Formation and Structure of Community Associations

Establishment of Community Associations

Condominiums and Homeowners Associations are typically established by developers during the creation of a new residential subdivision. The developer drafts a Declaration and Bylaws (Governing Documents), which are recorded with the county recorder's office. These Governing Documents serve as the governing documents of the HOA, outlining the rules and regulations that homeowners must follow.

Difference Between a Condominium and HOA

Whether a development is a Condominium or Homeowner’s Association has little to do with whether units are connected, amenities offered, or the maintenance obligations of the Association versus those of the Owners.  Ultimately, it comes down to land ownership.

• In a Condominium, individual unit owners own what the Declaration defines as their “Unit.”  (This is often – but not always - defined as the drywall of exterior perimeter walls in).  All owners also collectively own an undivided interest in the “Common Elements” (i.e. everything else).  Condominiums generally do not hold title to any common land.  Condominiums are governed by Chapter 5311 of the Ohio Revised Code.

• In a Homeowner’s Association (also known as a Planned Community, Master Association, etc.), owners own their individual lots.  The Association holds legal title to all common areas.  Homeowners Associations are governed by Chapter 5312 of the Ohio Revised Code.

Governing Documents

The primary governing documents of a Condominium or HOA in Ohio include:

• Declaration: These legally binding documents declare the existence of the community, outline the deed restrictions and maintenance obligations. 

• Bylaws: The bylaws detail the operational procedures of the Association, including the election of board members, meeting procedures, and the roles and responsibilities of officers.

• Articles of Incorporation: These documents establish the Association as a legal entity and are filed with the Ohio Secretary of State.

• Rules and Regulations:  Ohio law permits an Association’s Board of Directors to adopt rules that govern the Association and further define and clarify the deed restrictions (pet rules, parking restrictions, etc.)

Over time, it may become necessary to amend the Declaration and Bylaws to address changing needs or legal requirements. Amendments to these documents typically require a vote of 75% of the membership to pass.

Board of Directors

Election and Composition

Community Associations are governed by a Board of Directors, who are elected by the owners to carry out the day-to-day operations of the Association.  The election process is outlined in the bylaws, and board members usually serve staggered terms to ensure continuity.

In addition to being governed by Ohio Revised Code Chapter 5311 (Condominiums) or 5312 (HOAs), Community Associations are Nonprofit Corporations under Ohio law and are subject to Ohio’s Nonprofit Laws (Ohio Revised Code Chapter 1702).

Roles and Responsibilities

Duties of the Board of Directors generally include:

• Enforcing the Governing Documents

• Managing the association's finances, including budgeting and collecting assessments

• Maintaining common elements

• Hiring and overseeing management, landscapers, contractors and other persons or entities who work for the Association.

• Maintaining appropriate insurance policies

• Obtaining Reserve Studies

• Adopting rules that govern the common elements.

Meetings

Community association boards meet regularly. The frequency, notice and other requirements for these meetings are specified in the bylaws. Additionally, Ohio law requires that meeting minutes be recorded and made available to homeowners upon request. 

Associations are also required to hold an Annual Meeting of the membership. The primary purpose of this meeting is to elect the Board of Directors. Again, the Bylaws will dictate the time of year, notice and other requirements for this meeting.

Financial Management

Budgeting and Assessments

Community Association boards are responsible for creating an annual budget that outlines the expected expenses for maintaining and improving the community. This includes not only the expenses owners can see, such as those necessary to operate amenities, landscape common elements, but also professional fees (management, accounting, legal), insurance, and other operational expenses. This budget is funded by assessments, which are regular fees paid by owners.  The method for payment of assessments is set forth in the Governing Documents.

Reserve Funds and Special Assessments

Ohio law requires Community Associations to maintain reserve funds to cover repair and replacement of major capital items (common building exteriors, clubhouses, recreational amenities, signage, lighting, private roads, retention ponds).  These funds are collected over time through regular assessments and help ensure financial stability and reduce the need for significant special assessments.  The most common way to determine a Community Association's reserve needs is to obtain a reserve study from a qualified expert.

If reserves are not sufficient to cover maintenance needs, a Community Association may impose a special assessment to cover the costs.

Architectural Control and Property Use

Architectural Review Committees

Many Community Associations in Ohio have Architectural Review Committees (ARCs) responsible for reviewing and approving any exterior changes or additions to properties within the community. Owners must submit plans and obtain approval before commencing any projects, ensuring that changes are consistent with the community's aesthetic standards.

Use Restrictions

Declarations typically include various use restrictions to maintain the community's character and property values. Common restrictions may include:

• Limitations on the type and color of exterior materials

• Restrictions on the placement and type of fencing

• Prohibitions on commercial activities or certain types of vehicles

• Requirements for landscaping and property maintenance

Enforcement of Rules and Regulations

Violation Procedures

When a homeowner violates the Governing Documents, the Board of Directors board has the authority to enforce compliance. The enforcement process typically involves several steps:

• Notice of Violation: The board sends a written notice to the homeowner outlining the violation and providing a deadline for corrective action.

• Notice of Intent to Impose Enforcement Assessment/Right to a Hearing: If the owner fails to correct the violation, the next step is to send notice of an intent to impose an enforcement assessment. This notice must again put the owner on notice of the violation and provide notice of the enforcement assessment to be imposed.  At this point the owner must also be given the right to a hearing before the Board of Directors.

• Fines and Penalties: If the violation is not resolved, the board may impose enforcement assessments or take other remedies (such as entering the property to remove or repair the violation)   

• Legal Action: In severe cases, the Association may take legal action to enforce compliance, including seeking injunctive relief or declaratory action.

Homeowner Rights and Responsibilities

Rights

Owners within a Community Association have several rights, which generally include:

• The right to access and review the Association's books and records, including financial records and meeting minutes

• The right to vote on amendments to the Declaration and Bylaws

• The right to elect members of the Board of Directors

Responsibilities

Homeowners also have responsibilities to their community, including:

• Paying assessments and special assessments in a timely manner

• Complying with the Governing Documents

• Maintaining their property in accordance with the Governing Documents

• Participating in community meetings and activities

• Maintain property insurance as required under the Declaration

Community Associations play a crucial role in maintaining the quality and value of residential property in Ohio. By understanding the laws and procedures that govern Community associations, owners and board members can work together to foster a harmonious and thriving community. Whether you are a new homeowner or an experienced board member, staying informed about your rights and responsibilities is essential for the success of your association.