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Article about HOA excessive power

JNA

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#4
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#5
I have never liked restrictive HOA, never will. Ultimately it's a person's choice if they choose to buy into one of these developments. I'm not surprised this is happening, especially now since the economic downturn.
 

Linda_D

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#6
I have never liked restrictive HOA, never will. Ultimately it's a person's choice if they choose to buy into one of these developments. I'm not surprised this is happening, especially now since the economic downturn.
I don't think that most people who buy into these developments realize exactly what they're getting into, especially in newer developments with detached homes. All a lot of these folks see is the community pool and clubhouse and the low tax bill (because they aren't paying for the infrastructure through their taxes), and think it's no big deal not to pay the HOA fees since they don't use the pool and clubhouse anyways. Then when a number of homes sit empty and nobody pays the HOA fees on them or as the development ages and repairs are required, the proverbial excrement hits the proverbial fan.
 
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#7
I don't think that most people who buy into these developments realize exactly what they're getting into, especially in newer developments with detached homes. All a lot of these folks see is the community pool and clubhouse and the low tax bill (because they aren't paying for the infrastructure through their taxes), and think it's no big deal not to pay the HOA fees since they don't use the pool and clubhouse anyways. Then when a number of homes sit empty and nobody pays the HOA fees on them or as the development ages and repairs are required, the proverbial excrement hits the proverbial fan.
I fully agree. I'm amazed at how little due diligence is undertaken given a home is the biggest investment most will make in their lifetime. It's unfortunate that some really have no idea what they walking into when purchasing a home in a HOA. Reading and understanding the HOA documents are a must!

I wonder if this is more of a legal issue than a planning problem. IMHO, HOA should not have anywhere near the kind of power to foreclosing on past dues without a judicial proceeding.
 
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#8
Then when a number of homes sit empty and nobody pays the HOA fees on them or as the development ages and repairs are required, the proverbial excrement hits the proverbial fan.
I'm curious. Is there any legal basis to unwind an HOA and contribute its assets to the municipality, in the event things go completely pear-shaped? What happens to the clubhouse when 40% of the units sit vacant and unsold? Who waters the lawns? Can the municipality refuse to take the assets? What would that mean for the homeowners who are there?

Moral of the story: People need to design communities that don't require Big Brother to run them, to preserve their value. Unbelievably (to me), somebody here tried to argue on another recent thread that municipal governance needs to change to look and act like HOAs. Yeah, that'll work.
 

mendelman

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#9
I'm curious. Is there any legal basis to unwind an HOA and contribute its assets to the municipality, in the event things go completely pear-shaped? What happens to the clubhouse when 40% of the units sit vacant and unsold? Who waters the lawns? Can the municipality refuse to take the assets? What would that mean for the homeowners who are there?
That happens often, especially when there are private streets in the development. After about 20-30 years the streets need to be replaced, which is very expensive, but the units are not likely to be occupied by households with enough income to cover the special assessments to rebuild the streets. Therefore, they ask to have the municipality take over the street. Unfortunately, most municipalities only accept public infrastructure from private entities in a new state (new construction) and it must meet the dimensional/construction requirements for public streets. So, the HOAs get stuck in a catch-22.

As for half developed/occupied developments with common buildings like clubhouses, the municipalities will just make sure they are maintained, but will not do much else.
 
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#10
Adding to Mendelman's comments...

Many times the developer prefers that the infrastructure be private so that they do not have to conform to the city's standards, particularly with regard to streets. The buyers do not understand this. They see new pavement and think it is just fine. Right. Later when it begins to crumble and needs to be replaced, they do not want to bear the cost and think it should be the city's responsibility, just as it is in other neighborhoods.

In this state we had a legal challenge a few years ago where the owners of a condo development thought they should not have to pay all of their property taxes because they do not have the city plowing their private streets, maintaining them, etc. It failed. What these people did not realize is that they collectively own a private property, not simply a house on a public street. It is no different than a shopping mall or office complex. These places need to maintain their own internal streets, plow their parking lots, mow the lawns, etc., just as the owners of the condominium complex must do, or just as we need to do on our own single family detached housing lot with public sidewalks that we must shovel and maintain.
 
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#11
A couple of comments. 1) For our conservative members, shouldn't this be the way to go? The free-market and people making decisions. You don't have any government interference and taxes. You don have any social agendas. People deciding what level of service they want.

2) It is fairly common for developments to what the local government to take over the streets. Especially after the residents discover how expensive infrastructure really is. I don't have a problem with the local government requiring all the roads in a development-be it public or private, to be built to their specs. That way when the residents petition the local government to take over the roads, the government knows what it is getting.

3) There normally is a trigger point for when the developer hands over the development to the HOA. It's normally a set number of people. The problem that comes up is when the HOA falls apart.
 

Hink

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#13
This is the private sector working for the people. Unfortunately the cost to run the development is higher than the fees residents are paying currently. With no subsidies, they have to be trickled down to the residents. It sucks, but that is what you signed up for.

We have numerous HOA's that were created so the developer didn't have to meet our standards. These HOA's then don't maintain anything, and want to turn it over to us. The road isn't to our standards, so we won't take it. Which means that the private drive becomes almost undriveable. Grass doesn't get cut and becomes a nuisance. All the homeowner's get assessed.

It is a bad idea all around. Government is good for some things. Infrastructure and regulation are two strong points.
 
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#14
I'm not sure most residents/consumers make a fundamental distinction at an emotive level between paying "public" as opposed to "private" taxes. Taxes are taxes. Let's say you own a condo and your tax assessment is $800/month (for the streets, parks, dogwalk, playground, local schools, police, fire, etc) and your condo HOA charges are $700/month (for the building staff, hallways, gym, building plant, private security, etc). Each month you pay your management company $1,500 and they pay your taxes out of that, as is generally the case where I live. You don't really say, "OK. $700 of that $1,500 is good because it's going to a private, voluntary entity that I decided to join while the $800 is bad because it's going to the evil of public government. Rather, you just say, "Woah.. that's a lot of money for taxes each month." If you're renting that same apartment, for, say $2,500 a month, that $1,500 is invisible to you.
 

Hink

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#15
I'm not sure most residents/consumers make a fundamental distinction at an emotive level between paying "public" as opposed to "private" taxes. Taxes are taxes. Let's say you own a condo and your tax assessment is $800/month (for the streets, parks, dogwalk, playground, local schools, police, fire, etc) and your condo HOA charges are $700/month (for the building staff, hallways, gym, building plant, private security, etc). Each month you pay your management company $1,500 and they pay your taxes out of that, as is generally the case where I live. You don't really say, "OK. $700 of that $1,500 is good because it's going to a private, voluntary entity that I decided to join while the $800 is bad because it's going to the evil of public government. Rather, you just say, "Woah.. that's a lot of money for taxes each month." If you're renting that same apartment, for, say $2,500 a month, that $1,500 is invisible to you.
No, but people do make the decision to live outside the private arm quite often. They let the public sector meet their need of infrastructure and regulation.

Also, the biggest issue here is having an open book. The private HOA doesn't have to explain to anyone where the money is going. $500 a month pays for the services. A public body has a line item budget that shows exactly where the money came from and went.
 

Linda_D

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#16
I'm not sure most residents/consumers make a fundamental distinction at an emotive level between paying "public" as opposed to "private" taxes. Taxes are taxes. Let's say you own a condo and your tax assessment is $800/month (for the streets, parks, dogwalk, playground, local schools, police, fire, etc) and your condo HOA charges are $700/month (for the building staff, hallways, gym, building plant, private security, etc). Each month you pay your management company $1,500 and they pay your taxes out of that, as is generally the case where I live. You don't really say, "OK. $700 of that $1,500 is good because it's going to a private, voluntary entity that I decided to join while the $800 is bad because it's going to the evil of public government. Rather, you just say, "Woah.. that's a lot of money for taxes each month." If you're renting that same apartment, for, say $2,500 a month, that $1,500 is invisible to you.
Actually, many, many people do. Coming from NY, all I ever hear about is how so-and-so is moving to South Carolina (or fill in the Sun Belt state) where the taxes on a new $200,000 house in a development ruled by an HOA is only $1500 a year. Why am I so stupid as to stay in NY and pay for "welfare" people? Of course, these folks ignore the fact that they are also paying $300+ a month in HOA fees to pay for infrastructure and a community pool, things that my local taxes in NYS pay for -- plus the rules for the government seizing my property for non-payment of taxes are explicit and appealable.
 
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#17
government seizing my property for non-payment of taxes are explicit and appealable.
Actually, in NYC, I'm pretty sure that nonpayment of condo HOA charges will result in legal action against me about a zillion times more quickly than nonpayment of municipal property taxes on the same. And, in terms of what they're likely to do to me to interfere with my exercise of property rights, I'm a lot more afraid of my HOA than I am of the government. And while NYS is more likely to rebate my taxes, the chances of me getting any relief on my HOA charges is nil. And if the elevator breaks and needs to be replaced with a special assessment, I'm really really in trouble. That concerns me a lot more than what Bloomberg does with my property taxes. He actually seems to know what he's doing.. Frankly, I'd much rather the HOA's powers be curtailed than Bloomberg's.

IMO, the New urbanist/smartgrowther reliance on HOA structures for their projects is a critical weakness of their paradigm. I don't believe that asking citizens to take on such unpredictable risk from what are often poorly managed local management companies contracted to run HOAs asure failure for many such communities.
 
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#18
But are not people who live in developments with HOAs chosing the level of services that they want and are willing to pay for. Therefore, is not the free market working in that circumstance. Further, free market ideology is a basic tenet of conservatism. As for the collectivism, people are chosing to live in that environment therefore agreeing with the collectivism. If they don't agree, they don't have to live there.
 
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#19
But are not people who live in developments with HOAs chosing the level of services that they want and are willing to pay for. Therefore, is not the free market working in that circumstance. Further, free market ideology is a basic tenet of conservatism. As for the collectivism, people are chosing to live in that environment therefore agreeing with the collectivism. If they don't agree, they don't have to live there.
Survey after survey say that people choose their homes on the basis of whether they like the house, the quality of the schools in the neighborhood, the prestige of the zip, their ability to afford it (get a mortgage for it, have enough downpayment), and their regard of the home's investment potential, roughly in that order. Factors such as the favorability of HOA policies tend to rank below issues such as proximity to work and services, which itself is way down on the list.

If people aren't bothering to check on HOA policies as part of their buying decision, then they are not really "choosing" a particular type, bias and level of services.
 
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Linda_D

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#20
Survey after survey says that people choose their home on the basis of whether they like the house, the quality of the schools in the neighborhood, the prestage of the zip, their ability to afford it (get a mortgage for it, have enough downpayment), and their regard of the home's investment potential, roughly in that order. Factors such as the faborability of HOA policies tend to rank below issues such as proximity to work and services, which itself is way down on the list.

If people aren't bothering to check on HOA policies as part of their buying decision, then they are not really "choosing" a particular type, bias and level of services.
I think the operative phrase here is caveat emptor.

I have no problem with governments regulating HOA practices/policies, but I'm not going to feel particularly sorry for folks who get screwed by their HOAs, either, and I sure don't want any part of rescuing them when they face major special assessments.
 
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