In California, homeowners associations, or HOAs, are governed by bylaws.
These Bylaws establish how the association will be run, and by a declaration of Covenants, Conditions and Restrictions.
The declaration of Covenants, Conditions and Restrictions outlines the rules of the association, which typically operates as a corporation. Both sets of documents are usually drawn up by attorneys during the initial stages of development planning. During this time, the Department of Real Estate in California oversees developments with HOAs until sales begin. Once the property has owners, there are several laws that California HOAs must adhere to, including the state’s corporation codes and the Davis-Stirling Common Interest Development Act. Presently, no agencies in the state regulate homeowners associations.
Homeowners Association Boards
Since homeowners association boards are usually corporations, a board of directors is established to operate the association. The Davis-Sterling Common Interest Development Act gives associations a framework for governing themselves and handling disputes pertaining to the association, according to the California Department of Real Estate. The act also specifies the roles and responsibilities of the HOA Board of Directors. Responsibilities include collecting assessments, paying association bills, managing association finances, preparing and delivering budgets and running the association efficiently.
Liability
In California, HOA laws protect volunteer association board members from personal liability as long as the member has acted in good faith, in the best interest of the homeowners association and with the care that a reasonable person would use in a similar situation, according to California attorney Melissa C. Marsh. In addition, California law states that board members still cannot be held liable if the HOA board has directors’ and officers’ insurance coverage, and damages are more than such insurance covers.
Assessments
HOAs levy fee assessments on homeowners to cover any operating and maintenance expenses incurred by the association. While the association board has the ability to increase monthly dues, they cannot raise them by more than 20 percent a year, unless a majority of homeowners approve the measure, according the California Association of Homeowners Associations. All homeowners must be notified in writing of any dues increase at least 30 days, but not more than 60 days, before the increase starts. Before the beginning of each fiscal year, the board must make the budget public to homeowners in the community at least 30 days, but not more than 45 days, prior to the first day of the fiscal year.
Fines
California HOA law allows the association Board of Directors to fine homeowners for breaking association rules or causing damage to common elements in the community, but the association board must follow specific guidelines, according to Melissa C. Marsh. The board is required to notify the homeowner of the alleged offense in writing at least 10 days prior to a board meeting. The homeowner has the right to address the board at the next board meeting, and the board will determine if an offense was committed. If the board agrees to fine a homeowner for violating a rule, then the board must notify the owner of the fine in writing within 15 days of the board’s ruling.
Liens and Foreclosure
In the event that a homeowner does not pay a regular or special assessment within the time specified in the Associations’ Collection Policy, the owner’s account is considered delinquent. As a result, the owner can be fined a late fee equaling either $10 or 10 percent of the monthly dues amount, whichever is more, according to the Davis-Stirling Common Interest Development Act. If a delinquency is not resolved, the association can place a lien on the property in the amount of the assessment and any fees incurred during the process, including attorney’s fees. Furthermore, California homeowners associations can legally foreclose on the property and file a judgment against the homeowner.