What is a homeowners' association (HOA)?

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Tasks, rights and duties of a homeowners' association

According to the legal definition, the term "homeowners' association" refers to the entirety of all flat owners within a residential property complex. It is an association of owners of apartments within a building in which the members make decisions regarding the common property. The rights and duties of the homeowners' association (HOA) are regulated in the Condominium Act. Anyone acquiring residential property in a multi-party building is therefore well advised to take a closer look at these legal provisions in advance. It is always possible to establish a community of owners if the residential units in a multi-family house or apartment building are divided up and there is not yet a community.

How to become a member of an HOA

If you purchase residential property in a house that houses several residential units, you automatically become part of the homeowners' association (HOA). When you buy an apartment, you buy a rental property share in the entire building. The amount of the share depends on how large your flat is in relation to the entire house. While owners of detached houses have complete freedom of design with regard to their residential property, you are more restricted with your own apartment and have to bow to the decisions of the majority. This applies, for example, to the exterior painting or the plan to structurally change the garage or to tear it down. The homeowners' association usually meets once a year and makes important decisions relating to the management and maintenance of the common property.

Decisions and resolutions

Various issues that affect the community are discussed at the owners' meeting. Resolutions of the assembly can be made if the members of the community represent at least 50 percent of the rental property shares. The main points discussed at the meeting include the business plan for joint ownership, annual accounts and accounting, or voting on structural changes to the property. This can be, for example, renovation measures or the replacement of windows. Items in the annual business plan include expenses for waste disposal, winter maintenance, and elevator costs for multi-storey properties. The maintenance reserve account, in which the house money determined by the community is invested, is important for annual economic planning. The reserve account is used to finance maintenance measures. Each owner must contribute a proportionate amount to the maintenance reserve; by law, the apportionment is broken down according to rental property shares. According to the Drinking Water Ordinance, the HOA is also responsible for having the drinking water in the building tested regularly. In addition, the tasks of the homeowners' association include the appointment of the management advisory board and the appointment and dismissal of a property manager. The administrator is responsible for convening the owners' meeting. If a homeowners' association is without an administrator, e.g. because the administrator has resigned, the meeting may also be convened by the chairman of the management advisory board, his deputy or jointly by the members of the advisory board. If there is no one within the community who wishes to take over the position of administrator, it is also possible to entrust an external person with the property management.

The rights and obligations of the homeowners association (HOA) are regulated in the Condominium Act.

Special, partial, and common ownership

There are various forms of common ownership for a property. Common property includes the land as well as safety-relevant and necessary parts of the house, such as load-bearing walls, ceilings and the roof. It also includes jointly used facilities such as a lift or staircase. Home ownership includes all components that are not used jointly. This includes, for example, everything in the apartment, but also parking spaces that belong to the residential property. Partial ownership is the ownership of rooms that are not used for residential purposes. For example, a room used as an office or chambers is considered part ownership, while the occupied parts of the flat are considered to be owner-occupied.

Decision-making body for common property

The owners' association performs important tasks and is responsible for property management. Sometimes problems arise within the community. These often concern the need for and the scope of remedial measures. Problems can arise even if the maintenance reserve does not cover the cost of repairs. A harmonious relationship between the members is therefore an essential prerequisite for the smooth running of the meetings.

Frequently Asked Questions

Written by:

Stefanie Aust, Guest Writer

Stefanie loves to put complex topics from the real estate world into understandable and inspiring words. Whether it's about the right financing, choosing the right type of flat, or a successful property search: Stefanie is happy to inform you.

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