Homeowners associations are quickly becoming ubiquitous with home ownership. According to the 1990 United States census, nearly one out of every eight Americans lived in a CID; since that time, an estimated (60%) of the new housing developed in the United States is CID-type housing. The bulk of new residential projects in Oregon (and nationwide) are governed by homeowners associations, which in turn are run by a board of directors made up of individual homeowners. For many new homeowners, figuring out which type of development they live in, the statutory provisions that govern their association, and the rights and obligations of owners within an association is a challenge.
Generally, homeowners associations have the following characteristics: 1) membership is mandatory and automatic, 2) certain documents (CC&Rs, Bylaws, Rules and Regulations) impose mutual obligations on the association and the owners, and 3) owners must pay mandatory assessments. Communities with these characteristics are called “Common Interest Developments” or CIDs. In Oregon, there are two major types of CIDs: planned communities and condominiums.
In a planned community each member of the association owns his or her lot and the dwelling that sits on the lot. Typically, the planned community contains common areas owned by the association. The common areas are maintained by the association using assessments collected from the owners. Although there are different classes and types, planned communities are governed by ORS chapter 94, also known as the “Planned Community Act.” The Oregon Planned Community Act was enacted by the 1981 Legislature and became effective July 1, 1982. The Planned Community Act requires that there be a declaration, which must include certain provisions, and that the declaration be recorded. It further requires that a HOA be formed and bylaws, which must also include certain provisions, be adopted and recorded to govern the affairs of the planned community pursuant to the Act and the association’s governing documents. It also imposes specific responsibilities and obligations, and confers certain authority on the board of directors.
In contrast, owners in a condominium do not own the earth beneath their condominium unit. The unit owner usually owns the air space within the boundaries of the unit, and also owns a fractional interest in the “common elements” of the condominium. Condominiums are governed by ORS chapter 100, also known as the “Condominium Act.” The Condominium Act was first adopted as the Unit Ownership Law in 1963. The OCA requires that an association be formed to govern the affairs of the condominium pursuant to the Act and the association’s governing documents. It also imposes specific responsibilities and obligations, and confers certain authority on the homeowner’s (HOA’s) board of directors.
Sometimes it is easy to determine which type of development you live in. However, with the increase of townhome-style developments, the line is often blurred. Owners must carefully examine their governing documents to determine the type of development, and, subsequently, the appropriate statutory provisions that are applicable to the development.