'Forced out': HOA fees to rise to $2,500 a month
wsoctv.comSomething doesn't add up here.
https://www.terravistarealty.com/search/NC/Sherrills-Ford/45...
The homes in this neighborhood are fairly average single-family homes, ~$400k, roughly the median home price in the US now. There's no shared roof or walls that would be the HOAs responsibility. There's no community pool. Does not appear to be gated. Only expense as far as I can tell is the periodically repaving street, salting, perhaps some gardening -- $2500/mo, even $1250/mo is not supported by those expenses.
Who is the developer? What is their financial situation? Did they take on debt to finance development when rates were near 0% when this development was built ~2020, now that debt has come due but rates are > 5%, and they cannot pay, so they figure they can up the HOA to drop the property prices, evict the homeowners, then drop the HOA again and resell the houses for a profit to shore up their balance sheet?
More details from a homeowner in this community: https://www.gofundme.com/f/homeowners-facing-devastating-hoa...
Developer is a guy named Aaron Guess, Story Homes LLC. Had his contractor license suspended for fraudulent statements (eg promised a pool, mailboxes, lawn care -- there's none) with a $15k fine. There are 80 homes in the HOA, a little over 20 are occupied, developer owns rest, is board president, and controls votes of the unoccupied homes presumably. Subcontractors have not been paid and have sued. Management company terminated contract with the HOA.
This has fraud and embezzlement written all over it -- developer is using the HOA as his personal piggybank.
Who does he know that lets him rest easy?
Can he just pay the mob boss in chief?
> The homeowners say the developer, who owns the majority of the houses, controls the HOA.
It's a 51% attack in real life.
That's a cool hack, but of course, that's going to be legal isn't it?
Why wouldn't it be legal? Reminds me of those 'non-profit' charter schools where the 'school' entity pays huge rent and/or other admin type costs to a very much for-profit entity controlled by the same people. So they set the price at what they want and extract what they can.
At least here in Argentina the equivalent of the HOA of the apartments have a lot of governmental regulations, they can't decide to pay the administrator a million dollars per month. Most accusation are about overprice in repair work and other stuff that is harder to prove.
A few years ago a common trick was that the developer designated the initial administrator. Then add a rule that requires a super majority to change the administrator, so it was almost impossible to remove it. Now there is a law that declares that special rule void in all apartments.
Revenues are up 100%, time for a cocktail party.
The board is shooting themselves in the foot here. You raise fees enough then no one will be able to afford living there. If no one is able to afford it, then the board is exacerbating the problem they’re attempting to solve in the first place with the fee increase, which is legal collection fees from delinquent owners.
Is there oil underneath or will this be a good place to build a datacenter? This is obviously intentional. The foreclosed properties will be sold for the price of the debt, probably back to the developer.
The board is the developer. Sub-contractors have not been paid, lawsuits filed. Developer had contractor's license suspended for fraud -- promised pool, lawn care, mailboxes, didn't deliver.
Can the board load the houses with fees to get them for essentially free, then turn around, drop the fees, and sell them?
I get the feeling private equity is involved somehow.
Pro Tip:
Always tick the "No HOA" box on Zillow when searching for homes.
Our first home was in a 7 unit townhome complex with a HOA. Complete opposite problem, we could not get people to vote to raise dues, even though we had a delinquent account and our expenses were 95% of our dues.
Me and my wife ended up having to manage everything, she was accountant, I did snow removal when the snowfall was not enough to trigger the company we hired to come out, vendors contact, etc. It got to be a lot.
We kept looking around and seeing the major maintenance headaches coming in the next decade and the utter lack of savings by the association and it was scary. We ended up leaving and now we have no HOA. We are still treasurer and snow removal though.
My in laws are in an HOA and their board is obsessed with preemptive maintenance. They are redoing siding on every property over the next few years and assessing more than ten thousand dollars a unit. Utter insanity and waste.
I have other friends and family who have no particular feelings about their HOA, so apparently they are not all evil, but man is it tough to believe.
This is what happens with you delegate power and decision making to others. At least you did the right thing -- moved out and now you and your wife have full agency and responsibility for your own house.
How does somebody /not/ delegate when you have shared ownership or responsibility though? Shared walls, shared drives, shared roofs, etc?
WSOC-TV Eyewitness News Charlotte
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> SHERRILLS FORD, N.C. — Homeowners in Catawba County said they could face foreclosure or bankruptcy as HOA fees are set to rise from $1,250 to $2,500 a month.
The HOA is meeting Monday night to raise the dues.
The concern from homeowners is that liens will be put on their homes, and they could face bankruptcy or foreclosure.
READ MORE: Magnolia Cove homeowners face massive jump in monthly HOA dues “It’s ridiculous,” said Diana Brokaw, a homeowner.
Brokaw still can’t believe she and the other 22 homeowners in Magnolia Cove are facing a sixfold increase in HOA fees by the first of the year.
“Who has $90,000 extra a year to pay for fees that you’re just told are going to happen,” she said.
Brokaw isn’t alone. Down the street, Jill Menson and her husband bought their home believing it would be their last. She said the homeowner’s fee five years ago was $158, but it shot up to more than $1,200 this summer with a $10,000 assessment. Now the couple is facing fees of $2,500 a month.
“We are going to be forced out with nowhere to go, because no one is going to get a dime for their houses even if we put them on the market,” Menson said.
According to an email from the Magnolia Cove HOA Board of Directors, “The increase is mainly driven by the Association’s legal and collection costs from owner accounts that haven’t been paid. Owners who stay current help bring those costs down over time.”
The North Carolina Attorney General told Channel 9 that there are no statutes that limit how much an HOA can charge in fees, but boards must comply with their governing documents. The homeowners say the developer, who owns the majority of the houses, controls the HOA.
“It’s not right,” Menson said. “Nobody is helping us. We’re not getting any help from the government agencies. No one is helping us.”
Those homeowners said the meeting Monday night will be held over Zoom, and they can’t ask questions of the board. The HOA said homeowners could submit questions ahead of time. The deadline was Friday.
On Monday, the HOA voted to raise fees from $1,250 to $2,500.
Many people ask Action 9 attorney Jason Stoogenke about their rights when it comes to HOAs.
It can be hard to win a fight with your board.
Stoogenke said if you have an issue:
Try to get the support of your neighbors. Strength in numbers. Try meeting with the board as a group, not by yourself. You may have to wait for elections and vote in new board members The initial copy of this story stated that HOA fees were originally proposed to rise to $7,500 a month. The HOA voted to raise fees to $2,500 a month during Monday night’s meeting, after this story first aired.
Thank you, this was very helpful to me! Hopefully it will be helpful to many other people as well.
I'm guessing one of the victims of this predatory behavior will respond with a gas can and a match. There are multiple ways to express discontent to this type of behavior, and it's statistically likely one of those ways will be arson.
This type of vigilante justice isn't good for a society, but it does tend to discourage the behavior. Similar to how markets where some thieves have a stump in place of a hand don't have a shoplifting problem(any more).
tldr; someone will likely make the developer suffer as a result of the suffering they are inflicting on others to feed their greed.
I love it when the listing says "includes covenants to protect your investment". Hahaha not a chance
What the hell is the story behind this? $2500 a month for the HOA when it used to be $150? This won’t end well for the board or the developer. You mess with someone’s home then you get a nice in-person visit.
If you click on one of the related articles it says that they wanted to raise it to $7500 but "compromised" on $2500. So it's actually a bargain!
Leave the city and don't buy into an HOA.
It's not that hard in the USA. If you don't like driving or have some pseudomoral dilemma over that, I don't know what to tell you. It's hardly a downside.
cant you leave the association? don't be associated no more
You can but the property can't. Look up covenants that run with the land.
You can only leave by selling your house which is what they did yes.
No one will buy your property when they see the HOA monthly dues are that high.
Freddie and Fannie won't even underwrite loans if the HOA dues are that high. That takes 70% of home buyers out of the market.
With no buyers and no ability to pay the HOA dues, homes go into foreclosure and the HOA gets to take possession of the homes.
This is beyond evil and states need to outlaw this behavior.
Honestly, there's got to be something illegal about this. It's basically theft:
1. Get control of 51% of a HOA.
2. Raise the fees to an unaffordable level. Trap 49% of the homeowners, and foreclose on their "debt."
3. Get control of the other 49% of the properties, basically for free.
4. (speculating) Dissolve the HOA, and return its "assets" to the "owners" (you), so you get all the fees you "paid" back.
You will own nothing, ever, you'll just pay increasingly absurd rent to different people.
that's okay with me if the terms are agreeable
What terms justify "absurd" rent? Where do you draw the line? Doesn't the fact that YOU would need to deem it absurd mean the terms aren't reasonable to you?
might be in a situation where i need to pay absurd rent
Honestly, if you bought a house that was part of a HOA, it's on you. Like, what did you think was going to happen?
Read the article. The HOA was a few hundred a month. Now it's 10x as much.
Apparently the developer owns half the homes and has voting power.
This isn't the homeowners' faults. This is beyond predatory.
This shit needs to be illegal, and the company doing this needs to pay.
A Subscription service increases its price ? Oh no how can that happen.
This isn't a "subscription service". This is a home. It's a significant portion of most people's net worth.
Most HOAs exist to do common area maintenance and make sure neighbors don't paint their house purple, install neon exterior lights, and chase away buyers.
This is something else entirely. It's malicious theft.
These buyers agreed to move into a house for which there is both a one-time-fee equal to, let's say, $300k, and a monthly rent. They may (or may not) be refunded a large portion of their move-in fee when they move out but the monthly rent amount is controlled by a landlord. This is the agreement they apparently signed up for.
It's a home, yes.
It's a significant portion of most people's net worth, yes.
But it's also a subscription service.
Exactly, they aren't ready to admit their poor decisions have consequences.
> Read the article. The HOA was a few hundred a month. Now it's 10x as much.
Read my comment, I specifically mentioned about not getting a house with an HOA in the first place. Again, if you chose a house that's in a HOA, it's on you.
> This is beyond predatory.
Of course, they're predatory, what did you think was it about? It's always someone with a power trip sitting on their boards. For a "HN contrarian", you sure get upset about a logical argument.
Often times you want an HOA. But you want limits on what the HOA can do.
People could vote to weaken HOAs so that people could have a way to leave HOAs when they are not providing value to home owners. We don't have to let corporate owners of residential property or landlords that do not live in their properties have any HOA voting rights. HOAs are currently used by builders to control homeowners.
This should flip to the HOA being used by residents to control builders and landlords. Builders would stop using HOAs if they could not control them, just like it used to be when houses were built just fine without HOAs.
Voting for billionaire conspiracies is more important to a lot of people than voting for themselves.
That doesn't work because a lot of city councils have offloaded responsibilities to HOAs as cost-saving measures. HOAs now build roads, water, sewage systems, garbage collection and security in many places. If a house leaves the HOA ... does it lose access to the road? How will road maintenance be paid? What about water? Etc.
This is getting worse, by the way. What will people do once the city council decides HOAs must run schools as well?
First, it doesn't matter what city council wants to do. They cannot force anyone into an HOA.
Second, it sounds like you are saying they need to run for their HOA to end it and run for city council to tax rich people again so we can pay for basic bare minimum services again. Giving tax breaks for the rich and telling people to form an HOA for garbage collection is not a solution to anything. Vote out the current people who set this nonsense up.
> Second, it sounds like you are saying they need to run for their HOA ...
Won't work if the HOA is a private company that owns 51% of the houses.
And there's no point if the HOA was smart enough to use debt to make this happen.
> ... and run for city council to tax rich people again so we can pay for basic bare minimum services again ...
If that's possible. I think in a lot of locales this is not possible, maybe even most. Frankly we'll need to change regulations again so housing/roads/sewage/water/electricity builds and repairs can become a LOT cheaper again, but I'm guessing nobody's up for that.
And income tax is bleeding local governments dry right now. I imagine Washington (and London, and Brussels, and ... because it's not like this problem is limited to the US) sees that as a feature and not a bug, but it's still something that can't continue indefinitely ...
You should work with neighbors to control the HOA board. That means running candidates and getting them elected. Depending on how corrupt the builder is this can be hard to do and may take legal action (suing to enforce the HOA governing rules).
But on its face it seems suicidal to cause the home owners to go bankrupt and leave your properties. Unless of course you'd like to tear down the development and build a big fat datacenter on it (the only building that is going on these days) which would net a profit. As grifts go it would kind of amazingly evil you get as much money as you can out of making your homeowners broke followed by selling the land out of foreclosure to build a data center on it and making a profit on that too.
They don't have voting power nor the power to air grievances in the HOA meetings.
States need to step in and pass laws against this. Georgia recently passed laws to prohibit what HOAs can do and how much they can charge. It also made them register with the state and remain in good standing to be able to collect dues at all. Other states need to follow suit.
For those saying dissolve the HOA or don't buy in an HOA. FTA: The developer, who owns the majority of the houses controls the HOA.
It is not easy to buy a house in the US that is not controlled by an HOA. A lot of houses are in an HOA and you really have to go out of your way to avoid it. If you're looking in a suburb, exurb, it's 100% going to be an HOA. It's by design:
HOAs are tightly connected to racial segregation, racially restrictive housing, and redlining. Read up on those and it will make you sick to your stomach.
Controlling what homeowners can do to the exterior of their houses has been the main theme of many HOAs. Combined with this, racist policies and architectural uniformity were historically intertwined. They were both done for the same reason: protecting property values.
Are you angry yet?
Some HOAs do OK and are kind of like a collective: They form their own street cleaning, street light installation and electricity bills, snow plow, garbage pickup, lawn mowing all for a deeply discounted monthly fee of sometimes just a few $10s a month.
> It is not easy to buy a house in the US that is not controlled by an HOA.
Perhaps in some places. In a large number of US cities, it is remarkably easy.
> If you're looking in a suburb, exurb, it's 100% going to be an HOA.
This is just categorically nonsense. Have you ever bought a house? Have you ever looked at houses outside the 20mi surrounding wherever it is you've always lived?
Sorry, this reads like a typical teenager-on-Reddit comment - deeply convinced that you know everything about everything, everywhere because you overheard your parents talking about it at the dinner table.
I’ve mentioned this on another thread, but municipalities are incentivized to create HOAs: the city/town gets all the tax revenue and gets to provide a fraction of the services—it’s a great deal for them. They need to be disincentivized to do this by default by a state-level forced reduction in property taxes for HOA properties and a forced on-ramp (similar to ADU legislation) for cities/towns to accept the developments (dissolving the HOAs in the process).
I feel nowadays it’s the opposite. I’m willing to pay a premium for a house that is not within an HOA. A house being part of an HOA decreases its value to me.
Especially for a new house.
And this is because local governments have offloaded a lot of their responsibilities to HOAs. Some HOAs put up water, electricity, roads, garbage collection and security. Even "public" transport in some cases. Things that used to be the responsibility of the city.
This leads to 2 very undesirable consequences:
1) given that the community of homeowners makes the area livable ... why would they allow public access to their roads? This is almost a complete negative for them.
2) this is effectively an extra tax for the homeowners. Which then also means there can now be very big differences in public services within the same city ... and the city council does not have many options (or justification) to change it.
Frankly this is switching how American cities operate to how it works in third world countries.
lol really? Downvoted for stating facts? I guess should not be surprised