Comparing Homeowners’ Associations to Local Government: Who’s in control, and how do we vote?

By Deborah Goonan

This blog series, Are Homeowner and Condo Associations Mini-Governments? will compare the typical governance structure of HOAs (using the term generically) to our local governments, as guided by the principles of our Constitutional Republic.

Part 2: Key differences between Homeowners’ or Condo Associations and Local Governments in America – Control and Voting Procedures

So, how are HOAs and our local governments alike?

  • Both have the power to tax (assess)
  • Both may use revenue collected from homeowners to maintain infrastructure, such as roads, storm water system components, multifamily structures and parking areas (similar to maintenance of public housing), community green spaces such as parks, recreational facilities such as community pools or playgrounds, etc.
  • Both may use revenue collected from homeowners to provide various levels of security for the community
  • Both have the authority to enact and enforce local ordinances (rules and regulations), including the authority to issue fines or other penalties against the homeowner
  • Both have the authority to place a lien on your property for non-payment of taxes (assessments), and can even foreclose on that lien as a last resort to collect on the delinquency

Seems to make a compelling case that HOAs are mini-governments! But, not so fast! Now let’s look at the ways HOAs differ from our local governments.

  1. HOAs are controlled by either a Developer or unpaid Volunteers.

HOAs are created by private developers, one or more original landowners, or real estate investors. The Developer and related affiliates continue to govern an Association by appointing the Board until the construction project is nearly complete. That process can take years or perhaps even decades. Some Developers retain control as long as even one lot remains undeveloped.(1) When the developer turns over control to the homeowners, control of the Association then passes to an elected Board of volunteers, who may or may not be qualified for the role.

Our municipal or county governments are established under public control from the start. We elect a board of commissioners or a town council and perhaps a Mayor. These are paid offices, and we expect that the individuals we elect have the skills, knowledge, and leadership capability to do their jobs effectively.

  1. Voting and election processes differ.

Our HOA Boards are elected using the corporate model of governance. Only shareholders, in the case of HOAs, homeowners or lot owners, have the right to vote. Votes are allocated according to the proportion of shares owned – generally one vote per housing unit or lot. Sometimes each owner’s vote is a proportional based on the size of a condo unit. The more property you own, the more voting interests you hold.

State laws vary on the manner of conducting HOA and Condo elections. Some require the use of secret ballots, others allow the use of proxies. Some statutes override original By-Laws of the HOA, others defer to what is written in the By-Laws or CC&Rs. There are no national standards to ensure the integrity of the HOA voting process.

Our local governments allow all registered voters over the age of 18 to vote, based upon residency. Each resident gets one vote, regardless of whether or not they own property. Votes for elections or amendments by referendum occur at designated polling places or by mail, both by secret ballot. We expect oversight by an election commission to help ensure the integrity of the process.

(1) MetroWest residents pay $2M to Gain Control of Community, Orlando Sentinel, Aug 20, 2014

http://www.orlandosentinel.com/os-metrowest-developer-20140819-story.html

Next: Part 3, No Division of Power, Due Process

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