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‘Easy’ condo/HOA living not without drawbacks

A new national survey finds 72 percent of residents in community associations have been involved in a significant dispute with their association. 40 percent have filed a complaint with a state agency. 30 percent have filed a lawsuit. This is the first of two articles on community association living.

27-Sep-15 – Tens of thousands of Chicagoans may reside in condominiums and homeowners associations (HOAs), but it is not a perfect lifestyle.

One of the biggest attractions of shared-community ownership is the so-called “carefree living” aspect. There are no yards to maintain, grass to cut, snow to shovel, windows to wash, decks to stain, or roofs to repair. All an owner has to do is sit back and pay his or her monthly assessments.

Condo ownership also can be a good lifestyle choice for singles, retirees, and smaller families not in need of larger spaces.

Another attraction of condo and HOA living is the hefty tax breaks. Federal and state tax deductions for mortgage interest and property taxes are handed to owners. Uncle Sam not only allows tax deductions for mortgage interest, but also allows home and condo owners to deduct the cost of real estate taxes.

However, the condo lifestyle isn’t always pretty. In 2010, a survey by Community Association Institute found that more than half of the nation’s HOAs were facing serious financial problems.

In 2013, Association Reserves, a California company that helps associations with budget and operational issues, noted that 72 percent of association-governed communities were under-funded, up from 59.5 percent a decade ago.

Now, a new national survey by Coalition for Community Housing Policy in the Public Interest (CHPPI) has found that 95 percent of community association residents feel that “lack of transparency” and “poor communication” was at least a moderate problem, while a shocking 84 percent felt that it was a very serious problem.

“Our survey, which rated the level of concern on 26 commonly reported issues, found that a broad spectrum – from voting and election procedures to power of the board to fine owners – were viewed as major problems within condo associations and HOAs by respondents,” said Sara Benson, a CHPPI board member and president of Association Evaluation, LLC, a Chicago-based real estate technology firm that rates condo and homeowner associations.

“An overwhelming 93 percent of survey respondents felt there is at least a moderate problem within their condo or HOA’s power of the board to issue fines,” noted housing advocate Deborah Cassano Goonan, a CHPPI board member based in Florida.

More than 300 owners residing in condominium and HOA communities in Illinois, Arizona, California, Florida, Nevada, Texas, and a host of other states responded to the survey.

Sara Benson Half of the respondents were real estate professionals involved in property management, brokerage, construction, land use, or real estate law, Benson (left) said. Fifty percent own single-family detached homes in an HOA, while 34 percent own a condo, townhome, or villa in an HOA with no private yard.

Other findings of the CHPPI survey…

  • A whopping 96 percent of those who were surveyed said there is at least a moderate problem in their condo or HOA with “apathy and lack of involvement.”
  • Ninety-three percent of owners said there is at least a moderate problem with their HOA board’s power to fine homeowners.
  • An HOA’s power to foreclose on an owner’s unit was overwhelmingly viewed as a problem by 89 percent of respondents.
  • Eighty-eight percent said there is at least a moderate problem with “unreasonable limitations on residents’ rights” in HOAs, and 86 percent said there is a moderate problem with discrimination against owners.
  • Seventy-two percent of all respondents said they have been involved in a significant dispute with a condo or HOA, one that was difficult to resolve.
  • Seventy-two percent said condo and HOA rules and restrictions are not consistently enforced.
  • Forty percent of those who replied to the survey said they have filed a complaint against their condo or HOA with a state agency.
  • Thirty percent of the respondents said they have taken legal action against their condo or HOA.

On the future of community associations, nearly half of all respondents said that HOAs “need to be significantly reformed” and 25 percent feel that HOAs “need to be abolished or phased out of existence.”

NEXT: Owners vent about specific problems, ranging from corrupt management companies to a board president who ran an HOA like “Captain Bligh.”

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