We are on the verge of inheriting a problem that afflicts Homeowners Associations across the U.S. – what to do about dead and dying gold courses. As we prepare to move into Trilogy at Vistancia, we just received notice that the builder is offering to sell their golf course to the Home Owners Association (first right of refusal). When we signed off on the original Disclosure statement back in May we were delighted that it contains the following language: “Neither the purchasers nor the Association will have any ownership or membership rights in the Golf Course, and neither the purchasers nor the Association will <not> have any responsibility for the maintenance and operation of the Golf Course.”
Now the builder wants us to sign off on an amendment to the Disclosure which includes the builder’s intention to sell the golf course. We have a problem with this because it is not material at this time, i.e. our decision to buy was made based on the Disclosure we signed in May. We contacted the builder to see if we have an option to cancel but were told that it would require legal action ($$$). In protest, we’re not signing the revised disclosure though that won’t change anything.
Many builders in the 1990s and 2000s built communities featuring a golf course. However over time the business of golf has declined. Revenue from golf club memberships and number of rounds played has decreased while operating expenses are increasing year over year. Not exactly a business that I want to buy into.
No Elegant Solutions
While researching options, we’ve become aware of the extent of this problem. Hundreds HOAs are trying to figure out what to do with dead or dying golf courses. Here are a few potential solutions and their less than ideal consequences.
- HOA buys the golf course. This usually results in an assessment and an increase in HOA dues. The continuing financial struggles of the golf course make future increases likely.
- The builder sells to a third party that agrees to keep it as a golf course. Over time the new golf course owner cuts expenses in an effort to stem the flow of red ink. Maintenance of the course declines with visible results. Home values, especially those adjacent to the course, decrease. In some cases, the HOA decides to buy the golf course to protect property values. The HOA can end up paying more for the course than when first offered. And of course assessments and increased dues follow.
- Convince the City to rezone the land to allow new home construction. Home owners who live adjacent to the course would be very displeased at the prospect of losing their views, quiet “backyards” and home value.
What to Do
We’ve spoken with our real estate agent and a representative from the builder’s sales team. Both have assured us that the HOA will not vote in favor of purchasing the golf course. The most likely scenario is that it will be sold to a third party that will continue to operate it as a golf course. So in the short term, nothing should change for us. But our concern is what happens if and when the golf course fails and goes into a state of disrepair? That’s when things could really get interesting. For now, we’ve decided to stay the (golf) course!
For more information on this subject check out these articles:
From the Wall Street Journal: Golf Home Owners Find Themselves in a Hole