Why You Shouldn’t Fear a Homeowners Association

From my childhood, I remember one time a dispute with our neighbor. The neighbor was upset that the family planted a tree near his property line, to which the owner that installed the tree replied, “It’s not even that big, it’s only a little bigger than you.” Not a good comment to direct towards a proud Italian man that was only 5’2” tall. The feud was on and it was comical that the fight ensued over the years. The tree family put up a 3-foot chain link fence and planted a row of bushes to screen the home from their difficult neighbor. The neighbor, not to be outdone, used chemicals to kill the row of bushes. It was farcical that this feud had no arbiter and no mechanism to stop the insanity of a feud that was simply personal.

Many people have heard of homeowners associations that are run with little or no reserves, and then a capital event causes a call for everyone to pay a special assessment. The key here is that they are being run with limited reserves, and short-sided management. One of the key hallmarks of any financial entity is good cash planning and generation of adequate reserves. Grenadier Homes tries to ensure that we employ the most professional homeowners association managers, who are fidelity bonded and attempt to properly budget for future capital reserves.

One of the most prevalent fears people have is that of losing control. This is the fear that if you don’t manage to control the outcome of future events, something terrible will happen. Some people equate being part of a homeowners association to losing control of their home.

One of the greatest responsibilities we take upon us as homeowners is maintaining all the items we need to take care of. What are the major capital items needing a repair or replacement– the roof, the foundation, the fence, the heat and air conditioning equipment, the irrigation system, and the list goes on. An HOA with adequate reserves and a good manager takes on this responsibility.

Nobody complains when the car they own and is under warranty is recalled for a mechanical issue. That warranty was included in the original purchase price of the car as a prepaid cost of the car. You do not think the auto manufacturer decides to never recoup those costs, do you? Why is a home different than a car? Both are large capital expenses, and both are highly complex manufactured items with many items that can deteriorate and need repairs. A well-run HOA has a capital reserve fund for such items and everyone funds this periodically as part of the dues.

So, it only seems logical, that a professional, high-integrity homeowners association can add tremendous value to its residents’ peace of mind by taking care of these major capital items. So why the anxiety, and why not the glee that it’s covered under warranty like a car?

What does an HOA do:

• Maintain shared amenities: pools, fitness, trails, etc.
• Manage landscape and seasonal color and mulch and irrigation systems
• Manage all capital repairs to the exterior structures
• Secure and oversee insurance of the property and structure (not contents as this is resident’s responsibility) along with managing all claims and deductibles
• Provide a mechanism for mediating disputes amongst homeowners
• Provide a forum for architectural approvals that ensure beauty and property values
• Manage or help host events at the community
• Manage the collection and payment of all items and generate financial statements and budgets

Most importantly, what does an HOA provide to Grenadier residents:

• Stabilize or raise property values when communities are kept from declining, which can happen in all economic downturns
• Better curb appeal as all homes are maintained to a standard
• Less noise pollution as all lawns are mowed on one day
• A feeling of wealth that you own something greater than your interior home
• A feeling of ease as all repairs are taken care of and all bids and specifications are left to the professionals
• Useable and attractive amenities that are kept in proper working conditions
• A sense of security as residents can act as one in times of need
• A higher sense of community because of a shared forum and neighborhood that forms groups

When the list of everything an HOA does is added to the list of everything an HOA provides, it can ease fears that many have about HOAs primarily being a loss of control. Perhaps that famous quote is relevant:

“All we have to fear is fear itself”