HOA MANAGEMENT FAQ

With more than 40 years of HOA Management Services experience, Gaughan Companies has the answers to your community homeowners’ association management questions. Contact us with additional questions or to discuss how our services can benefit your community.

Frequently asked questions

A Homeowners’ Association (HOA), or community association, is a legal entity in which the owners enjoy the protection, enhancement, maintenance and preservation of their homes and property.

The primary purpose of an HOA is to provide for the community business and governance aspects of the association. This is achieved 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.

Homeowner associations can require homeowners to pay a share of the common expenses, usually per-unit or based on square footage. The expenses are typically based upon common property elements, which can vary depending on the type of the association. Some associations have private roads, services, utilities, community buildings, and amenities. Most condominium associations consider items such as the roofs and exteriors of the structures as the responsibility of the association, while other associations may have no common property, but charge for services.

Yes, the assessment is commonly referred to as “dues” and is collected by HOAs and community associations for the upkeep of the organization and/or neighborhood.These assessments are billed at intervals, either monthly, quarterly, or annually.

The maintenance and management services incurred by the association are dependent upon timely receipt of the assessments due from each homeowner. Late payments will result in a late charge. In addition, the CC&Rs and Declarations of Condominium allow the association to charge late fees and interest and to proceed with a lien on your property, foreclosure proceeding, or a judgment and collections for nonpayment of assessments.

In relation to an HOA, community, or other formal organization, a director is an officer charged with the conduct and management of its affairs. The directors are referred to as a board of directors, and are either elected or appointed.

The governing documents contain the declaration, bylaws, operating rules, and articles of incorporation or any other documents which govern the normal operating procedures of the association.

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 maybe assessed a fine by the Association.

The declaration may be 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. 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 operation of the Association.

Common area is any area of improved real property intended to be shared by the members of the association.

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

Association management is a distinct field of management because of the uniqueness of associations. Associations are unique in that the “owners” are dues-paying members. The members also govern their association through an elected board or other governing body, along with association committees, councils, and other units. Generally, the board selects, retains, and evaluates a chief executive officer or an executive director who is responsible for the day-to-day management of the association and paid staff. Managers within the association environment are responsible for many of the same tasks that are found in other organizational contexts, including, but not limited to, 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.

An association management company is a property management company contracted by the board of directors or community to provide a variety of services including, but not limited to, collecting assessments, vendor bidding and project supervision, financial reporting and review, homeowner communication, general maintenance, and problem resolution. The Management company reports to the board of directors and all decisions related to the association are made through a majority vote of the board of directors.

A managing agent is a person or entity hired specifically to assist the board of directors in enforcing the documents and managing the assets, funds, and interests of the association.

A proxy is an individual appointed to act or vote on behalf of another person by representing them at a meeting of owners of the association. The title can also refer to the written piece of paper granting that power.

A quorum is defined as the minimum number of owners required to hold an official meeting of the association. The number of owners required can vary according to the corresponding association’s governing documents.

A lien is a monetary claim levied against a property for unpaid mortgage, 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.

MCIOA is the Minnesota Common Interest Ownership Act, Minnesota Statues 515B. MCIOA is the statutory authority for existing common interest communities formed after June 1, 1994. Some prior formed associations may have chosen to adopt in.

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