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HOAs and Owner Involvement: An Oxymoron? (part 2 of 3)

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guest blog by Deborah Goonan

Debunking the myth that owners can actually change their HOAs

CAI’s educational booklet makes the assumption that owners elect their Board. In reality, the Developer appoints the Board – or at least one or more members of the Board – for several years, or even decades during construction. When the developer still controls the Board and possesses weighted voting rights, isn’t owner participation essentially a moot point?

Have HOA proponents, and CAI in particular, ever considered that a homeowner, having had no opportunity to elect the Board or amend documents during many years of developer control, is unlikely to ever make a successful transition to widespread participation in voting? And by the time it is no longer developer-appointed, what if the Board is still controlled by a small minority of investors or developer affiliates, who hold the majority of voting rights? This situation is far more common than CAI industry professionals would lead us to believe.

Vote the bums out!

As for CAI’s oft-prescribed solution to dissatisfaction – electing a new Board – is it really that simple? Not really. Post-turnover election procedures are based upon written provisions of the governing documents, possibly subject to limited statutory guidelines. The fact is, HOA governing documents are not reviewed and approved for compliance with constitutional voting procedures. Therefore voting systems are generally built upon the following components:

–Inequitable allocation of voting rights (votes allocated by number of units owned or proportional share of ownership)

–Voting processes that often involve proxies and/or representative voting systems that disenfranchise residents

–Typically, tenants cannot vote

–Members can have their voting rights revoked as a result of an alleged violation or dispute, or for being delinquent on assessments. (If you were told you could not vote at the polls as a result of being delinquent on your property taxes, would you accept that?)

Although laws in some states address a few of these issues individually, no statute addresses all of them, most notably equitable allocation of voting rights. Some states mandate ballot election for Board members, but not for amending governing documents.

Quite often, loopholes allow existing HOAs to avoid compliance with applicable statutes, with the qualifying phrase “unless otherwise stated in the governing documents” inserted before election and voting provisions. And because there is no national standard, the relative fairness of elections and voting varies considerably from state to state and from one Association to another. Obviously, more realistic solutions are needed.

See Part 3: Exploring Solutions

Link to CAI’s publication, Community Association Living

HOAs & Owner Involvement: An Oxymoron? (part 1 of 3)

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guest blog by Deborah Goonan

Let’s get real!

One of the most common laments of HOA industry professionals is this: “Owners are apathetic. No matter what we do, we cannot get them involved in governance of the community.”

I have previously blogged, tongue-in-cheek, about the tendency of Boards to cultivate apathy. Today I will explore the issue in more depth.

Is it realistic to expect widespread participation?

Historically, few people actively participate in city, town, or county government, so what makes anyone believe that there would be a higher participation rate in HOAs?

Consider that HOAs (and especially condo associations) are marketed as carefree, low-maintenance lifestyles, often including amenities that owners do not have to personally maintain. HOA homes are not explicitly disclosed as what they are: shares in real estate investment, almost always part of a corporate entity. And, even if we could enlighten buyers and owners about the need to protect their investments in their HOAs, how many would take active roles? After all, most people with retirement accounts tend to put their money into funds managed by financial professionals – few actively monitor their funds.

Does HOA governance structure encourage or discourage participation of residents?

Some critics of HOA governance have suggested that Boards should allow residents to actively participate at meetings, with the ability to present ideas, make motions, and vote on resolutions directly affecting them.

But I doubt we will see such change, because CAI – and most governing documents written by attorneys for developers – promotes policies that give the Board broad authority to act on behalf of the association.

Refer to page 30 of Community Association Living: (Emphasis added in bold)

“Board members and committee members are volunteer leaders who meet regularly to discuss pertinent details about running their community. A board meeting at a community association is comparable to a town council meeting of a municipality. The basic authority in a community association lies with the owners. However, the owners elect a board of directors to act on their behalf. Usually the governing documents delegate almost all of the association’s decision-making powers to a board. This leaves the owners with very few direct powers. Typically, owners have only the voting power to:

  • Elect and remove directors
  • Amend any of the governing documents, except board resolutions

Occasionally, owners will approve the annual budget for their association. But all other decisions are usually left to the board. As a result, if owners are unsatisfied with a board decision, they usually do not have the direct authority to “veto” or “undo” its action. Under such conditions, their only remedy is to elect a new board to represent them.”

Clearly, the status quo discourages active participation of owners, exacerbating apathy. See Part 2: Reality Check

 

HOA Renters Beware!

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guest blog by Dave Russell

Do you think homeowners are the only ones being abused in HOAs? We have long blogged and discussed about the abuses of homeowners in HOAs. But what about those who rent in an HOA? Are they subject to the same HOA abuse? You bet they are!

Actually, renters are sometimes dealt a double whammy when it comes to renting in an HOA. I have heard it time and time again, “Oh great, another slum rental property, with more trashy renters!” Trust me when I tell you, rental properties and HOAs mix like oil and water. HOAs certainly do not roll out the red carpet for renters. Becoming a renter in an HOA is probably about as popular as playing leapfrog with a Unicorn, in most cases – “there goes the neighborhood!”

If the unfounded hostility towards renters isn’t bad enough, what if the landlord adds to it? Some landlords simply fail to inform their new renters that they are a little behind in their HOA dues. Now Mr. and Mrs. Renter, who are just thrilled with all of the amenities in their new humble HOA abode, that’s until they get what I call the “Nasty-Gram” from the HOA stuck to their front door.

Ah, the Suspension of Privileges Notice, that simple and short piece of paper informing the renter that their privileges to the pools, saunas, clubhouses and sometimes parking, have been suspended by the HOA for nonpayment of mandatory dues by their landlord.

Now you may be asking, what is a renter to do? Has the landlord violated the Tenant Landlord Act? In most States the answer to that question is no. The Tenant Landlord Act usually requires the landlord to keep the property in habitable condition. Most of these Tenant Landlord Acts do not address the issues regarding HOA amenities and simply state that the property has to be clean, safe and bug free.

Just like homeowners, the renters in HOAs are left with but one choice, which is suing the landlord. And just like with homeowners in associations, who has the time and money for that? The only difference between renters and homeowners is that the renter can simply move on while the homeowner is stuck in HOA purgatory.

Now just imagine this scenario, you are renting a condo, the doorbell rings and it’s a process server with legal papers. You see, the HOA is foreclosing on the property because your landlord has failed to pay his portion of the mandatory HOA dues. As we all know, some folks live from paycheck to paycheck, and many are already on the verge of homelessness. This leaves renters scrambling for a new place to live as well as paying for the cost of moving, deposits and time off of work to find another place to live.

Here is another frightening scenario where the HOA renter is once again victimized and stuck in the middle of the HOA vs. their landlord. The doorbell rings, again its Mr. Process Server with some more scary legal papers. The HOA has decided that they are going to do an assignment of rents because your landlord has failed to pay his/her mandatory HOA assessments. The court order directs you, as the renter, to send off your rent payments to the association’s law firm. Oh, did I mention that even though you are now paying the HOA, that you are still barred from all of the amenities?

HOA rental properties also seem to attract conmen and scammers. Here in my community, a single mother came in to introduce herself and requested keys to a specific unit. She stated that she just rented the unit through a “house sitting program.” The new renter stated the condo was in foreclosure and she paid a service $500 in exchange for free rent until the unit foreclosed. I personally knew the owner of this unit, and knew that the condo was not under foreclosure. I did some research on the person who signed the lease, to my amazement; it was a conman that I had seen on the news about a year ago.

I can’t tell you how bad I felt when I had to tell this single mother that she was the victim of a rental scam. I did contact one of my reporter friends at KPHO News Phoenix, who promptly blasted this conman’s scam and face during the evening news. This conman’s victims all had one thing in common — every scam he ran just happened to be in an HOA. I suppose it’s preferable to run a scam in a place where the biggest scams in history take place.

HOA Renters Beware! those gated communities, with those glorious amenities, may be a lot more, or a lot less, than you ever bargained for.

http://raycomgroup.worldnow.com/story/24812079/con-artist-accused-of-scamming-several-valley-victims-in-housing-program

Something Has To Be Done!

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We really do need to get national legislation, at least against some of the most outrageous HOA actions. The case linked below is actually a rather common problem in HOA Amerika… keeping a homeowner locked out of his gated neighborhood if he’s violated some minor covenant.

Jim Bartels of Fairview, North Carolina got into some kind of dispute with his HOA. The result? They installed a gate and wouldn’t give Bartels a gate code. The HOA board claims they can do that because he’s ‘not in good standing’ in the neighborhood.

A while back I blogged about a different case in Florida where a single mom was locked out of her neighborhood. She had to have someone drive to the gate and physically let her in. At the time I mulled over potential family emergencies and whether the whole neighborhood could possibly face a massive negligence and outrageous conduct lawsuit.

A lot of actions by HOA boards are outrageous. Some actions are despicable.

(link to WLOS News)

 

 

Bribes, Kickbacks & Other Forms of HOA Honesty!

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It’s not even an open secret that the typical HOA board member and common area maintenance company probably gets kickbacks from vendors. THEY GET KICKBACKS FROM VENDORS! Get over it. Don’t even question it. It’s about as common as worms on a sidewalk after a spring rain.

Since HOAs make their own laws and since government oversight over such things as kickbacks, bribery, extortion and embezzlement is approximately zero this kind of nonsense will continue indefinitely.

Jan Bergemann, one of the heroes of our movement just posted something unbelievable on his website. Actually, it’s not unbelievable. It’s just sad.

http://www.ccfj.net/CCFJCAMBribe.htm