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Owning a home that is part of a HomeOwners Association (HOA) has many benefits as well as some unique challenges. Here we try to answer some of the most common questions that we get asked by owners in an HOA.
Individual Owner’s Responsibilities as part of an HOA:
Owning a home that is part of an association or common interest community comes with the added responsibility of participation to make that community the best it can be. This includes:
- paying the association dues, fees, and assessments on time
- attending meetings and asking questions
- voting in elections and on other issues
- reading meeting minutes
- following the community’s rules and regulations
- dealing honestly with association leaders
- participating as a member of the HOA Board, if possible.
- maintaining separate homeowner’s insurance for the interior of the unit
Benefits include a communal approach for many maintenance responsibilities, such as landscaping, snow plowing, garbage pick-up, and sometimes other seasonal maintenance like gutter clearing. Though larger maintenance items may require a special assessment, the added benefit of an association should mean having the work done in a timely manner by a vetted contractor source.
The Board has a legal responsibility to you as the homeowner to run the association smoothly and properly. This includes abiding by both association bylaws and state laws regarding how meetings are to be conducted, how finances are handled, filing tax paperwork, and ensuring the association is carrying proper insurance. Some associations choose to hire out a management company. This may come at an extra cost but can offer peace of mind that both the law and best business practices are followed. Familiarize yourself with your association’s documents, and the state laws.
When you purchase your home, you agree to follow the rules of the association. This includes paying all dues and fees on time. A few things can happen if you don’t. First and foremost, the association can begin charging you late fees. If nonpayment continues, they may hire an attorney to collect all fees and late charges. If they do this, you will be responsible not only to pay what you owe the association, you will be responsible for attorney’s fees as well. If the amount due continues to remain unpaid, a lien can be placed on your property.
In smaller associations, it’s extra important that every owner pays their monthly fees on time. If they don’t it may affect the HOA’s ability to maintain the property and services.
But did you also know that if there are too many homeowners who owe money to the association, this can affect the ability for any owner in the association to sell their home? A bank may not approve a mortgage for a buyer to purchase in the association if they believe the association is not well-managed.
The best way to make any changes in your community is to get involved! Attend meetings, read through meeting minutes, familiarize yourself with your community’s bylaws and regulations. If you want to see a change, ask yourself – would this benefit only me, or the community at large? Why might someone else have a different opinion?
Life in an association might be difficult at times, but with understanding, empathy, and patience, it can be rewarding.
You should have received a copy prior to purchase, but if you have misplaced those or need a new copy, contact your board or management company.
Consider joining the Board of your HOA
Being an active member of your HOA is crucial to its success. If every owner waited for someone else to step up and volunteer, no one would and the HOA will fail in the very basic responsibilities, like keeping the lawn mowed, buildings maintained, or trash picked up.
Each association must comply with their recorded bylaws. Roles within the association should be spelled out clearly in those documents.
In general, the Board is responsible for the overall running of the association, as well as protecting the physical and financial assets of the association. Here’s some examples of what each Board position may do, though you’ll want to confirm with your Board each person’s responsibilities in your own association
As a President, you might run meeting, appoint committees, serve as a liaison with outside vendors and organizations, or co-sign on large checks.
As a Vice President, you might assist the President with meetings, vendors, and anything else necessary.
As a Secretary, you might give notice for all meetings, take and keep minutes for all association and Board of Director meetings, and keep records (other than financial) as directed by Board of Directors.
As a Treasurer, you might keep financial records (accurate and complete), including receipts, prepare financial reports for meetings, tax filings, etc., deposit checks and other monies, and write checks on behalf of the association.
As Board Members, you are responsible not only to the association but to the State of Vermont to ensure your association is following all bylaws and state regulations. Take the time to read through the state statues, linked under the FAQs of this page.
It is important that Board members understand that this is a “business” role and a very serious responsibility. While performing association business you must treat everyone equally and maintain confidentiality. It is a good practice to separate your role as a board member from your role as a homeowner.
The consequences for late payment should be spelled out in the association documents. If there is not a process in place for late dues, the Board should meet to vote on one. The policies should be clear and shared with each homeowner, so they are understood. It is important to follow through with the policy for each delinquent homeowner to avoid discrimination or favoritism, and to keep the association’s finances secure.
For a minimal fee, Community Associations Inc offers a host of classes on running an association, along with several published guides. This is a worthy investment in the health of your community.
The town of Alexandria, VA, also offers several trainings, and while they will be focused on the state of Virginia and pertinent state laws there, a good bulk of the information will carry over to best practice here.
Many associations choose to hire a professional Property Management company to handle different aspects of running the HOA. They may manage just the financial side of things, or they may also manage contractors and repair work.
Associations should all consider having a relationship with an accountant for creating your monthly and yearly financials as well as filing your annual income tax returns.
Associations should also have a relationship with an attorney that is familiar with HOA law. This will be necessary when an owner isn’t paying their dues, or if another legal situation comes up that the HOA must handle.
Yes! A bank can deny a mortgage if they believe an association is not running properly. This can include but isn’t limited to: too many delinquent homeowners, not enough money in reserves, failure to carry proper insurance, and too much deferred maintenance.
Other links and resources that HOAs may need:
Vermont State Statues for HOAs:
It is important as a homeowner and a Board member to know what is required by law of an association and a homeowner. Read through the Vermont state statues below.
Vermont Condominium Ownership Act
Uniform Common Interest Ownership Act
Boards also need to update their files with the Vermont Secretary of State regularly. Instructions on doing so can be found on the State’s Website Here.