Normally there is no cap on Annual Dues for HOAs. HOAs are usually set up for origination and implementation within the Covenants and Restrictions of the development by the developer of the property. This may or may not be the builder of the product. Initially, the developer will maintain control of the HOA until such time as lot absorption reaches approx. 80-85% of the overall project. At such time the developer will usually create an initial board of directors for the HOA and subsequently turn the HOA over to its members (homeowners). The developer and or itsâ€™ representative will maintain a position on the board until such time as 100% of the project home sites are absorbed. They will have a vote for each owned home site so control is key. They will usually then quietly get out of the picture completely once all home sites are sold.
Developers take this position for â€œcontrol purposesâ€ as it allows them to complete their projects more readily in terms of the desired amenities without any obligation. They can add and/or delete amenities as they see fit according to the absorption rate and return on the project. If the cost of said amenities goes up they have the ability to re-coup those costs by raising the dues or forgoing the amenity completely. This helps to maintain their ROI on the project. Sometimes the amenity is postponed until a certain absorption level is reached. Never say never. Sometimes the developer may implement cost restrictions within the by-laws for the HOA but it is very rare as it restricts their control- the very thing they cherish.
Once turned over, the HOA belongs to the community, its member home owners. However, the by-laws under the CCRs are still in place unless a vote is taken to change them with all members participating. The Board will set the annual rates based on the fiscal budget and desired improvements for the upcoming fiscal year. Again, no major improvements or substantial changes usually, but not always, can be made without a participating vote of its member body. The majority usually rules.
Hope this helps.
Stephen B. McClain, Broker Owner
Cornerstone New Home Solutions
Better question is how well the HOA handles its finances. A good HOA board manages its money well. The records are on file. If the financials are not posted, they are available by request.
HOAs do not enjoy a good reputation, and that's a shame. I live in a Colorado community with a great HOA. The fees have not been raised in 10 years. The HOA is vigilant. Some people don't like that.
There aren't obscure rules. Everyone knows they need to keep the lawn trimmed and the carts stored away out of sight. In my business, I get to see the alternative - no HOA. It ain't pretty.
Joe Jarusinsky, Realtor/Master Instructor, Keller Williams Realty, Austin's #1 Real Estate Company, Ranked #1 by Buyers and Sellers (JD Power & Assoc. 2012) Call 512-261-4415
Susie Kay, RealtorÂ®
GRI, CHMS, SFR
United Real Estate
III Lincoln Centre, 5430 LBJ Freeway #280
Dallas, TX 78240
Servicing your real estate need is my priority!
The questions we get here are all about the fee, and never about the financial condition of the HOA, nor about the living conditions an opressive HOA can inflict on the residents.
I would bet that almost every Realtor in America can relate a horror story.