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Why Do We Need a HOA Anyway?

Why Do We Need a HOA Anyway?

Why do we need a HOA anyway? Why does the HOA have so many rules? What are we getting for our dues? These are common mantras with a select few in almost all HOAs. For this article, we will refer to these members as anti-HOA members. This “anti” label is not meant to define these HOA members in a negative light but, rather, as a convenient euphemism considering that everyone has a right to their own opinion and their opinion should be respected. This article will provide strong talking points that can help win anti-HOA members over.

Surprisingly in the past, there was a minority of developers advertising their communities as “not” having a HOA as a positive marketing position. With the predominance of new homes now being built within HOAs, most developers have abandoned their negative posture towards homeowner HOAs and understand the overall value. The many benefits, known and unrealized, from living within a community with covenants, conditions, and restrictions may not be obvious.

Paying for Amenities as a HOA

Amenities and the membership’s shared cost of installation and maintenance are obvious benefits. For example, if a member were to install a home swimming pool, the average cost would be $35,000. Another example would be tennis courts with an average installation cost around $50,000.

Factoring in the routine maintenance and associated costs related to amenities can be a substantial amount, especially considering if these expenses were covered by only one member and not spread out amongst the entire membership.

Monthly pool maintenance alone is in the hundreds of dollars. Annual insurance expenses for amenities, liability and master hazard, can go into the thousands.

The Fallacy of Volunteer HOAs

Architectural enforcement is paramount to maintaining the HOA’s standards. Without community standards you eventually digress towards no standards. Architectural control is an area where some anti-HOA members will simply point out that everyone has individual deed restrictions that would not allow this or that and thus an overall HOA is not needed. This is the actual situation that is found in older communities and in volunteer HOAs (volunteer HOAs meaning members are not required to pay dues).

What is often not considered is, while yes there may be individual deed restrictions, who is going to enforce these restrictions? Most volunteer HOAs are not financially capable of pursuing enforcement. A common counter is to reference a municipality’s ordinances and related code enforcement officials. Code enforcement will not evaluate or enforce deed restrictions only code violations which never fully address all the possible deed restrictions that can occur. If there is no HOA and only deed restrictions, a community members only remedy is to file a lawsuit against another community member to try and reach resolution. The community member would also have to self fund the legal action against the member that is committing the violation. In these types of legal matters, generally speaking, recouping legal expenses may be difficult even if the aggrieved party wins the lawsuit.

When all else fails with the above ARC enforcement reasoning, the anti-HOA member many times will fall back on the old standby response; “That type of ARC situation would not happen in our HOA.” This may seem difficult to argue successfully because of the counterfactual nature of the statement but, then again, most all HOAs at one time or another have had experiences with extreme architectural violations. If a recent architectural violation was not up to the level of an extreme violation; it does not take much of an imagination to contemplate the slippery slope of not having a practical ability to enforce architectural restrictions.

The Democratic Process

One underlying benefit of an HOA is the democratic nature of the organization. While a homeowner HOA is not a direct democracy, it is safe to say that it is probably the closest to a direct democracy anyone will ever encounter. Unlike paying local, state, or Federal taxes, membership dues in an HOA directly impact the member’s community. The member can see how their dues are being spent. In many HOAs, membership input on certain spending, usually discretionary spending, is actively sought by boards and thus provides members a direct hand in the operation.

The most significant benefit of owning a home within an HOA is increased home value. A research study about community HOAs, What Are Private Governments Worth? by Amanda Agan and Alexander Tabarrok found that community HOAs can add a 5-6 percent increase in property values over similar homes in nearby non-HOA communities.

Home Value

Writing in Regulation magazine, the authors say that the increase in home value attributed to community HOAs is “especially remarkable when one considers that (HOA) residents pay twice for many local services—once in taxes and then again in HOA fees.” The authors also pose valid questions such as: Do community HOAs increase home values because they offer better-quality services than local government or because they offer services that local governments cannot offer (like more restrictive zoning) or do not offer (like greater security)?

The Final Word

Usually the anti-HOA problem or issue revolves around one particular aspect, such as ARC enforcement or the expense of the swimming pool. The best approach to counter these objections is to stress all the benefits and not focus on the one point of contention. While it may not be possible to win over all anti-HOA members, hopefully the points discussed in this article will aid in the discussion.

 

William Douglas Management, providing excellent management services to HOAs and condominium associations since 1980.

Copyright 2018 William Douglas Management, Inc.

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