Homeowners question association fees
An estimated one-fifth of Americans pay fees to homeowners associations, or HOAs. Many of them wonder if they're getting their money's worth.
For Stan Hrincevich, the trouble all started a couple winters ago, when a neighbor ran over to point out the all snowplows driving up and down their streets.
That hardly seems like it should be news in Colorado, a state known for its white winters, until Hrincevich explains, “It was four days after the snow storm. There wasn’t even run-off on the streets.”
HOA fees for the development where Hrincevich lives, in Highlands Ranch south of Denver, run close to $200 a month, so he wasn’t happy to see them going for this. “I want snow service,” he said, “but I don’t want my empty streets plowed.”
So Hrincevich asked for records. The board gave him a few, and then he says they started turning him down. The result was a multi-year lawsuit. That wasn’t what he had in mind when he got interested in HOA finances.
“This was supposed to be very easy, something I could get my hands on. It’s small. We all supposedly know and work with each other, it’s supposed to cooperative,” he said.
Hrincevich is now the unofficial leader of a movement to make HOA’s more accountable in Colorado. HOAs are something homebuyers rarely think about. According to Colorado realtor Jim Smith, among his clients, “less than 1 out of 10, probably 1 out of 20, has an opinion formed about HOAs and has a desire to be in an HOA or not to be in an HOA.”
But more and more Americans are living in these so-called "association-governed communities." An industry lobbying group pegs the number at more than 60 million people, who pay a total of more than $40 billion a year in fees. All that money can lead to friction, and there’s been an increasing push in recent years to give residents more power in disputes with management companies. But if fighting an HOA is tough, running one can be even harder.
Janet Lucas found that out when she ran for the board of her condominium community in Aurora, Colo. She was frustrated with the community’s management and didn’t think residents were getting enough benefit for their dues. The development’s roads were cracking; the landscaping was getting jungly.
Three years later, as president of the board, Lucas admits life isn’t easy on the other side of the purse strings.
“It is like running a small city,” she said recently, sitting in the community’s club house. “Something that I’m very, very concerned about is the budget and dealing with other people’s money, which, actually, I’m more cautious about than my own.”
Lucas’ condo association collects more than $750,000 a year in fees. That sounds like a lot of money, but with it her board has to pay for road maintenance, roofing, condo repairs, landscaping, and two pools. And that’s just the stuff residents notice. Lucas’ big headache now is less tangible; homeowners associations have to have insurance and insurance is going up.
The association recently got its first bid and “the increase we’re facing is approximately one-and-a-half times what our premium was for last year. The premium last year increased 55 percent over the previous year,” she said.
Lucas describes some of her time on the condo board as a nightmare, but she’s also obviously proud of the community she’s working for. And remember Stan Hrincevich, the guy whose frustration with unnecessary snowplows led to a lawsuit? After all of that, he’s still a big fan of his HOA, and the HOA idea in general.
“It’s a very stable neighborhood,” Hrincevich said. “It provides stability and, in more cases than not, appreciation of home values. Understanding before you get in there that you’ll pay for these things, and you’ll give up some rights.”
As Hrincevich sees it, residents just need to be prepared for one big unwritten fee that comes with living in an HOA: the cost of their time to make sure they’re getting their money’s worth.