HOA Pro's and Con's

You might visit Evan McKenzie's blog at
http://privatopia.blogspot.com/
or read his book entitled "Privatopia: homeowner associations and the rise of residential private government".
The links at that blog will give you lots of "cons"
Or you could go to http://www.caionline.org/ and get all of the "pro" propaganda CAI puts out.

You have hit upon one of the fundamental flaws in the HOA model "neighbors governing neighbors". But a GOOD management company is not the answer because a management company is not supposed to govern. It is supposed to administer the policies of a responsible board of directors.

I am a Realtor and HOA VP in Illinois. I can say in our area, homes in HOA's do appeciate faster/maintain value more than homes that are not.

A few of the more simple reasons why in my neighborhood:
You won't have a neighbor who stores their 29 foot boat and trailer in their driveway.
Your neighbor cannot paint their home purple.
Your entrance landscaping and pond will look nice. If it does not, the city will take care of it for you and send a big bill.
No fences falling down, giant above ground pools, sodium lights, etc.

In some areas near us with no HOA...these things exist. And even if it is just the perception of the 'quality' of the neighborhood, it matters.

As always, if someone doesn't like living in an HOA, or doesn't want these kinds of rules...they have the option of buying elsewhere. I have seen few communites get an HOA after it was created.

Currently, we are $150 per year per lot (300 homes)

We are self-managed, so we save a whole lot of money in that aspect of our management. We also maintain control of our association.

Our developer actually built a very similar one down the road. Theirs is bigger (600 houses), although the common areas they maintain are the same size as ours. They also have very nice park areas maintained by the park district for free.

Their dues are $260/year, because they have a management company. They also have lack of enforcement and many who don't pay their dues, etc....

Their values are about 20% less than ours- and we have less 'ammenities'

Similar homes outside of HOA's here are approximately 25-30% less in price. Mostly because they are in 'pockets' of land in older neighborhoods.

In the next town over....they actually started HOA's in older neighborhoods to bring values up, rentals down, and see some 'vintage restoration'. They have since seen tremendous appreciation.

But- you are correct that it depends on the state/market you live in as to how youyr value is affected. And sometimes no HOA is better than what exists!

Does anyone have data on the POA vs HOA? We are looking at making this change in our community due mostly to the fact that so many people feel that its okay not to pay their dues.

Jeff
HOA VP Georgia

I’m new to the forum. I have been reading old posts about HOA’s. I want to be on the board. I came across this post obliviously written some time ago. I was interested in knowing myself, why a HOA would want to be an POA?

Does anyone have data on the POA vs HOA? We are looking at making this change in our community due mostly to the fact that so many people feel that its okay not to pay their dues.

Jeff
HOA VP Georgia

I too live in Georgia. I have been to many board meetings and have heard discussions about delinquent dues.

Thank you all so much
Chuck W.

JulieS,

Do I understand thing correctly? When a foreclosure is placed on a home, there is an order in which debts are paid. You are now at the top of such list.
Can HOA foreclose on a property for non-payment?

I’m sorry! Duh, what is a lien?

We have homeowners in my community that are delinquent in their dues. Violation letters are not working! Would becoming a POA help in the process to recove some of this money?

Thanks so much

I have been reading a lot of post and have noticed that you are some others are very informative with your responses

A lien is placed on a home as a way to collect a debt. Liens are used for non-payment of various taxes, annual HOA assessments, etc.

When a person has not paid their annual assessment, we add a late fee equal to a percentage stated in our covenants and then a $10/month fee for collections. If the account has a balance due at 90 days, we file a lien on the property through the county in the amount of the unpaid funds plus associated costs of filing.

Our covenants do not allow for foreclosure and recently, in the state of Georgia, the ability to form a POA was established allowing for foreclosure. A lien placed by an HOA is pretty much at the bottom of the lien list in getting paid if a home is foreclosed. If there is a lien on a property that is being sold by the homeowner, the liens are to be satisfied before the property is sold, or even refinanced. If you are an HOA and you chose to foreclose, you need to find out what other liens are on the property and if it will be worth foreclosing to collect. You need to pay the mortgage company, 2nd mortage, tax liens, etc. before the HOA can collect. It may not be worth the hassle.

If you are a POA, your lien is placed highest on the list and getting paid. You also have the ability to foreclose, collect your money first, and the remaining balance is used to pay mortgage holder and other liens.

In the state of Georgia, should a home be foreclosed by the bank and the annual assessment has not paid, we cannot collect that year's assessment, even with a lien on the home. We can collect the following year from the new homeowner. (Go figure but that is how the law is here.)

Our process is to assign late fees as motivation to pay on time, file the lien at 90-days past due, another motivation to pay, and then we file lawsuits. We have a few people with balances of almost $3,000 and we are in the process of filing law suits (our annual assessment has ranged from $350-$450/year). These people are a result of past boards not being aggressive in collections. We do understand that people go through tough times and we are more than willing to accept payment arrangements. This is fine as long as they are paying...but most people make arrangements and don't pay.

My goal next year is to become a POA (I finally got enough consent forms signed in favor of an initiation fee to build reserves). We have some folks who want to protect non-paying homeowners from losing their home. I don't understand why these people want to protect homeowners who do not pay their annual assessments. Doesn't make sense. If someone hasn't paid the $450 they owe and you let them know you are going to foreclose, somehow they manage to find the $450.

JulieS-

Thank you for explaining all that for me. I’m looking to run for the BOD in a couple of weeks and this is one on concerns! I too live in Georgia! Our community has many delinquent homeowners. The current BOD was adviced to change to a POA. I believe that is their goal for this year.

Thanks again
Chuck W.