What You Need to Know When the HOA Takes Over from the Developer

It is regrettable that Community Association Management was left out of the equation. CAMs have a much wider range of experience than lawyers and CPAs. It is a CAM's responsibility to make sure the community "works" and other professionals don't have to live with their advice more than in passing.

Joe West is so informative on HOA life. I save his pieces through TopRetirements to use in my dealings here in NW Florida. We are so screwed up in my association going back to the transition from the developer. I try to be positive and hope for updated priorities but it seems to fall on deaf ears. Ego and incompetence rule over clear minds.

California has the Davis-Stirling Act and the ECHO website has a lot of information along with a newsletter which may be helpful in other states. https://www.echo-ca.org

Good advice. Our community had an extremely smooth transition from builder to resident governance in 2007. Our BOD from the beginning had homeowner participants...it was first called an advisory board. We used a task group to plan for transition using homeowner talents - many with strong financial backgrounds and engineering. The planning started almost a year before the transaction completed and did involve an attorney. We were able to acquire the developers sales and design center and convert it to a larger fitness center to the delight of our homeowners. There are many financial implications, while the builder is in control they often subsidize things like golf operations and food & beverage. The community learns exactly what costs really need to be covered to run the place!

I have questions about new community HOA’s. I moved into a new 55+ community last fall and was given the HOA covenants and rules at the time of my purchase. I have lived in the community about 6 months now and the HOA management company’s representative has sent out at least 5 sets of rule changes and decided that everything requires an application – even planting flowers – and she is charging $50 per application! No one that I have talked to has heard of anything like this, especially charging residents. The new rules are nothing like the rules I was given when I purchased, and if I had known about these new rules, I definately would not have bought in the development. We already pay HOA fees each month and have next to nothing for it. The “landscapers” are bad – they do cut the grass, but that is about all. so far this is all I can say that we have for our monthly fee as the pool and clubhouse are only about half built. Anything of importance to the residents that is asked of the HOA representative is either ignored, not answered or not done. This person also applies the rules inconsistently, allowing some homeowners something and denying another homeowner the exact same thing. has anyone had this kind of experience and what was done about it?

Hearing HOA horror stories is the number one reason we are leery of moving into a community run by an HOA, especially now that you mentioned that doing homework before purchasing does not protect you against arbitrary expensive changes after you move in. Here’s an article about where homeowners can find help with HOA problems:

https://independentamericancommunities.com/2019/05/04/homeowners-help-hoa-issues/

I have lived in a gated community with a HOA for 18 years now and I could write a book about the horror stories of HOA abuses. This is a topic that concerns many of us. I keep telling myself i will move next year but now with this pandemic, it will be another year. Our HOA changed the documents so that we do not get a vote on the budget and because the community was built before the enactment of the state’s Condominium Act, we have few protections under the law.

As I research areas to live in outside of the state I live in I
always scroll down to see if there are HOA fees. If so
I don’t look any farther. They seem to be somewhat
expensive.

Horror stories about HOAs seem to draw the most attention. But as the expert, Joe West, says In the main article in the third question, ”Most HOAs and condo associations I see are doing a good job. You don’t hear about them because they are quietly running well – they have competent, hard-working officers who attend to their responsibilities, often with good management and other professionals (attorney, CPA, reserve analyst).” HOAs are designed to provide a useful service, but there are some that are problematic because of individual personalities. I hope prospective retirees don’t automatically reject condo living because of HOA policies. A review of the entire article above is helpful. Due diligence before buying is key.

Clyde, how could due diligence Have helped Nancy? And what can help her now?

I have lived in a co-op since I bought my apartment in 1996. Luckily we have always had energetic people and retirees on the Board. Some years are better than others. We keep our fees under control as much as possible. Many people here are "lifers" and retirees and they also keep things under control. We hire our own management team and attempt to keep them in touch with the real life of the Member Owners. We have a three million dollar reserve and our operating budget also has a cushion. The fees are still higher than I would like, but includes all utilities except for Internet/Cable and lawn services. If I lived in a home, I would still need to budget for emergencies like roof replacement and pay all utilities and services like trash removal, security, etc. The personalities drawn to the Board can be self serving and power hungry, but if I am not willing or able to serve myself to try to get things changed, there can be little recourse. My consolation is that they have a limited three year term. You have to hope that the individuals within your community will care about the property as much as you do to keep the values high and the costs down. Talk with Member Owners who have lived where you are looking and see what their views are about the community before you buy into it. Read the HOA documents and have them looked over by your attorney if necessary to clarify your liability. Try to buy into a well established community--ours was built in 1929.

Our community is small, only 58 houses, and the people on the HOA board are very careful of how money is spent so the HOA fee is low. There aren't many rules other than the need to request permission for any permanent changes to the property that would make it look different from the way the place looked when it was new. The previous homeowner had been granted permission to make a planting bed on community property that is adjacent to the backyard so we can continue to use that area with the only requirement to get permission to remove either of the two trees he planted on it. We feel very lucky to have found a place like this and have heard really frightening stories about super controlling HOAs. It may be that different boards approach issues in different ways - address issues directly with the person or make a new rule and impose it on everyone? Also, I'd think that a certain "political" structure develops within HOAs between the control freaks and the live-and-let-live crowd, not much different than anything else.

The part of the article that hit home for me was Joe West stating: “Leadership is the key to success. Elect good people and you get a good association, one that’s a nice place to live – elect not-so-good people, and you get problems.” Are there checks and balances to their power? Can a good community turn into a bad one with the next HOA election? How many states have effective regulations? Are there HOA courses? Can a good lawyer save me from a bad HOA?

Here’s the link for Community Associations Network of which Joe West was mentioned in the article as being CEO, not sure if they have a contact menu:
https://communityassociations.net/

Bad HOAs are a fact of life and can be terrible to work with. But as stated, there are many or most that work for their community members as intended.

Jennifer's comment is absolute -- "if I am not willing or able to serve myself to try to get things changed, there can be little recourse." Years ago I served on our Board with good people. After three years including one as President, I left it to others. More years later I found myself criticizing actions and direction. I realized I had no right to complain if I wasn't willing to participate. Things did change for the better partly due to my efforts. In all, over 18 years, I served on the HOA Board about 10 years including 3 terms as President and , like other former Presidents, still enjoy some respect in our community. I can still see evidence of our early actions in the Boards of the past 11 years. It was at once enjoyable, difficult and fulfilling. Don't just complain do, participate. Remember the words of Smoky the Bear

In reply to Daryl about due diligence, a few brief thoughts: First, read at least a couple of books on condo buying and living, which will have lengthy sections on pre-buying due diligence. Get an experienced buyer’s realtor with familiarity about condos and HOAs in the area you’re interested in. Even if you’re buying in a new development, don’t just go through the developer’s realtor or representative. You need your own realtor for your protection and it shouldn’t cost you any more; you have a right to your own agent. Once you’ve made an offer and it’s been accepted, you’ll receive a copy of the HOA by-laws and policies. You’ll usually have three days to review those. If you don’t read all of it, you may regret it later. If it’s not something you feel comfortable reading, immediately have a real estate attorney review it. Your realtor can help you find one. If there’s something in the bylaws you can’t live with, you can usually cancel the entire deal, if done on a timely basis, and get your deposit back. If you do buy and move in and then find problems, you may need to spend some money on a real estate/condo association lawyer to help you. Also, when you first move in you might want to get a book like the “2020 Condominium Bluebook” (Amazon) that is a comprehensive guide to your rights as a HOA/condo owner. This book is primarily for California condos, but many of the laws are similar from state to state.

With over 350,000 HOAs in the US (53% of all owned residential units), there are bound to be some with inefficient or overbearing HOA boards. Sometimes you and other unit owners can work things out with board or elect different board members. But if not, a lawyer may be your best bet if a board or president are over-reaching beyond the actual bylaws.

Theoretically, it can be great to have a HOA that can purchase landscaping and other services at a discount, help to maintain property values and establish a reserve for advance planning. The question is always whether or not they achieve these goals reasonably well. Bad HOAs aren't found only in 55+ communities. In my prior all-age community in South Carolina, there were some stay-at-home Moms who used HOA participation as their empowerment. I saw everything from mean girl bullying between cliques on the neighborhood Facebook page (for ex., vicious fighting over the color of the flowers to be planted at the entrance to the neighborhood), to abuses of authority (such as providing their key to the community clubhouse to a friend to use for a free private pool party after closing hours). HOA rules were applied unequally depending on whether someone was a friend of a Board member. Someone drove around the community once a month with a clipboard to note perceived violations and send out nasty letters (mold noticed on siding; beds not maintained well; garbage can out for an extra hour after pickup...) that would then trigger a Facebook battle. It was exhausting, but entertaining. At least the HOA fees were kept low and the property was maintained well despite all the fighting. I swore I was done with HOAs, but my current home came with one that is well-run and hasn't raised the fees in about 5 years without touching large reserves -- and the services it provides are cheaper than if I went out and had to purchase them myself.

To add to the good recommendations already posted, consider asking your real estate lawyer to do a litigation search for the HOA to see if anything comes up.

Thanks Clyde, looks like a lot of homework is needed and I’m printing your comments. Kate, did you do a litigation search this time and do you think that spared you another nightmare?

Even though our “starter” home and lot turned out to be the perfect retirement home, our “starter” neighborhood no longer fits our wants or needs, and that’s an understatement. I thought a 55+ active community with an HOA would solve most of these problems, but was deterred by the negative HOA and developer stories (although grateful for opening my eyes.) Didn’t want to jump from the frying pan into the fire. Thanks to this site and the many helpful comments by members both pointing out problems AND solutions, I’m feeling more confident about a move.

Daryl: I always did as much research as possible, incl. checking sex offender sites to make sure one doesn't live nearby (don't assume there aren't any sex offenders in 55+ communities! I did run into several when doing my research. It could affect your property values & visiting grandchildren, among other things). I even subscribed to local newspapers for a little while to get the feel of a community when narrowing down my choices.

For ex., when I was learning about the Villages, the local newspaper and website chat pages gave me some insight into the area's conservative leanings, problems w/ sinkholes, and some abandoned homes when homeowners died. I also read about some adult children with drug, criminal, mental problems moving in with their retired parents, which is an something I hadn't thought about. That obviously doesn't mean every neighborhood in the huge Villages has those issues, but I learned about things to question. As another example, a litigation search into Sun City Hilton Head came up with a class action regarding defective stucco. That was helpful to evaluate pricing, home warranties & inspection needs when I considered buying an existing home there before choosing to move near my kids instead. If we have the time to do research, we might be able to avoid mistakes.

Thanks, Kate, really good ideas for research. I appreciate it!

Yes, it is good to do research and you can do it till you are blue in the face and have an encyclopedia of notes on the good, bad and uglies of every place you investigate. You can find the perfect place for you and move in. Who is to say that within a few months a sex offender won't move in next door. Or that empty house down the block is sold to a dysfunctional husband and wife that have drunken brawls requiring multiple visits from law enforcement. You never know who will move in a week, a month, a year or years down the road. There is no guarantee on who will move into the neighborhood or right next to you.

Natural disasters can't always be factored in. If your community never had a sink hole you might have a false sense of security. Then bam, one appears out of nowhere. Sometimes cheap construction isn't discovered till years down the road when the building starts to deteriorate.

Yes, doing your homework is very important but there is absolutely no guarantee your perfect world won't eventually turn into your personal hell down the road.

I believe everyone should go in with a long list of questions and find out the answers about the property, rules, regulations, costs, maintenance, neighborhood, activities...Those are the obvious things that can be answered. It is the hidden things that you won't be exposed to till you move into a new house in a new neighborhood.

My opinion is that the most problems are people problems. People with pets who do not control them. The noisy neighbor constantly doing something like drilling, pounding nails, neighbors with diesel trucks warming them up for an hour. Neighbors with motorcycles, revving it up in the driveway for a long time. Houses too close together and dealing with constant back yard noise. The nosey neighbor who is gossiping about other neighbors. I am sure others have horror stories of bad neighbors.

You’re right, Louise, do the homework then take a chance. It’s a few people who have ruined our current neighborhood, and that can happen anywhere. I’m trying to guarantee perfection and eliminate risk. Never learn that lesson.

Daryl, I agree with you. Louise is correct in that things may go south, but there is more information to assess the risk when you do your research. At our co-op one must produce two letters of reference before being accepted in Membership. Overall, it is a best address and we have been fortunate that most people behave accordingly. The one or two out of 575 Member Owners that have acted erratically over the years would not have prevented me from living where I now live. I cannot live worrying about the gloom and doom that might happen, I have to go on what is present today and historically in the neighborhood or community. If a Member Owner does not live by the rules then the community via the Board, can take action, and it might take time but we do have recourse.

HOA's are not for everyone and if you dislike being in a regimented atmosphere you will not like living in one.

If you want to beautify your property, not all beautification is allowed at certain communities. If you like a certain color in your yard, you will have to get approval first. Some rules are good but some are beyond ridiculous.

No, I do not want to live in a neighborhood with neighbors that have junked up yards but it is nice to see homes that display different ideas of flowers, outdoor benches, landscaping and decorations.

Here are a lot of links to horror stories of living in an HOA community.
https://www.bing.com/search?q=hoa+horrors&cvid=f3d3979795434de9b58b01d813c14fea&FORM=ANAB01&PC=DCTS

Living in a traditional neighborhood without an HOA does not guarantee anything either. I lived a long time in my home before moving and the house next door was kept up and with nice neighbors until they both passed away. Then the house sat vacant for several years and the exterior deteriorated, although the yard was kept up by a lawn service. Next an older teen relative (someone in the family's son) moved into the house alone. Constant traffic, different cars, different people coming and going. Cut off his ankle bracelet I found out, and visits from the police on a fairly regular basis. I was glad to leave. I did get the HOA rules for several different retirement communities, most of which were too restrictive. When I found one without such a restrictive HOA and no BBB complaints against the builder, I purchased. Now the HOA is becoming excessively restrictive and people on the "I like you" list get approvals, others do not without explanations. This is being done by a professional HOA management firm, not the homeowners. The original builder sold out to another builder this year while the development is not finished. Who would have known that was coming? The original builder had a good reputation and had been building in the area for a long time. It does seem that all newer neighborhoods and all the retirement-type communities I have looked at have HOA's. I agree they have good points to them, but it is beginning to appear that they are also a way to impose someone's personal opinion on the entire community.

Our original plan long before we retired was to build in a rural county south of our current crowded location. Since then the gas companies have come and fracked the place to death, so we dodged a bullet on that one. Now perhaps we should keep options open by rent and move, rent and move, keep those saddle bags packed.

I just read that 80% of new home communities have HOAs, so I might not be able to avoid them if I want a new or even newer home. Can we search your site for non-HOA run communities? Also perhaps whether they use a management company and who that company might be? Can you search communities by builder? I noticed that you can search by “rentals,” which is starting to sound more appealing in the short term.

Daryl, Why don't you consider building a brand new home on a plot of land you own? You will have to determine what State, what towns in that State interest you the go to a realtor and tell them your desires. Have a list. For instance, how big of a lot you want. 1/2 acre, 1 acre, or more. Are you interested in living in a remote area, one mile out of town, close to a hospital and shopping. Big town, little town. There are lots that might be abutted by a State owned forest so you wouldn't have neighbors on that side of your property. You could have a stream or some other natural thing that would prevent neighbors surrounding you. Or maybe you prefer lots of neighbors. Put your desires down on paper. Got to a realtor and discuss your likes and dislikes. Tell them you would rather not be in an HOA property. They will take you to places you would never know existed. Some you will hate, some you will love. Some too expensive. Once you find the property you will need to determine sewer needs and water needs. Some places have community/city water and sewer, other places do not so you will need to put in a septic system and drill a well. Once you determine that stuff and you do the proper tests (perk testing) for septic systems and find out how deep wells are in the area you are interested in. Well drilling companies know this stuff. If you decide to proceed, find a reputable builder. Probably the realtors can help you with that. I will not kid you, it is not an easy process but you will be happy once it is finished.

My husband and I built our home when we were 23 and 25 years old. My Dad had been a builder and guided us. My husband did a lot of grunt work and it was not easy because he was working a full time job too. We finished our house in 3 months. Started in June and moved in September 1st. It is a normal stick built home, not a shack. The house was completely finished when we moved in. Of course we had landscaping work to do and we were broke by the time we finished. We had saved enough money to pay for our lot. However, if we paid the whole amount we would have had no money to buy building materials. We struck a deal with the land owner and he took 2/3's payment and once we got the first installment of our building loan (mortgage) we paid him off. The bank requires so much work to be done for each installment to be paid out. There were 3 total installments.

We were young and stupid at the time. It was a huge learning experience for two pups who had only been married two years!

Be prepared for realtors who want to steer you to properties they are pushing for their own interests.

If nothing else, do some research on building your own home. There are tons of trades people out of work so you could get the work done quicker than normal. Also, my other recommendation is don't always go for a cheap price when someone quotes you cost for their work. Sometimes cheap is what you get for talent. When it comes to your well or septic system and heating system, getting the right company is an insurance policy.

You don't have to be a rocket scientist to build your own home. But, we had my Dad to lean on and there are tons of books out there to guide you. A lot of homes are built in factories today and they bring them to your property in two or 3 pieces and connect them. I have seen that in my area and the homes are gorgeous! They come with plumbing and I think they send the tradespeople to hook up all the stuff for you.

Thanks, Louise. I think I was seduced by the chummy, insulated feel of a 55+ active community. Probably a Disney-like dream with its clubs and activities. My daughter laughs at me and said I’d be spelling out S.O.S on my lawn after six months. I feel too lazy to start all over again taking on such a big project. But you are absolutely right about having control and getting exactly what you want where you want. That really would suit our personalities the best and makes a lot of sense. Food for thought.

Daryl, it would be less of an ordeal if you went to a modular company who will build your house in their factory. You would basically pick out the house you want, the fixtures, colors, upgrades and they will bring it to your lot when constructed and put it together. You would only have to buy the lot and find out about water and sewer. I have never visited one the the factories but most that make these homes are happy to give tours and see what they do and how they do it.

Here is one company that is in my area. I do not know anything about them as far as reputation but if you were inclined to go this route there must be many other companies across the country.
http://www.westchestermodular.com/capes.html This website will give you and idea of what they can do. Seems they can do modest homes and giant ones too. I think if I were to build another home, this is the route I would go. It would be less headaches with getting a zillion trades people coordinated. You tell them what you want and they build it. You have control but it is hands off. I saw the installation of two modular homes in my area and it was quite amazing. This one home was a colonial style home. The people must have got a really good deal on the lot because they had to blast out an area for the house to sit. I do believe the people bought the property and house to flip. Well, it is the worst lot you can imagine and the driveway is long, steep and has a hairpin turn in it. It is almost like they have to walk up 30 steps to get to the front door because of the hillside. The manufactured home company brought the house in at least 3 pieces. They had a crane and lifted it up and onto the foundation. It was quite a feat for sure! That house has been vacant off and on for years. I don't believe they ever sold it either. They picked a dud for a lot. Nobody in their right mind would buy that house practically hanging off a cliff! The other house is in the same vicinity but is on a very flat lot. The house has a 3 car garage too.

I too am seduced by the idea of The Villages but I hate the heat and humidity and my Husband wants nothing to do with FL considering all the snakes and gators. Most people claim they never see snakes or gaters but they are in FL!

Good luck on whatever you do!

Thanks, Louise! The ease of modular does sound appealing. I will check out the link you included. Best of luck to you, too, stay well!

Our all-ages community transitioned this year from a builder HOA to a home-owner HOA. Now the pandemic has created a few unexpected situations. Kids running in groups through the landscape, climbing trees, or riding bikes through bushes. Not six months in, people are up in arms about delaying opening the pool citing the COVID-19 pandemic, spewing vitriol on social media site Nextdoor, revealing their personalities. My husband and I are seduced by the idea of a 55+ community (no marauding teenagers), but the comments above are great to balance out our fantasies. What I really truly want is a 1 acre plot of land (or so) and a house in the middle of it for room away from immediate neighbors where I can have a small garden, a few chickens, couple of apple trees, and look at something beautiful and have peace and quiet. That's my fantasy. I just don't know how realistic that fantasy is for a couple of 65+ seniors. I know it's really driven by all these new problems with a novice HOA board, volatile neighbors, and unchecked growth around our community irrevocably changing our little city. We did our due diligence before moving here, but no one has a crystal ball into the future. And now a pandemic is creating extraordinary circumstances everywhere. And so, I'm staying home, on my property where I can control my exposure and environment, and live to dream of another day. And maybe a one acre plot of land with a house and a nice little garden.

PEldridge, where are you located/looking and is $300K+ out of your range?

Perhaps a pipe dream, but dreaming doesn't hurt. Bad time to sell and we aren't selling, but our established subd with owner HOA has options. There are others around us in central NC.

My gated 55+ community transitioned from builder to homeowner in 2019. In anticipation of this event, and with builder support, our residents set up a Transition Team of volunteers who were selected based upon their skills and commitment to our community. The Team was offered training from our insurance broker, Reserve Study consultant, and our on-retainer lawyer. We developed a sub-group to evaluate the condition of our physical structures, including hiring engineers to look at roof conditions of our common-area buildings and conditions of pools. This costs money, but ya’ gotta’ do it.

Several of the Transition Team members became HOA Board members, which was a goal of the selection of the Transition Team. I cannot imagine the problems we would have encountered later had we not set up the Transition Team early on.

In spite of our efforts, we still found common area issues, construction issues, and landscaping issues that slipped by.

Now in our first full year after the transition, we are finding our HOA meetings to be more civil, and many of the early confrontations are now behind us. Electing competent, committed, and communicative Board members is critical.