty to act for the benefit of the other on matters within the scope of the relationship.” Black’s Law Dictionary, 7th Ed. (1999). Therefore, the board, in carrying out association affairs, must always act in good faith, in the best interests of the association and its members, and exercise ordinary prudence in carrying out their powers.
As we have previously addressed, board members or officers who breach the fiduciary duty can be liable to homeowners or to the association itself for any damages caused as a result of the breach. Nahrstedt v. Lakeside Village Condo. Ass’n., 8 Cal. 4th 361, 386 (1994).
Members of the Association.
As with a democratic polity, power in any homeowners’ association ultimately rests with its voting members, who consist of the community’s homeowners.
Members have the authority to elect (and often recall) board members and run for the board themselves. Most significant changes in a community require amendment of the association’s governing documents, which, in turn, requires at least a majority vote of homeowners.
In many jurisdictions, members do not have to be on the board to propose amendments, if enough homeowners join in a petition. If enough voting members agree, homeowners can even take collective action to dissolve an association.
Property Management Company.
Although they do not apply to every association (smaller HOAs sometimes do not want or need them), a property manager plays a significant role when they are involved in an HOA’s management.
A property manager is retained by the board through the board’s power to contract on behalf of the association. And the board delegates some of its powers and duties to the property manager. The precise role varies by association, but property managers are typically responsible for maintaining common elements and managing facilities, handling collection of assessments and budgeting, and tracking compliance with covenants by members of the community.
Property management companies are often (but not always) licensed and regulated by the state’s real estate commission (or similar body). Importantly, the power of a property management company within an association is derived from the board’s power, and any restrictions or limitations on the power of a board—whether under state law or the community’s governing documents—also apply to a property management company it hires.
Architectural Review Committee.
In many communities, the association’s governing body is empowered to protect the aesthetic appeal and general appearance of the community—typically subject to standards outlined in the association’s governing documents and more precise regulations adopted by the board.
To act in that regard, an association or its board can appoint an “architectural review board” or “architectural control committee” authorized to grant or withhold approval for renovations, alterations, additions, and other projects that will change the cosmetic features of a lot, structure, or the development as a whole.
The level of discretion vested in an architectural Committee, and limitations on the arenas in which it has authority, vary considerably among jurisdictions and individual communities.
State and Federal Laws Affecting Homeowners’ Associations.
Most states have separate, but often very similar, laws governing HOAs and condominium associations. In general, a state’s HOA (or “common interest ownership”) law regulates the formation, management, powers, and operation of associations within the state. See, e.g., North Carolina Planned Community Act, NCGS, Chapter 47F; Florida Homeowners’ Association Act, Fla. Stat. §720.001, et. seq.
An HOA law lays the groundwork for how associations are structured and function—both empowering and restricting the association. The details can vary considerably between states, but the overall structure is usually somewhat similar.
Most states also require associations to organize as not-for-profit corporations under the state’s corporate code. As a result, the state’s non-profit corporation statute will govern the association concerning corporate structure and procedure.
Along with laws specifically governing homeowners’ associations, associations are also impacted, sometimes significantly, by state and federal statutes of general application.
The Federal Fair Housing Act (“FHA”), 42 USC. §3601, et. seq., for instance, is a federal anti-discrimination statute with a significant impact on HOAs. The FHA prohibits housing discrimination based on “protected classes,” including race, color, religion, sex, familial status, national origin, and disability. 42 USC. §3604.
Discrimination under the FHA can be express, as with exclusionary covenants based on a protected class, or arise from a policy’s “disparate impact” on a protected group. See Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc., 135 S.Ct. 2507 (2015); see also, McDonnell Douglas Corp. v. Green, 411 US 792, 802-04 (1973).
The Americans with Disabilities Act (“ADA”), 42 USCA §§ 12101 et. seq., also prohibits discrimination based on disability but affects homeowners’ associations less frequently than the FHA. The ADA prohibits disability discrimination in employment, transportation, public accommodations, communications, and access to government programs and services.
For homeowners’ associations, “public accommodations” is the most relevant activity if the association has facilities open to the general public, though, a large association may also be an ADA-regulated employer.
Other federal statutes and regulations that can potentially affect HOAs include:
Federal Fair Debt Collections Practices Act, 15 USC. §1692, et seq. (regulating the collection of consumer debts by third-party debt collectors);
Over-the-Air Reception Devices (OTARD) Rule, 47 CFR §1.4000 (prohibiting restrictions on installation, maintenance, or use of certain reception devices like antennas and satellite dishes);
United States Bankruptcy Code, and the
Freedom to Display the American Flag Act, 4 USC. §5, Pub. L. 109-243.
Duties of Homeowners’ Associations.
The fundamental purpose of a homeowners’ association is to improve the quality of life in the community and to protect property values (not to make life difficult for residents).
To that end, associations are charged with specific duties within their governing documents. The board, acting for the association on its initiative or through a delegee, has a fiduciary obligation to ensure that those duties are carried out diligently, in good-faith compliance with the association’s charter, and in a manner that promotes the best interests of the community.
Enforcement of Covenants and Restrictions.
Upon accepting the deed to a property in a community governed by a homeowners’ association, a purchaser implicitly accepts and agrees to abide by the community’s restrictions and covenants. See, e.g., Castle Point Homeowners Assn. v. Simmons, 333 Ga. App. 501, 505-506, 773 S.E.2d 806 (2015).
In consideration of those obligations, homeowners have a right to expect the HOA, and their fellow homeowners will likewise meet their commensurate obligations.
In establishing corresponding binding commitments, community covenants are very similar to traditional contracts, and, indeed, courts reviewing covenants interpret them under more or less the same standards as contracts. Big Boulder Lake Condominium Association v. Cappuccio. 673 A.2d 340 (Pa. Superior Ct. 1996).
As with standard contracts, HOA covenants are presumed enforceable under their plain language—absent some reason why an individual covenant should not be enforced. Nahrstedt v. Lakeside Village Condo. Ass’n., 8 Cal. 4th 361, 386 (1994).
A covenant that is “reasonable,” advances a substantial interest of the community, and is not unlawful or against public policy will almost certainly be upheld. Saunders v. Thorn Woode Partnership, LP, 265 Ga. 703, 462 S.E.2d 135 (1995).
Along the same lines, restrictions are presumed valid unless “the restriction is arbitrary, imposes burdens on the use of lands it affects that substantially outweigh the restriction’s benefits to the development’s residents, or violates a fundamental public policy.” Nahrstedt, Id.
Individual covenant and restrictions can vary considerably based on the nature and location of a community. Rural developments with larger lot sizes tend to have a more laissez-faire approach, with fewer and less invasive covenants and restrictions. Homeowners might simply be required to keep the yard mowed, remove any eyesores like visible trash or debris, and not keep livestock on the property.
Suburban communities with smaller lot sizes tend to be more restrictive. The community’s declaration might, for example, set strict aesthetic and architectural standards, prohibit short-term rentals, disallow above-ground pools, panel fences, and certain types of pets; and limit gardens to a small patch in the backyard.
Before making an offer on a property subject to a homeowners’ association, it is a good idea to review the declaration to ensure the community’s covenants are compatible with one’s accustomed manner of living.
Enforcement tools available to an association vary between jurisdictions and communities. Commonly, an association can impose fines for violations, restrict voting rights and access to common elements, and record liens against the properties of homeowners who owe money to the HOA.
If non-judicial remedies are insufficient, an association can institute a civil lawsuit asking a court to order the non-compliant homeowner to abide by covenants or pay the property’s assessments.
The most common reasons for a judge to refuse to enforce a covenant are:
That it violates a statute or clearly enunciated public policy (as with discriminatory covenants),
was enacted in a procedurally flawed manner or has been arbitrarily or capriciously enforced.
Enforcement is arbitrary or capricious if the covenant has not been consistently enforced equally against all members. If, for example, only one or a small group of homeowners are singled out for enforcement, or if the conduct sought to be enjoined, has been common in the community until the board decided to begin enforcing the restriction. See, e.g., Bloch v. Frischholz, 533 F.3d 562 (7th Cir. 2008).
In some cases, courts have held that inconsistent enforcement of a covenant results in an effective waiver of that covenant by the board. Liebler v. Point Loma Tennis Club, 40 Cal. App. 4th 1600, 1610-11 (4th Dist. 1995); Prisco v. Forest Villas Condominium Apartments, Inc., 847 So 2d 1012 (Fla.App. Dist.4, 2003).
Depending upon the jurisdiction and homeowners’ level of interest in HOA affairs, a board’s failure to appropriately enforce covenants and restrictions can lead to the recall of board members or officers by members or a civil suit from a member dissatisfied with the board’s interpretation of the HOA’s duties or reluctance to take enforcement action. See, Tex. Prop. Code §§ 202.004, 209.0058(a); N.C.G.S. §47F-3-103(b). Fla. Stat. §720.303(10); See also, Cox v. Melson-Fulsom, 956 S.W.2d 791 (Tex. App.—Austin 1997).
More generally, poor performance by an HOA board can result in decreased availability of the amenities and services the association is supposed to provide, a reduction in the community’s aesthetic appeal as architectural standards are disregarded, and diminution of overall property values throughout the community.
Budgeting, Finance, and Assessments.
Setting and abiding by the association’s budget is one of the board of directors’ most important duties. Precise systems for determining an association’s budget vary between communities and jurisdictions but almost always involve the use of relatively precise common-expense estimates to set assessment levels.
The Uniform Common Interest Ownership Act (“UCIOA”)—adopted at least in part by Alaska, Colorado, Connecticut, Minnesota, Nevada, Vermont, West Virginia, and Washington State—represents a fairly typical budgeting system. Under the UCIOA approach, the elected board proposes an annual budget based on the community’s anticipated expenses and reserve needs.
Individual assessments are calculated according to each lot’s proportional share of the association’s total common expenses, as outlined in the community’s declaration. Thus, under the UCIOA (and the laws of many non-UCIOA states), an increase in assessments implicitly requires majority approval because a new budget cannot be implemented until members approve it.
Assessments from homeowners are an HOA’s primary source of funding. The right to charge and collect assessments is derived from the association’s declaration and state law. Assessment revenue—usually due annually—pays for “common expenses,” such as maintenance and repair of common elements, any legal, professional, and management fees incurred by the association, and the HOA’s general operating costs and overhead. Assessments also frequently fund a reserve account for irregular maintenance and long-term capital expenditures.
Special assessments are irregular, one-time assessments imposed by an association (sometimes requiring approval of a majority of homeowners), usually to cover a significant common expense not anticipated in the regular budget.
In some cases, special assessments are intended to pay for an expense that will not benefit every lot in a community, or that was directly caused by some but not all homeowners. In either scenario, the association’s board will often impose special assessments proportionally among lots according to the relative benefit to be received by each lot from the expenditure.
State HOA laws provide associations with a statutory lien to secure payment of delinquent assessments. Along with the unpaid principal, HOA liens can also secure payment of late fees, interest, and collection costs if those charges are authorized by the community’s declaration and state law.
Subject to some limitations, homeowners’ associations have the power to foreclose upon an unpaid HOA lien—forcing a sale of the property to recover delinquent amounts owed to the association by the homeowner.
Most states require judicial foreclosure proceedings (i.e., foreclosure through a civil suit), though a few, including Texas and North Carolina, allow HOAs to foreclose non-judicially if all relevant criteria are met. Tex. Prop. Code §§ 209.008(f), 209.0092; N.C.G.S. §47F-3-116(f).
Member and Board Meetings.
State HOA laws and individual communities’ declarations mandate regular member meetings to discuss association policies, status, budget and finances, and potential issues to be addressed by the board.
At the meeting, the board typically presents “reports of the affairs, finances, and budget projections” of the association. Voting generally occurs at member meetings, though some jurisdictions allow for voting via written ballot, petition, and by proxy.
The board must provide advance notice of member meetings to all members, and, in many jurisdictions, members have a right to be heard concerning any issues affecting the community.
For the most part, member meetings only need to occur once per year. However, the board or a sufficient number of petitioning members can call additional regular meetings or special meetings to discuss specific matters. Board members conduct the association’s business and decide on issues within the board’s purview at regular board meetings.
Some states, though not all, require at least some board meetings to be open to all members unless sensitive or privileged matters are being discussed. Board meetings are usually held more frequently than member meetings and usually need a quorum present for the board to take action. In most states, homeowners’ associations must record and maintain minutes for both member and board meetings.
Statutory and Regulatory Compliance.
Ultimately, the duty to ensure that a homeowners’ association remains in compliance with applicable laws and regulations falls on its board of directors. This duty can mean, for instance, repealing or amending a covenant or restriction that violates the FHA by discriminating against or disparately impacting a protected class.
More commonly, it means interpreting and enforcing covenants in a compliant manner. For instance, an HOA board might decline to enforce a restriction that is generally acceptable but would violate a member’s rights if enforced in a specific scenario—such as with regard to religious or political displays. See, Savanna Club Worship Serv., Inc. v. Savanna Club Homeowners’ Association, Inc., 456 F.Supp.2d 1223, 1231-32 (SD Fla. 2005); see also, MD Code, Real Property, § 11B-111.2; ARS §33-1808C.
Rights of Homeowners.
Homeowners are not without rights when it comes to their dealings with an HOA. Community declarations often reserve specific rights to homeowners, and, just as importantly, state and federal laws guaranty certain rights and protect against infringement by a homeowners’ association.
Access to Property.
Even if a member is delinquent on assessments, state laws and common-law property rights prohibit community associations from infringing upon homeowners’ rights to access and peacefully enjoy their homes.
In Florida, for instance, associations are expressly prohibited from impeding an owner’s right to access and occupy his or her property, use utility easements, or park within the community. Likewise, North Carolina forbids any suspension of a homeowner’s property access.
Statutory Rights.
Although the First Amendment does not directly apply to homeowners’ associations, state and federal laws protect owners’ rights to, among other things, engage in certain speech, practice their religion within their homes, and display patriotic flags.
The FHA generally prohibits discrimination in housing based on religion. Although a legitimate, “facially neutral” HOA policy that happens to place limitations on specific religious practices or displays of religious symbols is generally acceptable, a policy that discriminates or singles out any specific religious group is invalid. See, Boodram v Maryland Farms Condo, 16 F3d 408 (CA 4 1994).
Several states have also adopted laws expressly limiting the power of homeowners’ associations to prevent homeowner displays of religious symbols. Tex. Prop. Code §202.018(b); 765 ILCS 605/18.4.
Similarly, many state legislatures have recognized the importance of political speech by enacting statutes protecting homeowners’ right to display political signs on their property and to engage in peaceful political activities within the community. The right to display the US flag is protected from HOA interference at the federal level through the Freedom to Display the American Flag Act of 2005 (Pub.L. 109–243, 120 Stat. 572, enacted July 24, 2006). And, many states have adopted similar statutes concerning both the US and state flags. Fla. Stat. §720.304; N.C.G.S. §47F-3-121.
Some individual states have enacted laws restricting HOAs in more specific areas. In Texas, for instance, an HOA is limited to the extent it can restrict roofing materials, solar panels, standby generators, and drought-resistant landscaping and water-conserving natural turf. Tex. Prop. Code § 202.007, 009-010, 018, 019.
Similarly, in California, Florida, and Arizona, an HOA can only restrict a homeowner’s right to rent his or her property if the restriction was already in place at the time of purchase or the homeowner consents to the restriction. Cal. Civ. Code §4740(a), (b); Fla. Stat. §718.110(13); ARS §33-1227.
Right to Disclosure and Inspection.
State laws uniformly allow homeowners a right to inspect association records, particularly concerning financial matters. HOA boards also have an affirmative duty to make regular disclosures of the association’s affairs to members.
Typically, a financial disclosure—including the HOA’s income, expenses, assets, and budget projections—must occur at the HOA’s annual member meeting or within a defined period after the end of the fiscal year.
In a few states, associations are required to make specific disclosures to prospective purchasers of homes in the community. The “disclosure summary” required in Florida, for instance, includes identification of current regular and special assessments and information about restrictive covenants affecting the relevant property. Fla. Stat. §720.401.
To review an association’s records, a homeowner generally needs only submit a written, statutorily compliant request for inspection to the association, and the association is then required to make its records available for inspection and copying by the member or member’s agent within a reasonable time.
Because HOAs are also required to maintain detailed and accurate records and preserve most documents relating to the association’s finances, and functioning, the right to inspection is a critical component in ensuring the transparency of homeowners’ associations.
Documents relating to an attorney’s representation of an association, another owner’s personal information, or an association employee are expressly excluded from homeowner inspection.
Due Process and Fair Treatment.
Homeowners have a right to equal enforcement of covenants and restrictions. An association board cannot arbitrarily enforce association rules against only some members or certain groups. Nahrstedt v. Lakeside Village Condo. Ass’n., 8 Cal. 4th 361, 386 (1994). Unequal enforcement can serve as a defense to an HOA’s civil action to enforce covenants or restrictions. White Egret Condo., Inc. v. Franklin, 379 So.2d 346 (Fla. 1979).
The right to fair treatment includes the right under the FHA to not be discriminated against based on race, color, religion, sex, familial status, national origin, and disability. 42 USC. §3604. In the case of a member with a disability, associations are required by the FHA to make such “reasonable accommodations” as are necessary to allow the member to enjoy housing and access to facilities. Janush v. Charities Hous. Dev. Corp., 169 F. Supp. 2d 1133, 1136 (N.D. Cal. 2000).
In general, a board’s exercise of its powers must be “procedurally fair and reasonable,” and its decisions must be made in “good faith … reasonable and not arbitrary and capricious.” Saunders v. Thorn Woode Partnership, LP 265 Ga. 703, 462 S.E.2d 135 (Ga., 1995).
Amendments to covenants can, in most cases, only be made after approval by a majority (sometimes a super-majority) of members. In many states, HOA budgets proposed by the board must be approved—or at least not rejected—by a majority of homeowners.
Some jurisdictions have specific notice and hearing requirements before a board can take certain actions. In Texas, for example, an HOA must provide notice, an opportunity for a hearing, and a chance to cure a violation before a fine can be imposed or lawsuit filed based on a violation. Tex. Prop. Code §§ 209.006, 007.
Similarly, in Florida, HOA-imposed fines are not valid until the board gives the member at least 14 days’ written notice of the proposed fine and an opportunity to request a review of the fine by an appointed committee. Fla. Stat. §720.305(2)(b).
In many jurisdictions (but not under the UCIOA), HOA boards must send written notice to a homeowner before recording a lien for unpaid assessments. In California, for example, homeowners can elect to attend a dispute resolution proceedings before the recording of a lien, and, under Florida law, homeowners have a statutory means to contest a lien that has already been filed without going to court. Cal. Civ. Code §5670; Fla. Stat. §720.3085(1)(b). Nearly every jurisdiction requires HOAs to provide written notice before foreclosing on a lien.
Importantly, state-law due process obligations imposed on homeowners’ associations are not mere technicalities. If an association neglects mandated procedures, its lien can be found invalid, and the association may even find itself liable to the homeowner for any resulting injuries. See Diamond v. Superior Court, 217 Cal. App. 4th 1172 (2013).
Even more, the failure of a homeowners’ association to abide by state-law or declaration-mandated rules and procedures applicable to
elections,
assessment calculation, or
budgeting
Can, in certain circumstances, provide a defense to a homeowner in a civil case for collection of unpaid assessments—if the deficiencies result in the assessments being deemed invalid. McGee v. Patterson, 323 Ga. App. 103, 746 S.E.2d 719 (2013).
In general, though, courts have ruled that a homeowner’s duty to pay assessments is not contingent on the board’s performance. So a board’s neglect of its duties is not a defense to a collection suit brought by a homeowners’ association. Hall v. Town Creek Neighborhood Ass’n, 320 Ga. App. 897, 740 S.E.2d 816 (2013); Spanish Court Two Condo. Ass’n v. Carlson, 2014 IL 115342, 26, 12 N.E.3d 1, 8 (Ill. 2014); Blood v. Edgar’s, Inc., 36 Mass. App. Ct. 402, 405-406, 632 N.E.2d 419, 421 (Mass. App. Ct. 1994).
The obligation to pay assessments is “unconditional,” absent a judicial determination that the association’s budgeting and assessment calculation process was conducted in bad faith or went beyond the association’s authority. Baker v. Monga, 32 Mass. App. Ct. 450, 590 N.E.2d 1162, 1164 (Mass.App. 1992); see also, Trustees of the Prince Condo. Trust v. Prosser, 412 Mass. 723, 725-26, 592 N.E.2d 1301, 1302 (Mass., 1992) (“A system that would tolerate a unit owner’s refusal to pay an assessment because the unit owner asserts a grievance, even a seemingly meritorious one, would threaten the financial integrity of the entire condominium operation”).
Resolving Conflicts with a Homeowners’ Association.
In the majority of situations, litigation should be a last resort. While the American judicial process is ultimately effective at peaceably resolving disputes, it is also expensive, time-consuming, and often leads to hurt feelings and emotional strain.
With that in mind, informal dispute resolution, if possible, is usually preferable for everyone. Surprisingly enough, polite communication is quite-often all it takes to work out a dispute. So, before paying an attorney to fire off a serious-sounding letter, a homeowner might be better off first having a conversation with a board-member or taking advantage of the right to be heard at a member meeting.
Participating in the “democratic” aspect of a homeowner’s association can also be more fruitful than homeowners sometimes realize. If a board member is causing problems, homeowners can vote for someone else or organize their own campaign for the board.
If a particular covenant or restriction is causing homeowners grief, talk to neighbors, and try to rally enough support to amend the declaration. Simply circulating a petition advocating for a policy change can make a big impression on the board if it collects enough signatures.
If there is a genuine dispute the democratic process is not equipped to handle, an attempt to negotiate a compromise—with or without the assistance of counsel—could lead to an acceptable outcome for both sides. In litigation, on the other hand, one side almost always “wins,” and the other loses, and everyone spends a lot more money. If non-judicial remedies are unsuccessful or do not address complaints, a homeowner (preferably with the assistance of counsel) can sue an association in the county in which the development is located.
In some states, alternative dispute resolution (i.e., mediation or arbitration) is either required or strongly encouraged in HOA disputes. An informed opinion from a knowledgeable, neutral third party can sometimes convince a stubborn board member or homeowner to reassess a troublesome position.
