People often wish for a perfect house with a comfortable lifestyle and good neighbours or a community for a better living experience. One way to achieve all these goals is the homeowners’ association (HOA). In the real estate industry and planned communities, HOAs are becoming a key requirement. An HOA-governed community can include single-family homes, townhouses, high-rise buildings, or condos, usually within a planned neighbourhood.
What is a Homeowners’ Association (HOA)?
As the name suggests, HOA is an organisation formed by homeowners or residential communities. This association collects fees from homeowners to maintain the units or neighbourhood. HOA implements rules & regulations to maintain common areas and address shared concerns for the benefit of all house owners.
HOAs are commonly run by resident homeowners, and volunteers from the team will be elected to a board of directors who oversee the HOA’s management.
Why is HOA Important in Community Development?
For the development of the residential community, HOA plays a vital role. The following are common tasks performed by HOA:
- The HOA supports maintaining the quality and overall view of the neighbourhood to enhance the living environment. This can enhance property values.
- HOAs maintain community amenities such as playgrounds, swimming pools, sidewalks, roads, clubhouses and gyms. These shared amenities will attract more potential buyers.
- HOS can serve elders or mediators to solve disputes between neighbours fairly and obeying community rules and regulations.
- To improve social interactions, HOAs commonly organise events or activities. This helps you to generate better bonds between your neighbours.
How do HOAs Work?
The homeowners’ association (HOA) includes systematic ways to ensure the community’s smooth operation and adherence to its rules and regulations.
Board of Directors:
They oversee the management and administration, including making decisions on the association’s behalf, obeying rules and regulations, managing finances, and representing homeowners’ interests. The homeowners typically elect these directors. The election process can be done by voting, nominations, and establishing terms for board members.
Non-executive Directors:
A non-executive director in HOA is a member of the board who doesn’t have daily operational responsibilities. They only need to focus on strategic oversight, policy development, and ensuring the association’s effective governance and accountability.
Committees within HOAs
There will be various committees to perform specific tasks. They need to take responsibility for issues related to that. They can be landscaping committees, social committees, architectural review committees, and more.
Working with Property Management Companies
This will help to perform day-to-day operations, administrative tasks, maintenance of common areas, collecting dues & fees, corresponding repairs, and implementing rules & regulations.
How to Join and Form an HOA in India?
Joining an Existing HOA
Before joining an already existing HOA, you need to understand the requirements for membership. You should ensure you can follow the association’s bylaws, including essential regulations and guidelines applicable within the community. Commonly, when you buy a home in an HOA community, you automatically become a member unless the community’s rules say otherwise.
Forming a New HOA in Karnataka
If you want to create a new residential HOA, you need to follow the following procedure per the Government Association Act applicable in your city:
1. Gain Support from Residents: You need to gain the majority of residents’ support for the effective functionality of the association.
2. Draft Necessary Governing Documents: You need to draft a declaration of Covenants, Conditions, and Restrictions (CC&R) and bylaws (a clear set of rules, responsibilities, and structures). These bylaws define the association’s objectives, membership guidelines, and powers. Make sure those are in accordance with the Karnataka Apartment Ownership Act, 1972, as this Act focuses on the rights and responsibilities of apartment owners and sets guidelines for drafting bylaws specific to apartment complexes.
3. Register the Association: You need to register your HOA with the Registrar of Societies under the Karnataka Societies Registration Act, 1960, or under the Apartment Ownership Act for added legal recognition.
4. Elect Office Bearers: After the completion of this procedure, HOA’s office bearers, such as the president, secretary, and treasurer, will be elected by residents. These office bearers are accountable for day-to-day operations, financial management, meetings, and addressing residents’ concerns.
HOA Governing Documents
Covenants, Conditions, and Restrictions: The CC&R is a legally binding document that abstracts the rules, restrictions, and obligations, homeowners within the community must follow. It generally includes requirements related to property maintenance, architectural guidelines, land use restrictions, and obligations to pay dues or fees for common area maintenance.
Bylaws: These are the internal rules and regulations overseeing the operation and management. They include procedures for meetings, elections, appointment of officers, and other administrative functions of the association.
Rules and Regulations: By providing additional guidelines for specific matters within the community, rules and regulations supplement the CC&R and bylaws. They may cover pet policies, parking regulations, noise restrictions, and the use of shared facilities.
Legal Framework for HOAs in India
In India, to support HOAs favouring both board members and association members, the following are relevant legal frameworks:
Apartment Ownership Act
In India, this will vary from one state to another. This Act allows apartment owners to form associations that manage common shared property, maintain shared spaces, and enforce community rules, directly supporting homeowners in maintaining their residences’ value and quality.
The Societies Registration Act, 1860
It’s important to structure HOAs. With this Act, HOAs can be registered as societies, giving them a legal identity and allowing them to operate within a recognised legal framework. This status enables them to enter contracts, own property, and sue or be sued.
The Indian Contract Act, 1872
This Act ensures that HOA members follow agreements and decisions made in meetings or community rules.
Financial Management in HOAs
Financial management in HOA is a very important task. It should be transparent in following obligations and providing necessary services to residents.
Budgeting and Assessment Process
The Board of Directors creates and approves a budget for the association. This budget includes expected costs for maintenance, repairs, insurance, and management for the upcoming year. To cover these costs, homeowners pay fees (called assessments or dues) every month, every three months, or once a year.
Collection of Dues and Fees
HOA fees, called assessments or dues, will cover the budget outline. If someone fails to pay dues, it may result in penalties or enforcement actions by the association, such as placing liens on properties or pursuing legal remedies.
Financial Reporting and Transparency
The HOA is needed to keep proper records and provide regular financial reports to members. The financial matters should be transparent and clear. Any members can review documents, including budgets, financial statements, and audits, anytime.
General HOA Rules and Regulations
In India, commonly, all HOAs include the following rules and regulations:
- HOAs commonly set noise limitations, avoiding loud music at specific times of the day.
- Most HOAs restrain the number of pets you can raise within the compound. They also might have restrictions as to where your pets can go.
- HOAs control where and how many cars you can have, as this can control street usage.
- HOAs set yard rules, such as trees, lawn maintenance, and keeping the yard free of clutter. Rules can also be applied regarding the kinds of plants and flowers you can have.
- HOAs have rules about trash disposal. They set rules on when and how to throw away garbage, the days for collection, and they do not allow large items to pile up in the front yard.
- HOAs may have fire safety rules, like which smoke detector to use and how to throw away flammable items safely.
Challenges of HOAs in India
The following are some drawbacks you need to consider:
- HOA fees can be difficult to manage if they increase over time.
- HOA can set strict rules and regulations; this can constrain the freedom of individuals.
- The HOA board’s rule enforcement and decisions can cause conflicts between residents and the HOA.
- There is a possibility of misuse of funds by board members.
Homeowners associations are important in building an organised and interactive community. This will also influence the resale value of the corresponding region.
Before joining a homeowners’ association (HOA), understand your rights as a member. Learn governing documents about what actions will be permissible and what restrictions apply. After joining, communicate clearly with the board, attend meetings, and advocate for your interests during discussions. Overall, HOA will help to improve life for everyone in the neighbourhood and ensure a harmonious, well-maintained, and supportive living environment.
Hemali Patel