Homeowner associations (HOAs) are the fastest growing form of home ownership in America. In metropolitan markets, they can account for over 2/3rds of all new home construction. As more buyers choose this form of housing, condos and planned communities are becoming a dominant force to be reckoned with. HOAs are quasi-governments that collect mandatory fees to pay for services and enforce architectural standards and rules in the same way that any government can. Like other forms of government, if you choose to live there, opting out of fees and controls is not an option. When you buy into an HOA, you automatically agree to be subject to its authority.
Since homeowner associations in their current form have only been around since the 1960s, they continue to evolve as lifestyles change and their strengths and weaknesses are better understood. The concept of “carefree living” promoted by early developers was largely hype intended to help close sales. As time and experience bore out, HOAs require a lot of care and attention for them to work right. Due to the dynamics of neighbors ruling over neighbors and members being owners, not renters, the challenges are more complex than other forms of property management. In commercial and rental property, for example, a lease or rental agreement can be terminated for non-compliance. Not so in an HOA. Private property rights have a profound impact on how homeowner associations must be run.
Homeowner associations have the unique ability to customize how their business is done. This allows one HOA to do business very differently than virtually every other HOA if the board and members choose to. While most don’t, there are often policies, procedures, rules and regulations that vary somewhat from one HOA to another. These differences can range from minor nuances in parking and pet regulations to major policies on architectural design restrictions. And like other forms of government, what was the policy two years ago may not be the policy today if the board or members vote to change it. Caveat emptor. Buyer beware.
Regardless of the tone and texture of rules and policies, there are some fundamental principles which all HOAs should follow when enacting and enforcing them. Some of these principles are common sense and others deal with the unique “neighbor” aspect of HOAs:
1. All rules need to be written. In days before the written word, laws were passed on by oral tradition. Since clans were closely knit, this system worked pretty well. But with modern fractured families living global lives, writing has a distinct advantage for keeping newcomers informed. Funny thing is, many HOAs have unwritten rules that offenders don’t discover until they break them. Judges, however, don’t like the idea of unwritten rules and often smite HOAs that have them. So all rules should be written in clear language.
2. All rules should be available for inspection. Written records are usually controlled by those that keep the records, the board or manager. With the advent of email and the internet, humankind has been set free of the paper prison. HOAs can now make rules, policies, information and records available 24/7 by way of a self-help website. Prospective buyers can also access this information to ensure there is nothing that would create a problem after closing the sale (like, the buyer has an RV and RV parking is not allowed.).
3. All rules should be consistently enforced. If a rule is important, it should apply to everyone, including the board and friends of the board.
4. All rules should be necessary. In a world gone mad with regulation, having a whole new set to adhere to at home is an unnecessary aggravation. If there is a city ordinance to control wandering or defecating pets, the HOA doesn’t need the same rule. Only add the rules the HOA really needs.
5. Never try to out rule scofflaws. Scofflaws love it when the board enacts rules to control them. They thrive on confrontation and rules are the line in the sand over which they must step. Fortunately, scofflaws are rare. If confronted by one, the board should address their special needs by other means which may include compromise.
6. Rules can be compromised. Since all humans are unique, one size does not fit all. The board may have its rules challenged in a way that is headed to a judge’s ruling that the board may not like. Since the board is elected to govern, the board has the power to compromise. If faced with the prospect of an expensive court battle or compromise, it is often in the best interest of the HOA to opt for the latter. Courtrooms are nasty places that often only further inflame disputes.
7. Run new rules up the flagpole. HOA boards can get myopic about the need for rules. Problems that loom large to a board may be of little importance to the majority of members. The board can make much ado about nothing. Or worse, the board can fan the flames of rebellion by enacting an unpopular rule. (Is that tar I smell?). There is no rule that is so urgent that couldn’t wait for a 30 day member review and comment. Proposed rules circulated to the members generally gain buy-in and compliance, rather than defiance.
8. Provide for a right of appeal. It’s very American to have an excuse. And extenuating circumstances may actually be legitimate. Appeals are not only fair, but expected. The board should never engage in a game of “Gotcha”. Look for ways to catch someone doing good.
At the end of the day, HOA rule breakers are neighbors. So the tone and texture of HOA rules needs to take this into consideration to avoid ongoing skirmishes between warring neighbors. Rather than plan for battle, groom the rules to help neighbors be better neighbors.
For more innovative homeowner association management strategies, subscribe to www.Regenesis.net