Establishing New Community Associations in a Changed Economic Climate

Code of Conduct Collecting Assessments HOA

New community associations are expensive to establish. Developers understand that in the current economic climate, community associations can be a hard sell to purchasers trying to obtain a loan and keep their monthly expenses low. Some developers have established associations in their new developments but have not assessed dues to the owners, in the belief that the community will attract more potential buyers or that the association is not built out enough to justify maintenance fees yet. One might feel that this is adding value by allowing new owners “free time” in the association. However, history show that such a philosophy leads to confusion, lack of participation, and negative reactions down the road by the new members.
Not only do assessments pay for the expenses of the association, but they provide members with a sense of “buy in” to membership in the association.  From professional associations to collegiate club, most organizations have fees. Without “buy in,” or obligatory fees, members do not feel they have a responsibility to the association or understand the association is a business that has costs associated with it. They will expect the developer to be responsible for the expenses of the association, and that role will continue after completion of the construction.
Owners may not realize that the community association has rules and regulations that they are responsible for following. Some are even unaware that a community association even exists.  They may make modifications to their homes without approval of the design review committee, sell their home to another without disclosure of the association’s existence, or refuse to pay assessments as they “choose” not to be a member.
Understanding that the developer’s intention is to establish a successful community association and make buyers happy at the same time, there is another option that could mitigate the negative effects of delaying paying assessments but still providing a cash value to owners. This solution will require more time, but considering the positive effects it will have owners’ satisfaction and understanding, the time is worth it.
Credit – Consider crediting the community association fees to the buyer at closing for a set period of time and advise them they will need to forward those funds to the community association.
Educate – From the onset of the creation of the association, take the time to familiarize the developer, potential buyers and new owners with the roles and responsibilities of owners, committee members, board members, developers, and management. Ensure that builders’ sales agents and construction crews understand community associations and can assist buyers in understanding them.
Communicate – During the development of new communities, owners often feel frustrated that they live in a community run by the developer. Hold regular meetings and provide timely communication on the status of the association and the progress of the development of the community. Send newsletters or create a website to provide up-to-date information between meetings.
Evaluate – Annually evaluate the perspective of the membership.  Ask for their feedback and opinion on changes that could be made.
Involvement – Provide committee opportunities to enlist members’ participation in the association.  Think outside the box of possible committees that could be developed to suit the needs and desires of the members such as a Homeowner Advisory Committee to provide insight to members’ needs and desires as well as a training ground for a future owner board.
Provided by AssociationTimes.
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