Exploring Condo Living: How Do I Find A Good Homeowners Association?

Where we live, most first-time homebuyers purchase condominiums or townhouses. (I haven’t seen any co-ops?) Besides simply finding a unit that you like, I’ve been worried about having to deal with homeowners associations, or HOAs. There are plenty of horror stories about evil HOAs out there, as outlined by this Yahoo Finance article 10 Things a Homeowners Association Won’t Tell You. They are often cast as petty and heavy with politics:

When one Virginia homeowner asked for permission to hang Christmas tree lights in 1992, the board didn’t like the idea but didn’t know how to prevent it. “We struggled with this one,” says lawyer Benny Kass, who represented the association. “But we finally concluded that the restriction against hanging lights was valid because you were pounding nails into the wood, and that was a fire hazard.” Ho-ho-ho.

…and they’re not afraid to sue you over it:

Experts estimate that in California, 75% of the homeowners associations are embroiled in a legal tangle of some kind. Chicago attorney Mark Pearlstein, who represents associations, figures that 60% of all condo boards and homeowners associations in Illinois are involved in some kind of legal suit.

…or they could simply be ineptly run:

Ron Williams, an engineer with R.J. Moore, a consulting company that specializes in reserve accounting, once worked with a Northern Virginia condominium that had a paltry $100,000 set aside. “Closer to $1.25 million would have been considered healthy,” says Williams. When power-plant equipment gave out in early 1994, the association didn’t have the $400,000 needed to replace it. The solution: A $2,400 special assessment to each of the 170 unit owners and a 22% increase in monthly dues.

It’s almost enough to make me stop looking at them at all! Instead, I’ve tried to make a list of things to try and at least screen out HOAs with obvious signs of problems:

Try to get a copy of the homeowners association agreement and recent meeting minutes. I figure if I am serious about buying a place, I would want to read about all the things I can’t do like replace the flooring, how many units are allowed to be rented out… or if I can put up Christmas lights! Also, I’d like to see in writing exactly what my fees are covering – usually water, sewer, common areas, and basic cable TV. If possible, have an attorney read through it. (It helps if you have friends that are lawyers!)

By reading about recent meetings, I can hopefully get an idea of what issues are currently being debated, and how petty they are. I’m not sure how easy this will be though – whenever I ask the listing agent about HOA-specifics, they always seem off-balance and say something about “Oh, the last owners loved living here, I’m sure they are wonderful”.

Learn about the reserve fund to avoid big assessments. One common nightmare would be to move in, only to be hit with a big assessment for fixing the pool that you’ve never even used yet. I’d want to make sure the reserve is large enough to handle expected and unexpected future maintenance costs. A friend told me you can get a list of all previous assessments if you ask, as well as any planned future assessments. Part of this is also noting the overall age of the building, as well as the existing condition of all the common areas. From the Yahoo article:

When it comes to checking up on a reserve fund, there are two good rules of thumb. First, about 20% to 25% of your dues should go toward the reserve fund, says Robert Nordlund, president of Association Reserves, a California company that specializes in reserve accounting. Second, there should be a long-term schedule for the reserve fund in the annual budget, including a projection of upcoming expenses for each common-area item: elevator repairs, painting, pool maintenance and so on. Reserve accountants suggest that the account should contain no less than 70% of the projected reserve budget. If the account is 30% funded or less, you can expect to be hit with some big assessments down the road.

Try to talk to an existing owner that’s not the seller. Usually there is someone outside playing with their kids or walking the dog. I don’t mind striking up a conversation with a potential neighbor to try and get an insider’s view. On top of HOA questions, I’d ask things like how long they’ve lived here, if it’s been getting better or worse, how good the soundproofing between units is, and if it’s a family-oriented complex.

Ask your buyer’s agent to do some research as well. You have a buyer’s agent, right? Ask if he/she has clients that either live there now or have sold a unit there in the past. If not, have them do some digging and ask their co-agents.

Are you a condo owner? I’d love to hear your experiences and tips on dealing with HOAs specifically.

Comments

  1. I live in a single family home with a neighborhood HOA and there have been no problems. However, my dad lives in a condo with a HOA and the restrictions are pretty tight, and heavily enforced. He says the condos are full of “three-dollar millionaires” that have nothing better to do with their time than police each other.

    An example: My dad got a visit from the HOA when he had his deck stained. The deck is completely hidden from anyone else’s view and you have to be standing on it to even see it as it backs up to woods off the back side of the condo. They said that the color was off (by a slight shade) and he needed to re-stain it. He told them to pound sand and they backed off. How annoying is that? And the Christmas light restriction to only white lights is also very “UN-ho-ho-ho.”

  2. I’m the president of my HOA and most of the things you say are true. Another important thing is to find out if the HOA is self managed or if they are using a property manager. If they are using a property manager give them a call. In my three years on the board we have gone through three property managers, now I think we finally found someone honest, ethical, and hardworking. The property manager is the one who basically takes what the board decides and makes it happen. Oh by the way, they also typically control the bank account, make sure board members are signing checks, we had a major fraud problem.

    While we don’t live in a millionaires community, we have the same problem, people with nothing to do get on the board and think they have all this power. After the realization that most likely for the first time in their life they have power, it magically goes to their head and the community changes to fit there agenda not what is best for everyone that lives there.

  3. When we purchased our Condo in Washington, D.C., we were given a 3 business day grace period to review all of the condo documents and if we did not like them, we were legally allowed to void our offer and back out of the deal. YMMV depending on the laws where you live but most real estate brokers should be able to tell you what the laws are for this type of thing. Of course, any investigating you can do before putting an offer down would be beneficial but at worst, you have this as a backup.

  4. Siggyboss says:

    Nice post. I’m renting in a building that is going condo and hear of the same potential problems in the form of future big assessments.

    If I could add one more thing, condo owners may be biased in helping to fill the building if it has recently gone condo: lowers the assessments for them and there may be some promotion. Lastly, don’t ask for people’s opinions with management or maintenance present – I can’t just spill my guts without the possibility of reprisal.

  5. It’s not a bad idea to ask for a disclosure that the owner is in compliance with HOA requirements. A friend bought and the previous owner had an unsatisfactory trim color for 3 months, with six notices, and did not tell the buyer. The HOA continued to assess fees. Luckily, they waived the fees because of the situation, but you might not be so lucky.

  6. I live in signle family home withan HOA in gated community. In my experience, it actually has helped to maintain home value, as they prevent house being painted pink, unkempt lawns, etc. I actually wish ours were a little stricter on certain items, but all in all ours is great. When we purchased the house (brand new), I spent conderable time reading the covenants. I suggest that this is the nest way to know what your rights are and where to go if you have noise problems, etc. In my HOA, the minutes are pretty good and I have saved all of them for when I sell my house. In the end I think HOA’s are good because they protect the neighborhood AND the value of your investment.

  7. stay away from them and you will be fine :) unless you like being told what you must do on your own property.

  8. Heather says:

    remember to re-run the numbers on renting vs buying for a condo… the hoa fees can really eat into any long-term gain there is from buying vs. renting.

  9. I have owned in both a condo with a HOA and currently live in a single family home with an HOA. I have also been on the board for 8 years (in the past not currently) as at the time no one wanted to be on the board so I volunteered with my next door neighbor. Othewise, control of the HOA was going to fall to the state.

    If I can avoid it in the future, I will never buy property with a HOA. Not that they are that bad but the dues money is a waste in my opinion. Having been on a board, members expect you to take care of issues like the mentally ill who hang in front of their house at all hours of the day, dogs that bark incessantly, etc. Suits over awnings, paint colors, etc. It never ends as to what some homeowner’s expect from their boards. We are not your mother or the police. The CC&R’s are too broad for my HOA IMHO.

    You can have a bad neighbor next door in an HOA just as easily as a place w/o an HOA. The HOA is not going to prevent that. The only reason HOAs exist where I live in CA is that my city dumped a lot of costs on the HOA this way. We own the streets, light poles, etc., in my neighborhood and are responsible for repaving when required. 200,000 sq ft 1 inch asphalt repaving is $250,000.

    You need to talk to an ex board member who will be upfront with you and neighbors to get the real skinny on an HOA.

  10. How is the appreciation of a Condo vs. a Single Family Home?

  11. It really depends on the association. I have lived under two. One had restrictions so tight it drove me crazy. My current one is great except that it is hard to get people who want to be on the board. We did have a special assesment to paint the building, but only because we didn’t want to use the reserves.

    The other thing I wish mine had was earthquake insurance. That is something you might investigate if you are in CA. I don’t know if it is as important in the bay area as down here in Los Angeles. CA does give you some days to look over the association docs and back out of the purchase based on them.

    Many of the legal battles mentioned may be between the association and contractors, not necesssarily with homeowners. We had an issue with some roofing contractors over leaks.

    I think you will be a step ahead by doing the research you mentioned. The ultra high special assesments are unlikely. The special assesment we had probably helped to improve the value of our home anyway because now it looks much nicer after being repainted, new awnings, etc. and it was not that large and was in effect for about a year.

    Given a choice, I would choose to live somewhere without an association, but with the cost of housing in our area, that is just not an option for us.

  12. Didn’t you say you and your wife will be making six figures?

    BUY A HOUSE!

  13. JustBeth says:

    This is precisely why I don’t want to own a condo or townhome. I want to make my own decisions about my home. It’s especially true when it comes to money. I want to decide if I’m going to hire someone to care for my lawn or mow it myself, etc.

  14. I sold my loft condo two years ago. after one chaotic HOA meeting I decided “never again.” the next place I buy will be unencumbered with such nonsense.

  15. We pay 877 a year for us, little pricey but not bad. We live in a gated community with pools, tennis courts and a gym. The neighborhood looks really nice and we haven’t had any problems.

    Stay away from CONDO’s, rich, retired people live there and have nothing to do…

    HOA’s are part of the american dream, its what keeps communites looking nice, otherwise our streets would look like Mexico.

  16. I had a p.i.t.a. HOA I had to deal with at my last rental property. The local HOAs will definitely be a factor in my next moving decision.

  17. I lived in a condo with an HOA for three years and I was on the board most of that time. The complex was small (12 units). When I purchased, a developer had gutted all units and sold them. The developer was in charge of the HOA until a certain percentage of units had sold.

    When the HOA was turned over to the owners, we learned there was almost nothing in reserves. Gulp. We had to drastically increase dues and charge a small special assesment at the end of the second and third year to maintain the property and keep something in reserves.

    I was very fortunate that my property significantly increased in value, however, I never want to be in that situation again.

    We had one neighbor who often threw late night parties on weeknights, but otherwise no neighbor problems and no extreme regulations on Christmas lights, etc.

    My advice – ask for HOA docs, review them and ask lots of questions. Call the HOA President and ask them questions. Ask if the HOA is self run or run by a management company (pros and cons to both).

    Good luck!

  18. From my experence and from reading here it seems to depend on the HOA and the rules for condos in your city/state.

    I currently live in a condo and have had no problems with the HOA. One thing I looked for though was a condo without all the junk that has to be maintained and repaired like swimming pool, fitness equipment etc. Problems can develop much more easily with those sorts of things.

    One thing to consider though is that a single family home can have the same evil horror stories. Say you buy a home on the city limits with septic and well, the city/county can decide to install sewer and water and you can be stuck with a $10,000 assessment plus monthly costs even if you don’t want to hook up. Also many neighborhoods restrict what color you can paint your house, how long you can have christmas lights up and what type of fence you can have in your yard.

    You could run into the similar issues where ever you move to. Something to think about.

  19. Juan De La Vega says:

    HOAs can be a big rip off.
    A friend of mine bought a town-home a year ago.
    In addition to monthly HOA fees of $340, he has been made to pay ‘special assessment fee’ of $2000 2 times.
    If you are considering buying a home which has HOA, I suggest you talk to a few people who live there and enquire about the HOA fees.

  20. Some years ago I made the unfortunate decision to buy a townhouse that had an HOA. NEVER AGAIN!!! I will not have hoa nazis dictating for me everything I can and cannot do with my property. Even more so with a single-family residence.

    JM2C

  21. We have lived in a condo for past 2 years. Small building, only 10 units. Most of the owners are young professionals like myself and my wife, so there isn’t any real problems to speak of. We had a sprinkler pipe freeze, burst and thaw causing damage to all 5 floors of the building. Our unit got the brunt of the damage. Everything was handled in a professional and timely manner. We have since outsourced the management of the building to a professional service and have received excellent quality from them as well. So we only have good things to say about our association so far. I think it really comes down to the people that are involved. Everyone is reasonable and thus things work out nicely. Like all things involving human interaction, your mileage may vary. In the end, its a crap shoot – like in-laws and neighbors.

  22. Mentally adding these new things, thanks!

    Ask if self-run vs. property management co.
    What type of insurance is included, earthquake etc.

    I wonder how you evaluate a new condo building? Do they have HOA rules drawn up already?

    We’re also looking at detached houses, and a few we rejected due to the neighbor’s unkept houses and rusty cars on the lawn. I suppose HOAs do have their benefits :)

  23. I never looked at a condo, since I wanted my own yard — I didn’t know about single family houses in areas with HOAs (oh yeah, I do, the REALLY SUPER EXPENSIVE houses in gated communities — oh well, I couldn’t afford that anyway).

    But, I have looked into condos in my area for my mom, who currently lives in her own home. I found through very simply calculations that the amount she spends in taxes and regular maintenance (she has lawn service, utility and anything else), is far less than she would pay in a condo. Those fees can become horrendous — and you don’t really have control over them. Okay, you can sit on the board, but then you will hear all of the complaints from your neighbors about what’s wrong and how you need to spend money on this and that. If it’s your place alone, you have full reign (more or less) over the costs you are willing to pay.

    When you do your own thing, you hire your own maintenance people and spend money on what you want. I understand there may a neighbor or two who will overdecordate on the holidays or have loud parties — but I think I’d rather have that than a neighbor snooping around my house to see what color I painted my shutters.

  24. p.s. I know that real estate may not look like a good investment right now, but I’ve written about our reasons for shopping for a house here.

  25. Also be aware that there are HOAs where no one wants to be on the board and the community as a whole would rather not have to deal with anything. This IMHO is just as bad as having power hungry board members. No one knows what’s going on, whether the reserves are funded properly, how to enforce parking violations etc. Then when the sh*t hits the fan and the roof needs to be repaired or some new people move in who really abuse the parking/garbage/common facilities, people want action, but no one wants to step up and take responsibility. If you’re moving into a community/building with an HOA, be prepared to actively involve yourself and *gasp* even run for the board.

  26. nonymouse says:

    stay away from HOA if u can. I just bought a home and I hear that there might be a special assesment of between $15K to $50K for some serious problem in most of the houses in my complex. My house is not affected but i gotta pay for the other ***!!

    Some idiots want to pay this and are not protesting it. I talked to some and there is some sick pleasure that they derive out of bitching and complaining about neighbors. Neighbor said that the last time there was special assesment is when they changed the roof!! i said wasnt that covered from the $200 we pay monthly…she said NO! WTF is this ***…….

  27. Stay away from HOAs ! I have owned a condo for 3 years and have a horrible HOA. The members never answer my mail. There has been a change of management companies over 3 times. The HOA never releases its meeting minutes. I have incurred about $4,000 in special assessments in addition to the $300/monthly HOA due.

    I warn anyone who asks about my building’s HOA.

  28. Michael says:

    In general, the people who hate HOAs (see above) did not follow your advice. If you are buying in an HOA, you absolutely have to talk to current owners, you absolutely have to read the rules, and you have to be willing to follow them.

    Many people (see above) want to control their surroundings; obviously, then an HOA is not for you! HOAs are for people like me: LAZY. If you really want a house, but are settling on a condo, wait until you can afford a house. But for me, someone who thinks gardening is just a fancy word for farming, HOAs are a great problem solver. I would live in an RV before I bought a house that did not come with snow removal, a gardener, and maid service all handled by my butler.

    PS. I love my HOA. They meet once a year (I’ve never attended), people have to be blackmailed to get on the board, and I live in a small community where nobody bothers anybody. I knew that because I asked a bunch of people before I bought, and now I’m a happy camper.

  29. I second that. I have some bad storys having to do with homeowners associations. Both from Northern Virginia like your post. One is my friend’s parents not being able to put in a fence and shed because the ones they put in were too high! WTF can you fit in a 6 foot tall shed? These people will tell you they own your property! They also receive emails all the time with stuff they need to do to their yard and the such. They tried to put in a simple small brick border walkway and got headaches. These people live in a townhouse with not even much land. Another was my mom not being allowed to have a window air conditioner in her room. And no it wasn’t facing the street it was only viewable from the backyard! I call these people homeowners NAZI’s and they need to go get lives and stop being busy bodies.

  30. Michael says:

    P.P.S. House HOAs make no sense to me, and I’d never buy in one. You get the drawbacks of an HOA with none of the benefits (unless you count a pool as a benefit, which your city probably provides already).

  31. whenever I ask the listing agent about HOA-specifics, they always seem off-balance and say something about ?Oh, the last owners loved living here, I?m sure they are wonderful?.

    If there were something to be a “hard-ass” about, this would be one of those things for me. The listing agent’s job is to know about the home and that includes the HOA. Having no details about the HOA is like the agent not knowing the number of bathrooms.

    If you get another “off-guard” response, it may be worth running with the direct follow-up. “So you don’t know any specifics? That’s OK, here’s the number where you can fax me some copies of the last few meeting minutes and financial statements.”

    If they don’t have this information, tell them to ask the seller or to give you the seller’s number so that you can contact them personally. Agents shouldn’t like you calling sellers directly and should probably cave to that comment. If you do get the number and are forced to call the seller, ensure that they know that you are calling them b/c their agent did not have the information (i.e.: you’re wasting their time b/c of the agent).

    Agents make great money and don’t really earn any my pity here. They’re some of the highest paid salespeople and they should deliver a high-quality job for that money.

  32. HOA’s – I don’t even know where to begin to explain why it’s a great idea to AVOID them at all costs. When I lived in central Virginia a few years ago, I made the mistake of moving into a subdivision that had a Home Owners Association – it’s absolutely true that there are people who have nothing better to do than to police everyone’s adherence to the phonebook thick book of rules.

    One guy used to stroll through the neighborhood early in the morning and measure grass with a ruler – seriously. Another lady would drive around and make reports of people who’s curtains didn’t show white on the outside facing side…

    When I’d finally had enough, the HOA almost torpedoed the closing because they reported that I was not in compliance with the rules regarding Satellite antennas, and would place a lien on my property to recover their “fine”. It took a call from a personal friend who happens to work in councils office at the FCC in Washington DC to convince them they THE HOA was in violation of federal law by attempting to restrict tv antennas and sat dishes, and should they continue with their course of action, they would end up in federal court.

    Another guy in the neighborhood was moving out, one of the HOA nazi’s drove by his house, and reported that he had an unauthorized kids playset in his backyard – they sent him a summons to appear in court and called to verify whether he would represent himself or have his attorney show up – when they discovered that the moron who did the “drive by” inspection, actually saw his neighbors playset (which looked like it could be in his yard, do to the elevation of the property), and had the HOA nazi bothered to get out of his car and look over the fence would have seen the playset was not on this guys property…

    I could go on and on…

    You may have seen in national news a few years back about the former Marine corpsman that was sued by the same sub-division for his display of the American Flag.

    HOA’s SUCK. Do yourself a favor – buy some land out of town, build a house in the middle of 5-10 acres, move in and enjoy.

    Regards,

    sip

  33. Important things IMO – (I’m treasurer for my HOA)

    First things first, Condos and Townhomes in most areas are not great investments, exception is in very popular areas where not much land is left to develop (Silicon Valley, NYC, etc) – there they are like starter homes.

    Size of HOA is important – you don’t want an HOA that’s too small or there will be problems with A) Getting people to sit on the board and B) economies of scale – things like the management fee will be split among less people, vendors won’t make you high priority, etc. The larger the HOA the more beurocratic its going to be – which can be a bad thing… Small to Medium HOAs have more of a community feel – people know each other and don’t try to cause problems as much.

    Management Company – if the HOA is self managed, run away. You want to make sure the management company is reputable – do they have an office with people answering the phones. There are a lot of “one-man shows” out there which if the manager gets sick, dies, or is on vacation, your HOA deals with it.

    Reserves – California requires the HOA to publish the percentage funded number each year – this number is misleading – if its high it means your HOA is most likely over-collecting dues, however if its very low – that is a warning sign. More importantly is to look at the reserve report and make sure the projected reserve balance never drops to an unsafe level (below a comfortable buffer) during the worst year. Also look through the reserve report to make sure they have all of the major maintence factored in – roofs, painting, fences, siding, balconies, landscaping, termites, etc. Big assessments happen when planning is poor and expenses are missed/not anticipated.

    The biggest problems in HOAs are: Parking, Pets, and Pools. Parking is usually limited – see what the rules are and how strictly they are enforced. Pets may or may not be an issue in a complex (they aren’t for us). If the association has a pool, again see what the rules are – especially if you are going to be living next to it.

    Try to get a history of dues by year – do they go up on a regular basis for inflation, or do they stay the same year after year and then take a big jump?

    The negatives of an HOA: the board can jack up your dues by as much as 20% each year without any homeowner input, they may not be financially smart and invest the money they collect poorly (put it in a checking account that underperforms inflation), some boards and management companies see the CC&Rs (rules) as absolute and waste time and money enforcing things that no one cares about (as opposed to using the rules as a tool to deal with pepople who abuse them).

    The positives: Can be a great community, the outisde of your house and your neighbors is taken care of (proprety less likely to drop because a lazy person moves in next door), Reserves are used to pay for things that need to be fixed including the unexpected (when you own a home if something breaks you have to find money to fix it – which can be very inconvienient), Townhouses are easy to sell in the markets I described above – they are more affordable than houses. Long-term in a state like California where the property tax increses are limited by law, townhouses and condos can turn into great investment properties.

  34. My first house was a townhouse with a HOA. I had a fairly negative experience and I will never own anything that is part of an HOA. I actually went to all the meetings and got to know the people on the board fairly well, and I generally had no complaints on how they tried to manage the association, but there were several issues:

    1) Just after I moved in, a new board was elected. I found out later that the “old regime” had kept dues low, but never made repairs or budgeted for it, so there was a lot of deferred work that needed to be done. The entire complex needed a new roof (it was on year 32 of a 10 year roof. The original builder has gone bankrupt while building the complex in the later 70′s and cut a few corners), so that was a $700/mo special assessment on top of the $285 mo. dues.

    2) The contractor that put on the new roof did a crap job and over 50% of the units had roof leaks that took up to 18 months to repair (in So. Cal is doesn’t rain for months at a time, so you never know if you’ve really fixed a leak). A lot more unexpected expenses and legal action against the roofer. Another special assessment of $100/mo. to build up reserved, too.

    3) It took over 4 months to get board approval to put in a new front door.

    4) Because there is a board, no one wants to volunteer to do little repairs around the complex, so the board always ended up hiring a contractor to dig out a tree stump for $900.

    5) Most residents did not attend the board meeting and had no idea why certain expenses were coming up and were not aware of the months of discussion that lead up to each major use of funds. They just complained when the bill came.

    My two biggest problems living with an HOA is (a) you have no control to decide what expenses *you* want to defer and which ones to deal with. If you don’t want to pay for driveway resurfacing this year, too bad, the board makes that decision, and (b) once people start paying dues, they expect every little think to be done for them: gardeners, lawn care, pool service, etc. All these little things really add up to high overhead, but there isn’t any politically feasible way to tell people, “Hey! Pay up or do it yourself”. I wasn’t even allowed to go up onto my own roof because of HOA liability.

    Basically, if you are at all handy or motivated to maintain your own property, you will probably find HOAs more of a negative than a positive.

  35. In my experience, HOAs are not family friendly. I grew up in an HOA policed condo community and it sucked. I would get in trouble for bringing more than two friends to the pool at a time. It was summer and everyone was out of school, yet i was supposed to pick which two friends i wanted to hang out with? Always getting in trouble for rollerskating or riding my bike. I swear the HOA members were at my house like every month complaining to my parents about me and my siblings. It’s not like we had a back yard to play in and playing out on the street wasn’t safe. I live in a condo now and I still hate all the BS. We have plenty of spots to park but the association won’t grant me a resident permit, even though they are free! So I started parking on the street and my car got broken into! I hate HOAs.

  36. You’re definitely getting a lot of feedback here — everyone is. I just referred this blog to a friend of mine who is closing on a condo in the Bay Area this week. It wasn’t until i read this blog that i realized i didn’t share with friend any of my experiences as a condo owner for two years.

    I owned a condo in a 5-unit complex in the East Bay and after my experience, i vowed i would never share homeowning responsibilities through an association again. Now that some time has passed, i would consider owning (and renting out) a condo in a large multi-unit complex as long as the Association is well-run. But you should STAY AWAY FROM TICs OR CONDOs IN A COMPLEX WITH LESS THAN 40 UNITS. The likelihood of a very large special assessment goes way up when you don’t benefit from scaling economies. I had to pay $17,000 for a special assessment that i wasn’t happy with. Fortunately, the seller had disclosed that i might have to pay $10,000, but that was before they (we) got quotes from contractors for the work — work that had been put off for years. And the only reason the work was finally done is because the association finally had 5 members willing face up to the responsibilities.

    Fortunately, i sold the unit just as the prices began declining, but you wouldn’t be a happy camper if you had to pay a “special” assessment just after forking over hundreds of thousands of $$ to purchase the thing.

    If, as you say, your goal is to buy and remain put, i think a single-family home is your best bet — i don’t think you’d want to live in a Condo for too long. If, however, you’re considering living in the unit for a few years and then renting it out after that, well-priced condos can make great investments b/c the require very little maintenance.

  37. one more HUGE piece of information you should know about condos. The association often has the right to take ownership in a unit where the owner hasn’t been paying the dues or special assessments. A decision like this is not something i would want to leave to a 5- or 7-member board of lay persons.

  38. We live in a single family home with HOA, in Orange County. Before we bought the house I requested all minutes and financial statements since construction. My wife and I scanned though all of the minutes from 1968 to 2004. I’m glad we did it, as we got a solid understanding of the development, neighborhood history, and politics. Our board consists of retirees, who make decisions that benefit their age demographic. Beyond that, no major complaints. Our dues are very low, under $200 a qtr, with a healthy cash reserve. In So. Cal most of the s.f. developments have an HOA and many of the newer ones have Mello-Roos. Out here you have to look out for mold issues (if coastal), land slides, and flooding due to poor drainage or low elevation.

  39. I just pulled out of escrow on a condo I was buying in CA because the HOA was unresponsive to my requests about the cost of installing AC, and they mis-spent their money (in CA you have 17 days to review HOA rules and minutes), and they were doing a special assessment and they were supposedly run by a professional management company that was rude and inattentive in my opinion.

    I am now closing escorw shortly on a condo with a self-managed HOA, there are only 4 units. The smaller the building… the better… That’s my opinion.

  40. I would NEVER buy another condo or live in an HOA neighborhood, if I could help it. It is getting almost impossible to find a home without an HOA though. My condo board selectively enforces the rules, harrasses owners who question where the money is going or try to run against them in elections. They have even created new rules just to go after people they don’t like. The same people keep getting on the board because the elections are corrupt. The board’s friends get everything they want, while the rest of us have leaking roofs, etc..Life is a nightmare here. I could write a book about why NOT to buy a condo!

  41. As a borderline libertarian, I hate HOAs. But I hate the quotidian task of home upkeep even more, therefore, I have a condo.

    Fascinating stuff. Thanks for pointing out that article. There are a lot of truths in the comments here. I will be posting something in a few days about my current situation and the weird sh*t going on. It’s mind boggling in a way that makes me want to sell, but I’m not in a position to do that.

  42. Liz Adams says:

    I represent a property management company in the DC area and cannot stress enough the importance of reserve funds. We have a lot of new condo associations in the area and too many of them are failing to adequately save. In my professional opinion, condo associations should aggressively build up their reserves until they are at the $6000/unit mark. In addition, condo assocs are legally obligated to follow their reserve studies. Associations should never not follow this because they could then be considered legally negligent. Associations, especially new ones, must also realize that not having enough money in reserves in one of the most negative selling points. With the web, people are becoming much wiser about checking out a condo association’ s reserve balance. We are having more people call our office to ask about the reserve balances for the associations we represent. The condos that sell the best are the ones that have the healthy finances. We have one building that almost wiped out its reserves to repair the roof. They cannot sell their units because they are not replenishing the reserves fast enough and potential buyers are frightened to buy into the association.

  43. I have lived in a condo for 8 years w/ an HOA. It has gone through all the madness described by the others. Our property values have gone down due to the original developer – and us having to sue him. As annoying as it is at times, I find it best to just ignore all the meetings and just pay the monthly fees automatically from my checking account. Assessments must be voted on, so I vote when needed, but ignoring the small stuff helps. If the building is going to implode, I am sure they will notify me and I can worry then. People in the condo. leave you alone unless you break a rule. Don’t break any rules and you won’t hear a peep until more money is needed (which has happened 2x in eight years).

    The condo experience has been much better than the house experience w/ HOA.

    We had a house for two years before moving to the condo. That was horrible because HOA Members – neighbors would constantly call us and stop by to check things out at our house. They were also clocking everyone’s speed and trying to keep certain people from “moving into the neighborhoood.” They EVEN had the nerve to have their “church” solicitors knock on our door all the time to talk to us about joining. You had to belong to the same church as the other HOA members. This happened so many times (we stopped answering the door after the first time), that we packed up and moved! That was annoying and I was personally offended.

    So, HOA’s can be bad in either houses or condo’s, but I have personally liked the condo much better.

  44. I bought my first condo and didn’t know anything about HOAs. Wow did I get a rude and expensive awakening! Plan to attend the meetings and make sure they are scheduled at a time when you can be there. Mine are only once a month but I don’t get home from work in time to make them. This means that I don’t get to be involved in discussions about the very expensive special assessments that are imposed on us every year. I don’t know any of the people who run for the various offices so my votes are worthless. I don’t get to be involved in discussions about new flowers (some moron picked nightblooming jasmine – highly allergenic), paint color (my condos now have hideous pink trim) and water/rain drainage (the design is a magnet for mosquitoes). Be willing to be deeply involved or stay away from the HOA!

  45. suzique says:

    DUDE. the next property I own will be a house 15 miles away from the next Neighborhood Association.

    My condo unit has had a water leak that occurs when it rains ever since I moved in well over a year ago. It is an easy problem to fix, but the board (ram-rodded by an inept liar of a property manager who has routinely suggested ineffective repairs because they cost 5 cents, or has failed to adequately supervise whatever dregs and rip-off artists she digs up to repair the place, so that they keep fixing it wrong!!!! And when it is discovered that it is being fixed wrong, everybody disappears for 6 months while they try to figure out what’s going on).

    It’s terrible. I’m in graduate school and it has helped make my grades plummet. I have had to hold off on having my carpet installed for an ENTIRE YEAR.

    It’s pretty bad.

    Run away! There are lots of nice homes in foreclosure. Buy one of those and don’t bother with condo living. Otherwise, you will grow old and gray waiting for your problems to get fixed.

  46. after reading all the above comments and dealing with a bad HOA situation myself, what can the homeowners do to stop the power trips, harrassement and decisions being made without the consent of the homeowner by the HOA board??? how can we get them out of office?

  47. Denise, your Bylaws should have a clause that allows for removal of Officers or Board Members. On ours, 75% of the homeowners can vote out an Office (we have Officers – Pres., V.P. Secretary & Treasurer, and we eliminated the board) with or WITHOUT cause. Our problem is the that homeowners want to complain about the Officers but then none of them are willing to step up and serve as an officer. If you aren’t willing to be an officer yourself, then you should quit complaining and give them a break. They are doing it because no one else will, for no pay, and with nothing but grief to show for their efforts.

  48. My husband and I live in a condominium townhouse in Wisconsin. We love the place but the association sucks. We did not know until we moved in that they were not following the bylaws. We did ask neighbors before we purchased but they all said they did not know and they don’t have time to attend the meetings. I should have smelled a rat. Only one person knew who the management company was and gave them a glowing recommendation but he could not show me a copy of the management contract (his “wife handles all that and she has it filed away somewhere”) — and he is a real estate broker-agent. (He’s one of the people who did not attend meetings.)

    Only after moving in did we learn nothing was being fixed or maintained for the last 20 years; the same person was Board President during that entire time; no one had a clue what the management contract stated; no one knew why nothing was being fixed; no one knew why the management company was being grossly overpaid for what little she did; the Board Pres. was making all the decisions for 27 units for 20 years; many of the owners were not well educated in general (many high school grads or less education); none of the owners have any common sense or financial sense; most owners are over-emotional and do not have any facts to back up their statements; personal attacks were common among the owners: no one attended the annual condominium picnic (again, I should have smelled something).

    There were so many “odd’ things but I could not put my finger on anything. We only learned about all the stuff after we moved in. One might say, we can move. Easy for you to say. I became disabled a few years after moving in. My husband was laid off and began his own business. Now the economy and housing market is worse. So I see no way out.

    My point is this: The laws in Wisconsin do not protect condominium owners. We owners have no legal recourse against anything the association does. i.e., We seem to have no rights. When we move, we will NOT buy a condo of any sort. No matter what based on this experience. It is like living in HELL but worse. We are stuck here. If we knew then what we know now, we would never have purchased a condo here and, in fact, we never would have purchased a condo in Wisconsin. And now, we never will again. We won’t even consider owning one in Illinois based on my in-laws experience there, much the same as here.

    Basically, you wind up being a renter but without the rights. Doesn’t sound very good, does it? We are fuming angry. We also trusted our attorney and only upon asking her (about a year after closing) what we can do, legally, her response was: “Move. This is why most people who buy condos move out of them.” Well — thanks for telling us this AFTER we have closed. This attorny made her money from us but never advised us about the problems with condos. Not once. THAT is what we hired her for — not to be just a paper pusher. .We can push papers ourselves, we don’t need to pay mucho bucks to someone with a law degree to do THAT. Needless to say, we will NEVER use her again and we will recommend others NOT to use her.

    Angry condo owner and cannot wait to unload this place — if we can.
    That is my advice from my personal experience. I have been to meetings of other condo owners from other condo communities and the stories are as bad or worse. My advice is the one I give to myself: NEVER buy a condo under any circumstances in any state. The problems are not worth it. (My major complaint is with the building exterior not being repaired the entire 18 years we have lived here — in spite of annual letters and photos of the repairs needed, and in spite of their written responses each year that they will make the repairs. No work is ever begun to make the repairs.)

    That’s what most people won’t tell you. I am not signing my name. I want to be able to sell the place. I cannot fix the association of owners here.

  49. Wow JJ that’s quite the story, but I wanted to confirm something here: We also trusted our attorney… upon asking her … what we can do, legally, her response was: “Move. This is why most people who buy condos move out of them.”

    Is your attorney telling you that you have no legal recourse? Is your attorney telling you that you cannot sue the HOA for failure to make agreed upon repairs?

    That seems like a pretty serious allegation. Are you sure?

    Look at Jonathan’s second paragraph: Experts estimate that in California, 75% of the homeowners associations are embroiled in a legal tangle of some kind…

    But you’re telling me that you can’t even so much as sue your HOA?

  50. Carol Schmitt says:

    I’m in the process of getting my single house ready to be put on the market so I can purchase a condo in Wisconsin. I hate yardwork. All these comments scared the heck out of me. Now I’m not sure. I’ve looked at some that I really liked for the over 55 crowd. I’ve talked to quite a few people that live in the condos and they all liked them. They are side by side which would be the only kind I would buy.. The special assessment fees sound outrageous on some your units. I have to get more information from the complex I’m interested in.. I just dont know what to do now..

  51. STAY AWAY FROM HOA’S UNTIL THE GOVERNMENT GETS A HANDLE ON THE LAWS THAT GOVERN THEM…THERE IS NO CHECKS AND BALANCES YOU ARE UNDER CORPORATION LAW NOT GOVERNMENTAL LAW SO NO MATTER WHAT YOU HAVE NO RECOURSE UNLESS YOU HAVE ALOT OF MONEY TO FIGHT THEM.
    MANY PEOPLE DO NOT KNOW THEY ARE SIGNING AN ADHESION CONTRACT, MAKE YOURSELF AWARE OF CAI( Community Institute Association) they supply the lawyers that work for the association not for your benefit, These snakes fight legislature for more power to associations and less power to residents, these are facts, there are no laws that protect you, why…because you are now adhered to corporate law not constitutional law, you signe you rights away as soon as you sign on the dotted line and this will never be disclosed to you. You get people on these boards that abuse their power..Renting is one thing owning is another, this is your investment and most adults take care of their investment, Do not fall into the brainwashing that this is how they keep property values high, therei s no research that proves this, but there is research because of abusive boards and high foreclosure rates, in mine alone we have the highest rate of foreclosure because people are walking away, its easier to walk away then deal with this out of control board. Did you know that they can lein for unpaid fines and dues which can be agreeable if someone just doesn’t wan to pay, but now they are doing forcible entry and detainer and have on 52 properties in one year, you have to continue to pay your mortgage etc and they rent out your house to recoup fines and some minimal ranging from $200 – $1000, should you be kicked out of your home, should we give them this power? If any damages caused by their tenant is done, they are not responsible. I bet they won’t disclose that information. If the board does not like you they will find things to fine you for and then have the right to take your home, where is your day in court, oh that is right a citation hearing with all the boards friends. HOA’s need to go away the American Dream is to own your own house the white picket fence etc….instead you have something worse than big brother at least you live and let live in a regular community, people need to mind their own business and stop sticking their nose into other peoples lives, grow up and stop acting like children tatling on their neighbor for long grass, go over their and find out and if you can help your neighbors this is what I do, stop telling people how to live, the HOA concept is brainwashed into some but the average person respects their investment they do not need you telling them what to do, who are you or anyone to determine what is best, is this America???? I don’t think anyone remembers that their are soldiers dying for our Freedom and this is happening in our own backyard. The HOA industry is a money scamming concept that are fed by residents who buy into their propaganda! There are no checks and balances and unless you have reviewed your HOA’s documents, finances and requested information you do not get at the board meetings, don’t assume, then you are not doing your job as a shareholder in a corporation its more important to tattle on a homeonwer then it is to monitor the books.

    P.S. Board minutes..think about who types up these minutes.

    STAY FAR AWAY FROM HOA’S

  52. Do not buy anthing with a HOA fee of any kind. Rent if you find the perfect place with an HOA fee just rent the place. Never Ever own in an HOA unless you are on the board.

    I speak from experience our HOA started a seperate company that we are all obligated to spend all overage fees for no matter how much the new company goes over, this company is a management company, now they are starting to try to form a security company and possibly a grocery store and they will hide all cost as HOA fees. GET OUT OF HOA”s we have reported them to every organization we can think of and no one seems to be taking action. We have a court case against them and the judge states he does not wish to rule.

    So this board can decide to start any company they want for any reason and all cost are ours to bear. It has been going on now for 20 years and we can’t seem to get it to stop and it is geting worse!

  53. I sit on a board that opened a craft and candy store and they did the same thing to our homeowners. One of the board members wanted something for one of thier grown kids to do for a career so we foot the bill for all of her cost for the store and she keeps all the profits.

    HOA’s have got to be stoped.

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