When should a builder HOA vs no HOA?

Question

Is there published research outlining When should a builder HOA vs no HOA? social media analysis seems to indicate that buyers would live non HOA communities but builders don't seem to care. Why is that?

Chris Seveney · Answer

This depends greatly on working with the jurisdiction as part of permitting and entitlements. If its a public road I do not need to see why you would want a HOA as a builder but if they are private roads then you will want to have a HOA.

Bryant Brislin · Answer

I think it's more something that's required by the Department of Real Estate (or similar entity, it may be different state by state, but in California it's the DRE) or by cities/counties based upon their codes for subdivisions with common areas, etc.  While HOA's can be cumbersome, expensive and political (i.e. conflict between homeowners), they are certainly needed for various reasons.  However, what I've seen on smaller projects of, for example, fifteen lots where there is only a common driveway to maintain, and maybe some landscaping, is them doing a "Maintenance Association" which is less cumbersome and expensive since there are so few matters to handle.  There are real estate attorneys who specialize strictly in these matters, i.e. forming HOA's, etc.

Chris K. · Answer

Adding to the two posts above—it is hard to get any meaningful development projects done without relying on HOAs or other planned developments. Short version of the story is that developers have to deal with tons of regulations like stormwater, open-space, private streets, and so on. For one reason or another, laws evolved so these structures became an easy choice: developers can squeeze more units into smaller areas and meet those requirements by utilizing common spaces. Municipalities like this setup since HOAs cover a lot of the costs—it's basically "free" property taxes.

My guess is that your social media analysis reflects this gap. You could make a reasonable argument that these communities offer benefit to the resident as well. But reality is that most people don't care about a lot of this urban planning issues. And the net result of everything is that developers and municipalities can dump a lot of future headaches onto HOAs, which pass them right to owners.

Disclaimer: While I’m a licensed attorney, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

When should a builder HOA vs no HOA?

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