Q&A of the Day – Florida’s Proposal to Eliminate HOA’s
Each day I feature a listener question sent by one of these methods.
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Today’s entry: What are your thoughts about the proposal to end HOAs?
Bottom Line: Florida has led the country in population growth this decade which has also led to our state leading the country in the growth of HOAs. Approximately 45% of Floridians live in a community governed by an HOA, a number that jumps to over 50% for those who own their home, and that’s also a number that’s rising. Florida's booming population has also come with loads of regular home construction to account for it. 82% of all new home construction has been taking place within communities governed by HOAs. In total, Florida now has approximately 49,000 HOAs. At the current pace of change it’s likely that at some point this decade most residents will live in a community governed by a homeowners’ association. That is unless Republican Representative Juan Carlos Porras of Miami has his way.
The state legislature has moved towards restricting the power that can be exerted by the quasi-government entities, in addition to adding greater accountability measures for boards members and property managers. It was only last year that the Homeowners’ Associations law did just that with the most significant HOA reforms in the state’s history taking effect. This year, for the upcoming state legislative session that gets underway in January, the conversation is centering around the idea of going all of the way with the elimination of homeowners' associations altogether. So, about that...
Representative Porras recently said this: I think homeowner associations are a failed experiment. It’s just empowering a group of neighbors to have some sort of control over everyone else. We don’t want authoritarian forms of government to come in and tell us how to live our days. I frankly don’t mind if somebody wants to paint their house purple.
But here is what Porras has yet to do. Actually, propose a bill that matches his words. It remains to be seen if Porras will produce a proposal for the elimination of HOAs, however as of today it doesn’t exist. For that reason, the conversation is strictly hypothetical, including what the ending of associations would look like. It’s likely that any state law would include an offboarding process for winding down HOAs, as countless contracts, processes and services would need to be ended overtime or handled differently.
It would be a lot easier for me to provide analysis if I had a hard proposal to evaluate. Since we don't have a proposal to consider here’s a broad view of what that change might look like...
Starting with perceived pros:
- Immediate savings of $390 per month (the average HOA due in Florida – though in SFL the average is over $600/month)
- Increased homeowner autonomy/property use
- Fewer neighbor disputes (property legal action is half as likely in non-HOA communities)
Perceived cons:
- Less control over community infrastructure (would shift from HOAs to local government)
- Service transitioning uncertainties/challenges
- Legal uncertainty pertaining to voluntary contracts tied to properties through associations
Neutral outcomes:
- Potential relocations
- Fewer traditional TV packages/services used
- Property values
There’s obviously more to consider by that’s a good basis for now. Some of these might challenge the thinking of some. For example, some might think associations mitigate legal issues among neighbors. In fact, they exacerbate them. HOA rules are often used as the basis for neighbor disputes. As a result, 1% of HOA property owners find themselves in related litigation annually. That figure is 0.5% for non-HOA property owners. Also, some argue that HOAs aid property values through consistency. There’s no evidence to this effect. Notably, with rare exceptions, the most valuable properties in Florida’s communities are non-HOA governed properties. Otherwise, there are a mix of homeowners who prefer communities governed by the continuity provided by an association, and some avoid buying in HOA governed communities. The net effect over time appears to be neutral.
There’s little doubt that if there is a hard proposal that gains traction in the upcoming session, there’s a lot to sort out about the transitioning specifically, which would no doubt be particularly messy in many communities.