HOAs Experiencing Underfunded Finances
An article in Sunday's Arizona Republic highlights an issue we also have seen in the Pacific Northwest, especially in the Oregon real estate marketplace. As reporter Craig Anderson writes:
Developer abandonment is likely to become a serious issue in the coming year for as many as 200 of the more than 10,000 Arizona communities under HOA control, both opponents and supporters of Arizona's HOA policies say. Partially completed subdivisions and newer communities more prone to home foreclosures are the ones most likely to suffer, experts say. . . Homeowners in neighborhoods with underfunded HOAs have seen their association fees increase at the same time amenities and services are being reduced or eliminated.
Anderson also reported that homeowners in other communities have been unable to wrestle control of their association from developers, who usually are among the HOA's principal debtors. The complete article can be found here.
As I wrote in an October 26th post:
I have heard of several instances recently where a community (condominium or single-family home) has not been completed or sold out, is under Declarant control, and the Declarant files bankruptcy, leaving the association without sufficient funds to meet its normal operating budget.
If you are a member of an association that has not yet turned over and you believe your Declarant is experiencing serious financial distress, do not wait for it to file bankruptcy. Specific steps may include:
Call for a Special Meeting for the purpose of discussing the association's finances. Insist on straight answers to the hard questions of the solvency of the Declarant and financial resources of the association.
Both Oregon and Washington statutes require condominium and homeowner associations to conduct annual audits (with some exceptions). If homeowners have questions on finances during Declarant control, insist on the annual audit. If professionally managed, work with your association management company in this endeavor.
Be prepared to seek legal intervention, if needed, to preserve the assets of the association before the Declarant drains all available funds.
If you or your association would like more information on these issues, feel free to contact Barker Martin, P.S. by selecting the "Contact" tab at the top of this blog page.