I’m sure you’ve seen the legendary Seinfeld episode where Morty resigns from the presidency at The Pines of Mar Gables Phase II Condo Association in Del Boca Vista, Florida. Rumors swirled that he was stepping down due to threat of impeachment by vice president Jack Klompus, who was certain Morty was stealing from the association's capital reserves after purchasing a new Cadillac. It's a classic episode, and one those of us in the real estate industry enjoy.
As for you, the consumer, I can say with 100% certainty that your future club life in a homeowners association (HOA) will not mirror the lives of Morty and Helen Seinfeld. But it is important nonetheless to educate yourself ahead of time on the fundamentals of an HOA and what your role is as one of many homeowners within a community.
Over the past 18 months, Golf Life Navigators (GLN) has connected with over 10,000 consumers. 68% plan to buy a home during their search for the ideal golf club. For these folks, a common question we hear is, “What can I expect with HOAs?”
If you identify with the characteristics below, you’re not alone:
· Ages 55-65
· Transition time of 6-18 months to the Sun Belt
· Would like to live in a gated golf community
· Budgeting for a home purchase and club dues alongside a club membership
· Not really sure what to expect from the HOA side of the equation
Sound about right? We get it - a bit of anxiety arises when terms like "HOA" and "POA" get tossed around during the search. Unfamiliar territory on a subject is extremely important to understand ahead of time so you can ask the right questions.
To continue our Golf Advisor Living mission and get you educated and insightful on a Sun Belt move, our goal is to help you understand HOAs early on so you are much more comfortable with the terminology and objectives. Thus, there are no surprises along the way.
Helping us on this project is James Schumaker, senior vice president of the Castle Group. Based in the company's headquarters in Plantation, Fla., James spends his days overseeing all east coast business operations between Palm Beach and Indian River Counties. The firm manages both luxury condominiums and residential communities in both Florida and Texas with roughly 250,000 owners under management. We recently asked James to help provide an understanding of what HOA life is like ahead of that home purchase.
Golf Life Navigators: James, what is the fundamental purpose of an HOA in most club communities?
James Schumaker: This could be a very long answer, but, in short, the purpose is to govern the association per their rules and regulations and protect the value of the residences and community.
GLN: We often hear the term “POA.” What does it mean and how does it differ from an HOA?
JS: Great question. POA stands for "property owners association" and HOA stands for “homeowners association.” They are both similar in nature but an HOA must have residential homes with the homeowners being members of the association. The HOA is the body that governs a community of homes. POAs are more about the property itself and don’t require the actual dwellings (as in homes). Often you will see POAs govern lakes, golf courses, sidewalks, streets, etc.
GLN: If I purchase in a golf community and there is a management company for the club operations, will they also be managing the HOA?
JS: Yes and no. Clubs can have a variety of different structures set up. Often you will have a club or golf operator managing those departments while the HOA and residential aspects are managed by a management firm such as Castle. We do have communities that prefer to have everything under one umbrella so we at Castle can manage the club and HOA aspects together.
GLN: Do most communities (gated or not) have a management company such as Castle Group to oversee their HOAs? Are there positives or negatives either way?
JS: Most communities that have amenities (clubhouse, pool, sports, restaurants, etc.) have a property management firm managing their HOA. The community and amenities require a licensed CAM (property manager) and often need a social director, administrative assistant, maintenance tech, janitorial, front desk and so on. The staffing is purely based on the services, budgets and needs of the community. The pros are you have an experienced company managing the fiscal and operational aspects of the community. Without a management firm, there can be a large degree of risk with a lack of oversight and accountability.
GLN: For our readers, budget is very important. Is there a broad range when it comes to HOA fees or do most communities have relatively similar HOA price structures?
JS: There really can be any range of HOA dues. They can be due monthly or quarterly and we have communities with annual budgets of $500,000 all the way up to $10 million. Divide that by the number of owners and the dues are set via the corresponding budget. In simple math, the larger the staff and the larger the amenities and programming activities, the higher the HOA dues. My suggestion: when you're viewing homes in a community ask your real estate agent what the HOA dues are and compare against other communities you are searching in. Base your comparisons on the amenities and overall aesthetics of the community. This way you can determine how much you want to spend with regard to your home investment.
GLN: When it comes to value-added services from management companies like Castle Group, what can a consumer expect?
JS: Oftentimes we will work on behalf of the owners and board members by engaging in services that can provide a cost savings or additional services to their community. Examples can include the hiring of a consultant to negotiate/renegotiate for bundled and bulk cable/Internet/phone. We often obtain improved technology (fiber-optic to the home and faster Internet speed) with a lowered bulk cable monthly price. Another example is retrofitting club lighting to LEDs with motion sensors. Here again, the savings from bulk pricing is something the association can pass along to members.
GLN: The elephant in the room for buyers are hurricanes, flooding, fires, etc. What is an HOA’s role during a time of need or emergency?
JS: That is critical and why the importance of a management firm like Castle should factor into your decision on where to buy. It’s all about proactive communication and strong preparedness. We always update and prepare annually for the upcoming season and ensure we have a well-thought-out plan for homeowners to be safe and aware of steps to take in case of any emergency.
GLN: If there is one thing you could pass along to consumers about HOAs and what to expect, what would it be?
JS: In any home buying process, it is important to know that you have a strong and responsible board. They, after all, are the ones that make the final decisions in the HOA. Management firms like us manage, guide, and implement per the direction of that board. Meet with the board members. Attend a board meeting. Ask a lot of questions on what is important to you on the lifestyle you desire in your community. It’s your final decision in the end, so make it a good one by getting to know the current board members and their agenda before making a purchase.
In summary, HOAs and the dynamics that govern your future club community are a great thing! At the end of the day, you can rest assured that your home investment will be protected to the highest degree. In addition, most of you do not plan to be in the south for more than six months annually. That means, during the other six months, you will be at peace knowing that senior leaders like James are keeping a close eye over your community and investment. As always, I hope this was educational and by all means, enjoy the journey! You’ve earned it!