In today’s economy it can be tempting for HOA boards to under fund their reserve in an effort to save money. This is a disturbing trend in our industry because it can often leave the HOAs in a compromised position. With underfunded reserves, they have no choice but to scale down or defer important repairs and maintenance, eventually devaluing the entire development.

Read More: What is a Reserve Study?

Unfortunately, property values aren’t the only thing negatively affected by underfunded reserves. The perceived value of an otherwise financially stable association can be compromised as well. When a non-avoidable cost arises and the association doesn’t have money in the reserve, the board will levy special assessments to cover the cost. Savvy homeowners looking to buy will see an underfunded reserve as liability because they know that the HOA is likely to special assess as it goes along. Further more, lenders are factoring in Reserve Disclosures when considering to fund homebuyers looking to buy into your community.

Read More: Reserve Studies: FICO score for HOAs

Ultimately the choice to underfund reserves is short sided. It will end up costing you more in the future and could devalue both the property and the association itself.

At Barrera and Company, we complete thousands of Reserve Studies each year which have helped our clients comply with the law and prepare for upcoming expenditures.

Interested in getting a Reserve Study for your community? Click here to get a proposal!

 Living within a homeowners association (HOA) has several benefits that lead people to move into these neighborhoods. Common areas are kept up by the HOA and these neighborhoods often also have shared amenities like gyms, tennis courts and walking trails. Unfortunately due to the current state of the housing market, some homes are left unoccupied and uncared for.

Homes within the HOA that are owned by residents must be cared for and kept in good condition, according to CC&R’s. When a home isn’t occupied, however, its yard or exterior may become an eyesore. Luckily, there are a few ways that the HOA or its members can handle this problem.

Lien on Property

A home may be unoccupied due to an owner not paying their assessments. Even if the homeowner moves away they are still responsible for the upkeep of the home. The HOA can actually pay to have the exterior of the home cared for and apply the cost to the lien. It may take a while for the HOA to recover its costs, but once the home is resold, the money spent on keeping the property in good condition will be reimbursed via the lien. This should be done before a bank forecloses on the property, however, as in some cases the bank is not liable to reimburse that expense – just like it isn’t responsible to pay secondary loans on the home.

Foreclose on the Bank

Luckily, once the bank takes ownership of the home, they are now just like any other homeowner in the HOA. It becomes the bank’s responsibility to care for the home, including eyesore landscaping and any unsanitary conditions. It is difficult to find the person at a specific bank who is responsible for upkeep before the house is listed with a real estate agent, but it is possible.

If the banks do not perform proper upkeep of the newly owned properties, the HOA can still hire others to clean the property while applying fines to the bank for not keeping the property maintained. Several HOA’s have actually performed foreclosure proceedings on large banks when the banks fail to pay their maintenance fees. Foreclosure proceedings will usually pressure a bank to pay past due fees, assessments and fines owed to the HOA.

Neighborhood Task Force

Sometimes the legal work involved with some of the aforementioned methods can be more than an HOA wants to deal with. Even with several methods of reimbursing their costs, the HOA may not see compensation for years. In these complex situations, neighbors may decide that they’re willing to keep the lawn and other exterior portions of the home presentable.

No neighboring owner wants their home’s beauty to be negated by an uncared for community yard. A well meaning, concerned homeowners’ group should still check with the HOA to ensure they’re acting within the law, especially if it involves accessing property behind a gate. A task force may discuss amongst themselves who will handle certain areas of the property and how often.

Living within an HOA allows people to share mutual amenities at a fraction of what it would cost them on their own. Unoccupied homes, however, have become blemishes on otherwise beautiful HOA neighborhoods. All of the methods of keeping these homes presentable require a little sacrifice on someone’s part, but in the end, this handling is repaid either financially or through the advantage of having a completely beautiful HOA neighborhood.

Photo credit: https://www.flickr.com/photos/suavehouse113/494764354/

Interested in getting a Reserve Study for your community? Click here to get a proposal!

 The day-to-day planning and financial stability of a Homeowners Association is generally attributed to the diligence and competence of its HOA Board. If you’re thinking about running, there are a number of things to take into consideration, such as the skills and qualifications, which will help you manage effectively.

Responsibilities

Board members may possess numerous powers, depending upon their designated office, and they collectively will decide how to wisely spend the income of an association and protect it from unnecessary expenses. They will also decide who should be hired to perform tasks like property management, maintenance, reserve studies and legal services.

Some board members will also be accountable for setting the agendas and keeping accurate minutes on all of the meetings. Other such responsibilities include conducting fair elections that are in accordance with the state laws and CC&R’s and establishing rules and working alongside the HOA’s attorney to settle delinquent debts. Members of the board may also be involved with architectural improvement, application reviews and budgeting.

Qualifications

There are specific qualifications an HOA board member must possess to avoid making you and your association open to legal liabilities. A board member will normally be required to have a high school diploma or GED and, for some of the larger associations, a bachelor’s degree is the minimum requirement for board member consideration. There are also a number of college and certificate type courses that specialize in HOA operations. Communication skills are also imperative since a board member will have to deal with other members, occupants, vendors and attorneys to discuss HOA issues that may arise.

Since you will be partly responsible for creating budgets, making payment to vendors, assessing fees and going over financial reports, basic accounting skills are imperative for the position. Even where a property manager is employed for these tasks, the board must be able to provide oversight to some degree.  A background in management and business administration might be especially helpful for maintaining policies, updating incorporation articles and addressing issues in relation to property and tax assessments. A person with strong management skills can help the association form a tight bond and business structure. There are a number of programs designed to help board members with the current laws and regulations in regards to HOA management.

Personal Attributes

Before contemplating a run for the HOA board, you may want to take a couple of things into consideration. Depending on the size of your association, holding a board position could be very time consuming, so you first need to determine whether you can devote the hours to the tasks at hand. People who are impatient and lack people skills may not be the most suitable candidates for this position. Board members service the owners, and you may face difficult situations. This type of job takes good listening and team building skills. It’s also a thankless position with few rewards, other than being able to participate in shaping the environment in which you live.

If you have determination, and you are a motivated person with the right qualifications, being on the HOA board may be the right fit for you. It’s an excellent way to give back to your community by finding the best solutions and ideas that will bring the residents together.

Photo credit: https://www.flickr.com/photos/alancleaver/4446461866/

Interested in getting a Reserve Study for your community? Click here to get a proposal!

 Increasingly, many Americans turn to gated neighborhoods in an attempt to live in a place where they feel safe and secure. The concept of walls, gates and security cameras keeping out invaders and capturing attempted crime before it starts is very appealing to many who are willing to pay more for that privilege. Logically, it seems that such places would have less crime, or even be entirely devoid of crime.  Let’s take a look at the pros and cons, and examine whether or not that theory is holding up.

Is the Concept All Wrong?

The basic premise behind gated communities is that by keeping out unwanted visitors, especially those from bad neighborhoods or who have no good reason to be there, crime may be prevented. Logically this makes sense – those who have no good reason to be in a community could very well be up to no good.

Statistically, however, the vast majority of crimes within a neighborhood are committed by its own residents. Criminals of any sort tend to be opportunists, and venturing far from their home “turf” is not something they lean toward. After all, it would not only be harder for them to get there, and they might not know how to get away rapidly. The facts are that most crimes are committed by residents within a community, not foreign invaders.
Are All the Gadgets Doing Their Job?

You might think that at least the presence of guards, cameras and gates would deter any would-be criminals who are living in or legitimately visiting the gated community – but long-term studies have shown that they do not. Criminals are by their very nature not good at making decisions. After all, if they were good decision makers, they would not have chosen to be criminals.

Deterrence like walls, cameras and guards tend to be ineffective at preventing crime, though they might be instrumental in catching and prosecuting criminals after the fact. That is certainly a good thing, but if your sole purpose of purchasing a gated home is to prevent crime, the fact that the people committing crimes are much more likely to be caught is not what you want to hear.
The Bottom Line

The conclusion from various studies and crime statistic surveys concerning gated communities is this: they are no more or less safe than other suburban areas! Certainly, getting away from neighborhoods most plagued by poverty and gang violence increases personal security. Additionally, logical steps like keeping your house locked and secured will equally help prevent crime. But the installation of walls, cameras and guards does little beyond that, since only ‘police-state style’ surveillance (and their methods of immediate removal of persons before they have made their move) is the only way to truly prevent crime. This sort of lifestyle is unpleasant and not what most people want – even if they value security.

If you want to live in a gated community, you certainly have many choices. Gated communities generally enjoy higher home values, better care and maintenance of general facilities (roads, parks, clubhouses) and are tailor-made to the desires of the affluent. They are, however, no more or less safe than other suburban communities.

Photo credit: https://www.flickr.com/photos/dist0rtedwave/654905014/

Interested in getting a Reserve Study for your community? Click here to get a proposal!

 Selling your home can be a difficult experience, but if your homeowner’s association is preventing you from displaying a “for sale” sign on your property, the process can be downright impossible. A homeowner’s association is typically an organization that has been set up by the residents or developer to regulate and maintain a certain standard of living for members. Unfortunately, some HOAs go to extremes when it comes to enforcing rules, and this may be a problem if you need to sell your home using traditional methods.

Why HOAs Don’t Like Sale Signs

One of the biggest reasons that an HOA would choose to prevent a seller from placing a “for sale” sign on their own property is that it may give the appearance that the neighborhood is an undesirable location. This effect can be multiplied if a number of people are trying to sell their homes in the same neighborhood at the same time. Another reason for preventing such signs could be that some signs may not reflect certain image standards that the HOA contract dictates. In some cases, even if an HOA allows a sign on a homeowner’s property, the sign must conform to strict standards regarding size, color and placement.

Why Signs are Necessary

As a homeowner, not being able to place a sign in your yard advertising the sale of your home can mean many missed opportunities, especially in a poor housing market. Using a “for sale” sign is one of the most common and effective ways to let a passersby know that your home is available, possibly the asking price, the name of the real estate agency in charge of the sale and more. When these signs aren’t able to be displayed, due to the actions of an HOA, sellers may find it takes much more time and money to advertise their properties through other channels.  Some HOAs even prevent open houses, or even showings other than by appointment only.

What Can Be Done?

If you’ve found yourself in a situation where your HOA is blocking the placement of your sign, you may want to first speak with your HOA president. This should be done politely and professionally, and you should outline your reasons for needing the sign. Additionally, you should carefully examine your CC&R’s Rules and Regulations to find out exactly what you can and cannot due to remedy conflicts. Finally, if you are unable to come to a resolution with your HOA, you may need to speak with an attorney who specializes in property and real estate law or contract law.  Another avenue is to search for your county’s ombudsman; with so many HOA complaints in the past two decades, most areas have ombudsmen available to protect the public.

It’s important to keep in mind that, while most HOAs have some legal authority over their members, homeowners in California can rely on civil code section 712-713 for legal recourse. Essentially, this section of the civil code states that homeowners may place a “for sale” sign on their property displaying relevant information, as long as the sign is reasonably sized and is not blocking traffic. This means that your HOA cannot make something that is legal by California law into something that is illegal – simply by putting it in a contract. If you have more questions on how this law pertains to your specific situation, please seek out the services of an attorney.

Photo credit: https://www.flickr.com/photos/ke_netan_to/30264438/

Interested in getting a Reserve Study for your community? Click here to get a proposal!

 Homeowners associations (HOAs) have great powers in marketing, selling and managing residential subdivisions. The more amenities a homeowner association has, the more attractive it will be to potential residents. Having specific amenities can even allow the association to raise their HOA rates.

One way of increasing the attractiveness of an HOA is by adding a common area health club. This club could include saunas, showers, gym equipment and even hot tubs. The advantages of adding this amenity are numerous, but it does not come without a few possible liabilities. Knowing all of the rules, advantages and disadvantages of a common area health club will allow an HOA to properly weigh the costs and benefits before investing in such a large amenity.

Advantages

Having an on-site health club carries several advantages. The property values of the homes related to this club will assuredly rise, allowing the homeowners association to raise its HOA dues. Though there will, of course, be new expenses, the additional fees can also be put toward other positive endeavors that can raise property values. Some people would wonder if the higher dues would dissuade some from buying into the HOA, but in all likelihood a health club can do just the opposite.

Health clubs are becoming increasingly popular throughout the United States. People are finally realizing that active lifestyles can save them a host of health problems in the future. Some states have seen over a 100% rise in health club memberships since the new millennia. This is a sign that people are beginning to take better care of themselves, and if they have the option to pay a little more in HOA dues to have a health club at home, they are likely to jump at the opportunity.

Disadvantages

Having an onsite health club does carry with it some possible risks. Any injuries sustained in the club may very well be placed in the lap of the HOA. Even having the liability waiver in the HOA membership agreement, a California court recently found that this waiver doesn’t prevent a person from bringing forward a negligence claim.

Liability waivers may help in some cases, but absence of negligence is going to be a HOA’s best defense in any liability claims against them. Equipment should be properly maintained at all times, with service records maintained. One HOA recently faced civil liability because someone had allowed gum to get stuck to a treadmill; not having been cleaned in a timely manner, a member’s resulting injury landed the HOA in civil court.

Precautionary Measures

There are a few things an HOA should consider before bringing in aspects of a health club. One is that these facilities will likely be available twenty-four hours, but they are not likely to be staffed at all times. This means that everything should be done to ensure all equipment is absolutely safe to use and spaced properly to give plenty of room to move about. Faulty equipment should be shut down and repaired or removed as soon as possible.

One way to waive potential liability is to hire a corporate entity to manage the health club facilities; this can be done through your professional management company.  A full time attendant may seem unnecessary, however having watchful eyes on the area during all open hours could make the difference between a mishap and a serious injury and lawsuit.

Having a common area owned health club can be a great addition to any homeowners association. It certainly makes your community stand out in a crowd, attracts those interested in a healthy lifestyle and of course raises property values substantially. Whether you’re considering adding a health club to your common areas, or purchasing a home in a community that includes one – you’re about to add tremendous opportunities for enjoyment to your wise investment.

Photo credit: https://www.flickr.com/photos/neeta_lind/2517026291/

Interested in getting a Reserve Study for your community? Click here to get a proposal!

  If you live in a home or a condo that is part of an HOA, you might wonder how they ever became so powerful and seemingly all pervasive. As you may know from experience, when you live in a developed community you are required to abide by the rules, or you could be on the receiving end of repercussions from fines and penalties to property liens. While some believe Homeowners Associations are tyrants, others love that they help keep property values high and their communities clean.

Events That Prompted the Need for HOA’s

When you connect the dots, the history of HOA’s can date back all the way to the nineteenth century. In the late 1800’s, the economic structure of the nation shifted from primarily agricultural to innovative industrial. As more and more industrial jobs became available in the city, our citizens began moving into town to be closer to their work. When the 1900’s brought the invention of the automobile, workers were now able to move back outside the hustle and bustle of city life. This created a greater demand for suburban areas where people really wanted to live.

For over 100 years, the American Dream has been mostly about home ownership. To keep up with the growing demand for a “home of your own” in the 1960’s, our nation took on a number of different development projects toward making this dream come true for many Americans. With less government open lands available around the nation and the rising costs of construction, more and more people drove the need for developer-planned communities to be built in suburban and metropolitan areas.

The First HOA’s are Conceptualized 

Whether you love HOA’s or dislike them profusely, you can thank William Levitt for the concept, born from the vision of providing attractive homes on a budget for veterans.  It was the country’s first concept of a modern planned community, and the first Levittown was built in 1947 on Long Island. When veterans bought these homes, they were required to agree to very strict terms that prohibited many actions. While those terms did not constitute a formal HOA, they set the tone for the future, with more and more developments recognizing the need for bylaws and restrictions that were formally written into every contract.

In the late 1960’s, industrial workers throughout the nation started to buy residential homes in planned communities that were created to give people the opportunity to live a more rural lifestyle. As these communities cropped up, the developers also realized the need for laws to be enforced to keep these new communities nice and safe. Local governments also began to require the developments to create and maintain their own streets, utilities and common landscaping.

HOAs remain very popular today because they maintain amenities and keep the common areas in a community clean and presentable. There are often more amenities offered, property values are generally higher, and community pride is more evident in a development managed by an HOA. All these factors have naturally given the HOA a very powerful position, sparking much debate and additional governmental regulation.

Photo: https://en.wikipedia.org/wiki/File:Welcome_to_Levittown_sign.jpg

Interested in getting a Reserve Study for your community? Click here to get a proposal!