HOA rules for subgroup garage ownership

Started by PaulP18 • 4 replies • 234 views

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PaulP18 (Wisconsin)
Posts: 3

Posted:

Hi, I recently move into a new twin home condo managed by an HOA. The development is only 18 months old and has five twin homes for a total of 10 units.

The builder/developer set aside a small section of land for a four unit garage with the idea that there might be four condo owners who would be interested in working together to finance and build the garage. Each home owner involved would finance and own one garage unit.

I would like to work to get this garage built but have questions on how a separate subgroup of condo owners owning the garage impacts the rest of the HOA. Would I have to work with the HOA board to create a separate garage account structure to manage the shared cost, I.e. insurance, maintenance/repair and reserve fund accounts to keep them separated from the condos’ accounts; Then budget for these accounts with a separate monthly HOA fee?

Would the current HOA rules and bylaws need to be changed to address potential issues that may arise, I.e, non payment of monthly garage HOA fees, etc.

I need to gather lot of details to how this would be managed before I present the plan to the board.

How do other HOAs handle situations where a subgroup of owners own a building of which they each own a part of that is on HOA land?

Thank you.

LetA (Nevada)
Posts: 2,679

Posted:

Things you need to ask, Will the garage be for your exclusive use? Will the garage be deeded to my homes title? Is this a rental contract? If it is a rental, how long?
Will your assessments increase weather you participate in the garage or not?

PaulP18 (Wisconsin)
Posts: 3

Posted:

Thank you for the questions, LetA. The garage unit will be mine exclusively. Not sure how each garage unit will be deeded but I’d like to keep mine separate from my home as I reason it would be easier to sell to another condo owner in the event I want to sell it. Not a rental. But I’m concerned there may not be four homeowners interested in the project. Maybe there might be owners not interested in owning the extra garage space but would be willing to rent one, so I might buy two garage units and rent the extra out.

Again thank you

CathyA3 (Ohio)
Posts: 6,299

Posted:

I recommend getting a lawyer involved since jointly owned anything can lead to problems if the legal agreement have any flaws in them. The legal agreement also has to be in accord with the condo Declaration/CC&Rs, so the CC&Rs would need to be amended to add this new structure to the condominium property. The agreement would also have to specify who owns what in the garage and who is responsible for maintenance and repair.

Long story short, you need to get the association's attorney involved, at a minimum.

I'm not clear if the association has been turned over to the homeowners yet or if the builder/developer is still in control. He should be taking the lead and not pushing the responsibility onto owners who may not have a very clear idea of how condos associations work (which is most owners, unfortunately). The developer should be treating this the same as the residences. If the homeowners are in control of the association, I think it would be appropriate to ask for a proposal from him where he could spell out what he would have his plans for the garage are. And potential buyers should really be buying from the builder, not the HOA - there are some potential issues here, which is why I recommend getting the lawyer involved from the beginning.

There are potentially painful pitfalls here, so proceed cautiously.

Also, if you're on the board and you're planning to buy one of the garage units, you have a conflict of interest - so you'll need to recuse yourself from all discussions and decision-making. Sorry...

PaulP18 (Wisconsin)
Posts: 3

Posted:

Thank you CathyA3.

This is most helpful. The builder/developer has handed the administration of the HOA over to our newly elected board. (I'm not a member but my wife is.) We're all new to this and there are other issues they are addressing right now like increasing monthly HOAS fees to cover increased costs, warranty issues with plants, etc. We have a HOA management service managing the HOA for us now. Our HOA doesn't have an attorney but for something like this we may have to get one.

Thanks again.

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