Academy/HOA & Community Association 101
What is a planned community?
The catch-all category most subdivision HOAs actually belong to, and how it differs from owning a condo.
A planned community is a common interest community that is neither a condominium nor a cooperative. It's the category most subdivision HOAs fall into: each owner holds a fee-simple deed to their own lot, and a separate entity, usually the association itself, holds title to the common area.
Defined by what it isn't
State common interest ownership statutes sort every community into one of three legal buckets: condominium, cooperative, or planned community. The first two have specific, positive definitions. Planned community is the leftover bucket, whatever doesn't fit the other two.
"a common-interest community that is not a condominium or a cooperative."
Source: Nevada Revised Statutes Chapter 116, NRS 116.075, Nevada Legislature
In practice, this is the shape most single-family and townhome HOAs take: individually deeded lots, plus shared amenities like a clubhouse, pool, or greenbelt that nobody's lot deed actually covers.
Who actually owns the common area
This is the detail that trips up board members who arrive with condo assumptions. In a condominium, owners jointly own the common elements as tenants in common; every owner has an undivided fractional interest in the halls, roof, and grounds. A planned community usually doesn't work that way.
"The typical subdivision has a common area that's owned by the HOA by virtue of a recorded deed or plat."
Source: Common area ownership in condominiums and subdivisions, State Bar of Texas
The association itself, a separate legal entity, holds title. Owners don't have a deeded fractional share of the clubhouse; they have membership rights in the association that owns it.
Why the legal shape matters
The trade behind this structure is the same one behind every common interest community: shared cost and shared amenities, in exchange for accepting collective rules a standalone single-family homeowner wouldn't face.
"Subordination of individual property rights to the collective judgment of the owners association together with restrictions on the use of real property comprise the chief attributes of owning property in a common interest development."
Source: Nahrstedt v. Lakeside Village Condominium Assn., Supreme Court of California
Whether your particular association is even a nonprofit corporation, versus an unincorporated association, is a separate question from the type of community it is. Confirm your association's incorporation status by checking its articles of incorporation, rather than assuming.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Riverbend Estates is a subdivision of single-family homes. Each owner holds a deed to their lot, and a separate legal entity holds title to the clubhouse and greenbelt. What kind of community is this?
In a typical planned community HOA, who holds title to the clubhouse and streets?
Which of these is not one of the three basic types of common interest community?
Sources
- Nevada Revised Statutes Chapter 116, Common Interest Ownership, Nevada Legislature
- Common area ownership in condominiums and subdivisions, State Bar of Texas
- Nahrstedt v. Lakeside Village Condominium Assn., Supreme Court of California
HOA & Community Association 101
Next, see exactly what an HOA does and doesn't hold title to: What does an HOA actually own?
The exact statutory wording and numbering for "planned community" varies by state, and whether your association is incorporated as a nonprofit corporation or organized as an unincorporated association also varies. Check your own state's statute and your association's articles of incorporation.