HOA FAQs

The Homeowner’s association (HOA)  is an organization in a subdivision, planned community, townhouse or condominium building, that regulates and enforces the rules for that property.  The members of the HOA, are the property homeowners. The HOA is run by a board of directors and often managed by a company, like Gaughan Companies, to oversee the regulations, property maintenance and more.

A simple explanation is that an HOA protects the community (condo, townhome community) by upholding the regulations and any governance aspects. This is done by administering, maintaining and enhancing a residential real estate development, and through the establishment of a system of property rights, binding covenants and restrictions, and rules and regulations.

An HOA assessment, sometimes referred to as a special assessment, is generally a one time fee (assessment) that HOA’s charge homeowners to cover unexpected expenses.  These special assessments are typically based on common property elements of a community, but are ones that are outside the bounds of normal HOA dues.

HOA dues and assessments are not the same. HOA dues are monthly fees that each homeowner will pay for the general upkeep and maintenance of their community. This fee is a predetermined amount as determined by the HOA. HOA dues are non-negotiable.

Every HOA is dependent upon the timely receipt of monthly dues and assessments of their property owners. Late payments could result in late fees and accrued interest charges. In extreme cases, HOAs could seek foreclosure proceedings, assess judgements or initiate collection proceedings for nonpayment.

For HOAs, board of directors are members of the association / community that are either elected or appointed to oversee the property and the issues concerning each property.

The governing documents are the declarations, bylaws, operating rules and articles of incorporation (or any other documents) which govern the normal operating procedures of the HOA. To simplify, these are the documents set in place to protect and maintain the association as a whole, its common areas and any regulations that are to be upheld by the homeowners.

The term CC&R refers to “Covenants, Conditions & Restrictions.” A real covenant is a legal obligation imposed in a deed by the seller of a home and/or property upon the buyer of the real estate –  to do or not to do something. Such restrictions frequently “run with the land” and are enforceable on future buyers of the property. Examples might be to maintain a property in a reasonable state of repair, not to run a business from a residence, or not to build on certain parts of the property. Many covenants are simple and are meant to protect a neighborhood from homeowners directly harming property values. Some can be more specific and strict, outlining what a homeowner can do to the exterior of their home, what colors are acceptable to paint the home, when holiday decorations are allowed, or where satellite dishes can be placed on the property, etc. Homeowners that fail to comply with the CC&Rs may be assessed a fine by the HOA.

The declaration is often referred to as the “master deed,” “documents,” or “declaration of covenants, conditions, and restrictions (CC&Rs).” It describes an owner’s responsibilities to the association, which can include payment of dues and assessments, as well as the association’s various duties to the owners.

Bylaws are a set of rules or guidelines regarding the operation of a non-profit corporation such as a board of directors. Bylaws usually set forth definitions of offices and committees involved with the board of directors. They can include voting rights, meetings, notices, and other areas involved with the overall operation of the HOA.

A common area of any community is an area of improved real property intended to be shared by the members of the HOA. Examples of common areas shared by all homeowners could be a fitness center, the HVAC systems or the landscaping for the community.

An ordinance is an individual law, or set of laws,  adopted by local government at the county and city level.

Associations are unique in that the “owners” of an association, or its members, pay dues and have a say on how their organization is governed through participation with an elected board of directors. Generally, the board selects a chief executive officer, or an executive director,  who is responsible for the day-to-day management of the HOA and any paid staff. Managers within the HOA environment are responsible for many of the same tasks such as management of human resources, financials, meetings, IT, and project management.

Those that manage associations must also be familiar with the laws and regulations pertaining only to associations. In many cases, though, associations retain the services of a professional association management company to act on their behalf.

In short, association management companies represent and act on the behalf of the board of directors that represent the community (or HOA). The association management company is a property management company contracted by the board of directors of the community to provide a variety of services on behalf of the community (i.e, condominium / townhome) owned properties.

The management company reports to the board of directors and all decisions related to the HOA are made through a majority vote of the board of directors. Many of the services provided by a management association company, such as Gaughan Companies, includes collecting assessments, vendor bidding, project supervision, financial reporting, homeowner communication, general maintenance, and problem resolution.

A managing agent is a person or entity (management association company – such as Gaughan Companies) hired specifically to assist the board of directors to oversee and enforce the documents, rules and regulations as well as managing the assets, funds, and interests of the HOA.

In its simplest term, a proxy is an individual appointed to act, or vote, on behalf of another person during a HOA meeting. This appointment can also be granted via a written piece of paper that is granting that power on behalf of an absentee voter.

The quorum for an association is the minimum number of homeowners that are required to hold a meeting. That number can vary depending on the associations governing documents. The meeting will be rescheduled if there are not enough homeowners in attendance to represent the association.

A lien is a legal and monetary claim against a property for unpaid mortgages, taxes, vendor work, or other charges. A lien is attached to the property, not the owner, but legally must be recorded in the property records of the county of residence. An example of a lien would be unpaid assessments – these unpaid charges could be levied against properties in a HOA.

Minnesota Common Interest Ownership Act, commonly referred to as MCIOA, is a Minnesota state law that governs the operation of condominium associations and common interest communities. In other words, MCIOA provides legal authority to address issues that frequently affect common interest communities. The purpose of MCIOA may include regulating changes in the appearance of common areas, the exterior appearance of buildings, or regulating the use of the HOA, which may jeopardize the health, safety or welfare of residing occupants.