Guest Post By George Nowack of Weissman, Nowack, Curry & Wilco, P.C.
This article originally appeared in the March 2005 issue of RE Magazine.
Sooner or later, you will get a listing in one of those homeowner associations. You know, the one that everybody knows is in a constant state of turmoil because the Board is out of control. While you are thrilled to have a new listing, selling a property where buyers perceive the board is “out of control” can be challenging. What can you do?
First and foremost, get the facts. Virtually every allegation of a Board being out of control is made by one or more residents against whom the Board has taken action to enforce the covenants. Is the Board merely enforcing the “no fence” provision of the Declaration or is it really out of control?
Another example of a Board allegedly being out of control is when there has been an increase in the annual dues. Again, the best thing you can do is to get the facts. Find out why the dues increased $200.00 over the previous year’s dues. You will probably determine the increase was necessary to pay for a major capital repair, such as resurfacing the tennis courts, re-plastering the pool or paving parking lots to name a few. While no one likes to pay increased dues, the alternative is not to keep the property maintained. If that happens, buyers will be more attracted to other subdivisions that have better curb appeal.
Although some Boards are perceived as out of control, that reputation may not be deserved. By arming yourself with the facts, you can educate buyers and buyers’ agents on the Board’s actions. Breaking down misconception can be difficult and time consuming, but ultimately should help you get that property sold.
Occasionally, a Board will get out of control and alienate most of the association’s members by being hypercritical of members’ actions or spending money for a capital improvement that most home owners do not want. The Boards see their power as absolute and they are convinced that they know better than the members what actions are in the association’s best interest. Those are the associations that get all the notoriety.
If you have a listing on one of those neighborhoods, there is very little you can do to change things. But, if the listing agents let their sellers know that the neighborhood’s reputation is hurting sales, it will eventually lead to a change in leadership. If the membership is made aware of the effect the internal strife is having on resale values, the membership can recall Board members or simply not re-elect them at the next annual meeting. The Board members will either become attuned to the wishes of their members, or find themselves off of the Board altogether.
Boards of Directors can also run amuck by adopting a laissez faire attitude toward covenant enforcement. A kinder and gentler Board that does not take action to enforce a subdivision’s covenants is just as out of control as a Board that enforces everything. If yards are not maintained, houses aren’t painted, or cars litter a driveway, that association will have a reputation that also hurts sales. In fact, that Board’s lack of action will be more apparent than those of a Board that is over-zealous. The solution: get a Board in place that will enforce the covenants in a uniform and reasonable fashion.
If you’re involved in listing a property in a subdivision with a board that is perceived as being out of control, get the facts first. Remember, perception is not necessarily reality.