In Delaware, there are certain laws that apply to homeowners and condominium associations. Such communities would do well to understand these Delaware HOA laws to ensure compliance and prevent liability.
How to Establish an HOA in Delaware
According to the HOA laws of Delaware, creating a homeowners association requires the recording of a declaration. This declaration must be executed in the same way as a deed. The association must also record this declaration in every county where the community is located. For more information, read Section 81-201 of the Delaware Uniform Common Interest Ownership Act
Delaware Unit Property Act
The Delaware Unit Property Act controls the creation, management, authority, and operation of homeowners associations established prior to September 30, 2009. These associations can elect to abide by the Act by recording a declaration under it. But, it is worth noting that associations may also be bound by provisions within the Delaware Uniform Common Interest Community Act, discussed next.
You can find this Act under Title 25 of the Delaware Code. It consists of eight subchapters, namely:
- Preliminary Provisions
- General Provisions
- Administrative Provisions
- Declaration; Reservations of Charges Thereunder; Conveyances; Mortgages and Leases
- Recording
- Removal of Property From Provisions of Chapter
- Assessments; Taxation; Liens
- Miscellaneous
Delaware Uniform Common Interest Ownership Act
The Delaware Uniform Common Interest Ownership Act (DUCIOA) controls common interest communities formed after September 30, 2009. This includes planned communities such as homeowners associations, condominiums, subdivisions, and cooperatives.
Also found in Title 25 of the Delaware Code, this Act consists of four subchapters, each one divided further into sections.
Subchapter I. General Provisions
- Short title.
- Applicability.
- Definitions.
- Variation by agreement.
- Separate titles and taxation.
- Applicability of local ordinances, regulations, and building codes.
- Eminent domain.
- Supplemental general principles of law applicable.
- Construction against implicit repeal.
- Uniformity of application and construction.
- Severability.
- Unconscionable agreement or term of contract.
- Obligation of good faith.
- Remedies to be liberally administered.
- Relation to Electronic Signatures in Global and National Commerce Act.
- Applicability to new common interest communities; effective date.
- Exception for small condominiums and cooperatives.
- Exception for small and limited expense liability planned communities.
- Applicability to preexisting common interest communities and approved common interest communities.
- Exception for small preexisting cooperatives and planned communities.
- Amendments to governing instruments.
- Applicability to nonresidential and mixed-use common interest communities.
- Applicability to out-of-state common interest communities.
- Applicability to continuing care common interest communities.
- Additional exceptions for preexisting common interest communities or approved common interest communities.
- Transition period for existing contracts prior to effective date.
- Notice.
Subchapter II. Creation, Alteration, and Termination of Common Interest
- Creation of common interest communities.
- Unit boundaries.
- Construction and validity of declaration and bylaws.
- Description of units.
- Contents of declaration.
- Leasehold common interest communities.
- Allocation of allocated interests.
- Limited common elements.
- Plats and plans.
- Exercise of development rights.
- Alterations of units.
- Relocation of unit boundaries.
- Subdivision of units.
- Variations in boundaries.
- Use for sales purposes.
- Easement rights.
- Amendment of declaration.
- Termination of common interest community.
- Rights of secured lenders.
- Master associations.
- Merger or consolidation of common interest communities.
- Addition of unspecified real estate.
- Master planned communities.
- Other exempt real estate arrangements.
- Termination following catastrophe.
Subchapter III. Management of the Common Interest Community
- Organization of unit owners’ association.
- Powers of unit owners’ association.
- Executive board members and officers.
- Transfer of special declarant rights.
- Termination of contracts and leases of declarant.
- Bylaws.
- Upkeep of common interest community.
- Unit owner meetings.
- Executive board meeting.
- Quorums.
- Voting; proxies.
- Tort and contract liability; tolling of limitation period.
- Conveyance or encumbrance of common elements.
- Insurance.
- Surplus funds.
- Assessments for common expenses.
- Lien for assessments.
- Other liens.
- Association records.
- Association as trustee.
- Rules.
- Litigation involving declarant.
- [Reserved.]
- Removal of members of executive board.
- Adoption of budget.
- Service on associations and executive board.
- Delaware corporations.
Subchapter IV. Protection of Purchasers
- Applicability; waiver.
- Liability for public offering statement requirements.
- Public offering statement; general provisions.
- Common interest communities subject to development right.
- Time shares.
- Common interest communities containing conversion buildings.
- Common interest community securities.
- Purchaser’s right to cancel.
- Resales of units.
- Escrow of deposits.
- Release of liens.
- Conversion buildings.
- Express warranties of quality.
- Implied warranties of quality.
- Exclusion or modification of implied warranties of quality.
- Statute of limitations for warranties.
- Effect of violations on rights of action; attorneys’ fees.
- Labeling of promotional material.
- Declarant’s obligation to complete and restore.
- Substantial completion of units.
- Amendment to public offering statement.
Delaware HOA Laws on Corporate Governance
The Delaware Uniform Unincorporated Nonprofit Association Act, found under Title 16 of the Delaware Code, oversees nonprofit associations in the state. Many homeowners associations establish themselves as nonprofits. Therefore, this Act governs these associations when it comes to corporate procedure and structure.
This Act consists of 16 sections, namely:
- Definitions.
- Supplementary general principles of law and equity.
- Territorial application.
- Real and personal property; nonprofit association as legatee, devisee or beneficiary.
- Statement of authority as to real property.
- Liability in tort and contract.
- Capacity to assert and defend; standing.
- Effect of judgment or order.
- Disposition of personal property of inactive nonprofit association.
- Appointment of agent to receive service of process.
- Claim not abated by change of members or officers.
- Venue.
- Summons and complaint; service on whom.
- Uniformity of application and construction.
- Short title.
- Transition concerning real and personal property.
Delaware HOA Laws on Budget Ratification
According to Section 81-324 of the DUCIOA, HOA boards must prepare an association budget every year. Following the adoption of the budget, the board must provide a summary of it to all owners within 30 days. The board must also allow owners to ratify the budget during a meeting, the date of which must be set at least within 14 days but not more than 60 days after issuing the summary.
Delaware HOA Laws on Rule Changes
Members of an HOA community follow rules enforced by the board. But, Section 81-210 of the DUCIOA indicates that the board must notify all owners before adopting or amending a rule. This notification should consist of the following:
- The board’s intention to adopt the new rule
- The date of the meeting where the board will allow owners to comment on the new rule
Delaware HOA Laws on Association Records
Many states require homeowners associations to make certain records available for owners to inspect or review (Section 81-318). If an owner requests copies of association records, the HOA must comply within a reasonable time. Association records homeowner can request include but are not limited to:
- Financial records and statements
- Tax returns
- Minutes of all meetings not held in executive session
- Membership lists
Homeowners have a right to examine association records provided they are done during business hours or at a time and location that is convenient to both parties. Additionally, owners must provide 5 days’ written notice of the request consisting of the purpose and the specific documents they wish to copy.
Not all association records are subject to owner examination, though. Any documents that contain confidential, privileged, or sensitive information may be excluded. This includes medical records, contracts under negotiation, litigation documents, etc.
Fair Housing and Equal Accommodations
Much like the federal Fair Housing Act, Delaware also has its own Fair Housing laws that offer protection to persons against discrimination based on their race, color, national origin, sex, sexual orientation, gender identity, creed, religion, familial status, marital status, age, source of income, or disability.
Additionally, the Delaware Equal Accommodations Law works similarly to the Americans with Disabilities Act. Under this state law, homeowners associations must not discriminate against persons based on their race, color, national origin, age, creed, sex, gender identity, sexual orientation, marital status, or disability in places of public accommodations. This usually affects the common elements of a community that the general public may access.
