Community Association Facts

These are the facts your realtor won't tell you about the quality of life and property in Community Associations, Homeowner Associations (HOAs), Property Owners Associations(POAs), and all community interest developments.

Saturday, August 27, 2005

Are Private Gated Communities for You?

When you buy into a gated community you are buying into a dream. In some cases that dream can turn into a nightmare. Know the facts before you fall in love with the dream.

The dream that developers weave into their slick advertising has 7 important sales points.

(1) Prestige
(2) Security
(3) Privacy
(4) Maintaining Property Values
(5) A sense of Community
(6) Fun and Outdoor Adventure
(7) Service

Here Are the Facts:

1. Prestige: It’s true that many important and high profile people often live in mansions behind well-guarded gates. Today, however, more and more developers are opting to put in gated communities for median income homes in average neighborhoods. As a matter of fact, several municipalities, such as Atlanta, are even creating single-family, low-income, gated community housing. Like everything else in life, when everyone has it, it’s not all that unique or prestigious.

2. Security: Gates offer a sense of security. Today, however, 97% of gated communities only use keypad entry systems. Key pads are fairly easy to defeat. If the gates are actually guarded 24/7, you will be paying very high community association fees. In addition, it may take police and emergency services longer to get to the residence because of the gates.

3. Privacy: Gates do keep down drive-by traffic. But remember that when you purchase a home or land in a Private Gated Community, you are buying into a private community with private community services and facilities. The roads, all common areas, and all of the amenities are privately owned.

Private communities are like company towns where many of the civil rights we have come to expect in municipalities and local governments do not exist. You know that you don’t have the right to say just anything when you are on the job in a corporation. Well, when you live in a private community, which is governed by corporate law, you may have severely limited rights of free speech. As a matter of fact, many of your rights will be severely limited – even you’re right to vote.

Private Communities are private governments. These private governments are not at all similar to your city or county governments. Imagine if your right to vote in local or national elections was dependent on how much property you owned? That’s hardly the American dream, right? Many community associations actually give more votes to those who own more land.

Private means that the community will be governed by an association with very extensive restrictions. It also means that, in most cases, municipalities and/or counties will provide fewer services because you will be paying for these private services through your association fees.

4. Maintaining Property Values – It is true that homes in most gated communities have been maintaining stable property values. This is especially true in large metropolitan areas where the surrounding land may be going down in value.

Today, more and more gated communities are calling themselves, Master Planned Communities. That means that, like all gated communities, they are planned but they are bigger and they offer many more amenities and services. These Master Planned Communities usually show up in scenic rural areas around lakes, mountains, or on the seashore where property values are already soaring and the land is even more valuable than the improvements. So the gated community does little to improve or maintain already high values. As more and more developers jump on the gated community money train, the future of gated community property value maintenance remains to be seen. In some cases, gated communities can even detract from land values if their restrictions severely limit the enjoyment of the natural setting which other residents in the surrounding community enjoy.

5. A Sense of Community - Studies have shown that gated communities are not idealized small towns where everybody knows and cares about each other. On the contrary, the oppressive atmosphere of many community associations creates situations where neighbors are watching and turning each other in for restriction violations. This is because you are not free to do as you like on your own property - your neighbors control what you do on your property.

6. Fun and Outdoor Adventure –Many gated communities offer the dream of leisurely outdoor fun, but more often than not, the restrictions are so oppressive that the best part of the dream is the view. Even the view can be spoiled when you are gazing out your window at all of the other folks in the surrounding area doing what you can’t do on just as beautiful land without your restrictions.

7. Service – At some point in time your association board will get a visit from a management firm that wants your association’s business. They sell your board on the idea that a professional management team can do a much better job of managing the association than a bunch of novice homeowners.

Your board hires the management firm. Up go your association fees. Then the management firm tells your board that your association needs more insurance coverage, and the management firm brings in some buddies from the insurance industry. Up go your association fees.

The management firm has buddies in many contract service industries. They recommend that your board change the CC&R’s to reflect that all services a homeowner contracts for must be approved by the board. Now the Management firm makes sure that only their buddies will be “approved” as service providers or contractors. Up goes your management fees as well as the price you pay for services.

So eventually the homeowners in your association get wise and decide to vote the management firm out. But wait! You can’t do that. If the management firm was set up by the developer when he created the POA, then every homeowner’s mortgage has a “HOA rider” attached to the mortgage. Many riders say that homeowners will be prohibited from firing the management firm and if they do vote to remove the management firm, their mortgage may be recalled immediately.

It’s really a nice deal for everyone except for you - the homeowner.

"The price of freedom is eternal vigilance." -- Thomas Jefferson


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At 5:40 AM, Anonymous Anonymous said...

Excellent info...thank you so much!! You just saved me from purchasing land in a gated community.
This is NOT for me.
Many hugs from Nebraska!! xo


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