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Anatomy of a Homeowner Association

You’ve just moved into your first house — or maybe another house — in a quaint neighborhood in a decent part of town near good schools, parks and other trappings of upwardly-mobile couples or young families. Or you’re single or otherwise prefer not keeping up with a yard and stay in close proximity with city life by living in a townhouse or condo. You think you recall seeing a line item on paperwork somewhere that mentioned an “HoA fee” or “Association dues” as a yearly payment and figured, “I’m not completely sure what that’s about, but it doesn’t seem huge, and nobody’s made a big deal about it, so I’ll figure it out later.”

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 Personal Finance, The Home 
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Survival Guide to Homeowner Associations

Here in the southern US — and perhaps in other areas of the country — we have a governmental housing phenomenon known as Homeowner Associations. This concept especially occurs within subdivisions (large or small groupings of single-family homes located just off of a major thoroughfare). The intention is to bring a neighborhood together to deal with issues that affect the entire subdivision. Associations are themselves governed by a Covenant that the subdivision developer tenders with county records and By-Laws that provide the rules of engagement.

However, as with anything that involves relationships, things don’t always go smoothly. I happen to be in a situation where I’m having to right some wrongs and have attempted to garner as much information via research so that I can shed some light on what should be done on various issues. I am certainly by no means a lawyer and do not intend to be guiding you on any specific issue. Rather, my intention is to help give you some food for thought in the instance you have to deal with ignorance.

Incorporated and Unincorporated Associations

Whether an Association is specifically mentioned in your subdivision Covenant or not, an unincorporated Association it is literally a figment of your imagination, merely a collection of individuals making arbitrary decisions about issues. The biggest difference being incorporated makes is that the Association is then a legal entity that can own property, such as common areas, swimming pools, club houses, etc. The downside to being incorporated is that costs tend to go up because of the Association having to pay taxes on land it owns as well as insurance premiums and what not.

Also — and this is a very important consideration — if you’re involved with an incorporated Association, check with your homeowner insurance policy about an Association rider. When I inquired with my agent about this additional — extra cost — piece of insurance, I was informed that if something happens to the Association’s insured property, the individual homeowner would be covered for their portion of the Association’s deductible.

Most — if not all — Associations operate by way of By-Laws

A common misconception about Associations is that they have to be incorporated to have things like By-Laws. This is not true. By-Laws are contained in a document that describes how meetings are run, expectations for members and officers, how new meetings are communicated, etc. They are not intended to do what Covenants do — describing specific neighborhood behaviors ( e.g.: no cars in the front lawn with the wheels off). It’s usually a good idea to have By-Laws for any kind of meeting from the start, and usually good to be as simple and as plain-language (except if incorporated) as possible. I’m bringing a draft copy of By-Laws I’ve put together for our Association and used Jim Slaughter — one of a few nationally-recognized parliamentarians — as a main source.

“Robert’s Rules of Order” typically rules

The above-referenced site has a number of great HTML/PDF articles on dealing with “parliamentary procedure” — the formal set of rules by which issues are debated within any kind of organization. Institutions from the US Congress to local churches and national corporations invoke these procedures precisely because the rules permit the majority to move forward while being checked by the minority. An Association usually mandates the use of the Rules in their By-Laws. I’ll save the details of what different motions are meant to do for another post (maybe!) but suffice it to say that familiarizing yourself with these rules will permit you to make sure that you and/or your family’s interests are properly represented.

Law enforcement is still left to local or Federal authorities

Remember that whether an Association is incorporated or not, it is not a law enforcement entity. I have researched where the US Supreme Court has upheld decisions by different types of Associations, but that’s where peer pressure and local bureaucratic red tape come into play. I’ll explain.

Membership with your neighborhood Association is “at-will,” especially if it’s not specifically mentioned in your neighborhood Covenant that there will be one. In other words, peer pressure tends to be the main motivational factor in making sure people “follow the rules.” Even if your Association has an honorable mention in your Covenant, peer pressure rules except in the instance where someone actually tries to do something about the infraction.

Technically, the law can be forced upon a rebellious homeowner if your Association is specifically named in the Covenant, since the Covenant is a legally-binding document. Here’s the catch: an individual would have to take the time to gather the evidence, fill out the paperwork, present before the city/county, and probably spend hundreds of dollars — but it could be done. Probably the worst that would happen to a rebel would be having a lien placed on their house, which would prevent that homeowner from selling.

Become an Officer!

Unless otherwise specified in By-Laws or, perhaps, meeting minutes, anyone can become an officer of their Association as long as they’re willing to accept the duties and responsibilities of the office. Becoming an officer can be fun — “it’s good to be king, or queen” — but can be challenging, dealing with homeowner complaints and making sure everyone is following the Covenant.

Bottom line: Hopefully this post either helps you or will help you if you ever find yourself having to deal with organized neighbors. The best thing you can do for yourself with this and any other issue is to arm yourself with facts. Don’t just trust what I’ve posted here — do your own homework and see if your results parallel mine. This way you can at least begin persuading others to your obviously correct viewpoint :)

About the author: My name is Phil and I’m a guest poster here at Bargaineering (thanks, jim!). My family and I live in the great State of Georgia (US). I’m a technologist by trade and hobby, and I also enjoy dabbling with finance, politics, theology, and anything else I happen to find interesting when not enjoying the family. It’s my hope that the views I express will be practical and beneficial to you. If you feel the need to opine in my specific direction, I can be reached at phil dot the dot blogger at gmail dot com.


 Personal Finance, The Home 
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What Does Your Homeowners Association Do?

When I first shopped around I thought it was ridiculous that I would have to something like $30-$50 a month to some homeowner’s association (HOA) on top of a mortgage, insurance, taxes, etc. It wasn’t the dollar amount, it was a case of the final straw hitting that poor proverbial camel’s back. This was made especially aggregious after hearing stories of HOA’s that did very little in the community… luckily the area I moved into had not only a relatively inexpensive HOA fee but a relatively active HOA.

I pay $195 every six months ($32.50) to a homeowner’s association (HOA) and I think it’s a fair thing to ask. Certainly I can list all the things that they say they do, but after living in the house for nearly a year (and experiencing all the seasons) I can honestly list all the things they actually do. How does this stack up against your HOA?


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