Controlling the “Front Door” in a CID

Many of our clients are wary about turning over control of the project entry to the HOA too early in the project’s sale-out phase. Once an improvement is owned by the HOA, it is their responsibility to maintain it, and the subdivider often prefers to maintain it at a higher level than the HOA would.

More and more often, we see Use and Maintenance Agreements utilized, which allow the subdivider to retain fee ownership and control of the entry area until later in the development. An added bonus to this approach is that the arrangement acts as an assessment reduction program for the HOA. The Agreement creates a win-win situation: the subdivider controls the area, annual plantings and landscape maintenance can be enhanced as desired, and the HOA dues are lower in the early phase(s) because the HOA does not have to maintain those areas.

In markets where the amount of HOA dues are a concern, and in particular for small to medium sized developments, the Use Agreement can be considered as an alternative to subsidizing the HOA dues in the early phases. In this case, the dues structure of the overall project is evaluated based on the timing of common area turn-over and phasing plans are gauged on the assessment levels. The Use Agreement effectively acts as a subsidy and eliminates “front loading” the assessments when the common area is retained by the subdivider.

Depending upon the improvements covered by the Use Agreement, the subdivider may be asked to pay the reserves for the improvements for the period of time that conveyance to the HOA will be delayed. A Reserve Bond is the easiest and most frequently used approach to ensure payment of long-term maintenance and reserves. This is a very minor item in the overall scheme of a project’s successful sales promotion.


Hi, I'm Scott

I'd love to learn more about your new development or project. Use the link below to request a proposal.


Stay up to date.

Sign up our newsletter for latest article and news.
Housing Shortage

Challenges Facing Homebuilders in Meeting Demand for New Homes

In the quest to address the current housing crisis, homebuilders are facing substantial hurdles that hinder their ability to meet the rising demand for new homes. Despite the expectation that new construction would alleviate the shortage and stabilize home prices, builders are grappling with their own set of challenges that are stalling their progress.

Read More »
Borrowing from Reserves

Borrowing from Reserves: The Right Way

Budgeting is a critical aspect of managing a homeowner’s association. It helps ensure that the community’s financial needs are met while maintaining financial stability. However, some common budget mistakes can hinder the smooth operation of an HOA. One such mistake is borrowing from reserves. In this blog, we will discuss the potential pitfalls of borrowing from reserves and explore the legal implications of this practice.

Read More »

California’s Insurance Landscape: The Legacy of the Ruoff Case

In the state of California, it’s no secret that we face a dynamic and challenging insurance landscape. Insurance has become a hot topic, with community associations, condominium developments, and homeowners’ associations facing increasing challenges in securing adequate coverage and the limited number of providers in the state.

Read More »
Overcoming Resistance to HOA Budget Contributions

Overcoming Resistance to HOA Budget Contributions

In every Homeowners Association board, there’s often one member who passionately opposes any increase to the budget. Regardless of justifications, this individual consistently votes against it. We were contacted by a Condominium Association that had never conducted a reserve study in its 18-year history.

Read More »
Schedule a Call
Discuss your project or needs with someone from the California Builder Services team.