By Anjali Bean (Research and Policy Associate, IHC)
When you buy a condo in the United States homeowners associations (HOAs) are taken for granted. Residents assume that basic maintenance and safety will be maintained, and that the building will remain up to code. Typically association dues are required by every owner, elections are periodically held to appoint people to manage the process, and many associations hire outside management companies to help maintain the property.
When many people in the U.S. hear the words “homeowner association,” they are more likely think about overzealous neighbors lobbying for restrictions on outdoor paint colors and lawn ornaments, than a vital part of any multifamily building or development, responsible for maintaining common space such as lobbies and roofs or services such as heating or air conditioning. But when these systems break down, or never exist in the first place, problems arise and solutions are complicated.
Such was the case in many countries in Eastern Europe after the fall of the Soviet Union. Housing stock formerly owned by the state was sold or even given to the families currently living there, but the responsibility for common space and services for these large buildings was not adequately transferred or away from the state or communicated to the homeowners. What have resulted over the past 20 years are large buildings filled with families from vastly different economic backgrounds, unable to create or unwilling to trust an HOA to maintain their building. The backlog of repairs needed on any building is so large that even with a functioning association many owners would be incapable of paying for them in a timely fashion. Add inefficient and sometimes corrupt local government, and you get gridlock. While many homeowners may be unhappy with the decaying state of their buildings and governments do want a better quality of life for their citizens, both parties feel helpless to do anything to fix the problem.
There is hope though; with a coordinated effort from national governments, local organizations and international donors, associations can be set up and eventually function on their own. For this to happen, homeowners have to see that they can trust an HOA to spend money well. Corruption in the past has made people wary of pooling their money, so there need to be incentives and oversight to create successful pilots in order to generate willingness.
Second, a careful mixture of grants and loans should be made available to associations that have demonstrated success in fixing minor problems, in order to make large scale capital improvements. This will require coordinated funding from national governments and international donors over a long period of time.
The solutions are by no means easy, but there have been examples of success in some cities. The IHC recently released a paper discussing the challenges and potential solutions in more depth. Please visit our publications page for the full paper.
