April 4th, 2008 by Michael Oliver

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Homeowners’ Associations around Arizona, including Tucson Arizona, are being forced to make tough decisions about the services they can provide residents of their neighborhoods. An HOA is usually in charge of keeping common areas of the neighborhood free of weeds and graffiti, and enforcing bylaws of the association that it governs. Due to the unusually high rate of foreclosures around the state, many HOAs are running too low on funds to take care of the communities they were set up to serve. Most homeowner associations’ dues are billed to the individual or paid through escrow. When homeowners fall behind on mortgage payments, they rarely decide to keep making payments to the homeowners association! Without these payments, HOAs cannot function properly. Furthermore, when an owner does not maintain a foreclosed property and weeds and trash accumulate, residents that still live in the community suffer. The HOA will often service that home in order to keep the neighborhood from looking blighted. HOAs are not required to do this, but many try their best to keep neighborhoods in the best condition for residents.

When a foreclosed property reverts to the bank, they are required to clear the title on the property and HOAs can receive the monies owed by filing a lien on the foreclosed home. The foreclosure process can take 5 to 7 months, though, and in that time frame a property can become a quite an eyesore in the neighborhood. If too many properties in a community are in a stage of default, then the HOA can actually run out of funds and not be able to take care of the simplest tasks. HOAs run like government in the sense that they collect “taxes” (dues) and use them to fund their operations. I believe that this downturn in real estate will result in higher HOA dues for most communities in order to offset all the homes in default in Arizona. When purchasing a property in AZ, you may want to investigate the HOA in charge of the community you are buying into. If it is in bad financial shape, assume higher dues are not far away.