Covenants, Restrictions, and By-Laws…Oh, My! (safe neighborhood, buyers, subdivisions)
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Honestly, put yourself in the developer's shoes. You've borrowed a ton of money to develop some land. Are you going to grant the people who buy lots the right to alter the character of YOUR development before you've sold all the lots? No... you're going to protect yourself through C&Rs that give you the ability to veto HOA decisions AT LEAST, and more likely reserve all rights to yourself until you've done what you set out to do - sell homes. A homebuyer just buys a house; a developer and his banker are on the hook for far more - they prepared the land and paid for all of the infrastructure. They have a lot more in the game - you certainly wouldn't want to put your fortunes in someone elses hands.
I can put myself in the developer's shoes, because I have been there. Guess what...I chose to leave the company due to their decision to degrade the quality of product sold to the homeowners after contracts had been signed, instead of only being concerned about making a buck! Everyone that participates in the management and decision-making of an HOA has a fidcuiary responsibility to all parties involved. Therefore, if the HOA was turned over to the homeowners, they could not alter the covenants in a manner that had a negative effect on the home values in the community. This is what many of the developers are currently doing to residents in communities that are still managed by the developer. Unfortunately, if the community is small enough that the developer still maintains control, there is probably not enough money for the homeowners to fight the deep pockets of the developer in court.
As for the bank and developer being on the hook, perhaps there should be a little more consideration given to the preliminary planning. For example, put amenities in at a later date instead of in the beginning when there is not enough HOA income to support them; build fewer spec homes; change marketing strategies and REALTORS more often when property is not moving; sign shorter contracts with subcontractors so you are not paying for services that are not up to standards; use subs because they are competitive in price and not just because they are a member of the "good ole boys" club; change the draw schedules for the developers; pay for a reputable HOA manager from the beginning, before CCR violations get out of control and make the property less appealing to buyers.
Another thing that causes many of these problems is that the banks sit on foreclosed property for long periods of time in hope of hitting a home run to recoup all their money and selling to one buyer; that does not happen often. The mortgage holders wait until the overhead expenses for interest and maintenance of the property hit a critical point and then sell to anyone that will pay, which is often a builder that will only pay a small percentage of market value.
I would say we do put our fortunes in their hands when we buy in these communities. If you compare the value of our homes, to our overall worth, then compare the value of a bank/developer's investment to their overall worth, I would venture to say they are comparable.
FYI: The Huntsville Times has printed the incorrect date in todays paper...It IS the 23rd, NOT the 29th.
The meeting is the 29th, not the 23rd. If you go to their website www.alabamahoa.org and look under News and Events", you will see a copy of the information.
I can put myself in the developer's shoes, because I have been there. Guess what...I chose to leave the company due to their decision to degrade the quality of product sold to the homeowners after contracts had been signed, instead of only being concerned about making a buck!
Generalization fallacy - your experience with one builder means every builder is failing to deliver promised quality?
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Everyone that participates in the management and decision-making of an HOA has a fidcuiary responsibility to all parties involved. Therefore, if the HOA was turned over to the homeowners, they could not alter the covenants in a manner that had a negative effect on the home values in the community. This is what many of the developers are currently doing to residents in communities that are still managed by the developer.
First, let's be frank here, this isn't "many" developers. In fact, the only cases I'm aware of involved bankruptcy of the original developer - tough luck, I'm sure that's not what they wanted either.
Again, you're only seeing the homeowner perspective despite claiming otherwise. Certainly an HOA would try to avoid hurting their property value, but they may also choose that they don't like x architecture or y color, or z type of grass or any other builder offering. So now you'd have an HOA with direct control over a builder's ability to offer product in his own development. I'm sure that'll work out great.
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As for the bank and developer being on the hook, perhaps there should be a little more consideration given to the preliminary planning. For example, put amenities in at a later date instead of in the beginning when there is not enough HOA income to support them; build fewer spec homes; change marketing strategies and REALTORS more often when property is not moving;
I agree... but then, as a buyer, why wouldn't you be observing these traits? A builder may put a pool in early because its a tangable lure as opposed to a promise. Some thought should be given to what the builder is doing before you buy in his development. Building a pool, clubhouse etc when there's only a couple residents doesn't make much sense to me - and I wouldn't buy there. As I've said before, your buying the builder's plan, reputation and experience as much as you are buying a home. When I bought, I asked about how the development would proceed - how the phases would be developed and when amenities would be constructed - pretty standard stuff if you ask me.
We personally would rather see the amenities sucha s the pool and tennis courts up first. There seem to be neighborhoods that are still waiting for the pool and courts years later. If the developer goes broke, they never get done. Also I want to see what they look like - no surprises later.
For all the horror stories there are many good stories of a HOA protecting property values. I am not talking about a gestapo mentality but reasonable rules to keep the neighborhood looking nice. I do not want my neighbor able to put up anything he chooses such as ugly sheds or boats up on blocks or 5 cars parked on the grass. I want the grass to be cut and the yard maintained. Believe me, it makes a difference when you go to sell your house what your neighbors are doing.
We personally would rather see the amenities sucha s the pool and tennis courts up first. There seem to be neighborhoods that are still waiting for the pool and courts years later. If the developer goes broke, they never get done. Also I want to see what they look like - no surprises later.
Minimize chance of surprises by buying in an established, or at least nearly complete, neighborhood.
As DvlsAdvca8 pointed out, building and maintaining ammenities with only a few residents paying into the HOA is a hugh burden on the developer. The result being that consumers pay more and/or increasing chances developer will run into financial difficulties, possibly never complete the whole project, and potentially leading to surprises such as those faced by the LP homeowners more often.
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