Dangers of Grouping Community Utilities

shutterstock_60066028One of the best things about living in a neighborhood with an HOA is being part of a community. As a community, the neighborhood does many things together, which sometimes includes grouping community utilities. This can offer a lot of benefits, but it can also be dangerous if the HOA is struggling.

Why Offer Utility Grouping?

Grouping utilities for a community is always an appealing option. Think of it like the group health insurance people get through their jobs. Because the same insurance is being sold to a group, the individual gets a discount. If they purchased that same plan on their own, they’d pay more. Similarly, when HOAs group utilities, the homeowners get a discount. This is especially the case when there are different competitors in one area. For example, if the HOA works out a group deal with one cable provider, everyone who chooses that cable provider may pay a lot less than if they pick a different one.

What’s the Downside to Utility Grouping?

There is, however, a downside to utility grouping. When a homeowner is not part of utility grouping, they pay their utility fees directly to the utility provider. However, when an HOA groups utilities, the homeowners often pay the money to the HOA who, in turn, pays the utility bill for the whole group. This is fine as long as the HOA actually pays the bill. Unfortunately, the HOA may not follow through. At a condominium in Orlando Florida, residents were paying their water bills to the HOA, but the HOA failed to pay the water company. As a result, the water was turned off, even though the residents had done their part.

Should HOAs Ban Utility Grouping?

Despite the dangers of utility grouping, it isn’t something that should be banned across the board. Many communities have no problem grouping utilities and paying the bill. However, for HOAs that do group utilities, there should be some accountability. Homeowners should be informed on whether the bill is being paid, so they don’t find out when it’s too late. This is why it’s important for HOAs to have checks and balances. There should always be someone verifying how the money is being spent.

Like many features of HOAs, utility grouping has its own pros and cons, but as long as the HOA is run properly and with accountability, the pros should outweigh the cons.

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