Sunday, November 22, 2009

Homeowners Association Struggles

One of the underreported stories of the housing downtown, to date, has been the increasing difficulties facing homeowners associations.

More than 60 million Americans live in subdivisions or condominiums which are governed -- to one extent or another -- by homeowners or property owners associations. These associations can be surprisingly influential in regulating people's lives - they are not government entities per se, but they certainly exercise powers that can look and feel like government. Unfortunately, many homebuyers pay little attention to the rules or structure of their property association at the time they make the decision to purchase.

In an article in yesterday's Washington Post (here), Derek Kravitz reports that more and more associations in the DC-area are struggling. The problems can be divided into two main categories: financial difficulties (especially related to collecting assessments) and disagreements regarding governance.

Robert Diamond, a partner at ReedSmith (and former president of the Community Associations Institute), says that part of the issue is that homeowners associations are assuming functions that were formerly handled by local governments:
Diamond ... said that adding to the money crunch are responsibilities many associations have taken on in the past decade. Those functions, including the maintenance of private roads and lighting, trash removal and security patrols, used to be managed solely by local governments.
Virginia recently established the Office of the Common Interest Community Ombudsman. The Office's primary functions are (1) to hear complaints from associations and property owners and (2) to issue non-binding guidance on laws and regulations affecting associations.

You can link to the Ombudsman's website here. Business is strong: Kravitz reports that the Ombudsman has received 322 formal complaints through October of this year, in addition to 2,600 e-mails and phone calls.