Want to Avoid an HOA Neighborhood in Austin? Be Careful

HOA Rules Austin TX Real EstateIn early 2007 I got fed up with the deed restriction violations in my SW Austin neighborhood. This was a neighborhood with no Home Owner’s Association, and thus, no formal enforcement mechanism to keep bonehead neighbors in line.

This all came to a head when one neighbor decided to install a mobile home on their newly purchased 2 acre property. They did install the MH and they moved in. The plan was to live in the mobile home temporarily, for a year or two, while they built a new custom home, then remove the MH. The neighbors were outraged at the mobile home, which was a clear violation of deed restrictions. Tempers flew, rude signs were placed at the property, the email list caught fire with discussions, and a neighborhood meeting was called.

“Good!”, I thought. Under the umbrella of addressing the mobile home being placed on the property, we could also discuss the fact that nearly every other home in the neighborhood was also in violation of the deed restrictions, though in smaller ways.

In my neighborhood of 2+ acre homes, fences were in disrepair and/or too high, or made of wood, mailboxes broken and never fixed, driveways crumbling, yards never mowed, out-buildings that didn’t match the main home in appearance, remodel and construction projects that were started, abandoned and left as eye-sores, and several large commercial metal buildings had been built in back of properties.

The neighborhood was going down hill and becoming shoddy. Remember, without an HOA, and outside city limits, there is nobody to whom these violations can be “reported”. The County does not enforce deed restrictions. You have to actually hire an attorney and sue your neighbor in order to address violations. My home, which we had built in 2003, was the newest home in the neighborhood and I felt its value was threatened by the lack of upkeep in the neighborhood. This neighborhood meeting would therefore be a perfect opportunity to see if that could be turned around.

At the meeting, a succession of neighbors got up and railed against the mobile home. When I got up to speak, I spoke not against the mobile home or its owners (who attended the meeting and took all the heat), but instead asked the simple question “do we want to enforce deed restrictions or not? We can’t say that we want to ignore all deed restrictions except this particular one restricting mobile homes”.

And then I rattled off the aforementioned list of actual, current deed restriction violations on various neighborhood properties and wanted to know if anyone cared about those. To me, we needed to have this discussion of the underlying issue and then discuss the mobile home and other violations in the context of a shared understanding of whether or not the deed restrictions should be observed equally by all home owners.

I nearly got booed out of the meeting. “That’s different”, someone said. “This isn’t Circle C”, another blurted, to which I responded, “yes, that’s obvious to anyone who drives through and sees how shoddy the neighborhood looks”. Another neighbor shouted at me “we all moved out to a neighborhood like this because we want to be left the f**k alone and not be hassled by Yard Nazis”. To that I responded, “but you’re not leaving this family alone, now are you? You’re hassling them. You’re all saying that you don’t care about following the rules, but you want this one family alone to follow the deed rules – the same deed restriction rules that most of you are breaking yourselves – because you think their particular deed violation is a whopper, but that your own lesser violations are ok. You can’t have it both ways”. This perfectly logical and fair reasoning fell on deaf ears.

Finally someone said if I didn’t like it I could move. I already knew that. I went home that night and told Sylvia we were moving. I didn’t want to live around these rednecks and their declining neighborhood anymore.
We bought some acreage lots nearby in the new Granada Oaks subdivision (which would have a mandatory HOA) and built a new custom home. We sold our old home at the end of 2007 for just under $500K and have watched the old neighborhood fall into deeper disrepair since then, as it seems now to attract buyers with lower aesthetic standards. The house I sold probably wouldn’t sell for much more than $400K today, if that, so our timing was pretty good and my worries about the decline of the neighborhood were valid. In our new home, which I built turnkey for less than the sales price of the old home, we have a $300 per year HOA fee, which I am more than happy to pay because of the enforcement mechanism (and thus, property value protection) it provides.

And then comes today an article in the Austin American Statesman outlining this very same issue.

From the article:

The folks on Brenda Lane near Old Settlers Park in Williamson County — some of them have lived there 30 years — have enjoyed the rural lifestyle. Roosters crow. Cows roam. Horses graze. It’s always been peaceful, residents say, until recently.

On weekends, wedding receptions, quinceañeras and private parties are held at El Rancho on Brenda Lane, smack in the middle of the dead-end street with about 20 homes. “It’s basically a honky tonk,” said Barbara Penso, who lives a few houses away from El Rancho…

…She said thumping music keeps people up until 2 a.m. some nights, and the neighbors have to deal with heavy traffic, rows of cars parked up and down the road and beer cans thrown about by guests…

…Penso and other residents of Jackie Thomison subdivision say deed restrictions forbid a business to operate in their little enclave. But because the area has no homeowner’s association to enforce the restrictions, they’ve gone to Williamson County Attorney Jana Duty’s office to shut it down — with no success…

…The county attorney doesn’t want to get involved. “Our official policy is to not enforce deed restrictions,” said Hank Prejean, assistant county attorney…Those residents can hire their own attorney and take it to court.”

And the residents have in fact hired their own attorney. But the family in violation of the deed restrictions has a valid defense. They say that the deed restrictions have been violated for so long, by so many different properties, that the deed restrictions are no longer in force and therefore they are in violation of nothing. And if I had to bet on the outcome of this, I think the neighborhood is going to lose.

Says their attorney:

“Our position is that the deed restrictions have been waived because there are already other businesses operating, including a plumber, in the neighborhood. Our second point is that El Rancho has been operating since December of 2006. It hasn’t been a secret from the neighbors. In that time, there have been improvements. They’ve worked hard to become successful. The neighbors should have complained from the get-go, not now in 2009.”

This is exactly one of the arguments I made when pleading to my old neighbors that we can’t simply pick and choose which deed restrictions to enforce. When a neighborhood turns a blind eye to violations for so long, the restrictions effectively cease to exist and can become unenforceable.

So, in 2007, as I looked across the street from my old home at a 2 acre lot for sale, I knew that if a general contractor wanted to buy that property and build something 100% out of compliance with deed restrictions, including a 5,000+ sqft commercial metal building out of which a business might be run, I would have no reliable recourse. No leg to stand on. And the value of my home would take a big hit. And with neighbors not sharing my worries or willing to abide by deed restrictions, I wasn’t willing to roll the dice on my home value.

I’ve heard the horror stories of HOAs over-enforcing rules and making home owners feel like they are subject to harsh scrutiny, but I personally find that more tolerable than what I experienced. And certainly more tolerable than what is being described in the above quoted news article.

Plus, if a buyer wants to limit their Austin home search to non-HOA neighborhoods, that is going to rule out an unacceptable number of candidate properties, in my opinion.

At present, there are 8,936 homes for sale in in Austin MLS. Of those, 4,973 have a mandatory HOA. Of those without a mandatory HOA, there are only 709 priced below $250K that have at least 1600 sqft with 3+ bedrooms, 2+ baths and a 2+ car garage. Of those, only 104 are less than 10 miles from downtown. If I lift the non-HOA restriction from the 104, the search result grows to 307.

Thus, a buyer seeking the typical Austin home, as described above, would eliminate two thirds of candidate properties from their search pool if they maintain a refusal to consider homes with an HOA.

Still, we occasionally have buyers who, perhaps because of previous bad experiences with HOAs, say they don’t want to have an HOA. That’s fine. Just make sure you know the other side of that coin.

Posted by Steve
7 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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Michael @ The Stage Coach - 7 years ago

hi, Steve…
One of my favorite topics… I could write a short book on the Deed Restriction Insanity I see in our little Enclave of around 95x homes up here in Round Rock. One of the first things my wife and I will consider before buying our next home is: Is there an HOA? Do they pay a Management Company? And are Deed Restrictions REALLY enforced?
Here’s the most recent Cluster-F**K: As a result of the hail storms this year, many of us had to replace our roofs. One of the neighbors picked the cheapest roofer (they drove a pool truck – no joke) and shingles they could find to do the job. As a result, the new roof is out of compliance with the Architectural Shingle required by the deed restrictions. So they sent them a letter. And another. And another.
Finally, the HOA President knocked on their door. The owner’s response: “We can’t afford to put a new roof on the house.” Here’s where it gets REALLY juicy: He replied, “Have you filed for bankruptcy? The Management Company says we’ll have to have our lawyers file a claim against you in Williamson County Court if you haven’t filed for bankruptcy…”
So now we have this one house that looks like a cheap piece of garbage compared to the others in sight of it. The Board “feels bad” for the owners who have been down on their luck (lost job) and are have filed for bankruptcy. In fact, the reason they put the cheap roof on was to pocket the difference for living expenses – now, I’m no lawyer, but this sounds oddly like the Insurance Fraud mentioned to me by the company that replaced our roof.
I’ll Admit it: I guess I’m a sucker for mowing the lawn weekly – even if it does not need it. And I’m a goof-ball for pulling the garbage can – out of site of the street – on Friday afternoons. And I could have saved my deductible when we had our roof replaced this summer, and used it for an over size shed in my back yard. And may be I should have bought that 3/4 ton moving (commercial) truck I wanted for my business, instead of the pickup truck parked in my drive way. And we should have picked a home closer to the end of the cul de sac, so we could park our cars in the street in the visitor parking, and not in our drive way.
Earlier this year, the Board asked if I would volunteer for the year. I declined telling them, “Ya’ll are way too nice for me to tolerate. When you’re ready for the HOA Nazi, call me.”

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marty - 7 years ago

i live in my HOA-free central austin neighborhood and absolutely love it. it may be different out in the rural areas like you described, but property values in and around my neighborhood area and have always been quite strong — even with the city having to be called (not by me) on my neighbor for their grass being longer than the city itself allows. several houses over the past couple years have sold on my street near this rogue neighbor and they’ve all sold quickly at or near the high price being asked. i think this particular neighbor just adds to the flavor, to be honest. i don’t mind them, nor do i mind what anyone else does, obviously within reason (running a ‘honky tonk’ next door would probably be too much for me, too).

on the other hand, i have at least a dozen nightmare stories of people i know dealing with their HOA overlords, which in my opinion have FAR to much authority in most cases. if i don’t follow the HOA’s rules they can take my house? really? and what government body oversees this process to ensure the head of the HOA and his/her friends don’t simply have a grudge against me?

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Steve - 7 years ago

Hi Marty and Michael,

Both of you are right.

In the central Austin neighborhoods the location and land values, as well as the more forgiving sensibilities of the central inhabitants make the occassional junker less problematic. You also have city government to enforce things such as parking in the front lawn, parking motorhomes in the driveway, etc., which the County doesn’t do.

But in Michael’s example, the home owner agreed to abide and hasn’t. That should be enforced, even if it’s a sad situation.

Steve

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Bill - 7 years ago

HOAs are no panacea. Enforcement is slow to act and uneven (but at least there is some recourse, I suppose). Before we lived in our centralish, expensive, no HOA neighborhood, we lived in two HOA neighborhoods. In the last, we had neighbors with nine cars who were upset they weren’t allowed to park on the street — and went to elaborate lengths to devise a parking rotation to squeak by the rules in the in HOA. Other neighbors were a bit negligent in various upkeep or didn’t think some rules applied to them. (Basketball hoops on the street was a frequent violation.) Enforcement is a very slow process.

In our current neighborhood, we have some deed restrictions and town bylaws, but no HOA — yet by and large, there are less problems. There appears to be more a socio-economic drive than a legal drive when it comes to upkeep of a neighborhood.

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Julia - 7 years ago

Great story. I love that you addressed the underlying issue in that meeting. I wouldn’t have had the guts to do it!

I live in an HOA-free neighborhood, and I will admit that it’s got a bit of “character”. However, I’d much rather laugh over the absurd things my neighbors do than deal with unreasonable HOA enforcers. So I’d be one of those folks demanding to only see houses without an HOA. I’ve always said that if a problem is REALLY attrocious, the city probably has ordinances that address it. But great point in that the county does not. I wasn’t aware of that type of problem/risk, but it definitely makes sense.

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Ray - 7 years ago

I believe your title is a bit flawed. Avoiding HOA Neighborhoods in Austin is fine (and smart IMHO) due to city ordinances. It is outside of the COA jurisdiction that one needs to be careful – as the body of your article points out.

The comfort I feel living in a non-HOA central Austin neighborhood is priceless. The COA codes are typically sensible without being overbearing. In fact, I think it may be time to put a couple of hens in the back yard…

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Steve - 7 years ago

Thanks Bill, Julia, Ray. Good points. It’s really the County areas where the biggest risk is found in purchasing in unregulated areas.

Steve

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Sam - 4 years ago

Thanks! This was exactly what I needed to hear!!! I very much could not live in an hoa and have people dictate my property. If I want a darn toilet in the backyard I should be able because I bought it!!! Those people are a bit silly though, you can’t be not picky. If someone wants to put a mh on their property that’s their business. I want to move out of neighborhoods so I can avoid people not attract them… Only wish those farther out places had better schools ;/

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Jeff - last year

I’ve never been a fan of HOA’s and never will be. It’s bad enough the Country, state and city get to regulate how you live on your property, its even worse when you have people micromanaging grass height, vegetable garden’s and door colors. I bought a piece of land that I own and should be able to decorate or not decorate however I like. Otherwise what’s the point of ownership? I think the problem is that lots of folks treat houses as an investment and not a home. Let the neighborhood evolve on its own. If you’re in a good neighborhood good people will move in, improvements will be made and values will grow.

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R. Villarreal - 3 weeks ago

Is this still an active discussion? My neighborhood has deed restrictions but no HOA. Someone in my neighborhood has violated the deed restrictions, but apparently complied with COA code. From my research, it looks like there is nothing that can be done unless a legal suit is filed. So what does a person who cares about the resale future of the homes in this neighborhood do?

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Steve - 3 weeks ago

Hi R,

Not much you can formally do aside from suing. That’s basically the gist of thr pros and cons of HOA vs no HOA. If there was an HOA, you cold complain and the HOA would enforce.
Steve

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