Homeowners' Association Legal Authority

A Georgia association's authority is primarily derived from its declaration of covenants, articles of incorporation, bylaws, and (for applicable associations) the POAA. A declaration is essentially a contract between all community members under which homeowners agree to comply with certain covenants and restrictions and pay assessments for maintenance of commons areas. By purchasing a home within an association community, the homeowner is deemed to have accepted the contractual obligations.

Governance of Homeowners Associations in Georgia

Georgia associations are governed by a board of directors initially appointed by the declarant (usually the developer) and then elected by homeowners following the association's declaration of covenants ("declaration"). The board, in turn, appoints officers to carry out the board's duties and powers. Ga. Code § 44-3-231(f).  

Duties and powers include enforcement of covenants, assessment and collection of member fees, maintenance of commons areas, and acting on behalf of the association in legal matters. Its articles of incorporation govern an association's corporate structure, a legal document prepared when the association organizes as a corporation. Eligibility criteria for officers and board members are usually outlined in the declaration or articles of incorporation.

An association's declaration is recorded with the county land records of the county in which the association is located and sets forth the association's rules and covenants, the duties and powers of the board and officers, how association voting and elections occur, the process for calculating and collecting assessments, and any restrictions on the powers of the board or association.  

Lot owners and any occupants of homes within the association are legally required to comply with the declaration. In the event of non-compliance, the association, acting through the board, can bring an action against the non-compliant member to recover amounts owed to the association or to compel compliance by court order. Associations are also empowered to impose and assess fines and temporarily suspend voting rights and the right to use certain common areas and services to enforce such compliance. See, Ga. Code § 44-3-223 (Compliance with provisions of instrument and with rules and regulations; penalties for non-compliance). Individual lot owners are also authorized to bring compliance actions against other non-compliant owners. Id.

Association members have a right to vote on certain association matters, including the election of board-members and adoption or amendment of covenants. Voting occurs at member meetings, which must be held at least once per year but are otherwise controlled by the association's declaration and incorporation articles. For a vote to occur, a quorum (at least 1/3 of possible voters) must be present at the beginning of the meeting.  See Ga. Code § 44-3-228 (presence of quorums at meetings). Votes are apportioned as one vote per lot. Ga. Code § 44-3-224 (voting at association meetings).

Limits of Power on Georgia Associations

Board members have the general authority to act for the association without a member vote regarding matters within the association's inherent or express powers, as outlined in the association's declaration or statute. Ga. Code § 44-3-231(b). However, board and officer powers may also be constrained by the governing documents. Ga. Code § 44-3-231(a) and (f). Thus, an association's declaration can deny powers to the board, which it might otherwise have or allow powers not expressly granted by statute - as long as the powers are "reasonable." Id.

Georgia law affords substantial deference to an association's declaration and articles of incorporation in interpreting association powers. 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, L.P. 265 Ga. 703, 462 S.E.2d 135 (Ga., 1995). 

A board can adopt supplementary rules and regulations in the association's bylaws. However, the rules and regulations must be "reasonable" and cannot conflict with the governing documents or state and federal law. All association actions and governing documents must comply with any applicable federal laws, including the federal Fair Housing Act (FHA) and the Americans with Disabilities Act (ADA).

Additionally, corporate boards of directors and officers have a statutory duty to act in good faith, in the organization's best interests, and exercise ordinary prudence in carrying out their powers. Ga. Code § 14-3-830.

The chief statutory restriction on an association's powers is that board-members must be answerable to homeowners through elections at annual member meetings under voting procedures outlined in the declaration. The board must provide at least 21 days' notice for regular member meetings and at least seven days' notice for special meetings. Ga. Code § 44-3-230 (frequency of meetings; notice).  

Association's Budgetary Requirements 

An association must maintain "detailed and accurate financial records, including itemized records of all receipts and expenditures." Ga. Code § 44-3-231(d)(2) (powers and duties of association; legal actions against agent or employee of association). At an association's annual member meetings, the board must present for member review "comprehensive reports of the affairs, finances, and budget projections" of the association.  Ga. Code § 44-3-230 (frequency of meetings; notice).  

The specific methods for adopting budgets and calculating assessments will be outlined in the association's declaration or articles of incorporation. The board has a duty to comply with those requirements. Members can take action against a non-compliant board either through a civil suit (Ga. Code § 44-3-231(g)) or by removing some or all board members or organizing a campaign to defeat their reelection.  

Removal of Board Members

Although Georgia's Property Owners' Association Act does not specifically provide for the removal of board members, the Nonprofit Corporation Code – which applies to associations organized as nonprofits – allows for removal. The Georgia corporate code applicable to for-profit associations has similar removal procedures for the few associations organized for profit.

A board member elected by members can be removed by vote "at a meeting called for the purpose of removing the director." Ga. Code § 14-3-808(5). The meeting's notice must advise members that "the purpose, or one of the purposes of the meeting, is the removal of the director." Id.  

The number of votes required to remove a board member is the same as what would be required to elect the board member if the meeting was organized for that purpose. Ga. Code § 14-3-808(3). The entire board may be removed in the same manner.  Ga. Code § 14-3-808(7).  

Amendment of Association's Declaration

Georgia's Property Owners' Association Act (POAA) requires amendment of a declaration via a member vote. The voting majority for an amendment must be at least 2/3, but the declaration can raise it to as high as 80%.  Ga. Code § 44-3-226. If the original developer is still holding lots for sale, the developer's consent is required to amend. Id.

Member approval for amendments is not required for the limited purpose of amending the declaration to conform with the POAA or other applicable law. Ga. Code § 44-3-231(c). For instance, if an association's declaration includes a covenant that violates the Fair Housing Act, the board could amend the declaration to remove the discriminatory provision without a member vote. In non-POAA associations, an amendment cannot be enacted without every affected owner's consent if the amendment is more restrictive than existing covenants. Ga. Code § 44-5-60. Otherwise, the declaration can be amended by member vote as provided in the association's declaration.

Amendments become effective on the date of recording or a later date specified in the amendment. Amendments are presumed to be valid and enforceable if not challenged within one year after recording. See Ga. Code § 44-3-226(d) and (f).

Architectural Control Restrictions and Display of the American Flag

Unless prohibited or restricted by its declaration, a Georgia association can "grant or withhold approval of any action" by a homeowner if the action would change the lot's appearance, any structure on the lot, or the development as a whole. Ga. Code § 44-3-231(a). 

Alternatively, an association can appoint or elect an "architectural control committee" to approve or disapprove cosmetic changes. Id. 

Thus, as long as the declaration does not restrict the board's powers, a Georgia association has considerable discretion in regulating lots' exterior appearances. This could include anything from exterior color, parking, and trash-can placement to restrictions on above-ground pools and solar panels (specifically protected in a few states, but not in Georgia).

An exception to this general rule involves the display of the American flag. While Georgia's law would, on its face, seem to permit an association to disallow the display of the flag, the federal Freedom to Display the American Flag Act of 2005 (Pub.L. 109–243, 120 Stat. 572, enacted July 24, 2006) forbids homeowners associations from banning the display of the American flag. An association may limit the time, place, and manner in which the flag is displayed, as long as the limitation promotes a substantial interest of the association.

Rental Restrictions by Georgia Homeowners' Associations

In general, Georgia law does not prohibit associations from imposing rental restrictions, so a "good faith" restriction promoting a substantial interest of the association and enforced in a non-arbitrary manner will probably be upheld. Saunders v. Thorn Woode Partnership, L.P. 265 Ga. 703, 462 S.E.2d 135 (Ga., 1995). 

However, a board cannot unilaterally impose a restriction; the association's declaration must authorize it. An association that does not have rental restrictions but wants to adopt them must amend its declaration. 

In associations governed by the POAA, as long as the amendment is adopted properly by member vote following the association's governing documents and the statute, the amended covenant will be binding on all members – even those who voted against it.  Ga. Code § 44-3-226.

Covenant Enforcement: Self-Help Remedy

Georgia law does not permit a board member, officer, or other association agents to trespass upon a member's property to force compliance with covenants. An association's remedies against non-compliant members are the penalty mechanisms provided in the declaration and statute or legal proceedings against the non-compliant owner. Further, an association is expressly forbidden from restricting access to a lawful occupant of a home-based on alleged non-compliance with association covenants.  Ga. Code § 44-3-223.

Notice of Homeowners’ Association

Practically speaking, in most cases, home purchasers are advised of a homeowners association's existence and provided with a copy of the association's declaration and bylaws before or at closing. Because the declaration is recorded in the county land records, purchasers are also deemed to have "constructive notice" of the covenants at the time of purchase so that there is an "implied covenant" to comply with the community's rules, even if the purchaser does not receive a copy of the declaration and affirmatively agree to the covenants.  See Castle Point Homeowners Assn. v. Simmons, 333 Ga. App. 501, 505-506, 773 S.E.2d 806 (2015).

Association Meetings and Appointment of Board Members

If authorized by the declaration or articles of incorporation, members can call elections and board-member recall meetings on their own initiative. Georgia's POAA does not specifically require the board call member meetings. Ga. Code § 44-3-230. Members can also take action against a non-compliant board either through a civil suit (Ga. Code § 44-3-231(g) or by removing some or all board members under the Nonprofit Corporation Code.  

Additionally, an association's failure to follow required procedures regarding elections, calculation of assessments, and budget adoption can sometimes be a defense to nonpayment of assessments if the assessments are deemed invalid.  McGee v. Patterson, 323 Ga. App. 103, 746 S.E.2d 719 (2013). However, the general rule is that a board's failure to do its job is not a defense to nonpayment. Hall v. Town Creek Neighborhood Ass'n, 320 Ga. App. 897, 740 S.E.2d 816 (2013).  

Compensation for HOA Directors and Officers

The board can employ, retain, or dismiss agents and employees (including officers) unless the declaration expressly prohibits or restricts the board's power to do so. Ga. Code § 44-3-231(a)(1). Georgia's Nonprofit Corporations Law also provides that "a board of directors may fix the compensation of directors" unless the governing documents say otherwise. Ga. Code § 14-3-812. Any such compensation must be recorded and reported at member meetings. Ga. Code § 44-3-231(d)(2), 44-3-230.

Annual Assessments Increases And Special Assessments

Georgia's Property Owners' Association Act does not specifically require member approval for rate increases. Any such increases must be made following the association's declaration. So, if the declaration requires member approval, then the board must obtain member approval. Special assessments must be "assessed equitably among all of the lots so benefited" if not every lot benefits from the proposed expenditure, or if the expenses necessitating the special assessments were caused by fewer than all lots. Special assessments are not permitted for maintenance for which the association bears responsibility. See Ga. Code § 44-3-225 (assessment of expenses; exemption from liability; liability for unpaid assessments).

 Association Records and Disclosure Requirements

An association must keep "true and correct copies of the articles of incorporation and bylaws of the association and all amendments thereto" in its principal office. Any lot owner can request copies of such documents, though the board may impose a "reasonable charge" for providing the copies. See Ga. Code § 44-3-227(c) (Incorporation as a prerequisite to submission to article; requirements as to corporate documents; board of directors).

An association must also maintain accurate, itemized financial records, including receipts for expenditures; detailed minutes of all board and member meetings; and any records or books necessary to track the association's affairs. See Ga. Code § 44-3-231(d). At an association's annual member meetings, the board must present for member review "comprehensive reports of the affairs, finances, and budget projections" of the association. See Ga. Code § 44-3-230 (frequency of meetings; notice).

Association's Authority to Collect Assessments

The Georgia Property Owners' Association Act at Ga. Code § 44-3-232 provides for the collection of maintenance assessments, special assessments, late fees, fines, collection costs and attorney fees, and interest. Special assessments, late fees, fines, collection costs and attorney fees, and interest may only be assessed if authorized by the declaration. Id. 

Maintenance assessments must be the same for all owners if paying for common expenses affecting all homeowners more or less the same. Special assessments can be charged to fewer than all lots if different homeowners are affected differently by the expenditure or if one or more lot owners or tenants caused the expense. See Ga. Code § 44-3-225

Late fees can be assessed at the greater of $10.00 or ten percent. Fines can be imposed for non-compliance, but only to the extent authorized by the declaration. Interest can accrue at a maximum annual rate of 10.00% per year. Chargeable collection costs include "court costs, the expenses required for the protection and preservation of the lot, and reasonable attorney's fees actually incurred." 

Associations that are not subject to the Property Owners' Association Act can only charge interest up to 7.00% per year unless the declaration expressly authorizes a higher rate. Northside Bank v. Mountainbrook of Bartow Homeowners Association, Inc., A16A0005 (Ga. Ct. App. 2016).

Assessment Liability and Association Notice

Generally, assessments are owed by every lot owner and assessed per lot so that a lot owned by two owners is only assessed once. Under the Georgia Property Owners' Association Act (POAA), a lot's current owner is jointly liable for unpaid assessments if the lot's assessments were delinquent at the time of purchase and not paid at closing. In associations organized under the POAA, the board is not permitted to waive assessments. Ga. Code §§ 44-3-225(c) and (b). 

However, non-POAA associations can be voluntary, allowing members to choose whether or not to join. In voluntary associations, the board can restrict access to common facilities (e.g., pool, fitness center) of lot owners who elect not to join the association.

Association declarations often include notice provisions requiring the board to provide property owners annual statements of assessments, but the POAA does not specifically require such notices. Members of POAA associations do have a right to request a written statement of past due assessments or other charges owed by submitting a written request to the board.

The association can charge a fee of up to $10 for preparing the statement, but only if allowed by the declaration. The association has five days from its receipt of the request to provide the written statement. Failure to comply can result in the extinguishment of the HOA lien. See Ga. Code § 44-3-232(d) (assessments against lot owners as constituting lien in favor of association; additional charges against lot owners; procedure for foreclosing lien; obligation to provide a statement of amounts due). 

Lien for Unpaid Assessments and Fines

Associations organized under the POAA do not have to record a lien's notice with the county land records. It attaches automatically, and the recorded declaration is presumed to provide notice of potential liens. POAA associations can still record the lien to avoid confusion and often do. Non-POAA associations must record a notice of the lien with the land records.

A lien can include assessments, late charges, interest, reasonable collection costs, fines, and, if a foreclosure has been initiated, "fair rental value of the lot from the time of the institution of action until the sale of the lot at foreclosure or until judgment rendered in an action is otherwise satisfied." However, any charges included in the lien must be authorized by the declaration. See Ga. Code §§ 44-3-109(a) and (b), 44-3-232(a) and (b).

Notice of Past-Due Assessments Before a Lawsuit

Associations subject to the Georgia Property Owners' Association Act must provide notice via certified or overnight mail with return receipt requested at least 30 days before commencing a foreclosure suit. The notice must state the amount of assessments and late charges due and the interest rate being charged, if any. The statutory notice is only required for foreclosure actions, so an association can bring a suit seeking a personal judgment against a delinquent member (but not a foreclosure of the lien) without providing the notice required by § 44-3-232(c).

HOA Foreclosures in Georgia

Georgia associations can only foreclose on assessment liens judicially. That is, an association can ask a court to order a foreclosure but can not foreclose non-judicially like with a mortgage. A judicial foreclosure suit can only be pursued if the delinquent amount is at least $2,000. An association could bring a small-claims action seeking a judgment for a lesser amount but would not be able to foreclose the lien. Importantly, foreclosure suits must be filed within four years of delinquency, as association liens expire after four years. 

Georgia's Property Owners' Association Act permits an association to foreclose on a home with a superior mortgage, but the mortgage survives the foreclosure sale. The prior owner remains personally obligated for the mortgage until it is satisfied and for assessments that come due while owning the property. The purchaser at foreclosure has no individual obligation to pay the old mortgage, but the bank will most likely foreclose if it is not paid.  

If the foreclosure sale amount is greater than the outstanding mortgage, the sale proceeds will pay off the mortgage company, with any surplus paying off the HOA lien. If there is enough money to pay the mortgage and the HOA lien, the surplus belongs to the prior owner. Suppose the foreclosure does not result in a sale because the combined mortgage and past-due assessments exceed the property value. In that case, the association can "purchase" the property for the amount of the assessments – thereby extinguishing the lien – and allow the bank to foreclose and sell the property to a new owner. See Ga. Code § 44-3-232(c).  

Concerning recovery after an HOA foreclosure, Georgia's POAA does not have any savings provision allowing owners to reverse a foreclosure after the sale by paying delinquent assessments and court costs. The owner being foreclosed upon can attempt to purchase the property at a foreclosure sale. In most cases, an owner can avoid a foreclosure sale by paying all amounts due, plus court costs, to the association before a sale has occurred.

Accruing Assessments During Foreclosure

Assessments are the personal obligation of an owner during the time of their ownership of the property. Ga. Code § 44-3-232. Thus, up until the time that title transfers, the owner is legally obligated for all accruing assessments. Depending on the property's value compared to the total lien amounts, a purchaser might elect to pay off any delinquent assessments to clear the property title. 

Moreover, under the POAA, the purchaser would be liable for any unpaid assessments. If the property sells, the proceeds will be applied toward the assessments (to the extent the sale price is sufficient to pay off any existing mortgage). If assessments are fully paid off from sale proceeds, the former owner will no longer be liable for the assessments because they will have been paid.

Oversight Over Georgia HOAs, Management Companies, and Developers

Georgia's law does not specifically delegate authority over homeowners associations to any specific officer. However, the Secretary of State has authority over any nonprofit and for-profit corporations. The Georgia Real Estate Commission must license property management companies unless the company is exempt or the association has non-mandatory membership. Most developers fall under the jurisdiction of the State Licensing Board for Residential and General Contractors, a department of the Office of the Georgia Secretary of State.

Homeowners' Recourse Over Nonresonsive HOAs

It is usually best to resolve problems with an association by talking things out or using the association's democratic processes, as outlined in the declaration. If a board member abuses power or acts unfairly, homeowners can try to elect someone else at the next members' meeting or attempt to remove the board member if warranted. Association members can also organize other homeowners in a campaign to limit the board's power by amending covenants. It is generally a good idea to keep records of any written communications with the association and take and preserve contemporary notes of any verbal communications. In the event of future retaliation, thorough records can help demonstrate when an association has acted arbitrarily or capriciously.

Suppose these types of remedies are unsuccessful or do not address your complaints. In that case, it is important to remember that an association is not the final arbiter of disputes between it and its members. If necessary, a homeowner can bring a suit against an association in the Superior Court of the county in which the development is located. Ga. Code § 44-3-221(4).  

The POAA expressly authorizes members to assert against an association a "tort action alleging or founded upon negligence or willful misconduct by any agent or employee of the association or in connection with the conditions of any portion of the instrument which the association has the responsibility to maintain." Ga. Code § 44-3-231(g). That essentially means that members can sue the association for negligence or willful misconduct, or for its failure to perform its duties properly. The Georgia statute likewise authorizes members to bring suit against other non-compliant members. Ga. Code § 44-3-223.

In non-POAA associations, members can bring suit against the association or other members under the common law – whether for negligence or a breach of covenants.  

The association as an entity is authorized to defend suits arising from a failure to meet its obligations. Except in cases involving intentional torts or fraudulent conduct, the association – rather than individual officers or board members – is the proper defendant. Ga. Code § 44-3-231(h).  

A suit against an association can seek money damages incurred by a homeowner due to the association's failure to perform its duties or "injunctive relief" – a court order compelling the association to perform duties or enforce covenants.

Suspension of Voting Rights and Facility Privileges 

Under the POAA, the association is authorized to penalize non-compliant owners by imposing fines, suspending voting rights, and restricting access to common facilities and services – but only to the extent, those penalties are authorized by the declaration. Importantly, though, an association cannot restrict an owner's access to his or her property. Ga. Code § 44-3-223.

In voluntary non-POAA associations, the HOA can limit access to common facilities for owners who elect not to join the association and pay dues. However, even owners who opt out must obey all covenants and have a right to enforce covenants.

Discrimination and Harassment

A member who believes he or she has been harassed or discriminated against in access to housing based upon race, color, religion, sex, familial status, national origin, or disability can file a complaint under the federal Fair Housing Act or Georgia's Fair Housing Law. FHA Complaints can be filed with HUD or the Fair Housing Division of the Georgia Commission on Equal Opportunity. Alternatively, a civil complaint can be filed in federal district court. 

A member who believes he or she has been harassed or discriminated against in access to public accommodations based upon disability can file a complaint under the Americans with Disabilities Act. ADA complaints can be filed with the Department of Justice's Civil Rights Division, or a civil complaint can be filed in district court.  

The appropriate response to harassment will depend on the precise nature of the conduct. If the harassment rises to the criminal conduct level, it should be reported to the local sheriff's department. Suppose the harassment relates to the collection of debts by a debt collector. In that case, the harassed individual can bring a civil action under the federal Fair Debt Collection Practices Act (FDCPA) or report the harassment to the federal Consumer Financial Protection Bureau.

Dispute Resolution

While litigation can be conducted amicably, in the vast majority of cases, that is not what happens. Instead, you get hard feelings, tons of stress, and big legal fees. So, if at all possible, it is usually best to try to resolve disputes informally.  

Sometimes, simple, polite communication is all it takes. Before sending a formal letter from an attorney demanding that the board enforce a certain covenant, an owner might instead just talk to a board member or raise the issue at a member meeting. Alternatively, if there is a disagreement over whether a planned home renovation does or does not comply with the covenants, the owner and the board might try informally negotiating a compromise that satisfies all parties.  

If that does not work, voluntary mediation with an experienced mediator is almost always cheaper, faster, and cordial than litigation. Georgia does not require mediation before HOA suits, but states that do, such as Florida and California, have had positive results. It may be that having a knowledgeable, neutral third party provide an informed opinion is enough to convince an otherwise obstinate board member or homeowner to reassess a contentious position.