Common Ground

In December 2004, Howard Amborn and his wife, Esther, left the lawn mower behind and moved into Bunker Lake Village, a Hanson Builders common interest community (CIC) comprised of forty-one cottage ramblers in Andover.

“Age was perhaps the most significant factor in deciding to move from our Lakeville home,” says Amborn. “Yard work, home maintenance, and the stairs reminded us that as age progresses, the joy and work required to maintain a beautiful yard and a large home become less important.”

For an increasing number of Twin Cities residents, a CIC, like Bunker Lake Village, just makes sense—and it’s not always about age.

“[People] are so busy with their lives—work, family, vacations, and even playtime,” says Sarah Evans, the neighborhood association liaison for Ron Clark Construction & Design in Edina. “The whole idea about someone else mowing the lawn and somebody else watching over them . . . people really like that freedom.”

Now the freedom afforded to homeowners through a CIC or an association-maintained residence no longer means succumbing to a boring, homogeneous row of townhomes. According to Evans, a single development, like Ron Clark’s Trout Run Preserve in Savage, can range from million-dollar, custom single-family homes to condominiums starting at $190,000—and everything in between.

“A lot of developers are starting to blend different styles of homes in the same area, which makes it feel much more like a town and a little more human,” she says.

Whether you’re a retiree looking for some help with the yard, or a thirty-something who would rather be vacationing in Cabo than replacing roof shingles, there are a few steps you’ll want to take before diving into the CIC market. Read on for tips from developers, managers, and industry professionals.

Surveying the Property
Once you’ve armed yourself with a realtor who knows the market, and have narrowed the pool down to a few suitable properties, it’s time to do some legwork.

Initially, when you step into a CIC, look for signs that it’s a well-run and well-managed property, says Amanda Johnson, a common interest community manager for Hanson Builders.

“See how quickly driveways, roads, and sidewalks are cleared of snow,” she says. “A good association is going to have that cleared within eight hours of snowfall. In the spring and summer, a good way to determine the quality of the association is by looking at the lawn care.”

Outward appearance can give you a taste of how a property’s association operates, but it’s also vital to take a look inside and see how the association is run.

In every CIC, an association made up of homeowners makes decisions for the community or shared property. Often, the association will hire a professional management company to deal with outside vendors such as lawn care providers, and take care of accounting and tax needs. Sometimes a management company will even run meetings, respond to homeowner complaints, and settle disputes within the community. A good management company will stay current on any laws or codes and keep homeowners informed of changes. In addition, many companies work with CIC developers from the very beginning stages of a community, giving them a unique knowledge of the property.

If there is no management company, Johnson tells buyers to proceed with caution. “Some homeowners’ associations decide they want to be completely responsible,” she says. “The problem is that usually they’re not lawyers and accountants and tax advisors.”

If homeowners make the decision to handle their own tax returns and legal issues, each homeowner—whether on the association board or not—is liable for any mistakes made. With a management company, says Johnson, “they have the liability in addition to the homeowners having the liability and that comes down to money [in] the homeowner’s pocket in the future.”

Along with tax and legal issues, management companies often become the go to place for homeowner concerns or complaints. This eases neighbor relations and can create a better living situation. Without company involvement, says Alex Stenback, a mortgage banker and host of The Home and Wealth Show on FM 100.3 KTLK, “It can be uncomfortable because there’s not a third party making the decisions.”

On the flip side, just because a CIC operates with a management company doesn’t mean it’s always smooth sailing. “At times, depending on the management company, they can be more or less responsive than everyone wants them to be,” says Stenback. “From personal experience, it seems larger association management companies have a hard time responding to the volume.”Asking the Right Questions
It’s important to weigh the strengths and weaknesses of each association in order to find one that suits your needs. To do this well, you’ll need to know what to ask.

The number one question potential buyers usually ask right up front, according to Steve Obermueller, project manager with Wooddale Builders in Minnetonka, is: “How much are the monthly association fees?”

While this is an important question, it should be followed by a close look at what exactly the fees cover.

“Every neighborhood is going to be different,” says Evans. “One may have an association fee much higher, and you think they’re overcharging, but when you look at the list of items the association is paying for, it’s probably less cash out of pocket every month because they get some buying power from the association.” For example, the fees may include a bulk rate for cable television that saves residents from paying for pricier individual cable subscriptions.

Fortunately, it’s easy to figure out  where your association dollars go. Homeowners’ associations are required to produce a detailed budget of how association fees are portioned out. Expect the largest percentage to go toward landscaping and snow removal, says Johnson. After that, associations typically cover trash removal, liability insurance for common areas and buildings, and maintenance on the exteriors of the homes.

Every association is different, so it is important to review all documents—including the budget—carefully to avoid surprises later on.

This is especially true with the community’s replacement reserve.

A replacement reserve is a fund  homeowners pay each month (in most cases) to prepare for the replacement of common elements down the road—like a roof.

“Most buildings establish reserve funds, the question is how well they’re funded and whether the homeowners’ association is paying attention,” says Brian Flakne, general counsel and project principal for Lupe Development Partners in Bloomington. “Somewhere along the line the building will need a new roof . . . you have to be putting enough money aside per month so you can afford the replacement.”

Even though a solid reserve fund may mean slightly higher association fees per month, it will save homeowners the headache of being assessed a large fee for repairs that were not adequately reserved.

Playing by the Rules
“[One’s] home is still a castle,” says Flakne. “But when you live in a common interest community, there are some parameters put on that freedom.”

Similar to CIC budgets, the documents and regulations that govern any association will vary dramatically from property to property.

“If you have four large dogs and six vehicles including a motor home,” says Holly Johnson, vice president of community management with Community Development, a professional management company in Golden Valley, “maybe the condominium with strict pet and parking policies won’t quite fit your lifestyle.”

CIC rules will be laid out in a set of documents called a disclosure packet. Read carefully; you don’t want to find out on moving day that your dream of planting six-foot sunflowers on your front lawn won’t fly with the neighbors.

Pulling the Trigger
So, you’ve fallen in love with a condo, made an offer, and it was accepted. According to Minnesota law, you have a ten-day period to review all condo documents and look them over with your lawyer. Flakne strongly recommends clients take this time.

“In every instance there is a review period,” says Flakne. “If you find something that is unsatisfactory, you can back out and get earnest money back if you’ve placed it.”

And if everything meets with your approval? Congratulations, you’re home.