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 future owners of property within the HOA will be bound by them as a condition of property ownership. They usually include:
- The covenants, conditions, and restrictions (CC&Rs) of the subdivision. These are likely the most important documents affecting the subdivision and are usually created when the subdivision is initially formed, and as such are often recorded in the official property records of the county or other jurisdiction where the subdivision is located. Commonly the CC&Rs specify what types of structures can be placed on a lot (e.g. an upscale community may prohibit mobile homes or travel trailers and require minimum sizes on dwellings, along with offsets from the property line where building is prohibited) and other property restrictions (e.g. no animals except for traditional household pets, no operation of commercial business).
- The HOA’s Articles of Incorporation and Bylaws.
- In some cases the documents may include board-enacted rules as authorized (expressly or implicitly) by the CC&Rs.
Generally CC&Rs are enforceable as legal documents. However, there are instances where a CC&R is rendered illegal by later enacted state or federal law and therefore is no longer enforceable. For example, a developer-drafted covenant giving the developer sole rights to amend the CC&Rs was declared unenforceable as a matter of public policy in at least one state, where the developer attempted to amend years after he had sold all the property. That state’s legislature later codified that public policy.[19] Other examples include CC&Rs which prohibited sales of property to certain racial groups; the Fair Housing Act rendered all of these also to be unconstitutional and unenforceable.