This information is a public service of the Community Associations Practice Group, serving the greater Tampa Bay area, including St. Petersburg, Largo, Clearwater, Sarasota, Bradenton and much of west central Florida.
In this section, we hope to better clarify key terms and concepts in to help consumers and companies better understand the guiding principles of community and homeowners' associations, association powers and assessments, and the laws that guide associations and their members.
A homeowners' or community association is an organization comprised of all owners of units in a common interest development, and is given authority to enforce the covenants, conditions, and restrictions and managing the common amenities of the development. Most homeowners' associations are now non-profit corporations, and are subject to state statutes that govern non-profit corporations and homeowner associations.
The fastest growing form of housing in the United States today are common-interest developments, a category that includes planned-unit developments of single-family homes, condominiums, and cooperative apartments. Before the first unit is sold in one of these developments, the developer records restrictive covenants on
all of the properties. Restrictive covenants limit the property rights of individual homeowners, by contractual agreement.
Since 1914, builders of common interest developments and firms and companies that sell services to homeowner associations have said that deed restrictions protect property values - a rationale that remains the most common justification for the loss of freedom inherent in a development run under a regime of restrictive covenants. For example, these covenants may authorize the board or a designated committee to approve the color a house is painted, or the types of flowers and shrubbery planted, and even regulate the conduct of homeowners. Restrictive covenants run with the land, meaning that they bind subsequent purchasers.
Proliferation of Homeowners' Associations
Since 1964, homeowner 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.
Powers
Like a city, associations provide services, regulate activities, levy taxes (assessments), and impose fines. Unlike a municipal government, however, most homeowners associations are incorporated as non-profit corporations, and are therefore governed by a board of directors. The board carries out tasks which would otherwise be performed by local governments or require private legal action under civil law. Boards appoint corporate officers, and may create subcommittees, such as "architectural control committees," pool committees and neighborhood watch committees.
Association boards are almost always comprised of volunteers from the community, which sometimes do not have any formal training, certification or credentials in business. During the construction and development phase of a new community, the developer of the property occupies seats on the board of directors until there are enough homeowners within the community to sustain the responsibility of filling all seats on the board. Some association boards hire property management companies and association law firms to assist them in conducting association business.
Assessments
Homeowner associations can compel homeowners to pay a share, usually per-unit or based on square footage, of common expenses. These expenses generally arise from common property, which varies dramatically depending on the type of association. Some associations are, quite literally, towns, complete with private roads, services, utilities, amenities, community buildings, pools, and even schools. Others have no common property, but may charge for services or other matters determined to be in the best interests of the membership. For example, an association can bring legal challenges against other entities as determined by the board of directors, or membership vote if the governing documents so require. In states such as Colorado and others that have adopted the Uniform Common Interest Ownership Act, homeowners associations may have standing to represent their members in an action against the subdivisions' builder for negligence or other causes of action.
Assessments paid to homeowner associations have mushroomed to tens of billions of dollars a year.
Controversies and criticisms
Covenants and deed restrictions are exclusionary by nature, and in the first half of the 20th century most were racially motivated. For example, a racial covenant in a Seattle, Washington neighborhood stated, "No part of said property hereby conveyed shall ever be used or occupied by any Hebrew or by any person of the Ethiopian, Malay or any Asiatic race."[4] In 1948, the United States Supreme Court ruled such covenants valid, but unenforceable, in Shelley v. Kramer. However, private contracts kept them alive until The Fair Housing Act of 1968 banned them. These racial restrictions are often still found on deeds throughout the United States.
Constitutional Challenges
Homeowners chafing under political speech restrictions imposed by modern associations sometimes rely on federal or state constitutional guarantees for rights that most Americans living outside of association areas take for granted. These rights include the freedom of speech, due process, and the right to peaceably assemble. However, these are rights that protect individuals against governmental abuse, and the associations argue that they are not governmental but private contractual entities.
Traditionally, courts have held private 'actors' are not subject to constitutional limitations -- that is, enforcers of private contracts are not subject to the same constitutional limitations as police officers or courts. In joining an association, homeowners can "contract out" of their constitutional rights, because boards of directors are private actors, and not government agents. Unhappy homeowners have argued that state judicial enforcement of restrictive covenants is state action, citing Shelley v. Kraemer. In Shelly private racially-restrictive covenants prevented whites from selling their houses to non-white buyers. These covenants were breached, and an attempt was made to enforce the private covenant in the state courts. The U.S. Supreme Court held that the action of the state judges was sufficient state action to bring the covenants under the prohibition of the 14th Amendment to the U.S. constitution, which provides that "No state shall ... deny to any person ... the equal protection of the laws." The racial covenants were repugnant to this provision, and hence were unenforceable in state courts under the United States Bill of Rights. However, in 2002 one appeals court, the 11th Circuit, declined to extend Shelley beyond racial discrimination, and so disallowed a challenge to an association's prohibition of "for sale" signs in Loren v. Sasser. In Loren, the court ruled that outside the racial covenant context, it would not view judicial enforcement of a private contract as state action, but as private action, and accordingly would disallow any First Amendment relief.
In a more recent 2002 case, after trial in the New Jersey Superior Court the trial judge ordered that the homeowners' association would not be subject to prohibitions against interfering with free speech of the New Jersey constitution, provisions that parallel the First Amendment but are more broadly applied. Committee for a Better Twin Rivers v. Twin Rivers Homeowners' Association. This trial judge's order was reversed on appeal, and the associations' restrictions on free speech were struck down, in Committee for a Better Twin Rivers v. Twin Rivers Homeowners' Assoc. (N.J. Superior Court, 2006).[12] In the Twin Rivers case, a group of homeowners collectively called "The Committee for a Better Twin Rivers" sued the Association, for a mandatory injunction permitting homeowners to post political signs and strike down the political signage restrictions by the association as unconstitutional. The appeals court held the restrictions on political signs unconstitutional and void, relying on a 1946 United States Supreme Court case, Marsh v. Alabama. In Marsh, the Court held that a company-owned town that functioned like a government should be treated like one. Accordingly, the company town was subject to the First Amendment and could not abridge the employees' freedom of speech. Similarly, the New Jersey appeals court found the Twin Rivers Homeowners' Association was open to the public, contained public schools within its boundaries, and provided many traditionally public services and amenities such as roads. The court concluded the association had assumed many governmental functions, and therefore the New Jersey state constitution would apply to protect fundamental liberties from excessive abridgment by those who set and administered that Associations' "standards of the community." The residents' free speech liberties were excessively abridged by provisions in the standards that sought to prohibit them from even posting political signs; such prohibitions were therefore void.