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Common HOA Definitions


HOA's are community corporations, formed by real estate developers for the sole purpose of marketing, managing and selling homes. It grants the developer privilege voting rights in governing the association. This allows the developer to exit their financial and legal responsibility of the organization by transferring ownership to the homeowners.  Membership and voting rights of an HOA, you must be a homeowner of that community. 

There are an estimate of 342,000 to 344,000 plus  community associations in U.S. and more are being built every year. Homeowners associations account for 51 to 55 percent of the total, condominium communities 42 to 45 percent, cooperatives 3 to 4 percent. There are 68 million people living in community associations, that's 21.1 percent  U.S. population living in community associations. Currently there's 80 percent  newly constructed homes in the U.S. that are in a homeowners association.

HOA communities are  structured as a private corporation and regulated by the state corporation statutes and/or specific association statutes. Each community  elect's their fellow homeowner to a governing board, called Board of Directors to run and direct its activities. Board of Directors have a fiduciary duty and have certain powers and responsibilities to govern in good faith to the community in which they are serving and also have individual duties to perform. 

If a board member breaches (surpass limits of authority) those duties, they may incur a or multiple liabilities, i.e. executes a contract without the authority to do so, executes a contract without disclosing that he or she is acting on behalf of the HOA, authorizing payment to a board member for doing their duty, personally assumes responsibility for a debt, may not make decisions that benefit their own interest or if their own conduct causes injury.