What is a Homeowner’s Association?

Homeowners’ association

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A homeowners’ association (abbrev. HOA) is the legal entity created by a real estate developer for the purpose of developing, managing and selling a community of homes. It is given the authority to enforce the covenants, conditions, and restrictions (CC&Rs) and to manage the common amenities of the development. It allows the developer to legally exit responsibility of the community typically by transferring ownership of the association to the homeowners after selling off a predetermined number of lots. Most homeowners’ associations are non-profit corporations, and are subject to state statutes that govern non-profit corporations and homeowners’ associations.

The fastest growing form of housing in the United States today is common-interest developments, a category that includes planned-unit developments of single-family homes, condominiums, and cooperative apartments.[1] Since 1964, homeowners’ associations have become increasingly common in the USA. The Community Associations Institute trade association estimated that HOAs governed 23 million American homes and 57 million residents in 2006.[2]

The origins of this modern version of utopian societies can be traced back to a publication by the Urban Land Institute in 1964, also known as TB 50. [3] This technical bulletin was funded by The National Association of Home Builders and by certain federal agencies: the FHA, U.S. Public Health Service, Office of Civil Defense, the Veterans Administration and the Urban Renewal Administration. [4]

Only nine years later, in 1973, Community Associations Institute (CAI) was formed to deal with problems with association management. It was an educational organization then, but as problems continued CAI made substantial changes in 1992 to its structure and became a business trade group primarily to lobby state legislatures. [5] In 2005, CAI dropped its membership category for HOAs since, presumably, HOAs were consumers, users of CAI services — and don’t belong in a tax benefited group whose aim is to support the business interests of its members.

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