Rental Property Investor · Cedar Park, TX · Member since 2014 · 415 posts · 272 votes
I own three homes in two homeowner associations that have exorbitant fees charged when homes are sold. In one neighborhood, the management company charges at least $500 (and won't say exactly how much) for emailing HOA documents and a statement of the account to a title company and then creating the new owner's account. In another neighborhood, the management company charges $490 for the same service and the association tacks on $300, financing the association disproportionately from homes that change hands.
The clerical work involved in these transfers probably takes no more than 30 minutes, but homeowners are stuck paying because title companies won't close escrow without the HOA managers' documents. In my experience, association board members do not pay attention to this and are unresponsive to complaints, because they don't like to question the management companies. Does anyone have a solution to these ever-growing charges?
I recently closed on a townhouse with an HOA, and while I feel that the monthly fee is quite reasonable for the services provided, I was definitely NOT very happy with the $2000 new ownership fee (although they claim this is in the "capital improvements" budget). Even worse though was how rude the company was when I tried to get information from them as a prospective tenant; I immediately filed a complaint with the supervisors.
The financials should be public. I took a look at mine and found that about 25% of my monthly fee is going towards some type of administration. Mostly wasted money, but nothing I can't live with. At the end of the day I just had to factor in the costs and decide whether or not it was still a good deal.
HOA members hired the current management company and they can fire them, but you have to get the HOA members to agree with you. If enough members refuse to accept these ever increasing profit centers, they can put it to a vote (as allowed by HOA by-laws) and make a change. I would guess that if enough HOA members showed up at the next meeting complaining and threatening a rebellion, the HOA would see the light and reduce their fees in order to keep the management contract.
I recently closed on a townhouse with an HOA, and while I feel that the monthly fee is quite reasonable for the services provided, I was definitely NOT very happy with the $2000 new ownership fee (although they claim this is in the "capital improvements" budget). Even worse though was how rude the company was when I tried to get information from them as a prospective tenant; I immediately filed a complaint with the supervisors.
The financials should be public. I took a look at mine and found that about 25% of my monthly fee is going towards some type of administration. Mostly wasted money, but nothing I can't live with. At the end of the day I just had to factor in the costs and decide whether or not it was still a good deal.
HOA members hired the current management company and they can fire them, but you have to get the HOA members to agree with you. If enough members refuse to accept these ever increasing profit centers, they can put it to a vote (as allowed by HOA by-laws) and make a change. I would guess that if enough HOA members showed up at the next meeting complaining and threatening a rebellion, the HOA would see the light and reduce their fees in order to keep the management contract.
Sadly, that approach will not work. It's very hard to gain control of an association board. The vast majority of homeowners have no idea of what the associations do and are not willing to find out. Typically, associations almost beg to get a quorum at annual meetings so they can elect directors, and quorums are achieved by persuading many homeowners to turn over their votes by proxy to the association president or another insider. This means it's hard to elect even one board member who does not go along with the management company, because it's more work to question things. Also, much of the decision-making is done in private, through email and conversations among board members. The idea that HOAs are democratic mini-governments that consistently respond to homeowners is a myth.
Apathy allows these associations to continue their antics. It would take a lot of work to educate the members and convince them that it's in their best interest to demand answers. But as you said, most will only complain or worry about the fees when it directly impacts them which may be years away.
This is precisely the reason I will never again own property in an HOA.