By Deborah Goonan, Independent American Communities
Home buyers may be drawn to HOA-governed housing because of all the so-called “advantages” promised by home builders and sales agents. But how many experience buyer’s remorse?
In September 2018 Insurance Quotes surveyed 649 homeowners about their opinion of HOAs, revealing that a minority of people actually ‘love’ HOAs.
Honest About HOAs analyzes survey data by board membership, the results are somewhat predictable. Among board members, 57% love HOAs, 14% hate them, and 29% have a neutral opinion. But among homeowners who have never served on their HOA board, 30% love HOAs, 33% hate them, and 37% remain neutral about HOAs.
And, once they buy in, Insurance Quotes’ exploratory data suggest that one-third of homeowners come to hate their HOAs, even though they may enjoy other aspects of their current home.
Let’s take a look at six of the most common promises that the HOA industry uses to reel in unsuspecting home buyers.
Promise #1: “low-maintenance” lifestyle
Townhouse and condominium communities often attract the resident who doesn’t have the time or desire to mow the lawn, shovel the snow, or maintain the exterior of their home.
Reality: Keep in mind that you’ll pay condo or HOA fees to cover the cost of maintenance. And there’s absolutely no guarantee that the contractors working for your homeowners, condominium, or cooperative association will maintain the common areas and amenities according to the high standards you might expect.
And, speaking of price, how much will you have to pay for home and community maintenance services? The cost may start low, but could double within a few years, especially after construction ends and the developer and home builders stop selling homes. Plus, as the community ages, landscapes and exterior surfaces will need more maintenance and eventual replacement.
Unfortunately, there’s little recourse if you become dissatisfied with the HOA’s service or value for the price you pay.
A homeowner cannot stop paying mandatory HOA assessments, without risking a property lien, thousands of dollars in collection fees, and the threat of foreclosure by the HOA.
Quite often, the vocal resident who complains about poor service often becomes the HOA board’s scapegoat, labeled as a troublemaker and malcontent. If the homeowner gets sucked into an HOA lawsuit, the conflict can drag on for years, without satisfactory resolution.
Promise #2: safety and security
Gated communities and secure condo and co-op buildings attract safety-conscious buyers and tenants. Some buy into the status or prestige of a private, exclusive community.
Reality: Gates and guards often create a false sense of security, which leads residents to be less alert to potential criminal activity in the community. Residents tend to cling to a false perception that all “outsiders” pose a threat to personal safety or private property, forgetting that most crimes are committed by “insiders” who know how to get around security guards and surveillance cameras.
Gated and secure entry points cannot always prevent unwanted guests or intruders, especially if neighbors share their keys, entry cards, and passcodes with many friends, acquaintances, delivery drivers, and service providers.
And, nosey or gossipy security or door guards, as well as intrusive cameras give some residents the creeps.
Promise #3: Exclusive Amenities
Home buyers and tenants are sometimes attracted to planned communities and luxury condo building by amenities such as a community swimming pool, a club house, exercise facilities, or a roof deck. Housing consumers often imagine they will spend hours of their free time enjoying these perks.
Reality: Your association will probably limit the hours you can enjoy the recreational areas. For instance, pool hours might not mesh well with your work schedule. Or your HOA might enforce unreasonable rules to prevent you from using the clubhouse.
Your HOA might rely on revenue generated by reserving the club house for private meetings and clubs. Some Associations even open reservations to the public. So your HOA club house or roof deck could be unavailable every weekend, booked for weddings, baby showers, graduation parties, and more.
On the other hand, if your HOA mismanages everyone’s assessment money, the first thing cut from the budget will be maintenance of those exclusive amenities. It’s not uncommon for homeowners to end up with an unheated swimming pool, scraggly lawns at the community park, an abandoned club house, or unsafe playground equipment.
Poor maintenance and security of common amenities opens up the HOA to liability for personal injury.
And, by the way, if the developer doesn’t build the community amenities by the time you move in, you might never see them completed.
Promise #4: social activities and groups
Active adult communities sell residents on the idea of dozens of social clubs and planned activities to keep them busy in their retirement years. So you might imagine yourself spending endless hours having fun and making new, lifelong friends.
Reality: In any community, social activities are only as good as the people planning them. Some event planners do a great job. Others, not so much. And while a few community-sponsored activities are free, many require participation fees over and above regular HOA assessments.
Social clubs tend to come and go as residents move in and out of the community, or succumb to the natural effects of aging. Active adult communities tend to have a high turnover of residents, many of whom move out after just a few years.
And once you or your friends move out, you’ll no longer have access to the community and its recreational facilities, except as occasional guests.
Promise #5: Affordability
Condos, townhouses, manufactured homes, and small villas are often sold as “affordable housing” options. The promise appeals to single adults and working or retired households with below-average incomes.
The purchase price of smaller living quarters, most of it attached or multifamily housing, can be attractive, especially to buyers on a limited budget.
Sometimes a buyer is lured in by low monthly condo or HOA fees, too.
Reality: A home can be affordable to buy, but that doesn’t make it affordable to own. When you add up a mortgage payment, property taxes, insurance, and HOA fees, the home might not be so affordable after all. That’s especially true when the condo or homeowners’ association suddenly decides to increase monthly fees or issue hefty special assessments to pay for deferred or unfunded maintenance.
Promise #6: trouble-free, modern, new construction
Home buyers often love the idea of a move-in ready house, especially if they don’t have the time or money to deal with remodeling or major renovations. Buyers usually expect new (or newer) construction to be attractive, easy to maintain, and energy-efficient. And they’re often willing to pay extra for the convenience and comfort of a modern home, and overlook the fact that the home is HOA-governed.
Reality: Newer is not necessarily better. Mass-production builders tend to be more concerned with the quantity of homes sold than quality of construction. Several of the largest home builders in the U.S. have been sued for shoddy construction, leaving homeowners on the hook for expensive repairs not covered by home warranties.
And when the HOA or condo association discovers defects in commonly owned property, it becomes and expensive headache for every homeowner. And, due to weak state regulation of the construction industry, homeowners are rarely reimbursed for the cost of correcting construction defects.
Bottom line: savvy home buyers would be wise to be skeptical of promises made in the sales pitch. The disadvantages of HOA-governed communities often outweigh the advantages.