Assessing HOA Clubhouse/ Common Areas

[The Warrior Monk]

I've moved this thread to Commercial/Industrial Appraisals, as there are appraisers that may frequent this section, but not other sections, and may have knowledge in the appraisal of these types of properties. I have a cursory understanding of how to value these properties, but it is best left to the experts for commentary.

 

[Elliott]

I was asked, Elliot, did you ever look back at assessing after you left or is the grass greener on your side?

I stayed nine years because it was a steady income, I had a big mortgage payment and it provided medical insurance. I wanted out after two years and couldn't stand the mismanagement. Never wanted to go back. I had a few nightmares over the years where I wake up in a cold sweat where I was back in the assessors office. But it is a good place to start. Being an independent fee appraiser is where I always wanted to go and it has been very, very good to me.

 

[SD Capital Investment]

I was asked, Elliot, did you ever look back at assessing after you left or is the grass greener on your side?

I stayed nine years because it was a steady income, I had a big mortgage payment and it provided medical insurance. I wanted out after two years and couldn't stand the mismanagement. Never wanted to go back. I had a few nightmares over the years where I wake up in a cold sweat where I was back in the assessors office. But it is a good place to start. Being an independent fee appraiser is where I always wanted to go and it has been very, very good to me.

Glad to hear it was the right move! My experience hasn't been traumatizing by any means but I've always wanted my own business.

 

[Thomas Holding]

Good Afternoon,

I have been contacted by the president of an HOA and have a meeting coming up to discuss the assessment of the homes inside the HOA and the Clubhouse. Currently all properties, but one, are duplexes. Each property is coveted which encompasses the articles of incorporation and bylaws, giving each property rights of use to the common property, not a percentage of ownership. The common property is a 5,000 sqft clubhouse with an indoor pool, outdoor pool, and parking lot.

Since the start of the development in 2004, the common property has been assessed its own value, and is legally described as an individual lot. The deed has been transferred from the developer to the HOA for $0. The twinhomes in the HOA have been reappraised and given market adjustments to follow the appreciation in value through sales over the past few years.

The HOA president has stated at his home in Arizona the common property is not assessed, as its value is recaptured through each sale of the lots inside the coveted HOA. I have been able to view case law for Florida relating to this issue, but cannot find anything helpful for South Dakota. My fellow SD assessors seem to agree the value is captured in this manner and they are being double assessed for the value of the clubhouse.

Does anyone have any experience making adjustments for this situation and do you have any laws in your state that help guide you in doing so fairly?

Thanks,
Ethan

I do not know the tax laws in SD or in a particular county there but in the different tax offices in NC where I have worked as an appraiser, I have seen both methods utilized. It all depended on the guidelines set forth in each individual county. Our state laws left it open for each county to decide how to assess common areas in properties with multiple owners. In the county where I currently work, the common areas like clubhouses and pools are assessed billed to the HOA. Tax offices typically do not split bills up and apportion a particular amount based on percentage ownership since that would be too cumbersome.