Voluntary HOAs – There’s More than One Way to Cope

There are a number of “voluntary” homeowners associations around the Atlanta metro area. These associations were typically created in the 80s and early 90s, as amenity areas became necessary for marketing subdivisions but there was still some perceived resistance to “mandatory” homeowners associations (among other reasons).

The concept, however, did not account for the aging/natural evolution of both the amenities and the people who live in the neighborhood. It also left the homeowners association with no reliable income stream from year to year. Neighborhoods are rarely static, at least not for long. Over time every neighborhood will change as its residents age or move in and out. Thus, with time, their needs and desires change.

We’ve discussed (briefly) changing a voluntary association to a mandatory association in a past post, but there is more than one way to address the problems facing a voluntary association.

Of course, there is the option of offering memberships to non-residents. In the case of many voluntary associations this option is already offered in the original documents. Another option is something like blending the traditional “all or nothing” approach of converting to mandatory ownership with the existing “voluntary” structure by allowing for owners to “opt in” to a mandatory membership. This allows those who choose not to opt in with the option to be voluntary members or not join at all. This option is not without its own pitfalls, but at a minimum it can help with some of the problems facing a voluntary association.

Another option associations have considered is allowing the association to basically collapse in on itself, under the weight of the expenses for aging facilities and taxes that it can no longer support. This seems like a simple idea, but the legal and real-life ramifications need to be seriously considered before proceeding on this course.

Because there’s more than one option that faces a voluntary association to address its needs it is very important to get legal advice to protect any current members, interests community residents may have, and to protect the board members of the association.

By: Amy H. Bray, a partner in our Commercial Real Estate Department.