How do cities mandate or require community associations?
Many cities require that all new construction must be in CIDs. They do this in several ways, but the most common takes advantage of PUD zoning. Cities have planned unit development zones where housing is exempt from setback and other density requirements. Developers want access to PUD zones to obtain higher density and thus higher profits. So, the City requires all development in PUD zones to have certain features (open spaces, landscape vegetation, perimeter walls). They, the City requires that there must be an entity to maintain features in perpetuity. HOAs are the recommended option.
Result: the City in effect mandates HOAs in all new construction within PUD zone.
The interesting part about this is that the money spent to hear these cases in court doesn't fall on they city's that mandate HOAs. The bill falls on the county. Why should the county bear the expense instead of the city that mandated the HOA be used? If the city had to foot the bill for HOA disputes, would they still mandate HOAs in all new construction? I'd be willing to bet that very few non-HOA owner vs owner court cases filed compared to HOA vs Owner & Owner vs HOA.
2 comments:
Are new HOAs able to obtain Fannie Mae approval? Without that approval, it will be a hard-sell to new homeowners.
I know our HOA violated so many Fannie Mae regulations (embezzlement, illegal foreclosures, etc).
If the bank whom writes the mortagage wants to recoup it's investment quickly then the mortagage would have to conform to the guidelines. Meaning the community would have to be financially sound by meeting the Fannie Mae and Freddie Mac guidelines. If the bank wants to wait 30 years to recoup it's investment then the loan does not have to meet those guidelines. The benefit to the buyer is that a Fannie Mae or Freddie Mac loan also called FHA or FHLMC carry lower interest rates than those that do not conform to the guidelines. Although banks still use the guidelines when processing loans they do not intend to sell.
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