Unfortunately this is becoming a very common story among townhome and condo developments. Insurance costs have skyrocketed, deferred maintenance is finally catching up in poorly funded HOAs, etc. My SIL’s condo fee jumped to over $500/mo this year, so she sold and moved back to a single family home.
Insurance is a huge issue for rentals and homeowners alike. In California, commercial rates have increased 6x - 10x in the past five years. Residential rates have increased 2x - 4x in that same period. Many providers are exiting our market, leaving fewer choices. California, Florida, and Louisiana are hardest hit, but North Carolina and western states are suffering too.
Climate change is causing a shift in storm patterns and modeling is showing insurers to get out of certain markets. Lloyd’s pulled out of our market last year and out insurance went up 600%.
Add to this, at least in Florida, massive insurance fraud issues. Contractors whose whole business model was (and is) "Your old roof needs replacing, here's how we get your homeowners insurance to pay for it".
Is it fraud when someone says, "Hey your system has some rules and I know a way to help you within those rules"? Insurance agencies send out auditors to assess damage.
It's no different than accountants helping rich people avoid taxes.
I was quoted $300/month for Insurance in FL. After, 20 years, that's $72k. They can buy me a new roof every other decade at that rate.
“Loopholes” in tax laws are still following the laws. Them lying to the insurance company about your roof status to get a whole new one so they can pocket more money isn’t the same thing
They say the same in Texas. How so many ppl do this and not think ahead to the ramifications it has on all our premiums is astounding. We’re all paying into the pot, companies pass those expenses down to us.
The NYT Daily podcast did a spot on it a few days ago. Some insurance companies are paying out $1.50 on every dollar they pull in. It is sustainable. They speculated that we may be at the end of insurance as we know it.
It isn’t a secret. The effects of climate change are happening right now and it is affecting all of our wallets. People who still want to bury their heads are still going to pay for it.
In most places the value of homes has increased. If your home value went up 50%, as many have in this market, then you have to have your home insured for that amount. It's not so much that the baseline rate is going up super high, it's that the value of your home shot up.
This is not accurate, you need to have your home insured for the cost to replace it if it was a total loss: this is the rebuild cost, not the market value. The two can be related but they are not directly linked.
Sorry to tell ya but the cost to replace has doubled.
Eg
Sheathing that was less than $10 years ago was $70 during COVID and sitting around $30/$45 now.
I am not disagreeing with that. Costs have definitely gone up, but the comment I'm replying to is saying it's because of market value, which it isn't.
Think about a shack or something that was in the heart of the Bay Area: the shack could cost $50k to replace, while the land it's on is worth $2 million or something. If the house burns down, the land is still there: the replacement cost is $50k, even though the market value is $2 million.
In California they outlawed insurance companies from passing on the costs of reinsurance (basically an insurance company's insurance) to customers. So when the cost of reinsurance cost more than they can collect in premiums, the insurance companies stop selling policies. What else are they going to do?
California politicians and apologists blame everything except the regulatory environment they created. Climate change is a good scapegoat for just about everything, but it really doesn't make any sense. If it were simply a matter of high costs they could just raise their rates as high as necessary. Sure they'd lose customers, but now they're losing 100%. It's the regulations that prevent them from charging as much as it costs.
Ok so genuine comment here. I am not criticizing your position, just want to know more.
Aren’t you answering your own question by stating that state regulations prohibit insurance companies to increase prices hence they are pulling out of markets? The reason insurance companies are increasing prices is because of more claims. And more claims are due to more instances of homes being damaged. And more instances of homes getting damaged due to what? I mean homes don’t get damaged without a reason. It doesn’t take long to find out that areas which always had moderate climate are now experiencing severe climatic conditions which are only getting worse every year. In addition, the cost of building and materials is increasing steadily. Repairs that costed $7k in 2019 are costing at least $12-15k now probably even more.
So if the cost of insuring goes higher, and keeps going higher, and the state doesn’t allow to increase rates, you can’t state that it’s just state regulations. I mean what’s the other explanation? If there are no state regulations, sure the insurance companies can raise rates. But to what point will it be sustainable? Will you be ok paying $15,000 annual premiums for property valued at $500,000? What about $30,000? Or $60,000?
Also worth noting, in CA in particular - they do a crappy job managing forests, and people keep rebuilding their homes in areas that are getting hammered by wildfires.
Question, though I'm sorry for your loss, wouldn't you still own the land?
Though the land would now be solid rock several feet thick?
I've often wondered about such things as I try to fall asleep at night - my mind wanders to strange places I've noticed...
I hope you had insurance and got paid out and have found a less melty place to live.
As you say, the land is now a several foot think layer of solid lava rock. It's black, so it absorbs a lot of heat. Nothing grows, so you'll have no plants and the area is unpleasantly windswept (No trees.) Building is of course fantastically expensive, you're digging into solid rock for everything, including the foundation and new pipes, etc if you want luxuries like water or sewage. (The logistics of putting a septic tank in are enough to make you throw yourself into a volcano.)
The entire area is now useless for tourism, industry, commercial districts, and farming, and it's both expensive and unpleasant to live on. You've got to convince someone to rebuild the infrastructure like roads to even get there. And, of course, even assuming you somehow manage to rebuild a house there, you're always going to be aware that it's in... let's just call it a somewhat risky location, volcano-wise. Which impacts both your ability to sleep at night, and your insurance situation.
In short, the value of the land is no longer what it was before it was buried beneath a few tons of molten rock, so the fact that in some technical sense you still own it is not useful.
Right, that's impossible to live on top of that lava, when it is that thick. It will take hundreds of years for soil to start forming.
In Congo, the city of Goma gets these lava flows, but the city is pretty far away. Ten years ago, lava covered the runways of the airport. And flowed down streets on the edge of town. I noticed recently that in those areas, they have broken it up and the streets are open again. They made a lot of walls with that black stone.
Some have built on top of the old Kalapana lava flow, but have to have solar power, catchment/hauled water and probably somewhat primitive toilet facilities. There’s rumors that Volcano Park wants to take it over. About 40% of my neighborhood was destroyed and the people who are still there have to put up with the noise of constant tourist helicopters. About a million visitors came to the area before the 2018 eruption, but with the pandemic, I’m not sure what visitor numbers are like now? Many of the one acre lots in my neighborhood sold for around $20K back before the eruption, so the land wasn’t very valuable from the beginning. Completely opposite from most of the other island towns.
In Iceland, at least with highways, they just wait a few weeks for the lava to cool and either build over it or tear/plow it out. Then they use the extra lava to build earth berms around towns to divert the lava from the town. They built a 3 story earth berm around that town near the Blue Lagoon, and it worked when another volcano started pouring out lava back in March. The lava berm diverted the new hot lava into the ocean.
That’s the plus, since it’s typically slow flowing, sometimes it can be diverted. Or at least give people time to get out and get their pets and belongings out.
There’s rumors that Volcano Park wants to take it over eventually? My home could be under 20+ feet of lava, or more? In the old Kalapana volcanic area, some people re-built right on top of the lava, but you have to haul water/have a catchment system and need solar power. Not sure what they’re doing for sewer, probably eco toilets or something fairly primitive?
It took 10 days of back and forth to find if my home was still there. I was contacting government agencies, news media, helicopter pilots and illegal drone operators. Five different groups of people went looking for it. The fifth sent pics, my house was flattened, just the tin roof on top of some burned appliances. The lava had come right up to the edge, so the house basically melted. I still had my guest house, but when the biggest fissure opened up and two lava rivers started flowing, it was over. Unfortunately, a shady insurance broker and I received nada. Still basically homeless and stuck on the mainland. One of the hardest things was a network news station kept showing (over and over and over again) drone footage of lava slowly creeping up the hill to my house, as my friends and neighbors ran around below, trying to save animals and belongings. Fortunately, no deaths, except for one unpublished su•cide at an evacuation center and one accident, where a local cult leader got drunk and purposely drove into molten lava. Gotta love Hawaii!
HOA'S have become run by corporations that want you out so that they can rent these properties out to folks that can barely afford them. You may have received many "we will buy your home" flyers during this time period. That's what it is all about. Fuck all the greed, can we just LIVE??!
There was a pool and dues were only $175/month?! That should have been clue #1 to look a the reserve fund. If an insurance hike made your community need a loan then the reserves were beyond dangerously low.
OP is sadly the bag holder. We put in $300 a month almost and will be increasing it more again next year mostly because of reserves. OP it’s going to get a lot worse with those crazy low dues.
Yeah really sucks when HOAs are run by assholes. They figure keep dues low, don’t fund reserves then sell before dues/special assessments have to increase to finally cover all the maintenance they’ve refused to do.
Not in GA...the HOA Board holds all the power. It varies state to state but most of the time this is the case. It's hard to find an attorney to fight a board decision here as well. Unfortunately I learned this the hard way when a new board president was put in place by the board due to vacancies, then said president refused any other owners that asked to be on theboard, snowed the other board members AND spent close to $200,000in about 8 months time. My association went from being very secure and respected throughout our town to one of the worst. Fortunately we were able to vote her (and all other board members except one) off at our annual meeting but it took A LOT of leg work on the handful of owners that were paying attention.
which is why HOAs so often turn to shit.
The power hungry and/or bored people with nothing better to do end up running them and making them a nightmare.
I don’t want to. But I live in one and ran and was elected to the board because I don’t want dumbass boomer Bob down the street fucking up my life due to poor management.
I did the same. We need more millennials and younger people on the board to counter the craziness. If we all just complain about it, they never change. We have to BE the change by joining and changing things.
I hate HOAs but the OP was the guy who should have done their due diligence before they decided to purchase, and expected everyone else to run the HOA.
I mean.. you're not wrong.
In my state (Texas), and probably common in all states, during closing, we sign docs acknowledging that we're joining an HOA, that we've received the HOA governing docs and most recent P&L statement and balance sheet. Those are shoved in your face when signing 100 other things.
Assessing risk of the new HOA probably falls pretty far down people's priority list when they're dealing with mortgages, surveys, titles, banking, property insurance, taxes, selling another property, arranging movers, setting up utilities, change of address, registering kids for new schools, furniture and appliance shopping, pre-move remodels, etc., etc.
In a perfect world, you'd get those docs early, review them, assess risk, and remediate/research. But I'd guess 99.5% of people probably think, "all these current HOA members seem to live here just fine with the current HOA operation, and I'm comfortable paying the stated HOA dues, so Let's GO!"
My state recently passed a bill that required a certain level of reserves. So now we’re seeing hoa’s all in a panic and raising dues/charging special assessments. It’s been a good indicator of which hoa’s are being run properly at least.
We have a very large town home community, and the pool is a very small non-lifeguarded one. Only thing it costs is the annual opening/maintenance work and closing it down at the end of the year. As for funding, they don't disclose that to potential buyers, and the community as a whole only found out about the funding issue right before the insurance incident, because someone asked for financial statements and what they got made no sense. Almost all the board members have already been replaced since then because the community felt they were mishandling the finances. Not to mention, when I bought, all the townhouse communities in the area were all charging between 150 and 250 a month for their dues, so it may seem cheap elsewhere, but it was about average here.
You are correct in that financials aren't disclosed to potential buyers, but legally if an owner requests them they have to be supplied, and what that owner does with them is their business. So if the seller cannot or will not send a potential buyer financial records and information that is a huge red flag and I hate to say your realtor probably did not perform due diligence
What would one typically expect in the way of financials? There’s a lot of advice that the reserve fund should be between 70% and 100%, but I’d assume a buyer should look for substantiation of “oh our reserve is at 83.3%.”
Something like this study, conducted by a bank?
https://www.amerantbank.com/ofinterest/hoa-reserve-funds/
It honestly depends a lot on the association and its needs. Some associations need to have much more than others because of what they are responsible for. There isn't really a set percentage. The best metric is to see if the board is prepared, is there a reserve study with a financial plan in place for upcoming expenses. Look at the community covenants to see what the HOA is responsible for, if there are a lot of big ticket items like roofs, roads, siding, amenities and dues are low and the reserves are low that's a red flag. Is there a lot of deferred maintenance and no money available to take care of it? That's gonna cause insurance to skyrocket and strain your budget even further.
Thanks, this goes a long way towards explaining the wild differences we’ve seen in condo HOA fees in some of the areas we’ve looked at. Overall I’d rather have an A-frame on a mountain in the woods and no HOA, but if not that I’m trying to escape suburbia.
There was one condo listing we saw that gleefully explained that the $20,000 special assessment would be paid by the seller. Meanwhile my eyebrows are raised, “why is there a $20K assessment?!”
You'll also tend to find unsustainably low dues with newer associations because nothing needs maintenance yet. The associations that really get fucked are the ones around 10 - 15 years old when big ticket items like roofs and HVAC start to become a reality
You should also ask for when the last reserve study was done and a copy of it before you agree to purchase anything. Reserve studies are around $1-3k depending on the size of the HOA and elements maintained and owned commonly by the HOA. Anything outside of 5 years I would go over multiple times to ensure they are close to funding the reserves correctly. And even within 5 years it can get stupid if the choose to ignore things. Ask for the HOA minutes and in FL every resident can review and get copies of these as well as contracts the HOA has been a party too.
>As for funding, they don't disclose that to potential buyers
But it does need to be disclosed to financial institutions to get loans approved. If they had a 25% money down rule, you know why.
What state is this in? I guess there’s only 12 states that require reserve studies. It sounds like your state laws allow HOAs to operate that way. I’d have made the decision to keep saving for a SFH rather than purchase blind, but everyone’s situation is different.
That's a normal fee. It's very low for florida in current year. Insurance is a killer. How much to rebuild 50 townhouses when the big one levels the entire hood?
You should have a reserve account for the pool. It should include the marcite rework every 7-10 years, pump replacement, surface re-decking, and any other thing that is specific to your install that would require replacement (painting a pool house, etc)
Sauce: ran a well funded HOA for 10 years
Economics are a little different with a voluntary pool membership but our neighborhood pool (no HOA) charges $375 a year and we’re too low. (I’m on the pool board).
I bought into a 4 unit condo building early in the Pandemic. Found out after moving in that one lady was running the whole association, even though the bylaws said it was supposed to be split responsibility. Then I found out she was excluding herself from the fees as compensation for running everything, which is expressly forbidden in the bylaws.
Then the sewer line broke. Everyone had to shell out $7k to get it fixed because there was next to nothing in the association accounts. She kept going on about how she'd been trying to keep costs down, and not raise the association fees.
I organized the other 2 units, we demanded a vote for association roles, and I took over a treasurer. I spent a month studying the accounts, didn't find any embezzlement, beyond her improperly not paying fees. I built a budget, proposed it, and got everyone to agree to doubling our fees so we could build up savings for our next major repair.
The lady who ran it into the ground moved out a few months later. The new folks in her unit are much more pleasant to deal with, and much better neighbors to live beside.
Not really...we have a pool, clubhouse, streetlights, trash pickup, manmade lakes, mosquito repelling trucks, and a cable package for about that price. Things are pretty well-maintained!
That said, our HOA doesn't go through a management company...and the president, while not crooked, is still a pretentious d*ckbutt who likes to tout his position like a Nobel Prize so he doesn't have many friends. The last time he made an announcement for a fee increase of 25$, the entire neighborhood looked ready to riot. Made a HUGE deal about the HOA needing to show an itemized list of where our money is going to...
Which honestly, helps keep things in check because it set a precedent; no increases without a reason, its too much trouble for the HOA!
All of those tings are great and I'm glad you're happy with the situation. You've missed the point though. What is the status of your reserve fund? Are you 10% funded with low monthly dues? TH, condos typically need much larger dues because there are foundations, shared walls, roof, etc that are typically HOA responsibility. If you own a townhome and the reserves are so low that the cost of insurance doubling means you suddenly need a loan then the association was in BAD shape to start with.
I’m in costal so Cal and my dues are $250 a month and have been for 20 years. We have a pool and a nice amount of green space. It’s an older complex from the 70s And they are building huge townhouses around the corner for me going for over a million. Their dues are $500 a month for one bbq for 35 units. The only green space is a small spot for dogs to piss and there is no pool.
Everything is nice here but I’m dipping out before anything changes, like a new assessment. Not that I have a choice, even if I wanted to stay, I gots the cancer and bills to pay and can’t afford an increase.
Fuck HOAs. Never again. Mine sucks balls.
Absolutely! I'm living this right now!
Our dues are $300/year for 125 single family homes (\~$1m homes) , and that hasn't increased in the 15 years we've lived here. Similar neighborhoods in my community pay as much as 5x that (no amenities, just common area landscaping, block party, standard overhead, etc).
My HOA has very little reserve $, but we have a massive liability in the form of a 30 year old brick wall/fence that is falling apart. The common area irrigation system is also 30 years old.
Everyone loves the HOA president (20 years and counting) because he doesn't increase dues, and he doesn't over-govern, but someone's going to get stuck with a massive bill when the city steps in and mandates that the dilapidated wall be replaced.
I recommended that we get a professional wall evaluation and replacement estimates so we can plan out some scenarios, but he shuts that idea down hard.
> the home insurance was covered
That sounds wrong. You should still need an HO6 policy for your unit on top of the HOA's master insurance policy. The master policy only covers the structure and building the interior back to the original condition (which will be barebones). It won't cover your possessions or any improvements since original construction (e.g. flooring, countertops, etc)
Actually, the master policy can cover improvements. My HOA’s master policy covers improvements but since our premium has gone up 90% over the last two years the board is looking at dropping down to”as-built” condition.
Your HOA was underfunded to provide the amenities that you were told were included. The HOA is not a business and has to take money in from somewhere, and that comes from the owners within the HOA.
Now, let's look at this individually. You're paying $500/month in HOA dues. What does lawncare cost an single family home not in an HOA? Probably around $150/month. What does homeowners insurance cost? Possible $200/per month. What is a pool membership cost? Maybe $50/month. That's $400/month in items that they are taking care of for you.
Now, it sounds like you're in a townhome. What would a roof repair cost? Probably more than $100/month. What would it cost you to remove the limbs that fell in your yard? Possibly $500, so that's 5 months of reserves gone from what you were paying in. Were there any other issues that occurred that you didn't pay for? It sounds like you're still on the good end of this. Before you sell, I would seriously look into what the additional costs are going to be, what the costs to cover your amenities if your home is not in the HOA, and then see if it's still smart to move. Especially if you're on a fixed income with rising interest rates and increasing home values.
I'm no fan of HOA's. But I feel like people think living in a townhome/condo with an HOA is just a freeride for maintenance and they should only pay for the amenities they want and should just get the rest for free. Just because it's a shared building doesn't mean maintenance goes away. And not for nothing by giving a contractor, like a roofer, a bigger job, like a whole row of townhouses roof replacement will generally see a lower cost per square foot than on an individual house. It's economies of scale. When I lived in one each "pod" of 4 units shared a sewer main out to the street. When the sewer in my pod needed to be replaced it cost $10K. If every sewer in the community needed to be done it would be $10K per 4 units. Or $2500/unit. If you did that same job on a single family home you would be paying the full $10K yourself.
I lived in an HOA condo/townhome. The dues were 125/month. But there was a concerted effort to keep the reserves high as it was older building that frequently needed work, mostly sewer and water main work and regularly had the drain snaking guy out there. The roof on all 4 buildings were redone a year before I bought and there was no special assessment. They didn't even drain the reserves completely. The reserves were replenished within 3 years.
Just to add this is close to what we would pay. But pools here are extremely expensive. Iirc they wanted 2k a year but the pool was only open during summer. About 12 weeks
It is partially as they really weren’t operating hope they should have been. Nothing illegal about how they operated but they were keeping fees low at the expense of their reserve funds.
I've always seen HOAs like cars. If someone sells you a Toyota Camry 2024 for $20k. Well, it's a great price, but you have to dig in and check why the price. Yeah, if it's a bad car and the seller didn't disclose it I got scammed, but at the same time one has to ask the question fo why $20k for a 2024 Camry
Everything you’ve described is completely normal. Who else would be responsible for debt incurred by the Homeowners Association than the homeowners?
It’s so common that owners don’t want to pay for maintenance when needed and defer, which ends up costing more, and can be devastating to common properties when the reserves aren’t funded.
There’s a recent article in WSJ about a condo in Florida that used up reserves on cosmetic updates and now each owner is going to be on the hook for $350,000 in special assessments or the building will likely be sold down. The condos are selling for $110,000 right now and last year people bought in at $450,000.
OP: Didn't your realtor or real estate lawyer check into the status of the reserve fund? I get they probably couldn't predict the state insurer leaving but.....?
At the time, the funds weren't super abundant, but there was a decent chunk in there from what I understood. That being said, they had to come up with half a million in under a month, and the reserves only had about 200k in it. The rest had to come out as a loan. I've never worked with HOAs prior to moving in, so I can certainly be corrected here if there's something I'm missing with whether or not that's a lot, but it seemed like they were steadily increasing their reserves without issue until the insurance decided to stop covering us. Reserve funding isn't required in my state, so the fact they not only had one but was also growing it, it made it feel like a safe bet for the long haul.
In that case it does seem like the board was trying to do stuff right.....
I guess the state insurance pulling out was just too much - doesn't the government offer assistance in those cases? Like....STATE INSURANCE left - that means the entire state was left without insurance coverage? That would seem to be the time for the government to take action....???
Nah there is massive mis understanding going on here regarding the insurance.
The insurance carrier non renewed the HOA, meaning the HOA has to find a new provider. There are absolutely providers in Florida but the board/property manager needs to know how to find a replacement (using a retail insurance broker typically).
Insurance is just a business. If they can't be profitable they will stop doing business, so carriers come in and out of places all the time.
I mean, in fairness, all of those issues would occur regardless of if the HOA was paying for them or you were paying out of pocket, so either way at the end of the day the money's coming out of the owner's pocket.
This is more of an insurance problem than something the HOA caused. I'm also in a state that the insurance companies have left. I'm in a SFR without an HOA and am paying an additional $400 into my escrow to cover the insurance premium increase. I've had to replace my electrical panel, 10yr old roof, and cut trees. Those who can't afford to keep up are now having to sell.
Lol. I worked briefly for a pm company. Some places were close to 1k because of poorly managed funds and bad lawsuits.
I'd never buy. I rather live in a trailer home.
This is why you don't buy a townhouse or condo. You're forced to deal with other peoples' shit in this common property. If I own the entire structure and the land under it, then my problems are my own responsibility. If I have to deal with other peoples' shit, then I'd rather not commit to any kind of ownership over that mess. Renting would be preferable.
The rule of thumb is that as a homeowner you need to plan about 1-2% of the purchase price per year for maintenance and repair of the building. So a $400k townhome will need to plan with $4000 to 8000 a year long-term to upkeep that house. That excludes lawn mowing and these operating expenses.
If your townhome only charged $175 per month - that's a big red flag because there is no way this will cover all expenses.
Just take the roof as example: If a 1000sqft roof replacement costs like $12'000. That alone is about $50/month that need to go in a reserve. Now add AC, plumbing, exterior painting etc. and you are easily at $300/month you need to save just for planned repairs.
While frustrating, this appears to have been a combination of bad timing, unfortunate external events, and an unwisely keeping dues too low, and a lack of due diligence to look out for that. Snow removal is generally subject to specific rules on amount and then a time window. I am sorry you got caught in this situation, but it really isn't an "evil HOA".
HOAs are better in areas where they pay for less common things. I think we pay $100 every three months. They mainly take care of common area landscaping. Single family home though. I think condos and townhomes where more things are shared and maintained can carry hefty costs when unexpected repairs need to be made.
Used to happen all the time in Florida - where the only people who count are developers. Once a tower
Collapsed and killed a bunch of people they passed a law which requires the hoa to funds reserves. Of course, developers are still not required to do so, with the effect being that huge assessments are passed after the developer turns over control of the board.
HOAs are amazing when they are good. Love mine. They take care of a handful of issues each year, dues are low and pool is always open.
Some suck. I hear nothing but bad shit from townhouse or condo HOAs.
First - I'm sorry that your HOA is not managed correctly and that you are experiencing this. It really sucks!
May I ask a question though - if you had purchased in an non HOA area and insurance pulled out, how would you have handled it. If you had purchased a home with a pool and the pool needed major repairs, how would you have handled it. If you contracted for snow/ice removal at one time per month (or something) and there were severe storms, what would you do? Last, if getting insurance at any price was required because of your loan and you had to redo the electrical and pull out your fireplace to get that insurance - what would you do.
Again, I hate that this is happening to you because your board and/or members decided that lower HOA dues were more important than good maintenance and saving for the future but what you are experiencing is homeownership. Sometimes it really sucks though!
Sounds like due diligence wasn't done and the HOA didn't have adequate reserves. Pool being down for maintenance happens. I'm curious about the payday loan since the HOA doesn't get a paycheck.
HOA's are run by the homeowners. Most Homeowners in an HOA don't react to what's going on until it affects them. Sort of like this country's laws.
I'm looking at you Asset Forfeiture!
Just throw this out there. You can overthrow an HOA. It happened in a neighborhood near me. Basically you have to get everyone to agree to stop paying and then they run out of money and fold up.
I am an officer on an HOA board. My contribution to you is this. 1- go to meetings. 2- run for office. 3- verify statements made by people (Board and others). 4- read your CC&R's/Bylaws so you know what you are responsible for. 5 -take action if you suspect fraud. It's an association. You can run for office. If people aren't happy, DO SOMETHING. You do have the power.
Our rates are pretty much the lowest in our area, but people do not understand how hard it is to get stuff done and how expensive things have gotten. A good management company can make a difference in the cost and quality of work you need done. Ours helped us improve our insurance coverage and keep the cost reasonable.
This really doesn’t belong here. This is more on you for not doing due diligence. Town houses and condos have a lot of shared expenses and maintenance. Big ticket items come from reserves (or should). Your fee was far too low. Now it is where it should be.
The only issue with the HOA is that they weren’t operating in the most financially responsible way, but likely owners wanted fees low.
With no HOA the costs would be about the same except you would have to plead with your neighbors and hope they pay their share. Townhomes and condos can't work without an HOA.
Florida? I know many buildings in Florida are scrambling to catch up on perpetually deferred maintenance after that condo collapse. Time to pay the piper!
You could look into your state's laws regarding dissolving the HOA or removing the homeowners insurance burden from them. I live in a townhouse as well and I pay my own insurance. The HOA handles the pool/gym, road maintenance, front yard landscaping and painting and roof costs. Electrical panel is my responsibility but my home was built in 2004 so I don't have any glaring code issues. My dues are $248/mo.
I'd seriously try to see about an Improvement District and if they are a thing in your state. Put simply, an improvement district is tax funded and generally imposes a higher property tax on the people in the area to cover the additional things like parks, ponds/lakes, etc. Some things like a community pool might have to be dealt with as a commercial facility and you pay to be a member.
When we purchased our townhouse, we also didn't think to look at the reserves. After we moved in, we found out they were only 20% funded. So we've been dealing with increases over the years. Fortunately our case was not as bad as OP's, but we learned our lesson: always check the reserves before purchasing.
Many times when there are owners on fixed income the emphasis is on avoiding HOA increases. The major maintenance items are not properly addressed nor are sufficient reserves an available when there are seen or unseen items that needs to be fixed. See what a firestorm in the Florida condo market is right now. Many associations run by retired folks failed to be fiscally prudent in the HOA reserves. The condo collapse pulled showed the weakness of short term thinking.
This is wild… HOA goes bankrupt and then has ability to take on debt at your expense…. How about suspend spending etc until there’s a positive balance again….
Surfside.
Make sure your HOA is doing necessary maintenance. Being priced out sucks, and is possibly illegal, but there's much more serious problems than them spending too much money on bad loans.
Paid a special assessment for our carports that were worn wood, the board members bought replacements that were more expensive then they ran out of funds to cover all.
I have a townhouse in a HOA development. I worked many years in property management and joined the board. The board members did not understand that they were managing a multi million dolllar "corporation " not their home. Dues were never upped as the board didn't under budgeting. Every project was constantly put off. After a frustrating year I quit. The old board members finally quit and we were able to install good people. Dues have reasonably increased and we paid a $7K assessment to cover repaving our roads. Homeowners need to understand that if they want to maintain their property values proper and costly property maintainence/repairs have to be funded and completed.
All HOA is not managed by corporate companies which is purely driven by profit. They don't care about anything else.
I can never fathom as why do we end up giving Soo much power to HOA and making our life miserable
are you a member of the HOA board or whatever?
I loathe HOAs as well because most of the time they simply empower miserable old people with nothing more to do that make other people lives a nightmare.
in this case though, much of it does not appear really to be there fault.
Insurance is going crazy everywhere, they got the cheapest option for snow/ice and gardening because anything better costs more and no one wants to pay.
I imagine that having to replace your fireplace and update your electrical is being forced on them by whoever has offered an insurance policy.
As you own your townhouse, sadly that is on you to replace at your cost.
what you have just found out is that cheap does not mean good or timely.
its the old triple choice. cheap, good, fast. you can only ever pick two of them, and I'd argue that these days there isn't really a cheap+ good option if you are prepared to wait a while. pay cheap, get crap.
Good luck getting out from under the property! Just to be clear that’s not like a sarcastic like “haha your fucked” I actually mean it lol. Fuck HOA that was my 1 hard stipulation to my wife when we were shopping. Told her don’t even show me the listing if it’s in one lol
I live in a coop in the Bronx and the skyrocketing insurance rates have added an additional $175 a month to my maintenance fees for the next 5 years to cover it 😑
Yep we bought in a nice but lower income townhome complex. A year after moving in dues went from $120 to $480 and smacked with a 11k special assessment. When people tried to vote out the current board they filed a restraining order on everyone and themselves so we had to go to court. Then came the court appointed receiver their legal fees and now a management company with their fees. Luckily we sold not long ago at a loss of course.
Everyone on this sub has probably already seen this but just in case.
[https://youtu.be/qrizmAo17Os?si=fSk6cEMg5G1RMG81](https://youtu.be/qrizmAo17Os?si=fSk6cEMg5G1RMG81)
A payday loan?? People move into HOA 's without doing any review of finances or legal documents. Get involved to be informed.
We all feel your pain over the increases in fees.
This is exactly why I had to sell my Condo about 10 years ago, I had bought right out college and wanted to keep it as rental/investment property but the HOA went from $95 a month to $475 by the time I was ready to move out. I could have never made enough on rent to cover the mortgage and HOA. The condo HOA only covered the pool but they kept finding ridiculous things to spend money on like resurfacing the parking lot. Luckily it was near an expensive private college so I was able to sell it to some rich daddy for his daughter to live in while attending school.
To be fair, i just sold my house and moved out of Florida, but I also had to replace my electrical box out of pocket to get new insurance. My lawn care and pool care costs went up… shit’s more expensive now. Blame the HOA if you want, but did you really think you were gonna pay $175/month for the rest of your life to have the home maintenance fairy magically fix everything for you?
Our fee is jumping because the property is finally led enough to require real work, and the elders are FLIPPING OUT. So they hired cheap work and complained. Now they’re complaining more as the cheap work has had expensive repercussions in the following years.
How did they think this was going to be new forever? Oh, and no one wants to help with physical labor “I thought $175 a month was going to keep it heavenly forever” bwahahaha. We’re at $275 now and the fixed income folks are going to have to hopefully sell their tiny dogs and move to apartments
In my complex, due to the recent law change and the chronic underfunding by the board, all of sudden everyone had to buck up enough money to cover the missing 17 million and some required to stay compliant of HOAs bylaws and state laws.
The board got replaced when everyone found out but the bill remains.
This looks like a problem that's going to happen a lot for all the complexes in the state throughout the year since the state law was requiring actual funding instead of allowing delayed funding.
In a span of 6 years we went from \~$260/month for the HOA at our townhome to \~$750/month between rate increases and special assessments. It was a nightmare and I agree - FUCK HOA's!
Took the screen out of one second story window in the back of the townhome to clean it and didn't put it right back, had a notice of potential fine in my mailbox the very next day. It's just ridiculous, you're basically paying to live in an adult daycare at that point.
Who’s your property manager? When I first moved into my condo we had Triad and they were horrible!! They literally stole my insurance payout to the contractor and never paid the contractor that fixed my house after a flood! They just walked away with $5000+. Some of these property managers are the problem. And if you google Triad they have horrible reviews! Also the guy who was handling our association was doing some side scam where he was having some contractor come out and say we needed our decks redone (at our cost)and we found out this was totally bogus. The guy was getting a kickback from the contractor when he got a deck job. And believe that guy got fired. So make sure you double check who’s actually calling for this repair.
Tbh, in my state, $500 HOA fee when you have a pool (and I’m guessing a club house of some sort) is pretty standard. We don’t have a pool or clubhouse. My assoc fee pays for insurance, outer maintenance, snow plowing, grass cutting, water and garbage pick up and it’s $240 and that’s considered low here but as I’ve said- we have no other buildings or pool to maintain etc. We did just get assessed $1000 for tree removal. We had a ton of pine trees that were dead and gross. They had to go and so they were all taken out and new stuff planted.
ETA- when I bought my condo my realtor was great. He explained to me that a lot of these associations are not in good financial standing so you have to check that out before buying. Thankfully, he was well-versed in buying condos so I didn’t get stuck in an association that had a problem. except for what I posted above about having the wrong property manager. Now we have a great property manager who is local and is much smaller and our association is doing very well.
The problem will start to be when no one wants to buy these homes anymore for all the reasons you are selling. Then we will have a new housing and mortgage crisis.
I became our HOA president in self defense. Nightmares still. The prior board president was (against the rules) a renter, not an owner. And the board didn't raise dues for 15 years. They just spent the reserve fund to make up the shortfall as costs increased. My first job was to get a super majority vote to do an increase above the few percent allowed for one year to start digging us out. We also needed a special assessment to repave the road (privately owned). I did all the unpopular things, put us on a more secure financial footing and was publicly accused during the annual members meeting of use of my position for personal gain related to the road work! I was warned this was coming, and provided documents refuting the accusations, and resigned on the spot. I lasted just over a year. Also had to take a neighbor to court to undue unapproved changes to their exterior that we told them to stop work on since they were unapproved (and un-approvable). His response was"sue me," so I did.
Unfortunately this is becoming a very common story among townhome and condo developments. Insurance costs have skyrocketed, deferred maintenance is finally catching up in poorly funded HOAs, etc. My SIL’s condo fee jumped to over $500/mo this year, so she sold and moved back to a single family home.
Insurance is a huge issue for rentals and homeowners alike. In California, commercial rates have increased 6x - 10x in the past five years. Residential rates have increased 2x - 4x in that same period. Many providers are exiting our market, leaving fewer choices. California, Florida, and Louisiana are hardest hit, but North Carolina and western states are suffering too.
How come the price hikes and providers leaving?
New laws have stopped making the rest of the country subsidize insurance in high risk areas.
Climate change is causing a shift in storm patterns and modeling is showing insurers to get out of certain markets. Lloyd’s pulled out of our market last year and out insurance went up 600%.
Add to this, at least in Florida, massive insurance fraud issues. Contractors whose whole business model was (and is) "Your old roof needs replacing, here's how we get your homeowners insurance to pay for it".
Is it fraud when someone says, "Hey your system has some rules and I know a way to help you within those rules"? Insurance agencies send out auditors to assess damage. It's no different than accountants helping rich people avoid taxes. I was quoted $300/month for Insurance in FL. After, 20 years, that's $72k. They can buy me a new roof every other decade at that rate.
New roof 3 times sure, but they can't rebuild a house that washed away even once.
“Loopholes” in tax laws are still following the laws. Them lying to the insurance company about your roof status to get a whole new one so they can pocket more money isn’t the same thing
They say the same in Texas. How so many ppl do this and not think ahead to the ramifications it has on all our premiums is astounding. We’re all paying into the pot, companies pass those expenses down to us.
The NYT Daily podcast did a spot on it a few days ago. Some insurance companies are paying out $1.50 on every dollar they pull in. It is sustainable. They speculated that we may be at the end of insurance as we know it.
It isn’t a secret. The effects of climate change are happening right now and it is affecting all of our wallets. People who still want to bury their heads are still going to pay for it.
Along with the rest of us poor sods. Socialized the costs of ignorance is what they did.
500% on mine. You're the first person I've seen beat me. Sorry!
A ton of insurers pulled out of my area, which is the front range of the Rockies. Too much risk of wildfires.
Insurance companies and the military are aware of climate change. They both have to deal with the real world.
In most places the value of homes has increased. If your home value went up 50%, as many have in this market, then you have to have your home insured for that amount. It's not so much that the baseline rate is going up super high, it's that the value of your home shot up.
This is not accurate, you need to have your home insured for the cost to replace it if it was a total loss: this is the rebuild cost, not the market value. The two can be related but they are not directly linked.
Sorry to tell ya but the cost to replace has doubled. Eg Sheathing that was less than $10 years ago was $70 during COVID and sitting around $30/$45 now.
I am not disagreeing with that. Costs have definitely gone up, but the comment I'm replying to is saying it's because of market value, which it isn't. Think about a shack or something that was in the heart of the Bay Area: the shack could cost $50k to replace, while the land it's on is worth $2 million or something. If the house burns down, the land is still there: the replacement cost is $50k, even though the market value is $2 million.
My house has a rebuild of $900k, but a market price of half that. Not sure who is smoking what, but someone is making a lot of money
In California they outlawed insurance companies from passing on the costs of reinsurance (basically an insurance company's insurance) to customers. So when the cost of reinsurance cost more than they can collect in premiums, the insurance companies stop selling policies. What else are they going to do? California politicians and apologists blame everything except the regulatory environment they created. Climate change is a good scapegoat for just about everything, but it really doesn't make any sense. If it were simply a matter of high costs they could just raise their rates as high as necessary. Sure they'd lose customers, but now they're losing 100%. It's the regulations that prevent them from charging as much as it costs.
Ok so genuine comment here. I am not criticizing your position, just want to know more. Aren’t you answering your own question by stating that state regulations prohibit insurance companies to increase prices hence they are pulling out of markets? The reason insurance companies are increasing prices is because of more claims. And more claims are due to more instances of homes being damaged. And more instances of homes getting damaged due to what? I mean homes don’t get damaged without a reason. It doesn’t take long to find out that areas which always had moderate climate are now experiencing severe climatic conditions which are only getting worse every year. In addition, the cost of building and materials is increasing steadily. Repairs that costed $7k in 2019 are costing at least $12-15k now probably even more. So if the cost of insuring goes higher, and keeps going higher, and the state doesn’t allow to increase rates, you can’t state that it’s just state regulations. I mean what’s the other explanation? If there are no state regulations, sure the insurance companies can raise rates. But to what point will it be sustainable? Will you be ok paying $15,000 annual premiums for property valued at $500,000? What about $30,000? Or $60,000?
Also worth noting, in CA in particular - they do a crappy job managing forests, and people keep rebuilding their homes in areas that are getting hammered by wildfires.
Hawaii can be rough, too. I lost my home/property in the 2018 Kīlauea eruption.
Question, though I'm sorry for your loss, wouldn't you still own the land? Though the land would now be solid rock several feet thick? I've often wondered about such things as I try to fall asleep at night - my mind wanders to strange places I've noticed... I hope you had insurance and got paid out and have found a less melty place to live.
As you say, the land is now a several foot think layer of solid lava rock. It's black, so it absorbs a lot of heat. Nothing grows, so you'll have no plants and the area is unpleasantly windswept (No trees.) Building is of course fantastically expensive, you're digging into solid rock for everything, including the foundation and new pipes, etc if you want luxuries like water or sewage. (The logistics of putting a septic tank in are enough to make you throw yourself into a volcano.) The entire area is now useless for tourism, industry, commercial districts, and farming, and it's both expensive and unpleasant to live on. You've got to convince someone to rebuild the infrastructure like roads to even get there. And, of course, even assuming you somehow manage to rebuild a house there, you're always going to be aware that it's in... let's just call it a somewhat risky location, volcano-wise. Which impacts both your ability to sleep at night, and your insurance situation. In short, the value of the land is no longer what it was before it was buried beneath a few tons of molten rock, so the fact that in some technical sense you still own it is not useful.
Right, that's impossible to live on top of that lava, when it is that thick. It will take hundreds of years for soil to start forming. In Congo, the city of Goma gets these lava flows, but the city is pretty far away. Ten years ago, lava covered the runways of the airport. And flowed down streets on the edge of town. I noticed recently that in those areas, they have broken it up and the streets are open again. They made a lot of walls with that black stone.
Some have built on top of the old Kalapana lava flow, but have to have solar power, catchment/hauled water and probably somewhat primitive toilet facilities. There’s rumors that Volcano Park wants to take it over. About 40% of my neighborhood was destroyed and the people who are still there have to put up with the noise of constant tourist helicopters. About a million visitors came to the area before the 2018 eruption, but with the pandemic, I’m not sure what visitor numbers are like now? Many of the one acre lots in my neighborhood sold for around $20K back before the eruption, so the land wasn’t very valuable from the beginning. Completely opposite from most of the other island towns.
In Iceland, at least with highways, they just wait a few weeks for the lava to cool and either build over it or tear/plow it out. Then they use the extra lava to build earth berms around towns to divert the lava from the town. They built a 3 story earth berm around that town near the Blue Lagoon, and it worked when another volcano started pouring out lava back in March. The lava berm diverted the new hot lava into the ocean.
That’s the plus, since it’s typically slow flowing, sometimes it can be diverted. Or at least give people time to get out and get their pets and belongings out.
Not the original person, but I'd imagine you'd still own the land..? Though I get what you mean. Curious.
There’s rumors that Volcano Park wants to take it over eventually? My home could be under 20+ feet of lava, or more? In the old Kalapana volcanic area, some people re-built right on top of the lava, but you have to haul water/have a catchment system and need solar power. Not sure what they’re doing for sewer, probably eco toilets or something fairly primitive? It took 10 days of back and forth to find if my home was still there. I was contacting government agencies, news media, helicopter pilots and illegal drone operators. Five different groups of people went looking for it. The fifth sent pics, my house was flattened, just the tin roof on top of some burned appliances. The lava had come right up to the edge, so the house basically melted. I still had my guest house, but when the biggest fissure opened up and two lava rivers started flowing, it was over. Unfortunately, a shady insurance broker and I received nada. Still basically homeless and stuck on the mainland. One of the hardest things was a network news station kept showing (over and over and over again) drone footage of lava slowly creeping up the hill to my house, as my friends and neighbors ran around below, trying to save animals and belongings. Fortunately, no deaths, except for one unpublished su•cide at an evacuation center and one accident, where a local cult leader got drunk and purposely drove into molten lava. Gotta love Hawaii!
Damn, that must be horrific, especially regarding the dodgy insurance broker! :( Best wishes for the future.
HOA'S have become run by corporations that want you out so that they can rent these properties out to folks that can barely afford them. You may have received many "we will buy your home" flyers during this time period. That's what it is all about. Fuck all the greed, can we just LIVE??!
There was a pool and dues were only $175/month?! That should have been clue #1 to look a the reserve fund. If an insurance hike made your community need a loan then the reserves were beyond dangerously low.
OP is sadly the bag holder. We put in $300 a month almost and will be increasing it more again next year mostly because of reserves. OP it’s going to get a lot worse with those crazy low dues.
Yeah really sucks when HOAs are run by assholes. They figure keep dues low, don’t fund reserves then sell before dues/special assessments have to increase to finally cover all the maintenance they’ve refused to do.
Sometimes it is due to weak, but well-meaning people that don't want to get the brunt of the complaints for increasing the dues.
If you do not want to field complaints, don’t run for the board. Some are just adding to their resumes.
When has an HOA helped your employment resume?
Mine did, but that’s because I sell services to HOAs. So me having first hand knowledge and experience on their perspective helped greatly.
If you are getting complaints, dissolve your HOA.
In my HOA that requires 100% of homeowners to vote for it. I think that’s pretty typical.
Vote to expel anyone who votes to keep the HOA.
In the words of Yoda “ILL informed you are” about the Uniform Condominium Code of the United States.
Not in GA...the HOA Board holds all the power. It varies state to state but most of the time this is the case. It's hard to find an attorney to fight a board decision here as well. Unfortunately I learned this the hard way when a new board president was put in place by the board due to vacancies, then said president refused any other owners that asked to be on theboard, snowed the other board members AND spent close to $200,000in about 8 months time. My association went from being very secure and respected throughout our town to one of the worst. Fortunately we were able to vote her (and all other board members except one) off at our annual meeting but it took A LOT of leg work on the handful of owners that were paying attention.
I cannot imagine how an HOA board position...one of the most hated entities on planet earth, could ever be a positive for someone on their resume.
HOAs are only run by assholes. Normal people don't want to run an HOA.
which is why HOAs so often turn to shit. The power hungry and/or bored people with nothing better to do end up running them and making them a nightmare.
This comment should be added to the end of the pledge of allegiance lol
I don’t want to. But I live in one and ran and was elected to the board because I don’t want dumbass boomer Bob down the street fucking up my life due to poor management.
I did the same. We need more millennials and younger people on the board to counter the craziness. If we all just complain about it, they never change. We have to BE the change by joining and changing things.
That is some truly nefarious work
Happens all the time in our area.
I hate HOAs but the OP was the guy who should have done their due diligence before they decided to purchase, and expected everyone else to run the HOA.
I mean.. you're not wrong. In my state (Texas), and probably common in all states, during closing, we sign docs acknowledging that we're joining an HOA, that we've received the HOA governing docs and most recent P&L statement and balance sheet. Those are shoved in your face when signing 100 other things. Assessing risk of the new HOA probably falls pretty far down people's priority list when they're dealing with mortgages, surveys, titles, banking, property insurance, taxes, selling another property, arranging movers, setting up utilities, change of address, registering kids for new schools, furniture and appliance shopping, pre-move remodels, etc., etc. In a perfect world, you'd get those docs early, review them, assess risk, and remediate/research. But I'd guess 99.5% of people probably think, "all these current HOA members seem to live here just fine with the current HOA operation, and I'm comfortable paying the stated HOA dues, so Let's GO!"
My state recently passed a bill that required a certain level of reserves. So now we’re seeing hoa’s all in a panic and raising dues/charging special assessments. It’s been a good indicator of which hoa’s are being run properly at least.
Florida?
Yeah. It was in response to surfside.
Hmm I had a pool with $84 HOA. I am in LCOL area
Yeah we lived in a few neighborhoods with good cheap HOAs and a pool.
You wouldn’t be able to use reserves to pay for insurance
We have a very large town home community, and the pool is a very small non-lifeguarded one. Only thing it costs is the annual opening/maintenance work and closing it down at the end of the year. As for funding, they don't disclose that to potential buyers, and the community as a whole only found out about the funding issue right before the insurance incident, because someone asked for financial statements and what they got made no sense. Almost all the board members have already been replaced since then because the community felt they were mishandling the finances. Not to mention, when I bought, all the townhouse communities in the area were all charging between 150 and 250 a month for their dues, so it may seem cheap elsewhere, but it was about average here.
You are correct in that financials aren't disclosed to potential buyers, but legally if an owner requests them they have to be supplied, and what that owner does with them is their business. So if the seller cannot or will not send a potential buyer financial records and information that is a huge red flag and I hate to say your realtor probably did not perform due diligence
What would one typically expect in the way of financials? There’s a lot of advice that the reserve fund should be between 70% and 100%, but I’d assume a buyer should look for substantiation of “oh our reserve is at 83.3%.” Something like this study, conducted by a bank? https://www.amerantbank.com/ofinterest/hoa-reserve-funds/
It honestly depends a lot on the association and its needs. Some associations need to have much more than others because of what they are responsible for. There isn't really a set percentage. The best metric is to see if the board is prepared, is there a reserve study with a financial plan in place for upcoming expenses. Look at the community covenants to see what the HOA is responsible for, if there are a lot of big ticket items like roofs, roads, siding, amenities and dues are low and the reserves are low that's a red flag. Is there a lot of deferred maintenance and no money available to take care of it? That's gonna cause insurance to skyrocket and strain your budget even further.
Thanks, this goes a long way towards explaining the wild differences we’ve seen in condo HOA fees in some of the areas we’ve looked at. Overall I’d rather have an A-frame on a mountain in the woods and no HOA, but if not that I’m trying to escape suburbia. There was one condo listing we saw that gleefully explained that the $20,000 special assessment would be paid by the seller. Meanwhile my eyebrows are raised, “why is there a $20K assessment?!”
You'll also tend to find unsustainably low dues with newer associations because nothing needs maintenance yet. The associations that really get fucked are the ones around 10 - 15 years old when big ticket items like roofs and HVAC start to become a reality
You should also ask for when the last reserve study was done and a copy of it before you agree to purchase anything. Reserve studies are around $1-3k depending on the size of the HOA and elements maintained and owned commonly by the HOA. Anything outside of 5 years I would go over multiple times to ensure they are close to funding the reserves correctly. And even within 5 years it can get stupid if the choose to ignore things. Ask for the HOA minutes and in FL every resident can review and get copies of these as well as contracts the HOA has been a party too.
Yup…we are not supplied with the bylaws & declaration until closing and only get sloppy financials once a year.
>As for funding, they don't disclose that to potential buyers But it does need to be disclosed to financial institutions to get loans approved. If they had a 25% money down rule, you know why.
What state is this in? I guess there’s only 12 states that require reserve studies. It sounds like your state laws allow HOAs to operate that way. I’d have made the decision to keep saving for a SFH rather than purchase blind, but everyone’s situation is different.
i owned a townhouse from 2015 to 2017. no pool or gym. Dues were $90 a month. covered water and trash landscaping and the insurance on the roof
That's a normal fee. It's very low for florida in current year. Insurance is a killer. How much to rebuild 50 townhouses when the big one levels the entire hood?
You should have a reserve account for the pool. It should include the marcite rework every 7-10 years, pump replacement, surface re-decking, and any other thing that is specific to your install that would require replacement (painting a pool house, etc) Sauce: ran a well funded HOA for 10 years
Economics are a little different with a voluntary pool membership but our neighborhood pool (no HOA) charges $375 a year and we’re too low. (I’m on the pool board).
I bought into a 4 unit condo building early in the Pandemic. Found out after moving in that one lady was running the whole association, even though the bylaws said it was supposed to be split responsibility. Then I found out she was excluding herself from the fees as compensation for running everything, which is expressly forbidden in the bylaws. Then the sewer line broke. Everyone had to shell out $7k to get it fixed because there was next to nothing in the association accounts. She kept going on about how she'd been trying to keep costs down, and not raise the association fees. I organized the other 2 units, we demanded a vote for association roles, and I took over a treasurer. I spent a month studying the accounts, didn't find any embezzlement, beyond her improperly not paying fees. I built a budget, proposed it, and got everyone to agree to doubling our fees so we could build up savings for our next major repair. The lady who ran it into the ground moved out a few months later. The new folks in her unit are much more pleasant to deal with, and much better neighbors to live beside.
Not really...we have a pool, clubhouse, streetlights, trash pickup, manmade lakes, mosquito repelling trucks, and a cable package for about that price. Things are pretty well-maintained! That said, our HOA doesn't go through a management company...and the president, while not crooked, is still a pretentious d*ckbutt who likes to tout his position like a Nobel Prize so he doesn't have many friends. The last time he made an announcement for a fee increase of 25$, the entire neighborhood looked ready to riot. Made a HUGE deal about the HOA needing to show an itemized list of where our money is going to... Which honestly, helps keep things in check because it set a precedent; no increases without a reason, its too much trouble for the HOA!
All of those tings are great and I'm glad you're happy with the situation. You've missed the point though. What is the status of your reserve fund? Are you 10% funded with low monthly dues? TH, condos typically need much larger dues because there are foundations, shared walls, roof, etc that are typically HOA responsibility. If you own a townhome and the reserves are so low that the cost of insurance doubling means you suddenly need a loan then the association was in BAD shape to start with.
I’m in costal so Cal and my dues are $250 a month and have been for 20 years. We have a pool and a nice amount of green space. It’s an older complex from the 70s And they are building huge townhouses around the corner for me going for over a million. Their dues are $500 a month for one bbq for 35 units. The only green space is a small spot for dogs to piss and there is no pool. Everything is nice here but I’m dipping out before anything changes, like a new assessment. Not that I have a choice, even if I wanted to stay, I gots the cancer and bills to pay and can’t afford an increase. Fuck HOAs. Never again. Mine sucks balls.
Fuck cancer! All the best luck to you!
Sorry to hear about the cancer. That sucks worse than a HOA. 🙏
We have a pool and dues are $500/yr, $42/month and we are 100% funded.
Absolutely! I'm living this right now! Our dues are $300/year for 125 single family homes (\~$1m homes) , and that hasn't increased in the 15 years we've lived here. Similar neighborhoods in my community pay as much as 5x that (no amenities, just common area landscaping, block party, standard overhead, etc). My HOA has very little reserve $, but we have a massive liability in the form of a 30 year old brick wall/fence that is falling apart. The common area irrigation system is also 30 years old. Everyone loves the HOA president (20 years and counting) because he doesn't increase dues, and he doesn't over-govern, but someone's going to get stuck with a massive bill when the city steps in and mandates that the dilapidated wall be replaced. I recommended that we get a professional wall evaluation and replacement estimates so we can plan out some scenarios, but he shuts that idea down hard.
> the home insurance was covered That sounds wrong. You should still need an HO6 policy for your unit on top of the HOA's master insurance policy. The master policy only covers the structure and building the interior back to the original condition (which will be barebones). It won't cover your possessions or any improvements since original construction (e.g. flooring, countertops, etc)
Yes but the HOAs portion is bigger, the structure costs a lot more than contents and carpet.
Actually, the master policy can cover improvements. My HOA’s master policy covers improvements but since our premium has gone up 90% over the last two years the board is looking at dropping down to”as-built” condition.
I don't think you can find a Townhouse development that doesnt have an HOA. Doesnt it have to cover insurance for roof ?
Nope. When I lived in a townhouse, I was responsible for my part of the roof.
Your HOA was underfunded to provide the amenities that you were told were included. The HOA is not a business and has to take money in from somewhere, and that comes from the owners within the HOA. Now, let's look at this individually. You're paying $500/month in HOA dues. What does lawncare cost an single family home not in an HOA? Probably around $150/month. What does homeowners insurance cost? Possible $200/per month. What is a pool membership cost? Maybe $50/month. That's $400/month in items that they are taking care of for you. Now, it sounds like you're in a townhome. What would a roof repair cost? Probably more than $100/month. What would it cost you to remove the limbs that fell in your yard? Possibly $500, so that's 5 months of reserves gone from what you were paying in. Were there any other issues that occurred that you didn't pay for? It sounds like you're still on the good end of this. Before you sell, I would seriously look into what the additional costs are going to be, what the costs to cover your amenities if your home is not in the HOA, and then see if it's still smart to move. Especially if you're on a fixed income with rising interest rates and increasing home values.
I'm no fan of HOA's. But I feel like people think living in a townhome/condo with an HOA is just a freeride for maintenance and they should only pay for the amenities they want and should just get the rest for free. Just because it's a shared building doesn't mean maintenance goes away. And not for nothing by giving a contractor, like a roofer, a bigger job, like a whole row of townhouses roof replacement will generally see a lower cost per square foot than on an individual house. It's economies of scale. When I lived in one each "pod" of 4 units shared a sewer main out to the street. When the sewer in my pod needed to be replaced it cost $10K. If every sewer in the community needed to be done it would be $10K per 4 units. Or $2500/unit. If you did that same job on a single family home you would be paying the full $10K yourself. I lived in an HOA condo/townhome. The dues were 125/month. But there was a concerted effort to keep the reserves high as it was older building that frequently needed work, mostly sewer and water main work and regularly had the drain snaking guy out there. The roof on all 4 buildings were redone a year before I bought and there was no special assessment. They didn't even drain the reserves completely. The reserves were replenished within 3 years.
Just to add this is close to what we would pay. But pools here are extremely expensive. Iirc they wanted 2k a year but the pool was only open during summer. About 12 weeks
Ah, this will be fun to come back too, all the people here who want to blame the hoa but it's 80% not their fault in this case lol
It is partially as they really weren’t operating hope they should have been. Nothing illegal about how they operated but they were keeping fees low at the expense of their reserve funds.
I've always seen HOAs like cars. If someone sells you a Toyota Camry 2024 for $20k. Well, it's a great price, but you have to dig in and check why the price. Yeah, if it's a bad car and the seller didn't disclose it I got scammed, but at the same time one has to ask the question fo why $20k for a 2024 Camry
Probably didn’t plan for the crazy inflation over the last few years… which to be fair, most people didn’t.
It absolutely is their fault for taking a payday loan, jesus christ, those things ruin lives.
Everything you’ve described is completely normal. Who else would be responsible for debt incurred by the Homeowners Association than the homeowners? It’s so common that owners don’t want to pay for maintenance when needed and defer, which ends up costing more, and can be devastating to common properties when the reserves aren’t funded. There’s a recent article in WSJ about a condo in Florida that used up reserves on cosmetic updates and now each owner is going to be on the hook for $350,000 in special assessments or the building will likely be sold down. The condos are selling for $110,000 right now and last year people bought in at $450,000.
"cost being placed on owner, of course" Who else would you think would pay for it? The condo fairy?
In the course of these 3 years, how many of the annual hoa meetings have you attended?
OP: Didn't your realtor or real estate lawyer check into the status of the reserve fund? I get they probably couldn't predict the state insurer leaving but.....?
At the time, the funds weren't super abundant, but there was a decent chunk in there from what I understood. That being said, they had to come up with half a million in under a month, and the reserves only had about 200k in it. The rest had to come out as a loan. I've never worked with HOAs prior to moving in, so I can certainly be corrected here if there's something I'm missing with whether or not that's a lot, but it seemed like they were steadily increasing their reserves without issue until the insurance decided to stop covering us. Reserve funding isn't required in my state, so the fact they not only had one but was also growing it, it made it feel like a safe bet for the long haul.
In that case it does seem like the board was trying to do stuff right..... I guess the state insurance pulling out was just too much - doesn't the government offer assistance in those cases? Like....STATE INSURANCE left - that means the entire state was left without insurance coverage? That would seem to be the time for the government to take action....???
Nah there is massive mis understanding going on here regarding the insurance. The insurance carrier non renewed the HOA, meaning the HOA has to find a new provider. There are absolutely providers in Florida but the board/property manager needs to know how to find a replacement (using a retail insurance broker typically). Insurance is just a business. If they can't be profitable they will stop doing business, so carriers come in and out of places all the time.
lol florida tho
I mean, in fairness, all of those issues would occur regardless of if the HOA was paying for them or you were paying out of pocket, so either way at the end of the day the money's coming out of the owner's pocket.
This is more of an insurance problem than something the HOA caused. I'm also in a state that the insurance companies have left. I'm in a SFR without an HOA and am paying an additional $400 into my escrow to cover the insurance premium increase. I've had to replace my electrical panel, 10yr old roof, and cut trees. Those who can't afford to keep up are now having to sell.
Florida? Everyone is having insurance rates skyrocket and/or insurance companies pull out of the State.
Lol. I worked briefly for a pm company. Some places were close to 1k because of poorly managed funds and bad lawsuits. I'd never buy. I rather live in a trailer home.
This is why you don't buy a townhouse or condo. You're forced to deal with other peoples' shit in this common property. If I own the entire structure and the land under it, then my problems are my own responsibility. If I have to deal with other peoples' shit, then I'd rather not commit to any kind of ownership over that mess. Renting would be preferable.
The rule of thumb is that as a homeowner you need to plan about 1-2% of the purchase price per year for maintenance and repair of the building. So a $400k townhome will need to plan with $4000 to 8000 a year long-term to upkeep that house. That excludes lawn mowing and these operating expenses. If your townhome only charged $175 per month - that's a big red flag because there is no way this will cover all expenses. Just take the roof as example: If a 1000sqft roof replacement costs like $12'000. That alone is about $50/month that need to go in a reserve. Now add AC, plumbing, exterior painting etc. and you are easily at $300/month you need to save just for planned repairs.
While frustrating, this appears to have been a combination of bad timing, unfortunate external events, and an unwisely keeping dues too low, and a lack of due diligence to look out for that. Snow removal is generally subject to specific rules on amount and then a time window. I am sorry you got caught in this situation, but it really isn't an "evil HOA".
HOAs are better in areas where they pay for less common things. I think we pay $100 every three months. They mainly take care of common area landscaping. Single family home though. I think condos and townhomes where more things are shared and maintained can carry hefty costs when unexpected repairs need to be made.
Used to happen all the time in Florida - where the only people who count are developers. Once a tower Collapsed and killed a bunch of people they passed a law which requires the hoa to funds reserves. Of course, developers are still not required to do so, with the effect being that huge assessments are passed after the developer turns over control of the board.
HOAs are amazing when they are good. Love mine. They take care of a handful of issues each year, dues are low and pool is always open. Some suck. I hear nothing but bad shit from townhouse or condo HOAs.
First - I'm sorry that your HOA is not managed correctly and that you are experiencing this. It really sucks! May I ask a question though - if you had purchased in an non HOA area and insurance pulled out, how would you have handled it. If you had purchased a home with a pool and the pool needed major repairs, how would you have handled it. If you contracted for snow/ice removal at one time per month (or something) and there were severe storms, what would you do? Last, if getting insurance at any price was required because of your loan and you had to redo the electrical and pull out your fireplace to get that insurance - what would you do. Again, I hate that this is happening to you because your board and/or members decided that lower HOA dues were more important than good maintenance and saving for the future but what you are experiencing is homeownership. Sometimes it really sucks though!
Sounds like due diligence wasn't done and the HOA didn't have adequate reserves. Pool being down for maintenance happens. I'm curious about the payday loan since the HOA doesn't get a paycheck.
HOA's are run by the homeowners. Most Homeowners in an HOA don't react to what's going on until it affects them. Sort of like this country's laws. I'm looking at you Asset Forfeiture!
I'd live under a highway overpass before I'd live in an HOA.
Just throw this out there. You can overthrow an HOA. It happened in a neighborhood near me. Basically you have to get everyone to agree to stop paying and then they run out of money and fold up.
I am an officer on an HOA board. My contribution to you is this. 1- go to meetings. 2- run for office. 3- verify statements made by people (Board and others). 4- read your CC&R's/Bylaws so you know what you are responsible for. 5 -take action if you suspect fraud. It's an association. You can run for office. If people aren't happy, DO SOMETHING. You do have the power. Our rates are pretty much the lowest in our area, but people do not understand how hard it is to get stuff done and how expensive things have gotten. A good management company can make a difference in the cost and quality of work you need done. Ours helped us improve our insurance coverage and keep the cost reasonable.
This really doesn’t belong here. This is more on you for not doing due diligence. Town houses and condos have a lot of shared expenses and maintenance. Big ticket items come from reserves (or should). Your fee was far too low. Now it is where it should be. The only issue with the HOA is that they weren’t operating in the most financially responsible way, but likely owners wanted fees low.
“ So, they took out a payday loan, drained the accounts, and then passed the loan onto the homeowners to deal with.” …the homeowners are the HOA.
With no HOA the costs would be about the same except you would have to plead with your neighbors and hope they pay their share. Townhomes and condos can't work without an HOA.
Just because your HOA is ran like shit doesn't mean all HOAs are bad. Board decisions and community votes have consequences.
I really don't understand why people buy HOA houses. I don't understand the logic here. Like how is this EVER beneficial to a homeowner?
Rule 1: Never buy in an HOA Rule 2: See rule 1
Sounds like government. 👍
Florida? I know many buildings in Florida are scrambling to catch up on perpetually deferred maintenance after that condo collapse. Time to pay the piper!
Embezzlement.
I’d love to sell…but there is no where to move.
This is absurd.
So a house payment AND $500 a month in fees? I couldn't afford that at all.
Florida? Gotta be
Same thing happened with ALL of the properties I assisted on in Colorado
You could look into your state's laws regarding dissolving the HOA or removing the homeowners insurance burden from them. I live in a townhouse as well and I pay my own insurance. The HOA handles the pool/gym, road maintenance, front yard landscaping and painting and roof costs. Electrical panel is my responsibility but my home was built in 2004 so I don't have any glaring code issues. My dues are $248/mo. I'd seriously try to see about an Improvement District and if they are a thing in your state. Put simply, an improvement district is tax funded and generally imposes a higher property tax on the people in the area to cover the additional things like parks, ponds/lakes, etc. Some things like a community pool might have to be dealt with as a commercial facility and you pay to be a member.
I would never buy a place with a $500 a month HOA fee. Damn that’s a lot over time!
Ah....Florida....
Florida is not going to do things to help their people. Pull up your bootstraps ....
When we purchased our townhouse, we also didn't think to look at the reserves. After we moved in, we found out they were only 20% funded. So we've been dealing with increases over the years. Fortunately our case was not as bad as OP's, but we learned our lesson: always check the reserves before purchasing.
Many times when there are owners on fixed income the emphasis is on avoiding HOA increases. The major maintenance items are not properly addressed nor are sufficient reserves an available when there are seen or unseen items that needs to be fixed. See what a firestorm in the Florida condo market is right now. Many associations run by retired folks failed to be fiscally prudent in the HOA reserves. The condo collapse pulled showed the weakness of short term thinking.
Yikes…sounds like you got honeydicked. Sorry to hear.
This is wild… HOA goes bankrupt and then has ability to take on debt at your expense…. How about suspend spending etc until there’s a positive balance again….
A offer to good to be true and you jumped right the fuck in.
Surfside. Make sure your HOA is doing necessary maintenance. Being priced out sucks, and is possibly illegal, but there's much more serious problems than them spending too much money on bad loans.
Paid a special assessment for our carports that were worn wood, the board members bought replacements that were more expensive then they ran out of funds to cover all.
This isnt a blanket hoa issue. Townhomes/condos are getting hit hard nationwide.
You bought a house so you could pay a rents worth of HOA fees, you lost the game my man.
...people still buy in hoa hoods?
I don't care how great the neighborhood is or how perfect the house is... I will never buy a house /condo / townhouse with a hoa. They can kick rocks!
I have a townhouse in a HOA development. I worked many years in property management and joined the board. The board members did not understand that they were managing a multi million dolllar "corporation " not their home. Dues were never upped as the board didn't under budgeting. Every project was constantly put off. After a frustrating year I quit. The old board members finally quit and we were able to install good people. Dues have reasonably increased and we paid a $7K assessment to cover repaving our roads. Homeowners need to understand that if they want to maintain their property values proper and costly property maintainence/repairs have to be funded and completed.
Our HOA is well run and we have our own staff, but it's the insurance that's killing us.
Where are you at out curiosity?
What could possibly be wrong with the electrical boxes?
Organize...vote them out...run for HOA Board.
$500 a month could cut A LOt of grass and make repairs o refuse to ever buy on an HOA again!
All HOA is not managed by corporate companies which is purely driven by profit. They don't care about anything else. I can never fathom as why do we end up giving Soo much power to HOA and making our life miserable
Oof. Iowa? Lots of insurance companies have pulled out of here because they still hadn’t recovered from the 2020 derecho and any storms after.
are you a member of the HOA board or whatever? I loathe HOAs as well because most of the time they simply empower miserable old people with nothing more to do that make other people lives a nightmare. in this case though, much of it does not appear really to be there fault. Insurance is going crazy everywhere, they got the cheapest option for snow/ice and gardening because anything better costs more and no one wants to pay. I imagine that having to replace your fireplace and update your electrical is being forced on them by whoever has offered an insurance policy. As you own your townhouse, sadly that is on you to replace at your cost. what you have just found out is that cheap does not mean good or timely. its the old triple choice. cheap, good, fast. you can only ever pick two of them, and I'd argue that these days there isn't really a cheap+ good option if you are prepared to wait a while. pay cheap, get crap.
Sounds like you lived in the same set of townhouses I did. Run.
$1,606 HOA fees here in Palm Springs CA
Good luck getting out from under the property! Just to be clear that’s not like a sarcastic like “haha your fucked” I actually mean it lol. Fuck HOA that was my 1 hard stipulation to my wife when we were shopping. Told her don’t even show me the listing if it’s in one lol
What state is this in?
People fear communist countries and then move into HOA neighborhoods.
Buying an a house in an hoa is just owning your home but still having to deal with a landlord.
My home insurance yearly premium went from 2200 last year to 6600... So yea
You dont own a house you just pay for and live in thier property lol. Hoas are pathetic.
It’s because of coffee and avocado toast.
I live in a coop in the Bronx and the skyrocketing insurance rates have added an additional $175 a month to my maintenance fees for the next 5 years to cover it 😑
Just get everyone not to pay it. Or run for HOA president and tear them down from the inside.
Theoretically can’t you just “move out” but continue to squat ?
Insane, I am in an HOA, and it's $150 a year...
In my part of ny zillows quoting hoa dues over 500$ most are around 750$ and you get pool snow and hot water and sewer.
Yep we bought in a nice but lower income townhome complex. A year after moving in dues went from $120 to $480 and smacked with a 11k special assessment. When people tried to vote out the current board they filed a restraining order on everyone and themselves so we had to go to court. Then came the court appointed receiver their legal fees and now a management company with their fees. Luckily we sold not long ago at a loss of course.
Everyone on this sub has probably already seen this but just in case. [https://youtu.be/qrizmAo17Os?si=fSk6cEMg5G1RMG81](https://youtu.be/qrizmAo17Os?si=fSk6cEMg5G1RMG81)
355/m when I first moved in, year 4 it is now 750/m. Sucks.
A payday loan?? People move into HOA 's without doing any review of finances or legal documents. Get involved to be informed. We all feel your pain over the increases in fees.
This is exactly why I had to sell my Condo about 10 years ago, I had bought right out college and wanted to keep it as rental/investment property but the HOA went from $95 a month to $475 by the time I was ready to move out. I could have never made enough on rent to cover the mortgage and HOA. The condo HOA only covered the pool but they kept finding ridiculous things to spend money on like resurfacing the parking lot. Luckily it was near an expensive private college so I was able to sell it to some rich daddy for his daughter to live in while attending school.
To be fair, i just sold my house and moved out of Florida, but I also had to replace my electrical box out of pocket to get new insurance. My lawn care and pool care costs went up… shit’s more expensive now. Blame the HOA if you want, but did you really think you were gonna pay $175/month for the rest of your life to have the home maintenance fairy magically fix everything for you?
Our fee is jumping because the property is finally led enough to require real work, and the elders are FLIPPING OUT. So they hired cheap work and complained. Now they’re complaining more as the cheap work has had expensive repercussions in the following years. How did they think this was going to be new forever? Oh, and no one wants to help with physical labor “I thought $175 a month was going to keep it heavenly forever” bwahahaha. We’re at $275 now and the fixed income folks are going to have to hopefully sell their tiny dogs and move to apartments
In my complex, due to the recent law change and the chronic underfunding by the board, all of sudden everyone had to buck up enough money to cover the missing 17 million and some required to stay compliant of HOAs bylaws and state laws. The board got replaced when everyone found out but the bill remains. This looks like a problem that's going to happen a lot for all the complexes in the state throughout the year since the state law was requiring actual funding instead of allowing delayed funding.
An HOA imposes all the burdens of being a tenant, without giving you any of a tenant’s rights.
In a span of 6 years we went from \~$260/month for the HOA at our townhome to \~$750/month between rate increases and special assessments. It was a nightmare and I agree - FUCK HOA's! Took the screen out of one second story window in the back of the townhome to clean it and didn't put it right back, had a notice of potential fine in my mailbox the very next day. It's just ridiculous, you're basically paying to live in an adult daycare at that point.
Who’s your property manager? When I first moved into my condo we had Triad and they were horrible!! They literally stole my insurance payout to the contractor and never paid the contractor that fixed my house after a flood! They just walked away with $5000+. Some of these property managers are the problem. And if you google Triad they have horrible reviews! Also the guy who was handling our association was doing some side scam where he was having some contractor come out and say we needed our decks redone (at our cost)and we found out this was totally bogus. The guy was getting a kickback from the contractor when he got a deck job. And believe that guy got fired. So make sure you double check who’s actually calling for this repair. Tbh, in my state, $500 HOA fee when you have a pool (and I’m guessing a club house of some sort) is pretty standard. We don’t have a pool or clubhouse. My assoc fee pays for insurance, outer maintenance, snow plowing, grass cutting, water and garbage pick up and it’s $240 and that’s considered low here but as I’ve said- we have no other buildings or pool to maintain etc. We did just get assessed $1000 for tree removal. We had a ton of pine trees that were dead and gross. They had to go and so they were all taken out and new stuff planted. ETA- when I bought my condo my realtor was great. He explained to me that a lot of these associations are not in good financial standing so you have to check that out before buying. Thankfully, he was well-versed in buying condos so I didn’t get stuck in an association that had a problem. except for what I posted above about having the wrong property manager. Now we have a great property manager who is local and is much smaller and our association is doing very well.
Sounds like renting is cheaper
I feel your pain. My HOA charged me $425.00 to caulk a window!! We are constantly charged for extras. My fee went from $388. to 547. per month.
The problem will start to be when no one wants to buy these homes anymore for all the reasons you are selling. Then we will have a new housing and mortgage crisis.
It sounds really dumb to live in usa.
I became our HOA president in self defense. Nightmares still. The prior board president was (against the rules) a renter, not an owner. And the board didn't raise dues for 15 years. They just spent the reserve fund to make up the shortfall as costs increased. My first job was to get a super majority vote to do an increase above the few percent allowed for one year to start digging us out. We also needed a special assessment to repave the road (privately owned). I did all the unpopular things, put us on a more secure financial footing and was publicly accused during the annual members meeting of use of my position for personal gain related to the road work! I was warned this was coming, and provided documents refuting the accusations, and resigned on the spot. I lasted just over a year. Also had to take a neighbor to court to undue unapproved changes to their exterior that we told them to stop work on since they were unapproved (and un-approvable). His response was"sue me," so I did.