|  Think
you won’t have to deal with your homeowners’ association
(HOA) as long as you don’t paint your house purple and stick
a yellow slide on the roof? Think again. There are many things
you may not know about HOAs that may come back to bite you.
Most developments now have a homeowners’ association
(HOA) governing how the community looks and acts. If you aren’t
very familiar with these organizations, there are many things
you should know as a responsible homeowner. A recent Yahoo Finance
article explores some little-known HOA facts.
1. HOAs Have More Power Than You Think. “So
I missed a few payments, what’s the big deal?” “I
can build that garage, what’s the worst that can happen?”
You may think that breaking your HOA’s rules “just
a little” is no big deal, but the truth is, it may be a
very big deal. HOAs vary, of course, and some are going to be
a lot harsher than others. Some HOAs will slap you with a fine
if you are one day late on your monthly dues. If you fall 90 days
behind on your dues, the HOA may place a lien on your home and
threaten to foreclose if you don’t settle the bill. Your
best bet, when you find your HOA taking drastic action, is to
pay what they say you owe and then argue your case.
2. Lawsuits Are Seldom a Last Resort. HOAs
may tell you that a lawsuit is the last thing they want to do.
In reality, this is not the case at all. In California, experts
estimate that 75 percent of HOAs are involved in a legal dispute
of some kind. Association lawyers often scare board members into
thinking that one exception will make the community fall into
immediate decline. Also, lawsuits are often tempting to board
members as an effective scare tactic.
3. Reserves Aren’t Always Reserved.
Every HOA has a reserve fund to be used when something goes wrong
or the property needs extensive repairs. However, many HOAs’
reserve funds fall into disrepair themselves. Approximately 20
percent to 25 percent of your HOA dues should go toward the reserve
fund. There should also be a long-term schedule for the reserve
fund in the annual budget, including an estimate of upcoming expenses
for the community: swimming pool maintenance, lighting repairs,
landscaping, etc. Reserve accountants recommend that the reserve
fund should contain at least 70 percent of the projected reserve
budget. If the fund is lacking, expect to be hit with big assessments
when something in the community goes awry.
4. Rules Change All the Time. HOAs often sidestep
the law and common courtesy by changing the rules whenever they
wish. According to attorney Benny Kass, who represents associations,
“Bottom line, the board has to have the right to run the
show.” This means that homeowners need to stay up-to-date
on any changes and raise a fuss when something isn’t done
to their liking.
5. Many HOAs Don’t Want Homeowners Involved.
Yes, HOAs are there to represent the homeowners in a community.
But that doesn’t mean that board members would rather avoid
or ignore homeowners in order to get the job done quickly and
painlessly. Watch out for last-minute changes to meeting times
or locations or no reaction when you raise your hand at a meeting.
If you feel ignored, try putting your complaint in writing. If
that doesn’t achieve the desired result, organize other
homeowners and call a special meeting to discuss the issue or
remove board members, if necessary. A last resort is, you guessed
it, a lawsuit.
6. Board Members May Be Volunteers, But Not
Always. In most cases, board members are volunteers. In some cases,
however, board members get perks from their position. Perhaps
board members are allowed to “bend” the rules but
no one else is. Or a board member’s best friend can install
a satellite dish, but her next door neighbor can’t. Or worse,
board members receive kick-backs from using certain contractors.
The best you can do in this situation is to keep a close eye on
the board. Watch out for big expenditures and stay informed.
7. Petty, Petty, Petty. Finally, some HOAs
are nothing if not petty. Many homeowners have stories of an HOA
that won’t allow Christmas lights. Or one that wouldn’t
allow a tall fence to be built between feuding neighbors. If your
HOA sounds like these, watch out. Think carefully about what matters
more: your sanity and financial security or some holiday decorations.
If you hold your ground, you may end up with a fine, a lien or
a lawsuit on your hands. Before buying in an area, try to get
a good idea about the personality of the HOA by talking to some
of the board members, as well as some of the homeowners who are
not on the board.
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