Wednesday, February 12, 2014

Voluntary Associations Are Being Created in Subdivisions Without HOAs

[Published Feb. 13, 2014, in the Jeffco editions of the Denver Post's YourHub section and in five Jefferson County weekly newspapers]

Buyers will often tell me they want to find a home with no homeowners association (“HOA”).  If the home is in a pre-1990 subdivision, that is quite possible.

HOA-averse buyers may have an RV or a boat which they want to park on their property. Most HOAs have rules against that.  Or such buyers might have had a bad experience with an HOA enforcing  rules or covenants they deemed unreasonable, and it left a bad taste in their mouths.

HOAs serve a valid purpose — to protect the property values of all member homeowners by not allowing individual homeowners to neglect the property or, yes, to store RVs, boats or large commercial vehicles where they can be seen from the street or by neighbors.

Back in the 1970s and 1980s subdivisions were created with developer-created covenants serving similar purposes, but it wasn’t until later that they included the creation of homeowner associations for the purpose of maintaining common property and amenities and enforcing those covenants.

When you buy a home in such a subdivision, you must agree to accept the covenants and pay dues to the HOA.  If you don’t pay those dues, they can become a lien on your property, and an HOA can even foreclose on your property if those dues go unpaid for long enough.

In smaller subdivisions, these HOAs might be self-managed, but larger subdivisions typically hire an HOA management company to handle the day-to-day business of col-lecting dues, maintaining and paying property taxes on common areas, etc.. The HOA itself has a board of directors consisting of homeowners elected at an annual meeting. This board hires (and can fire) the management company.

Seeing the need for rules governing both HOAs and their management companies, Colorado’s legislature created the HOA Information Office within the Division of Real Estate and gave it powers which I outlined in my Jan. 16th column, which is archived at http://www.JimSmithColumns.com.

I’m beginning to see neighborhood associations being created in those older subdivisions without HOAs.  They can call themselves “HOAs” but have no enforcement powers and are not overseen or regulated by the HOA Information Office. Heritage Dells is one such neighborhood. They hold social events and raised money for a sign on Kimball Avenue.

In last week’s column I mistakenly said that Lakehurst West has “no HOA and no covenants” — a common misperception of these older areas. Readers in that neighborhood quickly informed me that there is a vibrant “HOA” which publishes a newsletter distributed by 20 block captains and maintains an excellent website — http://www.LakehurstWest.org. They can’t enforce those old covenants, but they serve the community in a many significant ways.

So what about those covenants? They can only be enforced by one neighbor bringing a civil action against another in a court of law — but saying “no covenants” is wrong..

From now on, I’ll be more careful about describing a listing as having “no HOA and no covenants.”

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