Are some homeowners associations in financial trouble
... and what does that mean if you are living in or buying a home or condo in a community with a homeowners association (HOA).
Many people relocating to Charleston (or many cities in the Southeast) from the Northeast or Midwest are surprised to find that many or most communities have homeowners associations. Of course, some people don't like the idea that someone will tell them what they can and can't do, after all, they own their home but in theory, the HOA provides the many amenities that people enjoy and by enforcing reasonable covenants and restrictions that are put in place to protect property values.
But it shouldn't surprise anyone that with some people not able to pay their mortgage, car payment or credit card bills, that monthly, semi annual or annual fees to the homeowners association are going unpaid. And while the HOA has the ability to place a lien or even foreclose on a property owner who has not paid, I'm not sure that really matters much to someone who is already in a financial bind.
So, if you happen to be paying your HOA fee, you might expect several things to happen if some of your neighbors can't or won't pay. Amenities provided in your neighborhood might have to be cut back, swimming pools might not be open for as long in the season and maintenance of the common areas might not be done on a weekly basis any longer. And in some cases, your fees may go up anyway.
If you happen to live in a condo or townhome where the HOA is responsible for maintenance such as the roof of the building or the insurance is part of the monthly regime fee, the issue could become even more important.
If you are buying, your Charleston real estate agent should write the contract to give you the right to allow you sufficient time to inspect the financial condition of the HOA to your satisfaction before going forward with the purchase.
Two excellent related articles by June Fletcher in the WSJ.
How can condo owners protect themselves from deadbeats?
Tips for buying a condo at a bargain.