Know the Lingo: Association Intentions & (Naming) Conventions

Know the Lingo: Association Intentions & (Naming) Conventions

By Brad Barna, Esq. and Edward J. Cush, III, Esq. 

Like most of our clients, you likely refer to your community association as “The Association” or “my association.” When we provide legal advice to our clients, we will often use shorthand to refer to our clients in the same manner. Shorthand nomenclature is undoubtedly valuable. On the front end, it allows readers to more easily digest what’s being written. At the back end, it also allows a writer to be more succinct and easily understood. But what shorthand saves in time and money, it may lose in clarifying where a given “Association” stands in relation to other entities in the common interest community association field that may also be referred to using the same word, but are actually entirely different things with varying applicable laws and standards.

The same may apply when you discuss your “HOA” with another person, and they share information on their “HOA.” It may sound like you are referring to the same thing, but you may be discussing two completely different entities without even realizing it. The goal of this article is to arm readers with the context necessary to promote understanding of just how many different types of “HOAs” or “Associations” there can be, and knowing that when we say “Association” it could mean a variety of different things for each client.

Condominiums (“Condos” & “Condominium Unit Owners Associations”):

Condominiums are a creature of statute - namely, the Virginia Condominium Act (Code of Virginia, Section 55.1-1900, et seq.) or the D.C. Condominium Act (D.C. Code, Section 42-1901.01, et seq.). Condominiums are physically constructed by or on behalf of “declarants”, and legally created upon the recordation of each of the “condominium instruments” (declaration, bylaws, and plats and plans) in the land records of the Virginia county or city where the condominium property is located (or in D.C., the D.C. Recorder of Deeds). Ordinarily, those who buy into a condominium obtain full ownership of the unit(s) purchased along with an undivided percentage interest in the “common elements” (as defined throughout the condominium instruments) – they may also acquire the right to the exclusive use of a “limited common element” of the condominium, such as a parking space. While the condominium’s declaration is the means by which the declarant (developer) “declares” that a piece of land is a condominium, a condominium’s bylaws will typically create the unit owners’ association and contain the governance structure for management of the community. Also note that while many people hear the term “condo” and think of a high-rise building, any type of physical building or development can be created as a condominium, including single-family home developments, commercial office parks, townhome developments, parking garages, and even private airports.

Planned Communities (“Homeowners Associations” & “Property Owners Associations”): 

Often used interchangeably, “homeowners associations” (“HOAs”) and “property owners associations” (“POAs”) are virtually identical in nearly all respects. The affairs of HOAs and POAs alike are regulated by the association’s “governing documents”: (1) declaration or other type of restrictive covenants, (2) articles of incorporation (if applicable), and (3) bylaws). HOAs and POAs, unlike Condos, need only record their restrictive covenants or declaration (a document ordinarily setting forth covenants, conditions, and restrictions applicable to owners of property under association control) with the county or city land records office. Those who buy into an HOA or POA own only the home(s) or lot(s) purchased, and not the association’s “common area” or “open space”.

While all legally recognizable POAs in Virginia can be referred to as “HOAs”, not all HOAs legally amount to “POAs” under current Virginia law. Whether an “HOA” qualifies as a “property owners’ association” that is subject to the Virginia Property Owners’ Association Act (“POAA”) hinges upon whether the HOA’s recorded declaration expressly provide the HOA power to collect or make certain assessments and whether that declaration imposes upon the HOA a corresponding duty to maintain common area. See Dogwood Valley Citizens Ass’n v. Winkelman, 267 Va. 7 (2004). If your association is uncertain about whether it is an “HOA” or a “POA”, or concerned about the legal implications of this distinction, your association should consider contacting legal counsel on these issues.

Cooperatives:

Cooperatives are another type of community association existing in Virginia and the District of Columbia. While cooperatives are most often seen in older cities, there are a number of them remaining in both jurisdictions, but more so in D.C. Cooperatives are typically in apartment-style buildings and often confused with condominiums. However, in a condominium, an owner owns their individual unit plus a proportionate share of the common elements, while in a cooperative, an owner does not own the unit but instead owns a share in the cooperative association, with the ownership of the share granting a right to occupy a specific unit within the cooperative building. While this appears similar to some condominiums, the legal ownership is very different and has significant impacts on the rights of owners, associations, and even lenders.

Civic Associations:

Another type of community entity that you may come across are civic associations. Typically, civic associations are voluntary membership entities that residents within a geographic area can join to help promote the common interests of residents within their community. While civic associations are made of individuals with interests in a community, they are not “common interest communities” in which membership is mandatory for all persons owning a unit or land that is subjected to a recorded declaration of covenants. In addition, the voluntary nature of civic associations means that they have little authority and as such are a very different type of entity to Condos and HOAs/ POAs in Virginia.

Incorporated vs. Unincorporated Associations:

Another key distinction amongst community entities is whether they are incorporated or not. Many associations will be required by their governing documents to be an incorporated entity, while others may opt to do so for various reasons. Once incorporated, most community associations would be subject to the Virginia Nonstock Corporation Act (in addition to any other applicable statute; note that cooperative associations are typically stock corporations). There are many considerations that go into whether an association should incorporate, including whether or not corporate protections would help protect the association’s members from personal liability for acts or omissions of the association.   If your association is not incorporated, you may wish to consult with legal counsel to discuss if doing so may be beneficial.

Key Takeaways

Common interest community associations come in many shapes and sizes, and many formats and structures. Each type of community association is different, and each community association within those types is governed by a different set of governing documents. We often provide general education regarding “associations”, as we do in this newsletter, and many people will discuss “HOAs” with people that also have an “HOA” but of an entirely different type, subject to entirely different governance. Please keep in mind that solutions for association problems can be as varied as the many types of associations, and that a “one-size fits all” approach may not always be appropriate.  Legal counsel can assist with answering questions regarding governance issues, interpreting governing documents, and providing advice to associations of all types.