Homeowners’ Guide to HOA Living
HOMEOWNERS’ GUIDE TO HOA LIVING
Homeowners Associations (“HOAs”), also known as Common Interest Developments (“CIDs”), are a form of home ownership whereby the owners of housing units within the boundaries of the Association are also legal members of the Association and own an undivided interest in all common areas and common area elements. The terms “owner” and “member” will be used interchangeably throughout this document. Associations can be made up of a wide variety of housing structure types, from single-family detached homes to townhomes and mid-rise/highrise condominium buildings.
Just as housing structure types vary from one Association to the next, so do an Association’s amenities. While some Associations may have recreational amenities such as pools, spas and tennis courts, others may simply have landscaped slopes and private streets. Despite the differences between Associations, all are similar in that they allow individual owners use of common areas and Association amenities, and provide a system of self-governance.
Associations are governed by an elected Board of Directors, made up of volunteer Association members and stakeholders. Board Member qualifications as well as the number of Directors/Officers is defined in the Association’s Bylaws and can range anywhere from 3 to 9 or more, but 5 Member Boards is the most common. Just as qualifications and the number of Board Members vary from one Association to the next, so do the length of terms, but one or two year terms is the most common. Board Members are elected by the members of the Association via a secret ballot voting process at the Meeting of the Members and Board Member Election.
Membership in the Association is automatic and mandatory. If you purchase a home within an Association, you are automatically a member of the Association, obligated to pay assessments and abide by all rules and requirements set forth in the Association’s Governing Documents, including the Covenants, Conditions and Restrictions (CC&Rs), Bylaws and adopted Rules & Regulations or Policies. Associations are non-profit corporations and subject to all applicable Civil Codes and Corporation Codes.
II. Association Obligations
Homeowners Associations are obligated to collect assessments, maintain the common areas and enforce the Governing Documents. Most Associations will hire a professional, accredited Association management firm, such as PMP, to handle the day-to-day operations for the Association. In addition, Associations will directly hire vendors such as landscapers, janitorial companies, and maintenance vendors to handle common area maintenance duties. Association vendors are hired by the Association directly. Management does not select or contract directly with Association vendors.
Depending on the requirements set forth in the Governing Documents and the individual Association’s needs, the Association’s Board of Directors will hold Board Meetings monthly, every other month, or quarterly to discuss and vote on Association business. While there is a portion of the meeting that is private (Executive Session), the majority of Association business is done in open session (General Session) where members are encouraged to attend. While the purpose of the Board Meetings is for the Board Members to conduct Association business, there is a homeowner forum held during General Session were members have the opportunity to share feedback and address questions.
Associations and their elected Board Members are not to engage in activities that fall outside of the Association’s scope of duties and responsibilities, including but not limited to political or municipal campaigns, even if the result impacts the Association’s membership. The roles and responsibilities of the Association and the Association’s Board of Directors are finite and defined in the Association’s Governing Documents.
III. Owner Obligations
As indicated previously, membership in the Association is automatic and mandatory. As such, owners are obligated to pay assessments on-time and in-full, and abide by all rules and regulations detailed in the Association’s Governing Documents, including but not limited to the CC&Rs, Bylaws, Rules & Policies. Failure to do so may result in written violations and potentially monetary fines and/or legal action. Generally speaking, the following is true for all Associations:
- Owners are obligated to maintain their own property or exclusive use areas in a clean and orderly manner, as defined in the Association’s governing documents.
- Owners must seek approval before making any alterations to their homes or condominium units. When in doubt, contact PMP and ask. It’s far better to be safe than sorry as the Association may require any unapproved improvements be reversed at the owner’s expense.
- Owners may not maintain or improve Association common areas, including but not limited to patios, structures or landscaping. Requests for maintenance or improvements must be submitted to management, and potentially approved by the Board as may be applicable.
- Pursuant to California Civil Code, failure to pay assessments on-time will result in the issuance of a pre-lien, the approval of a lien against the owner’s property and the possibility of foreclosure by the Association.
IV. Where do my Assessments Go?
Associations are non-profit corporations. Assessments collected go towards paying Association operating expenses, such as:
- Landscape maintenance, replacement and enhancement
- Janitorial or maintenance obligations
- Common area utility expenses, such as electricity, water and gas
- Association insurance – Vendor contracts (fire systems, elevators, pool, spa, backflow, etc.)
- Management and financial reporting
In addition to operating expenses, Associations are required to also fund the Reserve Account to defray future costs of maintenance and replacement of common area elements over time.
To better understand the Association’s operating expenses and reserve obligations, and thus how your Association’s assessments are spent, owners are encouraged to review the Association’s annual operating budget, which is sent out to the entire membership each year prior to fiscal year end. Owners are also entitled to review the Association’s monthly financial statements once they have been reviewed and accepted by the Board of Directors to evaluate how operating expenses are tracking throughout the year in relationship to the annual budget.
V. Do Owners have a Vote Regarding Vendor Contracts and Association Improvements?
Associations are a representative democracy. Association owners (‘Members”) elect the Board of Directors and the Board of Directors make the decisions on behalf of the Association and its members. Owners do not have the right to vote on vendor contracts, common area improvements or the majority of Association decisions. Members who are interested in participating in the Association’s decision making process are encouraged to volunteer their time and run for a position on the Board of Directors.
VI. I Attend Board Meetings, but the Board does not Engage the Owners Present when making Decisions and Often wants to Table any Issues Owners Bring Up.
Member attendance at Board Meetings is always encouraged. That said, it is important to keep in mind that the primary purpose of a Board Meeting is for the Board of Directors to conduct Association business, and members present are not privy to all of the research and information that goes into making Association decisions. As noted above, Associations are a representative democracy. The members elect the Board and the Board then has the authority to make decisions on behalf of the Association and its members, much like our State and local government. While there is a Homeowner Forum at each Board Meeting for members to provide feedback and address concerns, the Board is limited by Civil Code requirements regarding what they are permitted to discuss unless the topic was included on the properly posted Board Meeting Agenda. For instance, if an owner wants to talk about potentially installing new security cameras and it is not on the agenda, the Board is not permitted to discuss it at the meeting and will ask that it be added to the next Board Meeting agenda for discussion. While this understandably feels like a lot of bureaucratic red tape, the purpose of the laws are to ensure that all members have the right to full disclosure of agenda items in advance of meetings so that they may have the opportunity to attend meetings where agenda items that impact them are considered. Some may feel strongly, either in favor or against security cameras, and they have the right to attend meetings and make their opinions known during Homeowner Forum.
VII. What is the Role of Management (PMP)?
PMP, an Accredited Association Management Company (“AAMC”), is the Managing Agent for your Association, hired by the Association to administer the day-to-day operational duties of the Association, carry out Board directives and assist the Board of Directors to ensure they have the information necessary to make educated business decisions.
PMP is responsible for many operational obligations, including but not limited to:
– Collecting Assessments
– Tracking and pursuing delinquencies
– Preparing monthly financial reports
– Association Accounts Payable processing
– Overseeing vendors to ensure they are meeting their contractual obligations
– Enforcing the Association’s governing documents, including rules, restrictions and adopted policies
– Executing on Board directives
– Preparing the Board of Directors for meetings
– Association escrow transfers
– Board Member education
– Record retention & archiving
– Customer Care for Association residents
While PMP performs many critical tasks to ensure the Association operates smoothly, PMP’s authority to spend Association money, authorize maintenance and repairs, and make material decisions is very limited. PMP has a very modest spending authority each month (between $500 – $1,000 depending on the size of the community), enabling the management team to address maintenance issues or minor repairs. Anything over PMP’s spending authority must be approved by the Board at a properly noticed Board Meeting. PMP also has little to no authority to make decision on behalf of the Association, including the selection of vendors and contractors, delinquency actions, fee waiver requests, and Association rules. The Association’s Board of Directors are the governing body tasked with voting on nearly all Association decisions.
VIII. Why Does it Seem to Take so Long to Get Issues Addressed?
We understand that a common concern voiced by owners is how long it seems to take to get items addressed. Associations are set up and governed by a strict set of laws that limit the power of any one party, which, while protecting the members’ interests, can seem overly bureaucratic. As an example, let’s say a common area tree dies or the pool heater goes out. Management should simply call the vendor to have the tree replaced and the pool heater repaired, right? Well, it’s not that easy (we wish it were!) PMP must first obtain a bid from the respective vendor. Depending on the expense amount, it may require multiple competitive bids. Most often the bid(s) exceed PMP’s spending authority, and therefore require Board approval. Simple enough, right? Not exactly. Pursuant to Civil Code, Boards may not discuss Board business or make Association decisions, such as approving proposals, outside of a properly noticed Board Meeting, so PMP must coordinate Board Member schedules to schedule a meeting. Oftentimes, depending on the urgency of the repair, Boards will simply ask that the item/bid be added to the next Board Meeting agenda. We wish it was as simple as PMP approving a bid and authorizing the work, but Association’s simply do not work that way.
It is also important to note that PMP, as Managing Agent, must use discretion when approving items that do fall within our monthly spending authority, focusing on life and safety issues first. For instance, let’s say that a light is out in a common area hallway or that there is a landscape light out. Easy enough to fix, right? And that would likely fall within PMP’s month spending authority, right? Maybe, but probably not. Most Associations will have a lighting contract with a local electrician who will visit the community once monthly to test and replace lights. To authorize a special trip to replace one or two lights that go out throughout the month limits PMP’s authority to address more pressing matters such as broken locks and gates, fire system repairs, elevator repairs or security. In addition, it is important to keep in mind that because Associations are non-profit, they work off of very tight zero sum budgets, and Board Members are nearly always focused on keeping costs, and thus assessments, as low as possible. Calling out an electrician each and every time a few lights go out would likely result in the need to increase assessments.
Please Note: Full-Service Associations with dedicated On-Site Management, Building Engineers and Janitorial Staff are set up to handle many maintenance related items more expeditiously than portfolio managed Associations. These types of Associations typically have much higher assessments, oftentimes thousands of dollars per month.
IX. My Association has a Facebook Page. Is this an appropriate place to make suggestions or report Association issues?
Typically, no. Most community Facebook pages are unaffiliated with the Association. They are created by residents as a means to connect with other residents on a social level. Most often Board Members and the Association’s Managing Agent are not members of the community Facebook Page, so it is fair to assume that anything posted to the Facebook page will not reach the Board or Management. As such, Association related suggestions or issues should be reported directly to Management (“PMP”). PMP is unique in that we have a live, friendly and helpful customer care department available Monday through Friday, 8:00am to 5:30pm to address resident questions or concerns. In addition, PMP also has a live emergency after hours team to address urgent matters (at the same telephone number).
It is also worth noting that Facebook pages should be considered public forums for all to see, even the “private”, invitation only Facebook pages. As such, it should be assumed that anything posted to Facebook can be seen by all, including new, prospective buyers. Our collective goal is to protect the value and integrity of the Association, and thus home values. Please do not negatively impact your Association’s reputation by posting negative comments or information on public social media forums.
X. PMP is Here to Help!
The primary purpose of your Association is to protect the value and integrity of the common area property as well as the corporation itself. Your Board of Directors are non-paid community volunteers who spend a great deal of time and effort working with your Association vendors and hired experts to achieve the community’s goals and objectives. When your Association partnered with PMP they so with your community’s best interest in mind. PMP has set the benchmark for extraordinary customer service in the Association Management Industry. Unlike other management companies, PMP has a full-time, in-house, live Community Care Team to answer every telephone call and assist residents with questions or requests for information.
Our skilled Community Care Team Members are intimately familiar with the details of your community and ready to assist you with the following common questions/action items:
|· Billing Inquiries||· ACH Registration|
|· Maintenance Requests||· Gates, Keys/Fobs|
|· Issue Work Orders||· Meeting Date Information|
|· Form Requests||· Account Questions|
|· Fee Waiver Forms||· Clubhouse Rentals|
|· Architectural Requests||· Violations|
|· Insurance Certificate||· General HOA Inquiries|
PMP wants your Homeowners Association experience to be a positive one, so PMP recommends that you familiarize yourself with the following Association governing documents to avoid confusion or frustration. These documents can be requested from PMP.
- Covenants, Conditions, & Restrictions (CC&R’s)
- Collection Policy
- Rules and Regulations
These documents will outline many commonly asked homeowner questions, from Association Rules & Regulations to Assessment due dates and penalties for late payments or non-compliance violations. They will even provide an overview of the Association’s organizational structure and the roles and responsibilities of your Board of Directors!
PMP is honored to be your community’s management partner and we look forward to working with you. Our dedicated Customer Care Team is standing by to provide you with the extraordinary customer service that has come to define PMP!