Organization
HOAs may have a board of directors. The directors often have the power to appoint officers. If the board appoints a member of the board as an officer managing the day-to-day work of the HOA, conflicts can arise. Homeowners may have little recourse if an officer of the HOA, who also serves on the board, is at the center of their dispute. Bylaws should be specific regarding the appeals process in these cases in outlining the responsibility of the board when one of its members also serves as an officer.
HOAs provide rules and regulations related to the maintenance of a property. HOA bylaws can be very stringent including minimum square footage for a home and the acceptable colors to paint a home. They also provide an appeals process for neighbors who have small disputes about their property.
State laws that govern HOAs vary from state to state. The responsibilities of an HOA in one state may be more stringent than in other states. Florida, for example, requires all HOAs to be incorporated. Arizona requires HOAs to provide financial oversight of its records. The laws governing HOAs have strong lobbyists in state legislatures on both the homeowner and real estate management sides.
Functions
HOAs develop budgets for subdivisions. They plan projects for renovation and maintenance. HOAs also oversee the work of property managers. Communication with homeowners via HOA officers occurs at regularly scheduled intervals. HOAs also may require fees for membership from homeowners. This has often led to criticism by some that in addition to property taxes, homeowners are taxed indirectly by their HOA.
Diligence
New homeowners should obtain copies of covenants and bylaws for their HOA. Read the bylaws thoroughly and ask questions about areas that are confusing. It is also key to under the homeowner's state laws governing HOAs. Understanding bylaws and state laws governing an HOA will prevent misunderstandings about HOA responsibilities for the homeowner.
