HOA 101

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A popular belief is that HOA Boards are power hungry, aggressive organizations that seek to do homeowners harm. While this may be true in some cases, those are usually the outliers and they are few and far between. It is true that occasionally you hear of an HOA foreclosing on a homeowner for some type of violation, but usually not the whole truth. The stories are probably sensationalized for a better bang.

The cornerstone of the HOA is the documents that create it. These documents consist of the Declaration, Articles of Incorporation, and Bylaws. The Declaration is created by the Developer at the inception of the neighborhood. As part of subdividing the tract of land into the individual lots, the Declarant (developer), declares certain covenants and restrictions on each and every lot. The covenants and restrictions are permanently attached to the lot, recorded in the County land records and cannot be removed in most cases. A common misconception is that "I didn't sign up for those", well you actually did by virtue of purchasing the piece of property with these restrictions. It would have been your title company's responsibility to inform you of this fact at the time of purchase.

The Articles of Incorporation are just that. The Developer created a corporation to manage the affairs of the community and have the authorities created for it in the Declaration.  Cabin Branch Forest Association, Inc.  is a real Virginia Non-Stock Corporation that is registered with the State Corporation Commission, registered and regulated by the Va. DPOR Common Interest Community Board and has to file Federal and State tax returns.

Lastly, the Developer created the Bylaws, to govern the operations of the corporation and also articulate further the covenants and restrictions created in the Declaration. There is much talk about the Bylaws but if you stop to read them you will find that the majority of the document is about administrative duties of the corporation, probably 75%. In the bylaws, there is a reiteration of the Covenants and Restrictions created in the Declaration. These are very powerful and sweeping generalized statements giving control of many aspects of the community to the Association(Section 8&9). If you think these are too restrictive, you can change the Bylaws, correct? Yes and no, while the Bylaws can be amended, the provisions that come from the Declaration cannot practically be amended as long as there are mortgages. It is our Association, right? Why can't these be amended?

While Homeowners Associations have been around for a long time in various forms, the proliferation of HOAs started in the 60's. Prior to this time, Mortgages were privately funded, and harder to qualify for than what most of us are used to now. To spur home ownership, the Federal Housing Authority began guaranteeing mortgage loans to condominiums and single-family homes as long as there was a condo or homeowners association. Since the home is the collateral to the mortgage, the FHA wanted a way to ensure stable home values. By creating a way to guarantee certain maintenance and appearance standards, they would likely be able to reduce their financial risk in the event of a default by a homeowner. Developers were happy to oblige and create the HOAs because it meant more potential customers. The Banks, as front-runners for the FHA, were quick to pile on as it meant more loans for them to pass through. https://en.wikipedia.org/wiki/Homeowner_association

So, there is the dirty truth, the HOAs documents were created by lawyers, for lawyers, to the benefit of developers and mortgage lenders. While the interests of the mortgage lenders and homeowners are generally aligned, having a nice neighborhood and preserving values, these documents have supreme authority which can be called into question by the lenders when they feel the rules are not being upheld. If you read the documents you will find that power hierarchy is Declarant, Mortgagee, and last, the homeowner. No changes can be made to the documents that lessen the Mortgagees rights or diminish or change the scheme of regulations or enforcement unless you get 67% of the mortgagees to agree, and why would they do that? The actual wording in more draconian, see section 12.5.a&b. Currently, there is a startling number of lawsuits against Homeowner Associations for lack of enforcement of the Bylaws. These are being brought to court by both lenders and homeowners against their associations. If the Association is found to be lacking in enforcement of the covenants and causing harm, the court may appoint a professional management agent as trustee of the Association.

So what is the best way to take back the Association for the benefit of owners, to preserve a quality way of life and maintain a pleasant attractive neighborhood? We feel that clearly articulating the rules and standards that represent the common expectations of the member homeowners. By putting our own definitions to these broad covenants and restrictions, we preempt future interpretation that may not be acceptable to the majority of the community. 

Our belief is that most people want to do good, be honest and be seen as a good person. I don't believe that most people knowing would want to tick off their neighbor by example, having their kids bikes all over the street and sidewalks. Not everyone has the same expectations about what is right and wrong. Here is an example, someone that grows up in rural New Mexico with a goat and a rock in front of their dwelling may have a different expectation for proper landscape care than someone that grew up in a neighborhood like ours. It is not that the first person is "bad", he just has a different level of expectation than the majority of the neighborhood. By clearly defining the expectation of the neighbors, most people want to fall in line with the norm. Isn't this a good way to promote harmony in the community? Is this unfair to ask him to confirm and oh yeah, ultimately preserve some value in his house?

While this page has been long overdue, it has been prompted by recent disturbances caused by the home inspections. The accusation that the recent changes to the Bylaws and rules and regulations are some sort of power grab by the Association. The changes to the Bylaws mostly remove declarant powers, restrict powers of the board, and remove some restrictions of homeowners. You can read about this on the main page. Power is a zero sum game in a HOA. Take weeds for example, yes weeds. If the HOA regulates weeds we may anger the homeowner that doesn't want to take care of his yard and limit his weeds, but make his neighbor happy because he doesn't have weeds creeping onto his property any longer. If the HOA doesn't limit weeds the anger and joy just switch places. The Board only wins if it can find an appropriate balance that satisfies both homeowners or the majority of homeowners. While weeds are a simple problem it illustrates the purpose of the rules. You can replace "weeds" with bright lights, unrestrained dogs, kids toys, or trash and end up with the same result. None of the changes benefit the board, other than as neighbors, the benefit only shifts from one neighbor or group of neighbors to the other. Some may choose not to have rules and regulations that define the wide sweeping statements that are contained in the Declaration and Bylaws. 

For myself I prefer the "Devil that you know" as opposed to an open ended statement that can be left to any interpretation. Consider this one, "Each Owner shall keep the Lot and all improvements located on the Lot in good order, condition and repair and in a clean and sanitary condition, including without limitation all necessary grounds maintenance" Section 8.3. Will we all interpret this the same way? Shouldn't there be a limitation each way on what the interpretation of this is or a common expectation of the homeowners? Apparently some would like to leave this wide open. I see this approach as problematic. This leaves enforcement of the rules very subjective, inconsistent and unfairly applied.