Free Real Estate Articles » Real Estate Values Fall As Home Owner Associations Avoid Insurance Liabilities
First time I've heard of this. The author says associations are getting rid of swing sets and playgrounds so they don't have to pay so much for liability insurance, but in doing so they reduce the value of the properties.
2 comments:
Some would disagree that they are "reducing the value of the properties" and also question which properties are allegedly losing value.
The only property that is arguably losing any "value" is the HOA property itself, however, it was never for sale and any enhanced value of the HOA property served primarily to benefit the municipalities that derived property taxes from the HOA-owned property.
The properties that might be sold would be the homes in this neighborhood. The playground is owned by the HOA and the homeowner has absolutely no ownership interest in the playground. One common misperception by buyers is that they are purchasing an interest in the "common area" along with the purchase of the house. This myth is routinely used in new home sales to artificially boost sales prices. However, the only thing the buyer is purchasing in "common" is a common liability - period.
To the extent other lemmings would be talked into paying a higher price because of the swingset, any "higher price" should logically be insignificant because even the myth of ownership would provide that the value was spread across all properties in the HOA. For even a very small HOA, such a swingset should have absolutely negligible effect on home values.
This issue has come up repeatedly in my HOA over the past 8 years or so. We have one meager playground in an inconvenient hidden area--it seems to be used chiefly as a teen make-out / drug use hangout. We've tried to improve it w/new equipment and private security but we can't afford the improvements it really needs to become popular (e.g., a sun cover--sun is fierce here in Florida, landscaping--we can afford the plants but not the necessary sprinkler installation, lots more policing) and the hidden location inspires vandalism, even though there isn't much vandalism elsewhere in the neighborhood. We considered moving it but have nowhere to move it to. So the question always arises--is the limited benefit we get worth the potential liability? We have always concluded that it the playground is worth keeping, but now with economic crunch, who knows what will happen.
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