Mandatory Equity Membership: Points to Ponder

Mandatory Equity Membership: Points to Ponder

Mandatory Equity Membership is associated with golf course communities requiring homeowners to purchase a club membership when they buy a home. This membership entitles them to use the facilities and own a portion of the golf club.

There is a mandatory equity membership fee and at times, an initiation fee; these can range anywhere from $5000.00 to $250,000.00, and higher. Some clubs separate the fee into a percentage that represents a refundable equity interest and the remaining fee is considered a capital contribution and not recouped by the owners upon a sale.

Annual homeowner's association (HOA) dues are a separate, reoccuring fee customarily billed monthly, quarterly or annually. The amount of the HOA dues depends on the number of members and the cost to operate the facility. Clubs with fewer members are more exclusive and more expensive. If the annual dues are insufficient to cover operating costs and capital improvements, members are assessed additional amounts each year to make up the shortfall.

In addition, most equity clubs require a minimum dollar amount be spent by residents each year in on site facilities like the golf course or restaurants. If the minimum is not reached, the member is charged the difference. Many clubs also charge additional amounts for golf cart usage, locker room use, club storage and at times, tipping or holiday bonus pools for staff.

By now you may be thinking how this expense may benefit you? In mandatory equity membership communities, the condition of the golf course is generally exceptional due to the fact there are greater funds for maintenance and fewer players to create wear and tear on the course. Tee times are readily available and the facilities and food are often of much higher quality than those offered at a public course.

If you are considering a home purchase in a mandatory equity membership community, have your REALTOR walk you into the membership office to meet staff and learn about the many benefits and levels of club membership. Prior to your final purchase decision, your REALTOR can usually arrange an opportunity for you to play the course and have a meal or take advantage of other services offered in the club.

Before considering a purchase, I recommend you take a tour of the facilities, learn about everything from charges for your guests to classes offered, hours of operation and social events. You should also have a thorough understanding of all costs so you can decide if this form of ownership suits your goals.

Mandatory equity membership can be a worthwhile expense with fabulous benefits just do your homework.

Copyright: Valerie Anne Martinetti, 2024