In these trying economic times, homeowner associations are looking for many creative ways to keep their collective heads above water. One possible means we have heard from our clients is selling or leasing common areas or facilities.
For example, an HOA may wish to sell a portion of its open space to an adjoining community or property owner, open its pool or club house to the public (for a fee) or provide vehicle or boat storage.
In assessing the viability of these options, an association board may first wish to balance the financial benefits with possible adverse effects – any decision should not be based merely on monetary gain. For instance:
- Allowing public access to formerly private areas or facilities increases legal liability and likely insurance premiums.
- Mixing non-owners or association members with homeowners adds a new dynamic to the community (which can be positive as well as negative).
- Running a storage or other public access facility requires administrative support, bookkeeping, regulation and tax reporting.
- Who is going to perform these functions and at what cost?
In addition to the practical considerations, a board of directors must determine if it has the
authority to convey, lease or encumber common areas or property. Often times, an association’s
declaration or other governing documents include specific provisions addressing the topic. In the
absence of such language, in both Washington and Oregon, state statutes address generally these issues.
If you have an association that is considering selling or leasing a portion of their common areas
or facilities, do not hesitate to give us a call for a more detailed analysis. Also, please remain
alert and let us know if you are aware of other creative or resourceful ways in which community
associations are responding to the prolonged economic climate.