I am a BOD and Officer in a HOA. This will be messy - we would have to sell all of our common amenities, parking lots, overflow parking lots, playgrounds, gym, pools etc to the government or a private company if this happens. County would have to take over maintenance of our platted common property and property that we mow (and get paid for) by the County. County would have to step up enforcement of parking on street rules, trespassing on what would become County property. What do we do with the $500k we have the operating funds and reserves collected over the past 40 years?
County would have to find another place to do their voting as we have offered our clubhouse for years. We would have to fire our LCAM.
County would have to maintain some expensive drainage and ponds that our HOA manages. Fountains. Weir replacement alone is $250k that we keep up.
Yes, reform HOA laws but abolishing them I am not sure is the right thing to do. It would create such a massive mess and requirement for Counties to maintain things that they don’t currently manage. It may lead to these areas to incorporate because then you would end up with City based code enforcement.
HOA reserve funds (not Condo) needs to be relooked at. We have healthy reserves because we have been keeping on top of reserve studies.
I upvoted you despite entirely disagreeing with your premise. Yes - negotiate with the county to take over management of the playgrounds and lawn mowing. Yes - make the clubhouse and parking lots open, fee-based and voluntary, and controlled by a private corporation rather than an imposed, taxed service. Yes - return the excess money to the current homeowners, or use some of it to effectuate these conversions.
Honestly, the amount of money you have in reserve, plus the list of amenities you list, makes it sound like the HOA has been sitting on a spigot of endless cash for a very long time and finding nice-to-have things to justify the continued fees.
We have a reserve study completed by a professional company that requires us to hold this much. For example, we are replacing two AC units for $50k total. Pool needs to be resurfaced for $100k. We have roof repairs that will need to be done eventually, gym equipment replacements, various beautification repairs, weir repair ($250k), fish guards/blockers, pond maintenance etc
Sure - I understand these roofing, HVAC and landscaping expenses are associated to the common amenities? So if you spin out the clubhouse into a country club that members can opt to join, you can allocate the clubhouse an appropriate amount of cash. When you negotiate with the county to take over management of the grounds including the pond, you can negotiate to give them some of the reserve money for the future pond fixes.
I understand it wouldn't be easy to change all these management responsibilities, but in principle everything the HOA does can be devolved to either voluntary associations, or to public authorities (as happens in most of the rest of the world). Unlike a condo association, it's not a completely unimaginable shift what this lawmaker is proposing.
Right agree and I think I have tried to articulate that here and below. Florida law says what to do when HOAs are dissolved. Point is it will be extremely messy to suddenly dissolve hundreds or thousands of HOAs. Windfall for the State too because the money by default needs to go somewhere and it won’t go back to the homeowners (which ones btw current or past, law doesn’t speak to it). So it goes to the State based on the sale of the land and properties.
I don’t think homeowners will be universally pleased with this.
Doesn’t that mean the budget at the county level will have to increase to cover all the new maintenance, and thus taxes raised? I’d rather have some say in what my money goes towards in the HOA than have taxes raised to maintain neighborhoods all over that I never visit. We end up paying either way.
Cities or counties suddenly having to take over lots of road, playgrounds, sidewalks, street lights, and etc is going to be a big drain on their budget. Sure they could run with the HOA's money for a while but eventually they're going to have to pay.
That is the best possible solution. That's how it works in my neighborhood and it is the best answer.
This neighborhood has a few amenities like soccer fields, tennis courts, bike/walk trails and exercise stations. In the early days of construction there was some debate about a HOA but that was fortunately shot down pretty quickly as far too toxic.
Instead, there is a property tax assessment on all houses in the area that covers for the city to maintain these common areas. Sure we pay for that, which is fair. The areas are maintained, they are open to all which is great, and there is no nasty HOA meddling in how people paint their houses or what flowers they plant or what car they buy. Best of all worlds.
I don’t believe this to be entirely the case, having served as President of a HOA for 10 years. HOAs are generally incorporated and hold said property. Should the Mandatory HOA be banned, the corporation could simply switch to private membership and offer access to amenities to those outside the community. If the residents don’t want that, they’d need to pay up. Condos, however, likely have different needs because of shared construction, but I’m certain a solution for that could be found.
I absolutely HATE living in an HOA for private property reasons; I don’t enjoy being told what I can do on and to my own private property and being bound by decisions other people make about my own private property. Things like being forced to use a specific (terrible) trash service and specific lawn care company (charged at 2x what I pay for lawncare with 4x the property), which are things friends complain about in nearby communities.
However, I also fully understand their value for communal property/amenities and see nothing wrong with maintaining mandatory membership for those features. The biggest problem is that those costs continue to be inflated in the HOAs around us, and now our own after I stepped down. For many of them it is the unnecessary improvements or using a board members cousin contractor, or a member, who charges 1.5x while providing .5x the value. That, or it gets turned over to a management company that takes a 30% cut and milks the budget with their own in-house contractors doing a similar overcharge/underperform thing.
Upon what? The “dissolution” of the HOA? Assuming so which is common for an HOA, it is generally its own legal entity which is separate from the mandatory membership component.
What the legislator wants, and what can be done legally are likely to be two separate things. They could certainly repeal laws that allow for mandatory membership to be durable upon sale, and provide support for HOA bylaw enforcement, but a law “abolishing” HOAs entirely would likely be struck down a day later. That Likely runs afoul of the first amendment among other things. It would be like saying people can’t form private political groups or enter into private contracts; nonsense, as HOAs are often private non-profit corporations.
Yes upon dissolution or termination as it’s called. Says goes back to public upon sale.
“Upon dissolution, the corporation's assets, both real and personal, must be dedicated to a public agency or utility for purposes similar to those for which the assets were originally intended. “
> What do we do with the $500k we have the operating funds and reserves collected over the past 40 years?
Uhm, return it to the property owners?
The real pattern is that HOAs have been abusing their power; or in other cases are required because municipalities don't want to do their job. As a result the lawmakers will, unfortunately, overcorrect.
You pay the current owners as of the date of dissolution. The current owners bought into the HOA from the past owners, and thus assume future liabilities (or profits) from the HOA.
Edit: If/when it becomes known that there will be some kind of a payout, people selling their homes will need to adjust the price and/or expect some kind of credit from the buyer at closing.
You need a majority of the members to want to do it. All have to respond to the ballot. Past experience is that the members generally don’t vote even at the annual meeting.
That's because are so mind-numbingly dumb that no one is going to show up for an annual meeting unless there's actually something important to vote on.
Saying, "hey, show up and vote and you might actually get some money from it," will make people show up.
I would guess it will vary by state laws. How about a force liquidation of all tenants in common properties and any other joint properties to pay off the HOA debts and disband the HOA's. Maybe even treat it much like a chapter 11 bankruptcy / reorg? Or get investors to pick up properties?
There must be cases of HOA's being force disbanded / dissolved in the past to use as a template. I think it's just a majority vote from home owners and submission of articles of dissolution? If enough properties could be liquidated then a good incentive could be giving home owners back a few years of dues. As a bonus all the over-zealous rules that have grown over the decades get dissolved and people just default to county and state laws.
I think what GP is saying is that if I was a homeowner for 30 years, paid HOA fees all those years, then last year sold to someone else, who gets the HOA reimbursement then? I paid thousands over years and would presumably get nothing, while some other guy who just moved in all of a sudden gets a big check? That seems unfair.
I would assume the sale price of your property would be higher if it's part of a well managed HOA with 500k in reserves than if it's part of a dysfunctional, insolvent HOA, so the previous property owner kinda already got paid out for their contributions.
It's like selling shares of a company with significant cash reserves before/after they choose to liquidate a chunk of them into dividends or stock buy-backs, I would hope you priced the shares accordingly and have nothing to be mad about.
Imagine you dissolve a company that has a lot of money in the bank. What do you do with that money? Distributing it to the shareholders seems like the right way to dispose of it. What if somebody sold all their shares a day before? Well, they get nothing, that's how it works. The company's money should be accounted for in the share price, so it all works out, there's nothing unfair.
An HOA is no different. All the owners are also owners of the HOA. When you buy a place in the HOA you also buy into the HOA, and when you sell you also sell your interest in the HOA.
Except the HOA governing docs say the money goes to the State and it’s expected that the State provides the same amenities and services that the HOA was providing.
If State doesn’t then a non profit corporation is formed that does
Where I'm from we call a HOA a body corporate, and every home owner in the scheme has a % ownership in the BC. The title deed includes the ownership share. So if the house ownership is transferred, so is the share in the BC.
Size of the share is determined usually by the dwelling floor area divided by the sum total of all dwellings in the scheme.
So if you sell your house after decades of contributions, and then the BC is dissolved, then too bad, you sold your share in a going concern and lost your say in it's affairs.
Arguably you benefitted from the contributions from someone who came before you, and now someone will benefit from yours.
Hoa funds practically never get redistributed back to owners. I've never heard of such a case. We are only talking about it here because a legislature is talking about changing something state wide (and realistically this won't happen anyways).
So there is no realistic scenario where hoa reserves factor into home price
Reserves are money available for HOA expenses which would otherwise require new money from the owners. For that to factor into home prices, you just need buyers and sellers to be aware of this and what it means for their wallet in the future. Which may not be the norm since people are often clueless, but it doesn't seem completely absurd.
What you are saying is not typically in HOA governing documents nor State law so law would have to be changed and / or governing docs updated which would take a majority vote by all homeowners (60% in some cases per State law)
> What property owners is my point? Many are long gone
This statement makes no sense. The property owners are the ones who own the properties, today. It is very clear cut who they are, it's even public record.
County would have to find another place to do their voting as we have offered our clubhouse for years. We would have to fire our LCAM.
County would have to maintain some expensive drainage and ponds that our HOA manages. Fountains. Weir replacement alone is $250k that we keep up.
Yes, reform HOA laws but abolishing them I am not sure is the right thing to do. It would create such a massive mess and requirement for Counties to maintain things that they don’t currently manage. It may lead to these areas to incorporate because then you would end up with City based code enforcement.
HOA reserve funds (not Condo) needs to be relooked at. We have healthy reserves because we have been keeping on top of reserve studies.
Be careful what you ask for is all I am saying.