Like virtually every segment of society, community associations (e.g., common-interest ownership communities, condominiums, homeowners associations and cooperatives) are subject to a wide range of state and federal legislative and regulatory policies. That level of interest is predictable given the size and significance of the community association housing market, with more than 60 million Americans living in 325,000-plus communities.
(See page 3 for basic background information on the nature of community associations.)
State Issues
As local entities, community associations attract the greatest interest from state legislatures, especially in states that have seen the greatest population growth during the past 30 to 40 years. These include Arizona, California, Florida, Maryland, Nevada, North Carolina and Virginia. Some legislative initiatives are spearheaded by those who live and work in associations; others are driven by those who find fault in the way some community associations are governed and managed.
The following are just a few of the more common community association-related issues that arise in state legislatures:
- Community interest ownership acts that are based on the recommendations of the Uniform Law Commission, an organization that promotes uniformity of law when uniformity is desirable and practicable
- The collection of homeowner assessments that fund the daily operations of the community and reserve funds that are set aside for long-term capital improvement projects
- How communities collect delinquent assessments and, in the most serious cases, how liens and foreclosures are used to secure payment
- Clarification of the rights and responsibilities of association board members and residents
- Procedures for electing homeowners to community association governing boards
- Proposals to require licensing of community managers
- The degree to which associations limit the use of clotheslines and solar panels
- The right of associations to collect “transfer” fees when homes in the community are sold
State legislative initiatives also address double-taxation issues, rental restrictions, architectural guidelines, smoking, home-based businesses, parking, governance procedures, yard and political signs, artificial turf, insurance, construction defects and the creation of homeowner advocate offices.
CAI’s 35 state legislative action committees (LACs), which track and analyze more than 5,000 state legislative proposals annually, include homeowners, association board members, community managers, attorneys and other professionals who provide guidance and services to their state’s community associations. These CAI member volunteers strive to reach consensus on what is best for their communities, sometimes in the face of a few virulent critics who target not just associations, but also the homeowner volunteers who are elected by their neighbors to lead their associations.
While most bills fail to become law, significant legislative proposals are enacted. As of early 2014:
- 37 states have passed legislation addressing the use of deed-based transfer fees
- 22 states have adopted priority lien statutes for delinquent association assessments
- 9 states have adopted community manager licensing requirements
- 8 states have adopted common-interest ownership acts
- 7 states prevent associations from enforcing prohibitions on clotheslines
- 4 states have created an office of condominium ombudsman or an HOA information center
CAI recognizes that local and state CAI chapters and state LACs are in the best position to determine which legislative proposals are in the best interests of communities and homeowners in that state. Predictably, there can be different points of view about the nature, scope and benefits of particular legislation—even among community association stakeholders. As a result, CAI gives LACs substantial latitude to determine which measures to initiate, support or oppose, as long as their positions are consistent with CAI Public Policies.
Federal Advocacy
Supported by members of a Federal Legislative Action Committee, CAI is an increasingly assertive national advocate for community associations, both in Congress and among federal regulatory agencies. Recent issues of emphasis include:
- Government guidelines affecting the availability of mortgage financing
- Certification that allows prospective buyers to obtain financing to purchase homes in condominium communities (Federal Housing Administration)
- Disaster assistance for associations (Federal Emergency Management Agency)
- The relationship between deed-based transfer fees in associations and federal mortgage underwriters (Federal Housing Finance Agency)
Legislation adopted in 2006 giving association residents the right to fly the American flag was based largely on CAI's own public policy. Other issues of particular interest to associations and CAI include fair housing laws, debt collection practices, flood insurance and ham radio transmitters.
CAI’s View
CAI’s active legislative and regulatory advocacy is predicated on CAI’s fundamental mission of helping homeowners build better, stronger and more sustainable communities. Our goal is to inspire professionalism, effective leadership and responsible citizenship through self-regulation or, as needed, constructive government action.
CAI supports community association self-governance and opposes burdensome and complicated government-imposed regulations. We believe there communities, as legal entities, should be governed by elected homeowners, allowing these leaders to adopt and enforce procedures and rules that will protect property values, preserve the nature and character of their communities and meet the established expectations of owners.
Nature of Community Associations
The rapid growth of community associations has been driven by local municipalities that face the costly challenge of maintaining infrastructure. Associations became increasingly popular in the 1960s and 1970s as towns, cities and counties sought to transfer the burden of municipal services to these communities. Services include managing parklands and recreational facilities, maintaining streets and sidewalks, purchasing trash removal services, managing storm water management and paying for landscaping services and ground maintenance.
Community associations are not-for-profit entities that collect assessments from homeowners to fund these services—obligations that had traditionally fallen to municipalities. Other costs typically include insurance coverage and services provided by community management professionals, accountants, landscapers, reserve specialists, software providers, security personnel, attorneys and others.
LINKS
National surveys of Community Association Homeowners
State and national Community Association statistics
Issue summaries
Government and Public Affairs: Dawn Bauman, senior vice president, government and public affairs [email protected]; (703) 970-9224