This information is from the Community Associations Institute (CAI), an international membership organization dedicated to building better communities. See the bottom of this page to download and view guides with more information.
► W H A T I S A N H O A A N D H O W D O E S I T W O R K ? Whether you are a first time homeowner or a seasoned homeowner there are often many questions and misconceptions about what an HOA really is and does for you. When you purchase your home, you should be provided with all of the information you need to know on what your HOA is responsible for and how it works. However, this information can be difficult to read and is often overlooked. As a management company, Hammersmith Management has many responsibilities. We believe one of those is education. Below is a quick explanation of the basics of what an HOA is and how it works.
► W H A T I S A N H O A ? An HOA or Homeowners Association is a not for profit legal business entity. Ours is the Pine Creek Village Association (PCVA). That means it is a corporate business entity; however, the goal is that of a non-profit organization. The Association, the Board of Directors, and Management Company are legally bound to abide by its 'Governing Documents', which act as guidelines to help guide the community financially and physically. There are HOA's around the world but most are located in the United States. Think of an HOA as a miniature version of a local government that is designed to keep your community looking nice, well maintained, and to preserve your homes value.
► W H A T I S A B O A R D O F D I R E C T O R S ? The Board of Directors is a group of homeowners elected by other homeowners (members) in the community to make decisions on their behalf. The Board has a fiduciary responsibility to be fiscally responsible, maintain the community, and preserve home values. The Board works with contractors via contract to help in each of these goals whether that is landscaping, snow removal, maintenance, or financial planning. Board members typically serve anywhere from one to three year terms and any homeowner that is current in their assessments may serve if elected. When a community is under construction or newly built, the builder or developer serves as the board members until enough homes are sold. Under normal circumstances when a community reaches 75% of completion, the Board turns over from Developer to homeowner control.
► W H A T I S A M A N A G E M E N T C O M P A N Y ? A management company (Hammersmith) is contracted by your Board of Directors to oversee the management of the community. The responsibilities are outlined in a contract between the Association and the management company. The management company does not make decisions or rules for the Association. A management company implements the decisions and regulates compliance on the rules as directed by your Board. The management company is responsible for tracking payments, preparing payments for Board signature and publishing financial records. They act as the coordinator with the auditors, attorneys, vendors, contractors and are also responsible for inspections and enforcement of rules and regulations. A community manager is an 'agent' for the community and serves in a business advisory role to the Board on governance, budgets, collections, construction, financial and covenant compliance issues.
►RIGHTS AND RESPONSIBILITIES (Homeowners, Community Leaders, Non-owner Residents) Perhaps the greatest achievement for any association is creating and sustaining a sense of community among residents and leaders. This goal is best achieved when homeowners, non-owner residents and association leaders recognize and embrace their rights and responsibilities. It was with this goal in mind that CAI developed Rights and Responsibilities for Better Communities. These principles can serve as an important guidepost for board and committee members, community managers, homeowners and non-owner residents.
Homeowners have the right to: 1. A responsive and competent community association. 2. Honest, fair and respectful treatment by community leaders and managers. 3. Participate in governing the community association by attending meetings, serving on committees and standing for election. 4. Access appropriate association books and records. 5. Prudent expenditure of fees and other assessments. 6. Live in a community where the property is maintained according to established standards. 7. Fair treatment regarding financial and other association obligations, including the opportunity to discuss payment plans and options with the association before foreclosure is initiated. 8. Receive all documents that address rules and regulations governing the community association—if not prior to purchase and settlement by a real estate agent or attorney, then upon joining the community. 9. Appeal to appropriate community leaders those decisions affecting non-routine fi nancial responsibilities or property rights.
Homeowners have the responsibility to: 1. Read and comply with the governing documents of the community. 2. Maintain their property according to established standards. 3. Treat association leaders honestly and with respect. 4. Vote in community elections and on other issues. 5. Pay association assessments and charges on time. 6. Contact association leaders or managers, if necessary, to discuss financial obligations and alternative payment arrangements. 7. Request reconsideration of material decisions that personally affect them. 8. Provide current contact information to association leaders or managers to help ensure they receive information from the community. 9. Ensure that those who reside on their property (e.g., tenants, relatives and friends) adhere to all rules and regulations.
Community Leaders (Board and Committee Members) have the right to: 1. Expect owners and non-owner residents to meet their financial obligations to the community. 2. Expect residents to know and comply with the rules and regulations of the community and to stay informed by reading materials provided by the association. 3. Respectful and honest treatment from residents. 4. Conduct meetings in a positive and constructive atmosphere. 5. Receive support and constructive input from owners and non-owner residents. 6. Personal privacy at home and during leisure time in the community. 7. Take advantage of educational opportunities (e.g., publications, training workshops) that are directly related to their responsibilities and as approved by the association.
Community leaders (Board and Committee Members) have the responsibility to: 1. Fulfill their fiduciary duties to the community and exercise discretion in a manner they reasonably believe to be in the best interests of the community. 2. Exercise sound business judgment and follow established management practices. 3. Balance the needs and obligations of the community as a whole with those of individual homeowners and residents. 4. Understand the association’s governing documents, become educated with respect to applicable state and local laws and manage the community association accordingly. 5. Establish committees or use other methods to obtain input from owners and non-owner residents. 6. Conduct open, fair and well-publicized elections. 7. Welcome and educate new members of the community—owners and non-owner residents alike. 8. Encourage input from residents on issues affecting them personally and the community as a whole. 9. Encourage events that foster neighborliness and a sense of community. 10. Conduct business in a transparent manner when feasible and appropriate. 11. Allow homeowners access to appropriate community records when requested. 12. Collect all monies due from owners and non-owner residents. 13. Devise appropriate and reasonable arrangements, when needed and as feasible, to facilitate the ability of individual homeowners to meet their financial obligations to the community. 14. Provide a process residents can use to appeal decisions affecting their non-routine financial responsibilities or property rights—where permitted by law and the association’s governing documents. 15. Initiate foreclosure proceedings only as a measure of last resort. 16. Make covenants, conditions and restrictions as understandable as possible, adding clarifying “lay” language or supplementary materials when drafting or revising the documents. 17. Provide complete and timely disclosure of personal and financial conflicts of interest related to the actions of community leaders, e.g., officers, the board and committees. (Community associations may want to develop a code of ethics.)
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