For many HOAs, times are tough and money is tight. In the past we’ve outlined some ways to cut your costs. Today we’re looking at possible way to boost your revenue. Let’s say for example you have a parking lot that the growing business next to your property might like a piece of. Or maybe you have an Olympic-sized swimming pool but can no longer afford to maintain it.
Can you sell them to generate revenue for your homeowners association?
The short answer is “it depends”.
There’s a difference between common areas and association-owned property. For example, your HOA may own a strip of land as part of grounds not designated as common area. In that case, a sale would be relatively simple.
However, those types of property are rare. Most areas that aren’t owned by individuals in your association are likely designated as “common areas”, which are much more difficult to sell.
“In theory, selling common areas might be a great way to generate revenue but in practice, it’s not really practical.
The process is time and document intensive; and the approval requirements end up meaning that you probably won’t be able to do it anyway.
Every owner possesses an interest in the common areas. Therefore an HOA would typically need approval from each of them and each of their mortgage companies.
Why do you have to get the mortgage companies approval? Because they have an interest in the property that secures the owners‟ debt, and you can’t do anything to diminish the value of that property without their consent.
That doesn’t mean associations can’t take a shot at the idea.
For example some HOAs have successfully sold their roof rights to neighboring buildings.
In other cases associations sometimes lease space on their roofs to add cell phone towers and satellite dishes.
So can you sell common areas to generate revenue? It depends.
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