Homeowners Associations Suffering from a Crisis
The Homeowners Association is going through a crisis right now as nearly 70% are underfunded. The company was first incepted in the 1970s decade during the time the local governments wanted alternatives and allot costly off-road services like road repair and snow removal to another party. Since then, municipalities have supported growth of such companies by offering zoning laws and tax incentives.
Today, there are almost 63 million people who reside in homeowners associations. During the initial days, this number was 2.1 million, but since then it has increased significantly. According to the stats, almost 80% people who buy a new home dwell in such a community.
The homeowners association is supported by many people in the real estate industry. All these claim that homeowners associations provide a number of services to the residents that help in maintenance, preserving landscapes and increasing the value of the property.
According to a research, almost 70% residents have positive experiences with homeowners association. A member of one such association considers his home and neighborhood to be wonderful simply because it is always kept in well-maintained conditions by those in charge.
Despite having positive testimonials, the homeowners association is in a crisis right now. This is probably because the residents do not really read the contract properly. As such, they disobey rules and accidentally put up a flag in their yard, forget to trim an overgrown shrub or permit their kids to play hoops on the road. In all these situations, a homeowners association can place liens. Should the situation worsen, a homeowners association can foreclose on properties even if the debt is no more than a hundred dollars.
In the pre-financial crisis era, none of the homeowners association opted for foreclosures. In today’s times, this is not practiced anymore because the funds are now decreasing, primarily because there are so many previously foreclosed properties that are still vacant. The stats claim that there are nearly 70% homeowners associations that are underfunded. In the past decade, this value was 58%, so that is a rise of nearly 12%.
According to a real estate attorney, governance is what has paved way for the entire situation. He states that the associations have not invested enough amounts that are needed for the repairs and other relevant tasks. Whether this is because of mismanagement or inexperience, something must be done about the situation, and soon. Otherwise, the effects can be quite drastic in the time to come.
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