Rent Real EstateFinding Homeowner Association Fee Fairness
After kicking lots of condo tires and comparing benefits and homeowner fees, the buyer makes a choice, closes the deal and moves in. All settled in, he happens to spy the stack of documents (didn"t they call them "CC&Rs," whatever that means?) and decides to riffle through them. Mid riffle, he lands on Schedule B-Assessment Allocation which explains how much each unit owner is supposed to pay. It also shows the square footage of each unit. He notices that his unit at 900 square feet is paying the same fee as units twice the size. WHAT??? How could this be? On top of that, units with a view also pay the same. DOUBLE WHAT???
Welcome to the World of Unfair. Even though most developers understand that fees should be proportional to the benefits received, few states have guidelines or requirements for them. This allows a lot of latitude for developers when they set the fee levels and, surprise, lowering fees for higher priced units helps them sell faster. This is what"s called your classic developer conflict of interest. By leveling the homeowner fees, lower priced units end up subsidizing the higher priced units.
Now, here"s a bitter pill. Even though this seems like something that can be corrected after the fact, it can"t. Changing the fee structure after the fact requires 100 percent approval of all owners. Lowering one unit"s fee means another owner will have to pay more. In spite of the best of intentions, few are willing to make that sacrifice and it only takes one to kill the deal.
Even though the fee allocation may not be entirely fair, there are substantial benefits from cost sharing. Virtually every service and utility the HOA pays is substantially cheaper than it would be if members were flying solo. Group buying works. So, rather than viewing the fee allocation as unfair, dwell on the benefits. Besides, life"s rarely fair, mon frere.