2010-10-cartoon-HOA-lowMany Minnesotans live in communities that are ruled by a homeowners association, community association, or other type of community organization that oversees the rules and regulations put in place by the homeowners.  The purpose of these associations is to keep property values high, help combine expenses in shared communities and provide services for the entire community.  Associations can be a great way for homeowners to be involved in their communities and a chance to have a say in how the community should live.

Homeowners and community associations are typically set up as non-profit corporations.  These communities are run by a Board of Directors which is responsible for caring for the community by collecting dues, enforcing rules and regulations and keeping track of vendors including gardeners, maintenance workers and snow removal.  These board members are required to act in the best interest of the community and follow the rules put in place by the homeowners.  Additionally, the board of directors is required to use reasonable care not to cause harm to the association and its members.  Most members of the board are volunteers rather than paid employees.  Frequently, the board of directors will need to seek additional assistance from experts including attorneys when issues come up amongst homeowners.

Rules followed by the Board of Directors are voted in by members of the community and placed in a document called the Bylaws.  Board members are required to establish a budget, maintain adequate reserves and following the rules as set out in the bylaws.  Members of the board of directors typically include a president, vice president, secretary and treasurer.  Larger associations may include more members including members at large.  Like a corporation, the association has rights and responsibilities which include the responsibility to maintain the property and keep property values as high as possible.

Minnesota law requires that associations not violate State and Federal statutes in creating prohibitions and restrictions.  Minnesota governs associations through the Minnesota Common Ownership Interest Act.  Many communities in Minnesota fall under this law which requires that the association have certain documents in place such as bylaws and requires the association follow its own rules and procedures.  Additionally, the Minnesota Common Ownership Interest Act allows association members access to documents kept by the association, create an annual report and allows lien and foreclosure procedures.

Real estate buyers should be aware of whether an association is in place and what its rules are before making a home purchase.  Buyers should know what the association fee is, what is included in the fee as far as insurance and utilities are concerned, what the reserves are, whether any special assessments are coming up which is where the association charge a special fee for a project or other maintenance, what the pet restrictions are and whether rentals are allowed.  Because some associations have limitations as to what percentage of the property may be rented out at one time, certain associations may not be desirable to real estate investors.