10 Fundamental Principles of a Homeowners Association

January 28, 2014 / by HOA Manager

10 commandmentsEven though you live in a homeowners association, and may even be a member of the HOA board, you might be surprised how many of your neighbors, owners and renters, don’t really understand the fundamental nature of common-interest communities or what a big business they are. Many others, including the media and government officials, lack a true understanding of the community association concept.

Community Associations Institute (CAI), a national membership organization that represents the best interests of common-interest communities like yours, developed 10 basic principles that answer three essential questions:

  • What is the basic function of a community association?
  • What are the essential obligations and expectations of homeowners?
  • What are the core principles that should guide association leaders?

10 Basic Principles of a Homeowners Association

  1. Associations ensure that the collective rights and interests of homeowners are respected and preserved.
  2. Associations are the most local form of representative democracy, with leaders elected by their neighbors to govern in the best interest of all residents.
  3. Associations provide services and amenities to residents, protect property values and meet the established expectations of homeowners.
  4. Associations succeed when they cultivate a true sense of community, active homeowner involvement and a culture of building consensus.
  5. Residents in the homeowners association have the right to elect their community leaders and to use the democratic process to determine the policies that will protect their investments.
  6. Association homeowners choose where to live and accept a contractual responsibility to abide by established policies and meet their financial obligations to the association.
  7. Association leaders protect the community’s financial health by using established management practices and sound business principles.
  8. Homeowners association leaders have a legal and ethical obligation to adhere to the association’s governing documents and abide by all applicable laws.
  9. Association leaders seek an effective balance between the preferences of individual residents and the collective rights of homeowners.
  10. Association leaders and residents should be reasonable, flexible and open to the possibility—and benefits—of compromise.

Community Associations are Big Business

  • More than 1.7 million volunteers serve as members of their homeowners association board and another 400,000 participate as committee members. There are 230,000 annual association meetings with democratically conducted elections and another nearly 2.5 million board meetings during the year in which owners debate and shape their community’s future. To assist HOA boards, more than 1.4 million committee meetings are held each fiscal year. The value, in the year 2000, of this volunteer participation was nearly $275 million. The dollar equivalent for volunteer time, using data from the 1998 Economic Report to the President, is $15.39/hour volunteered.

  • HOA boards supervise the collection of more than $34 billion in annual assessments and maintain investment accounts of another $35 billion reserves.

  • Homeowners associations provide a place to live for nearly 60 million individuals in homes that have an estimated resale value of almost $2.5 trillion.

  • These owners spend another $25 billion on internal home improvements and an estimated $85 billion on mortgage interest and real estate taxes.

Consider reading these homeowners association principles at your next HOA board meeting to help ensure residents understand the fundamentals of the community and the rights they have.

Fundamentals can be downloaded at www.caionline.org/governance/fundamentals.pdf. For more information about Community Associations Institute, go to www.caionline.org.

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Topics: HOA Management, Member of HOA