Yard Rules: HOAs provide necessary structure but have limited power

If you live in a neighborhood in Zionsville, you likely pay dues to a Homeowners Association.

The Community Associations Institute estimates there are 4,800 community associations in Indiana and as many as 347,000 in the U.S., 55 percent of which are HOAs.

The rules, amenities and fees associated with HOAs differ for each. If your neighborhood has a pool, for instance, the cost may be higher. Some neighborhoods have many acres of common space, maintained by the HOA, while others have very little common space.

History of HOAs

During the Industrial Revolution of the early 19th century, “railroad communities,” or neighborhoods built near railroads, were created. More communities appeared in the 20th century as the development of the car allowed people to live further away from cities.

Many of the neighborhoods did not have formal rules and regulations, but residents often agreed on how the neighborhood should look. In the 1960s, the Federal Housing Authority and the Urban Land Institute encouraged more residential developments and helped create HOAs.

Today, HOAs are formed when developers purchase land, divide it into parcels and then create covenants, conditions and restrictions, or “CC&Rs,” to govern the neighborhood, in addition to any town or city ordinances. The HOA is governed by a board of directors elected by the members and a set of rules called bylaws. In recent years, HOAs have started hiring third-party management services to handle daily operations.

Taking care of business

The Town of Zionsville has record of at least 45 HOAs. In Royal Run, a Zionsville neighborhood near I-65 and Whitestown Parkway, the HOA was established more than 20 years ago and is now managed in part by Community Association Services of Indiana.

Mark McDonald, president of the Royal Run HOA board, said the Royal Run community was entrusted with the care of the neighborhood.

“The HOA was formed to help keep it looking nice and to keep land values high,” McDonald said. “The people who live there have a vested interest in taking care of their own neighborhood.”

A key benefit to living in a neighborhood governed by an HOA is having well-maintained common space. Royal Run has more than 70 acres of common space, including nine ponds, one pool and a clubhouse, all maintained by its HOA.

“The HOA is very mission-minded on keeping our cost as low as possible. A lot of the dues go to land upkeep,” McDonald said.

The Eagles Nest neighborhood, located in Whitestown but with Zionsville addresses and schools, has a similar annual fee and amenities. Beth Kerkhoff, a resident of Eagles Nest, said its HOA board is highly communicative with residents.

“The HOA in Eagles Nest seems very willing to discuss issues people bring up,” Kerkhoff said.

McDonald said open communication also is important to the Royal Run board.

“Communication is a big thing,” McDonald said. “Getting the word out quickly and trusting people to read mail can be difficult at times. We promote our Facebook group to get people talking and to be aware of neighborhood issues.”

Checks and balances

Many HOAs are charged with making sure residents follow neighborhood covenants. But there also are state laws in place to govern the HOAs.

Royal Run resident Clint Harris moved to the neighborhood in early 2003 and said there was low interference from the HOA until 2015. The HOA board announced in January 2015 it would give citations for covenant violations starting that June.

“Letters sent to residents said the colors of their homes or garage doors were not approved,” Harris said.

According to Harris, the neighborhood attempted to fine some residents for each letter sent about covenant violations.

Coincidentally, House Enrolled Act 1286 was signed into law in May 2015 by then-Indiana Gov. Mike Pence, which restricts fines from community associations imposed on residents. It also states HOAs are required to disclose all communications relating to financial transactions of the association for at least two years and must be able to disclose any communication about a homeowner’s property requested by the homeowner.

“The original covenants of the neighborhood were written, including a clause on fines being an option to assess upon a home that was in continual non-compliance with standards,” McDonald said. “HEA 1286 states that this is no longer a legal course of action, therefore the HOA will not act upon it.”

Attorney Edward Woolard said there are more checks and balances on HOAs than some homeowners know about, to keep them from doing things like selectively enforcing rules. The power of an HOA comes down to its covenants and bylaws, but state law takes precedence.

“If you live in the housing addition, you are entitled to all the minutes and documents,” Woolard said.

McDonald said problems often arise from lack of communication, or new homeowners not reading all the documents. He aims to minimize the negative connotations of HOAs.

“I like the idea of trying to modernize the thought on HOAs as a group of people who are working together to make things better for everybody,” McDonald said. “I see it as a challenge to use it in a positive way for people.”

Comparing HOAs in Zionsville