With the housing market in a slump, the HOAs (Home Owners Associations) in many communities in the state are facing short falls of cash as house after house in the community is vacant and therefore owners are not paying a monthly HOA fee.
So far, there are no reported bankrupt HOAs according to the recent report in the Arizona Republic. But according to the report many of the Arizona HOAs are suffering financially.
Because of the financial shortage many are facing, some of the HOAs have resorted to charging both sellers, as well as buyers a fee when a home sells.
One worrisome side effect of this growing problem for HOAs is if an HOA ends up going bankrupt, a title insurance company will not be able to issue a title insurance policy. If a title insurance policy can’t be issued on a home it makes a property practically impossible to be bought or sold.
Many homeowners in financially stressed communities have banned together to help keep weeds down and clutter out of the areas.
The effect on HOAs is another thing we all need be concerned about in this difficult time in the economy.