Overcome homeowners association fears

Mood of the Market

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Jun. 21, 2010

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Mood of the Market

Tara-Nicholle Nelson
Inman News

Perhaps Robert Frost, in his poem "Mending Walls," said it best: "Good fences make good neighbors." So what happens where there are no fences whatsoever or a wall is even -- gasp -- shared?!

Such is the neighborly setup involved in many condo complexes, co-op situations, and other common living situations involving homeowners associations (HOAs). Think about it: the words "homeowners association" imply a connotation of neighborly solidarity, that instead of simply sharing walls, the members of the group would share alliances and allegiances.

Their interests -- in their largest, shared asset and the mundane details of their daily living situation -- from garbage to pet poop -- are aligned. Fellow HOA members would, in a perfect world, be "besties."

Needless to say, our world is less than perfect.

HOAs do not -- as they would in an ideal world -- inspire, excite and thrill homebuyers with the idea of buying one home and getting 100 (or so) new BFFs (best friends forever) free. Instead, the mere thought of buying a property that is part of an HOA strikes fear in the hearts of many an otherwise intrepid house hunter.

Some simply think the limits on customizing your own home defeats the purpose of homeownership. Many others, who see the value of uniform guidelines in community living, just don't feel the privileges of membership warrant the benefits.

This, despite the fact -- which I so often remind my own clients -- that most communities' HOA or co-op board dues actually include many expenses that would otherwise be an individual homeowner's solo burden to bear (think: garbage collection, community landscaping and maintenance, and building hazard/fire insurance).

And many, many buyers-to-be are wary -- scratch that -- turned all the way off of the idea of living in and belonging to an HOA by the horror stories of lawsuits; insane, protracted verbal, legal (and sometimes physical) battles between neighbors over nonsense like lawn ornaments and window-covering choices; and gobsmacking, massive and inescapable "surprise" assessments charged to individual owners for roof, boiler and even landslide repairs.

And not to be left behind, HOA drama evolved right in step with the housing crisis. Unit owners moved past being irritated by their neighbors for parking in the guest spaces to being irritated by their neighbors for defaulting on their mortgages, losing their homes to foreclosure and in many cases "devaluing" the neighboring units.

Next-generation HOA horrors in communities built during the housing boom included dozens of adjustable-rate mortgages resetting in unison and owners defaulting in unison.

The domino effect continues, with investors scooping up half the complex at the foreclosure auction on the county courthouse steps -- in just a matter of months, rendering a community of homeowners a community of mostly non-owner-occupied units -- and effectively prohibiting the existing owner-occupants from refinancing their home loans to today's low rates, maybe for a very long time (as most mortgage banks won't underwrite a loan in a complex where more than 25 percent of units are tenant-occupied).

A real estate agent friend of mine recently bought a home -- to live in -- in a complex where an investor had bought dozens of units, seized control of the board with military precision and was recently heard bringing a motion to convert the community center into his company's on-site office!

Current events even intertwine to generate HOA insanity. I recently read a story of a serviceman whose severely depressed wife had made the mortgage payments but managed to miss a few months of HOA dues. Without even a knock on her door -- and with full knowledge that her hubby was in Iraq on active duty at the time -- the HOA moved to foreclose on the home.

(The homeowner owed more than $800 in delinquent HOA dues.) The HOA then resold the $300,000 home via foreclosure for a whopping sum of $3,500.

Rarely are the HOA stories we hear the back-having, kumbayah-singing, cup-o-sugar-borrowing anecdotes implied by the term "association" -- or the term neighbor, for that matter. I suspect that there are probably a hundred positive stories to every HOA nightmare, but, as with everything, the negative tales get more press.

One thing I do know: Active participation in and monitoring of your HOA and the board (or its meetings) is enormously effective in minimizing negative feelings or, at least, the element of surprise from HOA goings-on. The happiest HOA members I know -- coast to coast -- sit on their boards.

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