H. B. 410 Defeated

Originally published on March 24, 2017

Last post, we discussed H. B. 410, a bill that would have led to higher HOA and Condo dues all across Georgia.  Recently, the bill was defeated!  We want to offer a heartfelt thank you and congratulations to all of our friends, volunteers, and colleagues who took action and let our Representatives in the state government know how they feel.  They definitely got the message, and it was clear that they could not let this bill through.

To recap H. B. 410, this bill would have limited a number of the fees that HOAs and management companies charge a homeowner at closing.  That includes the fees that a management company charges to process the closing, and also the fees that a community collects from the new homeowner at a closing.  The bill passing would mean that Realtors who lobbied for the bill would not need to worry about those fees when selling a home.  There's just one problem: those fees are vital to the communities.

 

Why does my HOA need those fees?

Your HOA or Condo Association is a not-for-profit corporation.  All of the money that it collects is either being spent on the community, whether it is spent right away or is saved for later projects.  That money has to come from somewhere.  If those one-time fees are cut, then you can be sure that the annual or monthly assessments will go up to cover the difference.

These one-time fees, sometimes called "Initiation Fees" or "Capital Contribution Fees" are especially important for new communities.  When a new community is being built, developers need money up front for everything from the pool and clubhouse to the roads and sidewalks.  That money is not going to come quickly if there are only a dozen homes paying regular dues.  Instead, these one-time fees for new homeowners help a developer succeed in completing the community.  Later on, those funds support the maintenance of the amenities that keep property values high.

 

What about the management company?  Why should HMS get to charge a fee?

It's no secret that HMS will have a problem if this bill passes, but we are in the same situation as the community.  You aren't going to find a line-up of luxury cars, fancy suits, and expensive business events in the management company industry.  (Our parties usually involve a potluck lunch in our warehouse.)  The money that we charge is goes toward providing all of the relevant services to the closing attorneys, Realtors, and the buyer and seller themselves.  Providing correct, up-to-date documents and details takes time, and time equals money.

In fact, the monthly management fees in the Atlanta area are 30% lower than the national average!  That is the business model that has come from a free market where the Boards and the management companies negotiate terms themselves.  The government stepping in to regulate our work does not make it any cheaper for us.  Just like our communities, if the expenses stay the same and the closing fees go down, then that money has to come from somewhere.  In the case of HMS and all of our competitors in Georgia, higher monthly management fees would have to make up for it.

 

So, what difference does the bill really make?

If management companies raise their monthly fees to make up the difference, and HOAs raise dues to make up the difference, then the people who suffer are the ones who live in the community.  Everyone would have to pay for a service that only benefits the person selling their home.  That's the one person who is leaving the community!  We think that it's better for this money stay with the HOA and the people who benefit from it.

We might see a similar bill get proposed next year.  But if we do, you can be sure that HMS will spread the word.

Originally published on March 24, 2017