HOAs: Benefits, Founding, Maintenance & Management

Homeowners Associations (HOAs) come in all shapes and sizes and can often seem a bit ambiguous.  In an effort to better understand HOAs, what they do, and why we have them let's start with the definition.  According to RCW 64.38.010(1) an HOA is "a corporation, unincorporated association, or other legal entity, each member of which is an owner of residential real property located within the association's jurisdiction, as described in the governing documents, and by virtue of membership or ownership or ownership of property is obligated to pay real property taxes, insurance premiums, maintenance costs, or for improvement of real property other than that which is owned by the member."  

Benefits of a HOA
Given how complicated it sounds, why would anyone want to start an HOA? According to Investopedia, "an HOA exists to provide services for the residents of a community and ensure it maintains the vision of a well-kept, organized community that all members can enjoy living in."

In some cases this is as simple as enforcing basic rules and regulations between neighbors for community conduct as well as maintenance or improvement of properties. However, the duties of a HOA can be more extensive and include collecting assessments and dues to manage and pay for maintenance of common areas as well as providing various amenities and services to HOA and community members.

Founding An HOA
Most HOAs are started by a builder or developer when a property is developed prior to its sale, though at times neighbors can collectively come together to found an HOA for an existing neighborhood or group of homes seeking the benefits of an HOA.

Starting an HOA is fairly straightforward in Washington State.  According to Clark Simson Miller "to create a homeowners' association, the initial board of directors or declarant must draft and adopt a community declaration.  The declaration will include all the rules and regulations set forth by the association along with a map of all property within the community.  It will also provide the formula for the allocation of votes amongst homeowners.  Documents must be filed within the county, or counties, that the community is located." 

Maintaining An HOA
Once you've established an HOA, maintaining one is fairly straightforward.  You'll need to file an annual report each year with the Secretary of State by the deadline or risk administrative dissolution and a $25 fine.  You'll want to keep on top of any changes to the filing requirements, such as those outlined by The Apex Law Group.

The type of HOA established (Condominium Association vs a Homeowners Association) will determine the governing body of the association. Most associations are registered as nonprofit corporations, governed by RCW 24.03A or RCW 24.06, the "Nonprofit Miscellaneous and Mutual Corporations Act". Since other statues don't provide much procedural guidance for HOAs they often need to look to these RCW's for relevant law & information. 

While maintaining Non-profit status is relatively easy by filling the annual reports with the state, it's important to note that there are some Federal Laws that an HOA must follow.  According to the Homeowners Protection Bureau, LLC (HOPB), HOAs must still follow the Federal Fair Housing Act, The Americans with Disabilities Act, Federal Fair Debt Collections Practices Act, Over-the-Air Reception Devices, United States Bankruptcy Code, and the Freedom to Display the American Flag Act. 

Ultimately, the CC&Rs, Rules & Regulations, & Bylaws that were established at the founding of the HOA will be the primary guidance for how an HOA is supposed to behave, how they're supposed to manage their funds, interact with contractors, vote, and so forth.  If the governing documents don't address a particular issue, the above referenced RCWs are there to offer guidance and support.  

Finally, an HOA will be responsible with providing documents required by Washington State laws and codes in a timely manner for the sale or mortgage of HOA member properties though they are able to collect a fee for the time and materials needed to generate these documents and reports.

Professional Management or Not?
While I have yet to find a single sources of detailed and easy to understand information about the formation & maintenance of an HOA, it's clear that the complexity of managing an HOA depends on it's size.  The larger the HOA or the more complex the management duties, the more need there is for a professional property management company to support the HOA.  All Property Management outlines the value of a property manager as providing a more rapid response time, financial management, ensuring everything is compliant, conflict resolution is fair and unbiased, and vendor relations are managed effectively.  This can definitely add significant value to Homeowner Associations who are volunteer based within larger communities as these issues can absorb significant amounts of time. Its particularly important to have great professionals helping when larger sums of assessments & dues are being collected, reserves are being held for future capital projects or there are greater maintenance responsibilities of the HOA.

However for smaller & simpler HOAs such as those which primarily exist for community rules and perhaps basic maintenance of a playground, drainage facility or green space, the costs of a professional regular property manager may out weight their benefits. This is especially true when there is minimal or no collection of dues for maintenance of the property and improvements. That said, without some attention from owners to address the basic administration the HOA may become inactive, unregistered, uninsured or non-compliant with the HOA declarations or state or local regulations which could result in the HOA regulations becoming unenforceable or being subject to fines or penalties. These issues can cause challenges with selling or getting loans on the properties if unresolved. While money can be saved through direct management by owners, there is some cost of time, education & attention to ensure compliance.


This is information is generic and shouldn't be used to make final decisions by a homeowner or HOA. We recommend speaking with an attorney specialized in HOAs to consult and help you make the best choice for management of your HOA.