Part One – HOA Overview
Over the next couple of months we will explore the legal issues of Home Owners Associations (HOAs). We’ll focus on topics unique to California residents, typical legal challenges encountered by homeowners, and how to anticipate and understand your rights as an HOA member. We’ll look at HOAs through the homeowner lens, and examine how to live with your HOA and to avoid legal trouble.
Every HOA is different. They are normally run by volunteer members of the community, and they are nonprofits. They have fiduciary responsibility to manage funds obtained through fees, oversee shared expenses and manage day-to-day concerns of their communities. They are human beings and they can make mistakes, especially when complex problems are at stake. As long as mistakes are not intentional or driven by personal gain, HOA members are not held personally liable.
Fortunately, the actions of well-run HOAs rarely lead to legal trouble. When things go bad, they can go very bad, very quickly. In these situations, it is best to consult and then retain a real estate attorney if you believe the HOA is acting negligently or capriciously. Consider these examples:
Common Interest Developments (CIDs) – You are Not Alone
The California Association of Community Managers reports our state is home to more than 52,000 Common Interest Developements (CID). Planned unit developments, multiplexes, high rise condos, time shares, mixed use developments – are typically CIDS and are governed by internally run associations (often called boards) intended to manage the interests of multiple owners. These boards are usually run by owner volunteers, who have fiduciary responsibilities and expected codes of conduct.
One More Acronym Before We Continue – CC&Rs
Covenants, conditions and restrictions (CC&Rs) can be considered the owner’s manual for members of an HOA. They address everything from hanging towels on outdoor balconies (discouraged) to expensive special assessments for new roofs (quite possible). There are two primary reasons for CC&Rs – 1). maintaining and enhancing property values – and (2) providing every owner full enjoyment of their property.
Before you purchase a home in a Common Interest Development, carefully read the CC&Rs in your HOA agreement. Pay particular attention to fees and assessments. While the document is long and the writing boring, this document will govern what you can and cannot do as long as you own your condo.
The California Davis-Stirling Act of 1985 – The Rules Behind HOAs
If you find yourself in conflict with your HOA, you will soon encounter the wide-reaching rules of the Davis-Stirling Act – the legislation granting HOAs the authority to regulate and manage common-interest developments. Here you will find out why building a squirrel habitat or rebuilding your home after a fire are all aspects of HOA responsibilities. Here is a partial list of topics many HOAs grapple with in California and elsewhere:
- Property use and maintenance
- Fees and assessments
- Dispute resolution and enforcement
- Construction defects
- Ownership and transfer of interests
- Maintenance services
- Insurance policies
- Special amenities
- Use of property – short term rentals, home businesses
Should You Sue Your HOA?
Suing your HOA can be very costly and time-consuming. Unless you are dealing with an unusual circumstance causing you extreme duress or major financial loss, you can most likely solve your issues by reviewing your HOA rules and working through them with the board. Sometimes this means an extended wait for election of a new board, or a process to change the rules of the association.
If your HOA problem is a serious issue involving problems addressed by the Davis-Stirling Act, a real estate attorney may be necessary. Examples might be a embezzlement of funds by an HOA member, failure to follow through with repairs resulting in injury or death, or discrimination and/or selective punishment for homeowner infractions of the CC&Rs. In this case you may well need legal assistance to be compensated for the negative actions of your HOA. Contact a real estate attorney with HOA conflict experience before the situation escalates.