HOMEOWNERS’ ASSOCIATIONS (HOA) – FRIEND OR FOE
When purchasing real estate, you might be one of the 25% of people who purchase a property in a common interest development, which is more commonly known as a homeowners association, or HOA. And while all properties have issues, HOAs have a unique set of additional operational, legal and financial issues that buyers must consider, analyze and review in conjunction with their purchase.
At first glance, HOAs seem to be a good bet. If you’ve ever had a neighbor that painted their house a Pepto Bismol pink, collected beat-up cars or refused to mow his yard, you may think that the answer is to live in a HOA community. At least that way there is something that can be done to preserve the value of your home. However, if you have lived in a HOA community and experienced what it’s like when the board or management company goes off the tracks and don’t abide by the bylaws, you may vow to never again live in a community governed by a HOA.
When I work with buyers who are looking in a HOA community, I always encourage the customer to talk to various neighbors and read the covenants and restrictions before submitting an offer. This has to be done on the front end because once you close on your property, it is too late. Ignorance is not a defense.
There are honestly so many horror stories, many in Florida, that I could write a book. Keep in mind that most of these stories would never have occurred if the buyer had just done proper due diligence by reviewing the HOA documents (covenants, conditions and restrictions). These items would offer insight into "issues." It is your responsibility as a buyer to perform the proper due diligence to avoid purchasing into a disaster of a common interest development community.
However, sometimes the issues arise after you purchase, which is the case with my daughter and son-in-law. They have found themselves, along with many other residents in the community, in the midst of a battle with the HOA. Shortly after they moved in the residents were made aware that the president of the board took it upon himself to give a raise to the management company. Once the residents voiced their concern and questioned his authority to do so, the HOA started levying hefty fines for what they felt were non-compliance for a driveway not being pressure washed, grass in the easement area, etc. At this time there were only two board members (not the required three) and one of them started harassing the neighbors, following them in her car and videotaping. The neighbors started talking amongst themselves and banded together to fight the HOA. Other critical issues materialized regarding the election of board officials and their unwillingness to allow other residents to be added to the ballot. A few of the residents obtained an attorney to advise them of their legal rights in fighting the HOA. Not everyone has the ability to obtain an attorney because it is very costly. The majority of the time the only option is arbitration. Unfortunately, arbitration can be dragged out for a year and in the meantime the wayward HOA continues to function and harass its residents. Recently the two board members decided to construct a playground in a paved area of the property in spite of the opposition and questions of the residents. Now the community has a playground on an asphalt parking area which is not in conformity with the local building and zoning laws. Most likely it will have to be torn down. The most recent antic is to hold the annual HOA meeting 30 miles away on a weekday at 10:00 in the morning. Most HOAs want to encourage participation by its residents and have the meeting as close as possible and in the evening. It’s really sad that the residents have to spend so much time, money and effort just to get the board members to operate in accordance with their bylaws. In this particular situation, there was nothing going on at the time they bought in the community.
Lately, I find more buyers who are adamant about not living in a HOA community. On the selling side, it is a plus for homes to advertise that they are not in a HOA community. I am not against HOAs because they definitely serve a purpose and most operate within their rules and guidelines. The key is to know ahead of time what the restrictions are and talk to neighbors.