What does it mean?

Many HOAs introduce regular accounting audits to mitigate homeowners’ financial risks. In the framework of such an inspection, an independent third-party CPA (Certified Public Accountant)[56] conducts a comprehensive analysis of an association’s financial records and accounting procedures, to determine whether they are accurate, legitimate and compliant with Generally Accepted Accounting Principles (GAAP)[57] or other reporting frameworks.[58] Upon completion of the planned auditing procedures, a …

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In some U.S. states (such as Texas) a HOA can foreclose a member’s house without any judicial procedure in order to collect special assessments, fees and fines, or otherwise place an enforceable lien on the property which, upon the property’s sale, allows the HOA to collect otherwise unpaid assessments. A proposed constitutional amendment in Texas would limit the power of …

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Board misconduct The New Jersey Department of Community Affairs reported[46] these observations of Association Board conduct: “It is obvious from the complaints [to DCA] that that [home]owners did not realize the extent association rules could govern their lives.” “Curiously, with rare exceptions, when the State has notified boards of minimal association legal obligation to owners, they …

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Association management Many HOA’s (especially larger ones with more upscale amenities) hire management companies to handle the governing duties of the association. Management services are typically divided into three categories: financial only, full management, and on-site management. Financial services typically cover administration of bank accounts, bookkeeping, assessment collection, and the HOAs budget. Full management typically …

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Governance Usually HOAs are structured as private corporations or private unincorporated associations (commonly as non-profit ones). HOAs are governed by federal and state statutes applicable to corporations (or unincorporated associations if so structured), as well as the HOA’s own “governing documents”.[18] The HOA’s governing documents generally “run with the land”, which means that all current and …

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Power of the HOA Through its board an HOA will provide some level of amenities (though differing greatly between HOAs), regulate activities within a development, levy assessments, and may (if authorized by CC&Rs or a state legislature) impose fines for noncompliance. Depending on the governing documents, HOA boards may create committees, such as an “architectural …

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The HOA will be governed by a board of directors. Initially the board is composed of developer-appointed members, in order to maintain the character of the community that the developer has for it. As the percentage of ownership shifts from the developer toward owners, the corresponding percentage changes from developer-appointed members to homeowners elected at an …

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