- September 28, 2020
- Posted by: Mike Madson
- Category: Article, associations, Business plans, communities, Community, Development, Economics, Finance & accounting, Funding trends, HOA, homeowner association
Have you ever looked around and noticed your neighbor’s unkept lawn or trash can that does not seem to get put away? According to a 2020 US housing report, approximately 10% of the value of your home is affected by how your neighbor cares for their home. If your home is valued at $300,000 and you are hoping to sale it for full market price; that unsavory neighbor may be lowering the price of your home by $30,000.
Homeowner associations are there to ensure that everyone abides by basic and common rules. These rules are generally called covenants or CC&Rs. Every homeowner is bound by law and must comply with those rules; unfortunately, some do not understand, are ignorant or chose to defy the rules. Sadly, it is chronic abusers and those few who are ignorant that influence what your neighborhood says about you.
Covenants, Conditions & Restrictions: The Unspoken Rule
The covenants are legally binding and hold all homeowners to a specific set of behaviors and rules. For example, covenants may say a homeowner needs to store recreational vehicles behind a fence or to maintain a yard in an acceptable condition. These covenants ensure a standard of living that is expected by every homeowner in their subdivision. It is these collective standards that contribute to defining a subdivision’s culture, and ultimately affects the value of property.
Subdivisions Are Planned Communities
In addition to following the rules, an association’s culture is defined by factors unique to it, for example, an entrance into a subdivision is used in the same manner as identifying a city. In addition, subdivisions by their amenities or the layout of the subdivision, the choice of shrubs, flowers and trees, the amount of front lawn and driveway space, the placement of ponds, pools, fountains or whether the back yard is fenced. Collectively, an association is defined by its condition.
The HOA Board: High accountability for Zero Pay
An unpaid Board member is elected to ensure the governance of the association, to ensure the proper function and operation of the association, and to oversee the maintenance and preservation of common amenities. These individuals represent the voice of all members of their association. As with any leaders, their influence impacts the culture of the people they govern. The process of enforcement can be rather strict or relaxed depending on their leadership style. Unfortunately, many Board members lack the necessary skills to lead or are aware of the resources to navigate the social dialog by a diverse collection of members.
An HOA Board is the catalyst to the collective culture within their subdivision which could either be positive or negative. It is the Board’s personality that dictates and directly influences this culture.
Measuring a Subdivision’s Culture
A subdivision’s culture can be measured by the degree in which homeowners comply with their covenants. There are homeowners who do not bring the same awareness of shared living, so the general rule is 10%. That is, about 10% of a subdivision fails to understand the value of following the rules or just simply refuse. For those subdivisions with a higher percentage of noncompliance, there is a higher correlation to lower property values. The good news is that the majority of owners do understand the basics and will comply with the rules.
Homeownership v. Renter Mentality
There is a fundamental difference between renters and owners. Those who own their homes are at a greater risk of losing a valuable asset; whereas, renters have less to lose. Renters are less likely to have a stake in their subdivision and subsequently not as motivated to comply with the shared behavior of the association. The difference between the two groups can be seen in how each relates to their space and to their environment. Owners plan to stay, renters live temporarily.
An HOA culture is the product of those who live in a subdivision and who have acquired or not acquired the knowledge, beliefs, morals, laws, customs, and habits. If your subdivision is struggling, chances are your community culture has not been addressed adequately by Board leadership. If your subdivision needs help, please contact MGM Association Management at (208) 846-9189 or visit www.gomgm.com for more information.