10 things a HOA won’t tell you

Yahoo Finance has as a rather alarmist article on 10 Things a Homeowners Association Won’t Tell You (via Galen). They are:

  1. “We Can’t Wait to Get Our Hands on Your Money — Or Even Your Home.”
  2. “We’re More Secretive Than the CIA.”
  3. “When in Doubt, We Sue.”
  4. “You Won’t Be Able to Sell When You Want.”
  5. “We’re Poorer Than We Look.”
  6. “We Can Make Up the Rules as We Go Along.”
  7. “We Don’t Want You at Our Meetings.”
  8. “We’re in Over Our Heads.”
  9. “We Work for Nothing but Get Compensated in Other Ways.”
  10. “We’re Incredibly Petty.”

Does this line up with people’s experiences? I haven’t done this whole condo thing long enough to know if should be running to a single family dwelling or not.

About Matt

Matt , Urbnlivn's publisher, has a love for lofts with industrial features and new construction condos that is only eclipsed by his passion for outdoor sports and urban living. Phrases such as “polished concrete” and “exposed brick” are music to his ears. You can also find Matt on Twitter or skiing.

  • Peckham

    1. We Cant Wait to Get Our Hands on Your Money Or Even Your Home.

    Hey, guess what? A condo is a not for profit corporation with a huge budget and many accounts payable. The HOA is charged with the responsibility to make sure that there are no delinquencies because it can have dire consequences to the health of the building and yes, they can put a lien on your unit.

    2. Were More Secretive Than the CIA.

    I would say that all boards — corporate as well as condo — are somewhat secretive because they have access to information that should not always be public. This could be information about residents finances and personal situations, or the details of and strategies in litigation matters. That said, condo boards do need to focus on communication of important business matters to the homeowers.

    3. When in Doubt, We Sue.

    This represents hyperbole, but there is a modicum of truth to it. I wont compile a top ten list of why homeowners suck, but two of them would be that they refuse to own up to their responsibilities — both in terms of fiscal matters and accountability — and they lie. These two factors mean that a board often has no recourse other than to engage a lawyer.

    4. You Wont Be Able to Sell When You Want.

    Not sure what this implies

    5. Were Poorer Than We Look.

    I am guessing this refers to replacement reserves. Reserves are often not fully funded according to a reserve study. The board pays for a reserve study every 2 or 3 years. Some boards, in collaboration with the homeowners, refuse to collect the amount recommended by the expert. Why? Because homeowners and board members hate homeowners dues increases. My pet peeve is that the majority of homeowners I have spoken with do not even know what the reserve fund is for. Questions such as, why cant we pay for that earthquake damage with the reserves really boils my blood.

    6. We Can Make Up the Rules as We Go Along.

    This has a homeowner counterpart known as we can ignore the rules as we go along. This results in when in doubt we sue. The governing documents of a condo empower the board to make certain rules. Of course you knew that, since you read all the governing documents, right?

    7. We Dont Want You at Our Meetings.

    Do the shareholders in a corporation attend every meeting? If no, why is that? Board members are decision makers. While all this PNW lets hold hands feel-good consensus building sounds good in new age magazines, it results in nothing ever getting done. The Boards job is to know the facts and make prudent decisions that protect the community and the value of the building. The more people you bring to the table, the harder that job becomes. I am not suggesting exclusion of the homeowners and I am emphasizing that business matters and the decision process should be communicated to all stakeholders. However, homeowners do not get to participate in every decision. Thats why its called representative government.

    8. Were in Over Our Heads.

    There is a reason that most condominiums hire a management company. There are no prerequisite qualifications for being on the board.

    9. We Work for Nothing but Get Compensated in Other Ways.

    This probably varies widely from association to association. All board members benefit from the knowledge that comes with access. Some board members benefit by having influence over the decision process and some may even abuse the power that comes with the position. Hey, it sounds like the real world

    10. Were Incredibly Petty.

    Homeowners are incredibly petty. Board members are homeowners. Thus, board members are incredibly petty.

    As I said in another blog recently, I liken living in a condo to walking into a crowded bar, picking 100 patrons and agreeing to share your financial interests with them.

    A lot of people that buy into a condo have no idea what they are getting themselves into. Many, such as the author of Urbnlivn, dont even read the declaration, condo rules and regulations and bylaws before accepting to live in a condo. Buyers are given ten days to review these documents and if they dont like the language or the implications, they can void their purchase and sale agreement without any consequences.

    Lastly, if you move into a condo and you havent thoroughly reviewed the reserve balances and the reserve study, youd better be prepared to pay big assessments. Even if you have reviewed this stuff, you still better be prepared to fork over a lot of cash. Seattle Heights had to come up with $5M or $6M to replace all the windows in their building. I wonder how that affected the homeowners vacation plans? I know of another condo where each owner will have to pay a $400,000 assessment. Ouch! Thats 1/3 of my net worth.

  • Peckham

    1. “We Can’t Wait to Get Our Hands on Your Money — Or Even Your Home.”

    Hey, guess what? A condo is a not for profit corporation with a huge budget and many accounts payable. The HOA is charged with the responsibility to make sure that there are no delinquencies because it can have dire consequences to the health of the building – and yes, they can put a lien on your unit.

    2. “We’re More Secretive Than the CIA.”

    I would say that all boards — corporate as well as condo — are somewhat secretive because they have access to information that should not always be public. This could be information about residents finances and personal situations, or the details of and strategies in litigation matters. That said, condo boards do need to focus on communication of important business matters to the homeowers.

    3. “When in Doubt, We Sue.”

    This represents hyperbole, but there is a modicum of truth to it. I won’t compile a top ten list of why homeowners suck, but two of them would be that they refuse to own up to their responsibilities — both in terms of fiscal matters and accountability — and they lie. These two factors mean that a board often has no recourse other than to engage a lawyer.

    4. “You Won’t Be Able to Sell When You Want.”

    Not sure what this implies…

    5. “We’re Poorer Than We Look.”

    I am guessing this refers to replacement reserves. Reserves are often not fully funded according to a reserve study. The board pays for a reserve study every 2 or 3 years. Some boards, in collaboration with the homeowners, refuse to collect the amount recommended by the expert. Why? Because homeowners and board members hate homeowners dues increases. My pet peeve is that the majority of homeowners I have spoken with do not even know what the reserve fund is for. Questions such as, “why can’t we pay for that earthquake damage with the reserves” really boils my blood.

    6. “We Can Make Up the Rules as We Go Along.”

    This has a homeowner counterpart known as “we can ignore the rules as we go along.” This results in “when in doubt we sue.” The governing documents of a condo empower the board to make certain rules. Of course you knew that, since you read all the governing documents, right?

    7. “We Don’t Want You at Our Meetings.”

    Do the shareholders in a corporation attend every meeting? If no, why is that? Board members are decision makers. While all this PNW “let’s hold hands ‘feel-good’ consensus building” sounds good in new age magazines, it results in nothing ever getting done. The Board’s job is to know the facts and make prudent decisions that protect the community and the value of the building. The more people you bring to the table, the harder that job becomes. I am not suggesting exclusion of the homeowners and I am emphasizing that business matters and the decision process should be communicated to all stakeholders. However, homeowners do not get to participate in every decision. That’s why it’s called “representative government.”

    8. “We’re in Over Our Heads.”

    There is a reason that most condominiums hire a management company. There are no prerequisite qualifications for being on the board.

    9. “We Work for Nothing but Get Compensated in Other Ways.”

    This probably varies widely from association to association. All board members benefit from the “knowledge” that comes with access. Some board members benefit by having influence over the decision process and some may even abuse the power that comes with the position. Hey, it sounds like the real world…

    10. “We’re Incredibly Petty.”

    Homeowners are incredibly petty. Board members are homeowners. Thus, board members are incredibly petty.

    As I said in another blog recently, “I liken living in a condo to walking into a crowded bar, picking 100 patrons and agreeing to share your financial interests with them.”

    A lot of people that buy into a condo have no idea what they are getting themselves into. Many, such as the author of Urbnlivn, don’t even read the declaration, condo rules and regulations and bylaws before accepting to live in a condo. Buyers are given ten days to review these documents and if they don’t like the language or the implications, they can void their purchase and sale agreement without any consequences.

    Lastly, if you move into a condo and you haven’t thoroughly reviewed the reserve balances and the reserve study, you’d better be prepared to pay big assessments. Even if you have reviewed this stuff, you still better be prepared to fork over a lot of cash. Seattle Heights had to come up with $5M or $6M to replace all the windows in their building. I wonder how that affected the homeowners’ vacation plans? I know of another condo where each owner will have to pay a $400,000 assessment. Ouch! That’s 1/3 of my net worth.

  • Rachel

    I served on the board at my condo for 2.5 years, the last 2 as secretary. I take issue with most of this list. Board members are owners too, and dont have to be on the board. (It took about 8-10 hours of my time a month.) The reason that I did it was so that I would know what was going on better, but there is very little that I knew that one couldnt have found out by actually attending a board meeting which no one did unless they needed something. (It was 150 unit complex.) The only thing I might have known that the average person wouldnt was who was late on their dues payments and how much. General financial info was discussed in the open meeting and noted in the monthly minutes.

    We Work for Nothing but Get Compensated in Other Ways.
    The only compensation I got was one dinner at the Keg at Christmastime, with a $25 limit.

  • Rachel

    I served on the board at my condo for 2.5 years, the last 2 as secretary. I take issue with most of this list. Board members are owners too, and don’t have to be on the board. (It took about 8-10 hours of my time a month.) The reason that I did it was so that I would know what was going on better, but there is very little that I knew that one couldn’t have found out by actually attending a board meeting – which no one did unless they needed something. (It was 150 unit complex.) The only thing I might have known that the average person wouldn’t was who was late on their dues payments and how much. General financial info was discussed in the open meeting and noted in the monthly minutes.

    “We Work for Nothing but Get Compensated in Other Ways.”
    The only compensation I got was one dinner at the Keg at Christmastime, with a $25 limit.

  • Phil

    What #1 and 2 said, plus…

    I was on the board at my townhome in CA for 2 years. This was a new development, and it was very hard to fill the 3 HOA board positions each year (50 unit complex with about 2/3’s couples). People were just too busy or didn’t want to bother. This was a first home for many and they couldn’t wait to get enough equity saved to buy a “real house” and move on.

    Everything is clearly spelled out in the HOA docs, and meetings are run under “Robert’s Rules of Order” – even if most don’t realize this.

    Having an experienced professional property manager makes a world of difference to the running of any HOA.

    Lawsuits cost money, lots of money and time: try mediation, or arbitration first.

  • Phil

    What #1 and 2 said, plus…

    I was on the board at my townhome in CA for 2 years. This was a new development, and it was very hard to fill the 3 HOA board positions each year (50 unit complex with about 2/3’s couples). People were just too busy or didn’t want to bother. This was a first home for many and they couldn’t wait to get enough equity saved to buy a “real house” and move on.

    Everything is clearly spelled out in the HOA docs, and meetings are run under “Robert’s Rules of Order” – even if most don’t realize this.

    Having an experienced professional property manager makes a world of difference to the running of any HOA.

    Lawsuits cost money, lots of money and time: try mediation, or arbitration first.

  • Phil

    Almost forgot…

    We Work for Nothing but Get Compensated in Other Ways.

    It cost me a about a hundred dollars/year in misc expenses while I was on the board, Not including my time.

  • Phil

    Almost forgot…

    “We Work for Nothing but Get Compensated in Other Ways.”

    It cost me a about a hundred dollars/year in misc expenses while I was on the board, Not including my time.

  • Dan L

    This article is pure tripe – the worst examples of what “could happen.” It makes a pity case for people who violate the rules they agreed to abide by, then end up owing absurd amounts because they were taken to court. The rules are in place for a reason, and while some boards may be overzealous about enforcement, isn’t that better than a group of passive do-nothings?

    It ludicrously compares HOAs to the CIA in point #2, then makes the case that HOAs are bumbling fools with no experience in point #8. HOAs are not some secretive government organization looking to screw over and cheat all the other residents. They’re homeowners just like everyone else, who want to be involved in the commnunity, are willing to put in their time and effort for little to no compensation, and they don’t always get everything right. Which is why they use property management companies.

    The article states that “75% of HOAs are embroiled in a legal tangle of some kind.” That sounds extremely high, but still, if the average HOA is governing say 100 people, there are bound to be issues. And I’m sure a large portion of those suits are against corner-cutting developers, neighbors, or other people not associated with the community.

    All in all, most HOAs are just people volunteering their time to help out the community. However, there has been some recent discussion on the 2200 forum about the HOA president there and a potential conflict of interest because he or his company may have represented Paul Allen in the past.

  • Dan L

    This article is pure tripe – the worst examples of what “could happen.” It makes a pity case for people who violate the rules they agreed to abide by, then end up owing absurd amounts because they were taken to court. The rules are in place for a reason, and while some boards may be overzealous about enforcement, isn’t that better than a group of passive do-nothings?

    It ludicrously compares HOAs to the CIA in point #2, then makes the case that HOAs are bumbling fools with no experience in point #8. HOAs are not some secretive government organization looking to screw over and cheat all the other residents. They’re homeowners just like everyone else, who want to be involved in the commnunity, are willing to put in their time and effort for little to no compensation, and they don’t always get everything right. Which is why they use property management companies.

    The article states that “75% of HOAs are embroiled in a legal tangle of some kind.” That sounds extremely high, but still, if the average HOA is governing say 100 people, there are bound to be issues. And I’m sure a large portion of those suits are against corner-cutting developers, neighbors, or other people not associated with the community.

    All in all, most HOAs are just people volunteering their time to help out the community. However, there has been some recent discussion on the 2200 forum about the HOA president there and a potential conflict of interest because he or his company may have represented Paul Allen in the past.

  • CG

    This is a terrific discussion. Peckham’s analysis is definitely worth printing out and keeping. I view HOAs as microcosms of society at large. The difference is that when there is disagreement or political intrigue, it creates discomfort smack dab in the middle of ones home. That makes it harder to compartmentalize and not mistake the political back-and-forth from personal attacks.

    Condo board members are volunteers who help manage sometimes massive budgets and do lots of grunt work. Many times, board members don’t receive any training in how to be effective communicators. Many dont understand building infrastructure and maintenance issues. Many dont initially recognize the time commitment that board service inevitably entails. Often, our paid property management companies provide only marginal assistance to the board beyond collecting the monthly homeowners’ dues.

    As a result, board members concluding their service often feel burned out and sour at the process. Some homeowners never raise their hand to volunteer but always are there to criticize.

    After three years in a condo, Im still idealistic enough to think that, hey, we establish and enforce our buildings rules ourselves. I like the challenge of trying to create a healthy and well-functioning condo community and living harmoniously among a diverse group of neighbors. Having a thick skin and being incredibly patient with the process are two good qualities of condo dwellers.

    Id love to see more exchanges on this site about what it means for busy urban-living types to deal with the challenges of managing our condo destinies, including tips and techniques for being both great board members and responsive and responsible homeowners.

  • CG

    This is a terrific discussion. Peckham’s analysis is definitely worth printing out and keeping. I view HOAs as microcosms of society at large. The difference is that when there is disagreement or political intrigue, it creates discomfort smack dab in the middle of one’s home. That makes it harder to compartmentalize and not mistake the political back-and-forth from personal attacks.

    Condo board members are volunteers who help manage sometimes massive budgets and do lots of grunt work. Many times, board members don’t receive any training in how to be effective communicators. Many don’t understand building infrastructure and maintenance issues. Many don’t initially recognize the time commitment that board service inevitably entails. Often, our paid property management companies provide only marginal assistance to the board beyond collecting the monthly homeowners’ dues.

    As a result, board members concluding their service often feel burned out and sour at the process. Some homeowners never raise their hand to volunteer but always are there to criticize.

    After three years in a condo, I’m still idealistic enough to think that, hey, we establish and enforce our building’s rules ourselves. I like the challenge of trying to create a healthy and well-functioning condo community and living harmoniously among a diverse group of neighbors. Having a thick skin and being incredibly patient with the process are two good qualities of condo dwellers.

    I’d love to see more exchanges on this site about what it means for busy urban-living types to deal with the challenges of managing our condo destinies, including tips and techniques for being both great board members and responsive and responsible homeowners.

  • jo

    Peckham:

    “I know of another condo where each owner will have to pay a $400,000 assessment. Ouch! Thats 1/3 of my net worth.”

    Wow, I’m like totally impressed about your net worth.

    Where is this mystery condo?

  • jo

    Peckham:

    “I know of another condo where each owner will have to pay a $400,000 assessment. Ouch! That’s 1/3 of my net worth.”

    Wow, I’m like totally impressed about your net worth.

    Where is this mystery condo?

  • Peckhammer

    “Wow, Im like totally impressed about your net worth.”

    Don’t be. We all need that kind of money if we are to retire before our bones turn to dust.

    Where is this mystery condo?

    Kirkland. It is a very unique property.

  • Peckhammer

    “Wow, I’m like totally impressed about your net worth.”

    Don’t be. We all need that kind of money if we are to retire before our bones turn to dust.

    Where is this mystery condo?

    Kirkland. It is a very unique property.

  • Phil

    I like the challenge of trying to create a healthy and well-functioning condo community and living harmoniously among a diverse group of neighbors.

    An alternative to your standard condo HOA is a cohousing development; more work, but more rewards –
    http://cohousingresources.com
    http://www.coophousing.org

  • Phil

    I like the challenge of trying to create a healthy and well-functioning condo community and living harmoniously among a diverse group of neighbors.

    An alternative to your standard condo HOA is a cohousing development; more work, but more rewards –
    http://cohousingresources.com
    http://www.coophousing.org

  • Scarlett

    I live in Peoria, IL.  Our 45 single-family unit is in the process of
    creating a HOA. It is causing a lot of bad blood.  I would move away,
    if I could afford to.  I have lived here for 11.5 years without need of an association.  The new HOA  has assessed $150 annual dues on each of our homes without having allowed us to vote on a budget.  The
    leadership has placed liens on homes of which one may be mine.
    They hired a lawyer and have spent $2900 in legal fees in an attempt
    to have two fences removed. Another $900 was spent for insurance
    so that the leadership can’t be sued.

    Yes, HOA are scretive and petty.  I grieve because my lovely,
    affluent, Christian neighborhood now habors mistrust and  gives off negative energy that I find deplitating; not to mention driven off prospective buyers.  No kiddie pools, no small storage units next to the home. They have even legislated the kind of mail box we can have.  Only wrought iron fences are allowed because “we like to see into people’s yards.”  The young children play in the streets often unsupervised. The dogs poop in our yards because few of us can afford to pay $5000 for a wrought iron fence.

    I thank God daily that our homes have not been leveled by weather, or foreclosed due to the uncertain economy.
    A white vinyl, and a chain linked fence legally installed by 2 new
    residents in the neighborhood are trivial matters not worth fighting over.   If a person has reasonably good health, a roof over their
    head, a job with benefits, and at least one operational passenger vehicle that is paid for, and produced healthy, educated, productive children, everything else is a bonus.

    Thank you for allowing me to vent!

     

  • phil

    Hi Scarlett,
    You have rights under IL state law and any HOA has to follow the same laws.  Don’t let them walk all over you.  The following site has links to the laws – http://www.cai-illinois.org

    I’ve been on the board of a HOA in California.  It can be a lot of work with few rewards and lots of complaining homeowners.