More and more new developments are now being developed today as Community Associations today than ever before. The reasons are both obvious and beneficial for many homeowners. By creating Associations, individual Owner can benefit for the mutual shared expenses of entryway Marquees, common shared amenities like pools, gazebos, conference or shared meeting spaces, laundry, and even utility services like a building boiler for heat or common shared internet access. It all boils down the developer (declarant) that builds the community based upon the demand that is seen from potential buyers.
The typical Condo or Home Owner Association (HOA) generally has 3 types of property in their association, including “Owned Elements”, “Common Elements”, and “Limited Common Elements”. Owned Elements are those parts of the structure that are the under the exclusive physical ownership and control of the property owner. For an attached Town Home, as an example, an Owned Element would be the interior of the unit from the inside walls. Limited Common Elements are those where the association has the duty to maintain, but the element itself is actually under the limited use of the property owner. An example of a Limited Common Element would be a deck that is attached to the unit, and can only be accessed by the property owner from the inside, but is actually owned and maintained by the association. Finally, a Common element is an element that is exclusively owned and maintained by the association and may be used by all association members.
Home Owner Associations also are tasked with the administration of the day-to-day tasks and responsibilities of the Condominium or HOA, which includes setting and enforcing rules like the use and operation of the community, as well as the individual units. Minnesota Associations are also generally covered under the Minnesota Common Interest Ownership Act (“MCIOA”), specifically Chapter 515B of Minnesota Statute, and the organizations governing documents (i.e., declaration, bylaws, articles of incorporation, and rules and regulations). Depending on when a particular condominium or townhome association was formed, and its governing documents, Chapters 515 or 515A may also apply to particular circumstances. MCIOA was created in 1994, so generally speaking of your declarations (per your property title) were dated before 1994, your association falls under the older rules, unless your HOA has gone thru the process of updating their declarations.
A condominium or townhome association must be governed by a board of directors, which is generally elected by the association’s members. This Board of Directors (BOD) is responsible for enforcing existing rules, carrying out the actions and duties of the association, and for implementing the changes requested by majority of the members (through parliamentary procedure, or “Roberts Rules”). When Associations are first established, usually the developer is also the declarant, and will; run the association until a stipulated number of the units are sold, at which time the control would be delegated to the BOD. At this time the Association would be self-functioning and solely governed by the members.
Associations are expected by the members to operate the Association responsible and to preserve, protect, enhance, and maintain the value of the common interest community. While it is the HOA or condominium association’s governing documents that specify the board’s powers, the association board generally has the power to administer all facets of the common interest community, including hiring an agent to help with the financial and administrative management of the association.
With these powers, the association has the right to charge members for their share of the budgeted expenses, to impose special assessments, and to maintain and use reserve funds for the long-term maintenance and improvements to the properties. By paying a pro-rated share of the expenses of the association, through the budget and assessment process, the homeowners are proportionally paying for the current and long-term maintenance obligations of the association.
The managing agent who is hired by the BOD can perform many functions in support of the Association including collecting assessments, paying the association’s bills, enforcing the rule’s of the Association, applying fines for infractions, contracting with vendors to perform services and repairs to common and limited common elements, as stipulated in the declarations. A good managing agent can really help an association meet is fiduciary obligations for accounting for the associations financials, and help guide an association to greatly reduce risks, maximize governing doc compliance, and maintaining property values.
For more information on Home Owner Associations, please contact a property manager at 33rd Company®