13 July 2019
People who live in homeowners associations tend to have a different perspective on property ownership than those who live in independent homes. The homeowners association is established to maintain the property values of the community as a whole and coordinate the actions of each of the members of the association for the good of the whole community. The association protects the interests of future members, as well as present members, and has the goal of operating indefinitely.
The association collects dues from the individual owners in the association and maintains and manages the common financial accounts. The association is responsible for corrective and preventive maintenance of the property held in common using resources in an operating account. In addition, the association is responsible for repairing and replacing elements of the common property that deteriorate or become outdated over time, using resources in a reserve account. The association is charged with anticipating its future costs as a function of time. The goal is that the dues collected and the investments made will always be sufficient to cover the expenses when they are incurred. The association seeks to avoid unanticipated special assessments.
The homeowners association follows a set of agreed-upon governing documents. All members of the association are required to comply with the established rules and regulations. Processes are in place to update and amend these procedures. The association has the ability to enforce compliance with the rules and regulations, with sanctions for non-compliance. An elected board of directors is responsible and accountable to the association members. Mechanisms are provided for dispute resolution and recall of directors if required.
The homeowners association distinguishes between the property of the individual owner, the property held in common by all members of the association (termed the general common elements), and the property in the boundary of the common area that is used exclusively by the individual member (termed the limited common elements). The association is responsible for insuring the general common elements and the limited common elements, while the individual owners are responsible for insuring their own personal property. There are penalties on individual members for encroaching on or harming the association’s common property.
Generally, a homeowners association will contract with a professional management company for the implementation of the policies determined by the board of directors. The board has the fiduciary responsibility to consider the interests of all the stakeholders in the enterprise and balance those interests in the most equitable manner possible. It is understood that tradeoffs between different stakeholder interests will always be necessary. The framework for objectively and fairly performing the tradeoffs should be explicit and transparent.
What strikes me is that we need to establish an “Earth Homeowners Association” in order to manage the common property that all people on our planet share. This includes Earth’s atmosphere, oceans, and ecosystems. Without such a structure, individuals and groups pursuing narrow self-interest, without considering the interests of the whole group and thinking for the long term, will cause the destruction of the Earth’s systems as we know them. The homeowners association appears to be a pretty good model for how we need to think about governance of the Earth on the largest scale. Some aspects of the homeowners association concept that seem particularly relevant:
- Resources are set aside in current years for anticipated future needs to enable the common property to always be kept in good condition
- The interests of future stakeholders are taken into account on a par with those of current stakeholders
- Limitations on the actions of individuals are based on the overall best interests of the community as a whole
- Governance is on the basis of commonly-agreed-upon policies and rules and regulations, with mechanisms to ensure compliance