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Are you considering buying a home that’s part of a Homeowners’ Association (HOA)? Or perhaps you’ve heard your friends discussing how their HOA requires them to paint their home a specific color? It should not be alarming, as over 40 million households are members of an HOA.1
In this article, student associate Katie Donovan explains the key differences between Homeowners’ Associations (HOAs) and Condominium Associations, highlighting their legal distinctions, governance, and impact on homeowners. It also discusses common HOA regulations every homeowner should be aware of.
Condominium Associations versus Homeowners’ Associations
While the terms Homeowners’ Association and Condo or Condominium Association are often used interchangeably in everyday life, there are actual operational and legal differences between the two. In fact, the relevant Wisconsin Statutes establish that homeowner’s associations do not include condominium associations. They are distinct legal entities.
Condominiums are multiple-unit complexes in which the individual units are owned by the association members. In addition to owning the individual units, the members of a condo association share in the joint ownership of the condominium’s common elements. For example, these common elements might include lobbies, shared hallways, elevators, pools, and even shared utility systems. The condominium association governs its unit owners through bylaws and declarations specific to the condominium, and typically the association is responsible for managing the common elements.
In contrast, HOAs are created in residential planned communities that are designed to impose and enforce covenants or restrictions of that planned community. While the HOA’s authority is derived from statutes, their authority is both empowered and obligated by the covenants and deed restrictions that run with the land. To run with the land means the covenant or restriction is connected to that specific piece of property, not the current owner. These covenants and restrictions govern the use of residential lots. Typically, they include rules on the structures, building setbacks, architectural standards, and other property-related matters.
Both types of associations tend to charge fees and assessments based on the association’s needs. These typically go towards the maintenance of common areas. Condo associations may have additional fees for the upkeep of an entire building or other common elements.
As mentioned earlier, there are actual legal differences between HOAs and condo associations. The Wisconsin Condominium Ownership Act is a comprehensive statute that governs how condo associations are to be created and run. You can find the act in Chapter 703 of the Wisconsin Statutes. There are various statutes that apply to HOAs, but, unlike condo associations, there is no comprehensive chapter of the Wisconsin Statutes meant only for HOAs. Because HOAs are typically incorporated as non-profit, nonstock corporations, they must adhere to the Wisconsin Nonstock Corporations Act, which can be found in Chapter 181 of the Wisconsin Statutes. Additionally, Section 710.18 of the Wisconsin Statutes also regulates HOAs. Beyond the laws discussed above, it is important to remember that HOAs and condo associations are still subject to additional state and federal laws, like the Wisconsin Fair Housing Act.
In general, there are fewer standards for how HOAs must operate, compared to condo associations, so each HOA’s rules can vary drastically. This is why it is crucial for all potential and current homeowners to read and understand the HOA’s governing documents if your home is part of an HOA. These governing documents include an HOA’s Declaration of Covenants, Conditions, and Restrictions (CC&Rs), bylaws, rules and regulations, and articles of incorporation. The CC&Rs are legally binding rules that homeowners sign and agree to when purchasing the home that govern how they must maintain and use their property. The bylaws generally include guidelines on the structure of the HOA and its board, along with how they should operate. The rules and regulations usually expand on and specify the CC&Rs. The articles of incorporation are required by law and contain basic information about the HOA, like the association’s name. You can find your specific HOA’s CC&Rs either recorded in the register of deeds or on the association’s website, if it has one. If you do not know who to contact or where to look, the Wisconsin Department of Financial Institution’s Homeowners’ Association Search may be a good place to start.2
Can an HOA tell you what color to paint your home?
Typically, the answer is yes. Under Section 710.18(1)(c)(a) of the Wisconsin Statutes, HOAs have the power to set restrictions or requirements regarding architectural standards, fence restrictions, or the appearance or maintenance of the property. This would include what paint colors the HOA allows on your home. Additional requirements may include whether or not you can have a fence, the length of your grass, and even if you can rent out your home. But it is important to remember that while they have this power, it must be written in the governing documents to be enforceable. You usually find these restrictions in the CC&Rs, but be sure to consult all of the documents prior to starting house projects.
Can an HOA take your house?
While an HOA regulating your home’s paint color is a more straightforward issue, the answer to whether an HOA can foreclose on your house is yes, though it’s not an easy process. In most instances, your HOA’s governing documents may permit the association to fine you for failing to comply with rules and regulations. Alternatively, some associations may be permitted to pay a third-party to bring your property into compliance, and then pass the costs along to you. If you refuse to pay these amounts, Wisconsin statutes allow HOAs to place liens and subsequently foreclose on properties. Although they have the right to do so, HOAs must outline whether the association has these rights and when they may enforce them in their governing documents. Most often you can find this information in the CC&Rs. Additionally, Wisconsin law provides some specific protections for home owners in such circumstances. For example, if a homeowner fails to pay their assessment, an HOA cannot file a claim for a lien against a property until 60 days past the date of the levy.3 Thus, understanding your HOA’s specific rules and state laws is essential to protecting your property from a potential lien or foreclosure.
Because the governing documents are legally binding and enforceable, it is crucial for potential homeowners to read them before purchasing a home in a planned community and for current homeowners to read over the documents before completing housing projects. It is best practice to consult an attorney to understand your specific rights and obligations regarding your HOA’s rules.
If you would like additional guidance on what actions you or your HOA may take in accordance with your HOA’s CC&R, or if you are facing disputes with your HOA, please contact the legal professionals at West & Dunn online through our Contact Us page or by telephone at (608) 535-6420 for a Consultation.
2 https://apps.dfi.wi.gov/apps/HomeOwnersAssociation/Search
3 Wis. Stat. § 779.70(4)(a)
