Across the US, approximately 2.5 million people serve on community associations and boards. More Americans are choosing to live in communities that are ran by HOA’s. Beyond being the people who decide if you can paint your door purple, the list of obligations and responsibilities Homeowners Associations have is certainly long and complex.
You should also know about HOA responsibilities if you’re living in a place where they govern. For instance, this kind of information can make or break your decision on whether or not you want to get involved.
Keep reading to learn more about legal obligations of homeowners associations.
What Is a Homeowners Association?
Firstly, HOA’s are homeowners associations. They are nonprofit corporations, also known as incorporated associations, who control planned communities. Furthermore, planned communities include subdivisions and condo complexes. They also consist of people who own property in a given development. Another one of the homeowners associations obligations is to manage the common interest of these developments and communities.
In addition, big decisions and homeowners association rules are made and enforced by the board of directors. Board of directors are elected to their position. But the HOA is also responsible for things like maintaining common areas, setting and collecting fees, and hiring staff and contractors.
Top 10 Responsibilities of Homeowners Associations
You might be thinking of joining your HOA board and getting involved. It’s a good move if you want to have a say in how your community will be regulated. But keep in mind that as a board member you have responsibilities and obligations of homeowners associations. And those responsibilities also come along with liability as well.
If you think you’re ready to join the board, read on to find out what the top 10 Legal Obligations of Homeowners Associations are, before jumping in feet first.
1. Management of The Property
To start, the board of directors manages the entire HOA. While they can delegate responsibilities to management teams, contractors, and other businesses, the ultimate control must always stay with the board.
2. Fiduciary Responsibility
Secondly, in the US, board of directors of any corporation are recognized to be serving in a position of trust. So, corporate law dictates that every board of directors has a fiduciary responsibility. In other words, the board and its members are required to serve in the best interest of the corporation.
The boards of HOA’s are also subject to that fiduciary responsibility. It doesn’t matter that HOA’s are nonprofit corporations or that the members are volunteers. Even more, they must always act in the best interest of the development, and if they don’t, there can be financial and other consequences.
There are three components to fiduciary responsibility:
- Duty of Care
- The Duty of Loyalty
- The Duty to Act Within the Scope of Authority
We’ll explain each of these in more detail below.
3. Duty of Care
The duty of care involves making informed decisions. Before making any decisions, board members need to make sure they’re fully informed of rules, regulations, and any other relevant data. They must also be sure to act in a cautious and reasonable manner.
4. The Duty of Loyalty
This refers to the fact that board members cannot act in their own interest. They should also not act where there’s a conflict of interest. Furthermore, it obligates board members to act in a fair manner and always in the interest of the HOA.
5. The Duty to Act Within the Scope of Authority
Another HOA responsibility says that HOA board members cannot make decisions or act in a way that goes beyond their own authority. While they are required to perform certain functions and duties, they cannot act on matters that they don’t have the power to act on.
6. Responsibility For Injuries
If you’re injured in your community, chances are you won’t be able to hold the HOA directors responsible. That is unless the conduct of the directors was the cause of the injury. So, in these cases, they may be held legally and financially liable.
7. Financial Responsibility
The debts and obligations of a Homeowners Association are another responsibility of the HOA. A director or directors aren’t held liable for those debts. Except under special circumstances. These occasions include whether the director(s) personally assumed the responsibility for the debt, created a contract without authority, or created a contract without disclosing that it was for the HOA.
8. Give People The Right to Sit on The Board
Any property owner in the community has the right to run for a spot on the board of directors. Although, they can’t be prohibited from doing so. Of course, they need to meet qualifications that are laid out in the governing documents in the community.
There are a number of items that HOA’s have to disclose to the community, either automatically or upon demand.
For example, HOA’s must disclose whether airports are close to the community. They are obligated to give notice of airports in the area. But, only if it applies to HOA’s that have been recorded after January 1, 2004.
HOA’s must also disclose when board meetings are occurring. They also must provide 4 days notice as well as an agenda for open meetings. For instance, executive sessions require at least two days notice before the meeting.
HOA’s must provide annual disclosures about rules, fines, budgets, reserve, and financials. Homeowners can also ask for meeting minutes, insurance information, and host of other information that must be logged and kept by the board.
10. The Extension of Rights of Ingress, Egress, and Support & Access
Finally, HOA’s don’t have the authority to prohibit homeowners from their private units. There are, of course, exceptions to these case.
For example, a person can be prohibited from ingress and egress. But, only if the HOA has a court order. Also, if reconstruction or a hazardous condition exists, the HOA can extend this authority.
We Can Manage Your HOA
In conclusion, Homeowners Associations tend to maintain control over the community and its rules. However, they’re legally allowed to delegate those duties. So, in many cases, this helps overcome liability issues that can arise. For example, they might come up from fiduciary and other responsibilities. And that’s because management companies have the experience. Therefore, they know how to manage planned communities and stick to the rules.
If your HOA is looking for outside help, look no further. Request a proposal from us today!