by guest blogger Nila Ridings
Every now and then some “advice” appears on the internet about buying in an HOA. And quite honestly some of it gives me a massive headache like this one. To me, this is nothing more than someone with so little HOA knowledge they should be embarrassed to publish it. I’m willing to step up and present the brutally honest truth. I think it’s only fair and right to do so.
Are you considering moving into a housing development that has a homeowner’s association? Here are eight things to consider first, according to HOA-USA, an organization that supposedly educates people about homeowners associations.
1) Be sure to do background research on the homeowner’s association.
The HOA can tell you anything, including giving you falsified documents for accounting. When I tried to do “background research” the HOA office told me no records were available to potential buyers. They were for members eyes only; proprietary information, you know. Unless a homeowner decided to “go for broke” and sue the HOA there are no records at the courthouse. Only liens and lawsuits filed for delinquent dues. The City has lockjaw. Real estate agents disclose just enough to keep from losing their licenses. Depending on what homeowners you talk to it could be a board member who says “come on in, it’s a great place.” Perhaps posting a note on the bulletin board at the closest grocery store to the HOA would be the best chance to get the truth?
2) Know who is in control. Most of the time, the homeowner’s association is a non-profit corporation that is governed by a board of directors. Only 20 percent of associations hire a professional management company to handle day-to-day operations.
This one makes me choke. With all the stories in the news of corrupt property managers, who would trust any of them? Board members come and go like jets at the gates during the holiday season. The entire board could have changed since you signed on the dotted line and before you unpack your first box of dishes. Bottom line is: THERE IS NO WAY TO KNOW WHO IS IN CONTROL BECAUSE SO MANY HOAs ARE OUT OF CONTROL WITH BOARD MEMBERS DRUNK ON THEIR NEWLY ACQUIRED POWER!
3) Be sure to read the homeowner’s association’s governing documents before making an offer on a residence.
Reading the CC&R’s is a good idea before making an offer IF you can get a copy of them from the county records. In the majority of cases buyers have not seen the CC&Rs until they’re presented by the title company at the time of closing. Lest you forget, boards don’t always follow their own rules and many make up new ones as they stumble along. Where do you go to get the rules that were fabricated while the ink was drying on the contract you just signed?
4) Review the financial records of the homeowner’s association. Make sure there is an adequate reserve fund for projects and repairs that could come up in the future.
Laughable. All across America tens of thousands of homeowners are fighting and feuding and suing HOAs to see financial records. But Joe Shmo off the street is going to just waltz in and pick up a copy of the financials? Again, proprietary information. Reserve funds? What the heck are those? You may be shown those figures on some records, but by the time you get your U-Haul trailer unloaded those figures could be wildly different and spent on who-knows-what. Massive numbers of HOAs are operating without reserve funds or severely inadequate reserves.
5) Know how much the monthly homeowners association fees are.
Dues are not etched in granite. Buyers are shocked when the $50 dues they were promised at closing suddenly jump to $485. Not to mention special assessments that can take place at the whim of the board of directors. When I purchased my home I was shown an HOA annual report by the seller that said my dues would go down significantly after the “stucco program” was completed in 2009. No mention that the “stucco program” could and would be canceled and the dues would go up by more than $60 per month over seven years.
6) Remember that HOA laws vary by state and can be complicated. It is better to be educated about the laws than become involved in an expensive lawsuit.
Educated about the HOA laws? What laws? Very few states have any laws that govern HOAs. And plenty of HOAs completely ignore the few laws that are on the books. Why? Because they know that in order for you to enforce a law you’ll have to spend mega bucks on an attorney while the HOA uses your dues to pay an attorney to keep you from exercising your rights. I spent nearly ten thousand dollars to see financial records only to have the board president tell the judge the HOA had no records! And a year later, she and another board member were caught shredding records.
7) Remember that the HOA board has the authority to assess fines and restrict access to services. HOA boards can also place liens and foreclose on properties.
THIS IS THE MOST TRUTHFUL THING LISTED!!! And it should be the one that makes you jump in your car and bust through the gate to get out of the community while you still can!
8) Know that if you purchase in a community that has HOA issues, you do have options: you can accept the issues, make things better by becoming involved, file a lawsuit, or move.
“Accept the issues” means this: You are willing to be bullied, threatened, ridiculed, shunned, harassed, and suffer mercilessly at the hands of the HOA Nazis. Of all the HOA stories I’ve heard there is only ONE person I recall who has actually made things better. He quit his full-time job, took a major cut in pay and benefits, works 24/7 as the property manager, attends HOA legal enrichment classes, works closely with his city government and State Legislators, and does media interviews to educate others. Maybe one in five million people living in an HOA are willing to do that! File the lawsuit is music to the HOA’s ears. They all seem to love lawsuits! Perhaps that’s because the board members aren’t personally liable for the expense of defense? They use your dues money or the HOA insurance company brings in its team of attorneys to try and bankrupt you in a legal battle. File a lawsuit ONLY when you have well-documented records, photos, witnesses, and a really sharp attorney who is NOT affiliated with the CAI. And locating such an attorney is like trying to find the sunglasses you dropped into the ocean over the side of your boat. MOVE! That word has been used by every HOA in the country whenever someone stands up to speak against the de facto government.
I know this blog is long. But I hope by reading it you’ve learned that this type of ‘guidance’ from ‘industry’ websites is short on facts and long on superficial content.
The most important facts a buyer should know is: You are signing away your US Constitutional Rights. You are becoming business partners with every one of your new neighbors in a non-profit corporation. You’re using your personal bank account to pay for every single thing the board members do (lawsuits, bullying, malicious intent, whatever). The two most important words to ingrain in your brain about HOAs and condo associations are: