Well, well. A North Carolina legislator has introduced a bill that would strip Homeowners Associations of their ability to foreclose on homes. It won’t pass, of course. The lobbying powers that profit from the HOA business will pour millions of dollars into defeating any such bill anywhere in the country.
Still, it’s interesting that HOA abuses and bully boards are entering the collective consciousness of American homeowners.
(link to North Carolina proposal)
I notice this proposal is taking a different approach — attempting to create a referendum to allow the voters to decide whether or not to amend the state’s constitution. Interesting.
I doubt it will pass the House and Senate, because the proposal has not provided a viable alternative to collect these assessments. The HOA industry treats them as if they were taxes, rather than fees for business services. The industry wants that money — especially the fees and collection costs that go straight to attorneys and management companies!
I am surprised the proposal is not to garnish wages instead of state tax returns.
Prohibiting HOA foreclosure would stop the practice of targeting homeowners with no mortgage, or very low mortgage balances, so the HOA could pick up a unit for pennies and immediately acquire equity.
If HOAs were able to collect on liens before mortgage holders and local governments, they could simply wait until the house exchanges hands to collect on any debt. As if that will ever happen!
But the root problems run deeper, because the reasons for the debt can also stem from abusive practices such as issuing bogus or excessive fines for minor “offenses,” or being unable to come up with the money to pay a huge special assessment due to poor planning or intentional manipulation on the part of the HOA Board, or initiating Foreclosure for relatively small dollar amounts and piling on attorney and collection fees. And in states like NC — nonjudicial foreclosure plays another role in the abuse.
But it’s encouraging that at least the idea of taking away HOA powers is beginning to take root.
That shall go down in the annals of understatement.
The H.O.A. rabbit hole goes very deep, with a system of incredibly perverse incentives and moral hazards which leave home owners essentially powerless and extremely vulnerable financially. It is why I am extremely skeptical (and so frustrated) with most H.O.A. reform proposals; most which do nothing more than address a specific harm, provide home owners with an affirmative defense, and/or mandate that the H.O.A. corporation have written procedures and policies about something-or-other.
I think it’s also why we have such a difficult time making our case to people — especially our policy makers — who are uninformed, or misinformed, about this issue. Where do we even begin?
You can read the bill, H931, “An Act To Amend The North Carolina Constitution To Prohibit Homeowners’ Associations From Foreclosing On Real Property For Unpaid Association Dues, To Allow Homeowners’ Associations To Obtain Judgments For Past‑Due Assessments, And To Allow For Setoff Against State Income Tax Returns For Past‑Due Assessments“, and track its progress at http://www.ncga.state.nc.us/gascripts/BillLookUp/BillLookUp.pl?Session=2015&BillID=H931
Since the bill is 5 pages of legalese which I haven’t read yet, I’ll refrain from commenting on it, except to point out that:
1) this is actually a bill to put the question on the ballot this year.
2) I’m sure that even if it passes, the H.O.A. industry will find a way to exploit loopholes and screw over home owners (e.g., I don’t see how this removes the perverse incentive to run up charges for usurious attorney fees). But that’s because at this point, I am extremely skeptical and pessimistic about H.O.A. reform legislation measures, even the well intentioned ones.
3) The bill’s sponsors are
– Representative Rodney W. Moore (Democrat – District 99)
– Representative Kelly M. Alexander, Jr. (Democrat – District 107)
– Representative Yvonne Lewis Holley (Democrat – District 38)
4) Republicans have a majority in both houses of the North Carolina General Assembly, along with a Republican governor:
http://ballotpedia.org/North_Carolina_State_Legislature
– NC State Senate: 34 Republicans, 16 Democrats
– NC State House: 74 Republicans, 45 Democrats, 01 Indepenent
5) As far as I am aware, this is the first effort ever by any state legislators to ban foreclosure by H.O.A. corporations, and to put an H.O.A. reform measure on the ballot for a popular vote. It will definitely be interesting to see how this plays out.
My favorite part of the WSOC-TV news story is this:
It’s an admission that
1) H.O.A.s aren’t truly voluntary
2) home owners cannot be persuaded to remain paying customers of H.O.A. corporations, so heavy handed governance and enforcement — backed by holding their homes hostage — is required. And
3) the debt collection measures available to other creditors aren’t enough to satisfy the greed and sociopathy of the H.O.A. industry.
PS — The Tom Corey in the news story video looks an awful lot like the Tom Corey pictured at
https://www.linkedin.com/pub/tom-corey-jd-crm/7/575/3b2
I posted this blog to a number of the FB HOA Homeowner advocacy sites and the Pennsylvania Civil Rights Law Network site with this message:
05.01.15 – HOA – North Carolina – “Vile HOAs Finally Attract Lawmakers’ Attention,” neighborsatwar.com, http://neighborsatwar.com/…/vile-hoas-finally-attract-lawm…/
Please see this blog post by Ward Lucas who is a trusted, educated, knowledgeable and sincere HOA (COA, POA (CIC/CID)) homeowner expert, advocate and author in America. Ward Lucas is also a “voice” of logic and truth on the range of HOA issues and abuses facing trusting and unknowledgeable HOA homeowners and home buyers in these communities across the country.
The blog linked above and below concerns proposed legislation in North Carolina (NC HB 931 and I have put the link at the end of this post) sponsored by NC Representative Rodney Moore. NC Representative Rodney Moore is a passionate, persistent and upstanding HOA homeowner advocate in NC. I believe he wants to see the range of abuses, criminality and foreclosure of innocent HOA homeowners to end. NC also has terrific HOA homeowner advocates and advocacy’s; hear4nc.org and hoaowners.org and nchoalaws.org that are standing up, speaking out and working tirelessly for HOA homeowners and alongside Representative Moore for those who have been victimized in a range of HOA abuses, criminality, legal abuses, foreclosures and fraudulent foreclosures.
HOA homeowners and home buyers have been unaware, not educated, and other times possibly misled, on what they “are buying themselves into.” The issues, abuses, legalities, arbitrary and selective enforcement rules and regulations, created conflicts and personal vendettas being carried out in these abusive groups are unthinkable to most, and many are greed driven by abusive and criminal HOA boards and any of their accomplices!
Prospective home buyers buying into these groups have no idea of the H___ they may be “buying into.” It can destroy their lives, health and finances, and devastate their families. Homeless families are vulnerable and I believe this is another area where certain populations in HOAs are targeted for these abuses and fraudulent homelessness. Please go to the site below, on Neighbors at War, and post a comment on your thoughts about this proposed legislation.
I trust this blog post will receive a lot of attention.
“Thank you,” Ward Lucas for writing on this proposed legislation and “thank you,” NC Representative Rodney Moore and all those with hear4nc.org, hoaowners.org, and nchoalwas.org, as well as many of the national HOA experts and advocates who try to work together and support one another on the much needed HOA reform and across the nation.
“Vile HOAs Finally Attract Lawmakers’ Attention”
http://neighborsatwar.com/…/vile-hoas-finally-attract-lawm…/
http://www.ncga.state.nc.us/…/20…/Bills/House/PDF/H931v0.pdf
Robert, good eye!
Here’s the problem. HOAs have now become responsible for many essential maintenance tasks that used to be the duties of local government – paid for with tax dollars. So now HOA assessments have become as essential as property taxes in terms of maintanance of essential infrastructure and, increasingly, private “security” of HOAs.
Back when HOAs were more about the recreational amenities — non-essential infrastructure — mandatory fees were not as critical. But all of this is courtesy of our local governments abdicating their duties while collecting increased tax revenue!
So let’s have our local governments take over the essential functions, to be covered by tax dollars, and drastically reduce or eliminate assessments to the HOA. The HOA can charge for the pool or exercise equipment or playground. Then eliminate the power to foreclose. Allow the HOA to lien just as any other contractor, and that should be the end of it. Ban the delinquent member from using the recreational facilities, but hands off the home.
Let’s face it. When houses sell at low prices in fireclosure, that has much larger negative effect on the holy grail of HOAs (property values) than an assessment delinquency of a few thousand dollars – most of that collection and attorney fees!
Letter to Mr. Moore;
Mr. Moore:
Stripping the ability of HOAs to foreclose on unit or home owners is an excellent action whose time is long over due. You deserve a big round of congratulations from all HOA victims and owners.
Replacing the ability to foreclose with the ability to garnish state income tax returns is a disastrous action.
The first problem is that you have a rather large population living in HOAs who are not full time residents of North Carolina and who do not pay North Carolina income tax. These summer residents would not be subject to North Carolina state income tax return garnishment.
Giving the ability to garnish state income tax returns to an HOA board would require all owners to provide their social security number and federal income tax mailing information to the board. This would be disastrous. This would be giving the ability to perform identity theft to unscrupulous board members.
Again, taking away the ability for any HOA to foreclose on any unit or home or property owner should be state law. In fact, it should be the law across the nation.
Just as a reminder, I spoke before the HOA committee of the legislature when you were a member. I provided a CD with background information and took the position that there are good HOA laws on the books, 47A, 47B, 47C. and 47E but there is no enforcement. I still maintain the same position. Taking away the ability of an HOA to foreclose would be an excellent action.
Jim Bothwell
78 Chelsea Road
Waynesville, NC 28786-6780
772-341-3412
jsbothwell@ac.com
NORTH CAROLINA — Under North Carolina law, if you live in a neighborhood that has a homeowner association and you don’t pay your dues, that HOA can foreclose on your house.
But now a new bill has been introduced in the North Carolina Legislature that would strip HOAs of their ability to foreclose.
Instead it would open up a legal avenue for associations to try to satisfy debts owed to them including garnishing state income tax returns.
The idea is to keep people from losing their homes because they haven’t paid their HOA fees.
“It’s a big issue to a lot of people,” Rep. Rodney Moore (D-Mecklenburg) said.
He introduced House Bill 931because he said home owners need more protection against heavy-handed homeowner associations that have the ability to foreclose on those who haven’t paid their HOA fees.
“We experienced an influx of a lot of HOAs abusing that particular power,” Moore said.
He wants to protect homeowners but at the same time, if there is a legitimate claim, it can give them some recourse.
“Problem is if they don’t have any money for that they probably won’t have any tax return money either,” Moore said.
Tom Corey is a homeowner and former HOA president who lives in north Charlotte.
The foreclosure power needs to remain intact, he said.
“Right now, that’s the best mechanism to get people to pay their HOA fees,” Corey said. “Otherwise, people tend to treat it more as a voluntary payment which it shouldn’t be.”
Homeowner Jill Cope disagrees.
“Foreclosure has such has such huge repercussions not just for the homeowners but for the families,” Cope said. “I mean, we have small children and other people that are impacted by foreclosure.”
Proponents of the bill said that includes innocent neighbors whose property values suffer when a foreclosure happens next door.
“I think there are other penalties that might be used instead of a foreclosure,” Cope said.
The Constitutional amendment will still have to get the nod from the state House and Senate before it heads to the ballot for the voters to decide, Moore said.
Agreed, but for different reasons. As far as I can tell, it does nothing to remove the perverse incentive for H.O.A. corporations to charge unconscionable and usurious attorney fees and other junk fees.
I’m not an expert on debt collection laws, so take the following with the appropriate grain of NaCl :
An H.O.A. corporation should have no more rights to collect a “debt” than any other creditor. And any “contract” that gives them more power to do so should be void by law, as contrary to the public interest and as a consumer protection measure.
But for some reason, state legislatures across the country have given H.O.A. corporations a preferential status, as though they are Too Big To Fail ™.
While eliminating the power to foreclose is necessary and long overdue, adding language to the bill allowing H.O.A. corporations to garnish tax return refunds is a continuation of that preferential status. If other creditors don’t have that power, than neither should H.O.A. corporations. If other creditors do have that power elsewhere in North Carolina law, then it was not necessary for Representative Moore to repeat it in H931.
Agreed.
Hopefully, Shu will have him as a guest on “On the Commons” sometime soon ( http://onthecommons.net/ ).
Agreed, and I believe Shu has spoken with Representative Moore, or his staff in the past concerning appearing on the show. Now, would be a great time if both their schedules permit.
Yes, I’m aware of that.
And this is probably why it will take federal intervention to provide home owners with substantial relief, and get local governments to assume the traditional responsibilities that they abdicated by privatizing local government in order to “double-tax” residents.
Speaking of double taxation:
One of the current issues that I hear conservatives and libertarians griping about is residential solar power. For example, Ward’s buddy Jon Caldara refers to solar power users as “moochers:
This isn’t just one isolated Ayn Randian in Denver saying these things. This is an ideologically-driven nation-wide effort by special interest groups to discourage the use of residential solar power. See the comments by Dave Russell and myself at http://neighborsatwar.com/2015/03/seething-over-solar-seems-senseless-in-kehrs-mill-estates/
Yet these same people have absolutely no problem with home owners paying H.O.A. assessments to subsidize the property taxes of non-H.O.A. home owners to the tune of $65 billion per year. I have no idea how much solar panel users are allegedly “mooching” from other utility customers (for some reason, I can’t find that number on the Independence Institute’s web site) but I’d bet that it’s a lot less than $65,000,000,000 per year.
Maybe Ward can ask about this the next time he’s on Jon’s TV program ( https://www.youtube.com/watch?v=Ya0px16jYoY ).
Robert, you said: “this is probably why it will take federal intervention to provide home owners with substantial relief, and get local governments to assume the traditional responsibilities that they abdicated by privatizing local government in order to “double-tax” residents.”
I agree. Very few volunteer Board members have the requisite knowledge and expertise to ensure successful administrative management and maintenance of major infrastructure. The assumption has been that property managers would fill that role, but a) most CAMs lack sufficient knowledge as well, b) the Management companies and/or Developers hand pick their own “experts” to their own advantage vs. the good of the members of the association, c) about 40% of Associations are self-managed anyway. Additionally, most Associations simply lack sufficient financial resources to do the necessary work over the long term.
There are a lot of good thoughts and evaluations of this proposed legislation in the comments on this blog. And, yes, Robert, Deborah is right, “good eye.”
I looked through this Bill, but do not believe it to be as “streamlined” as comes across in the wsoctv report. The wsoctv states, Re: HOA: “satisfying debts owed to them” and then mentions “dues.” This gave me the impression that if the HOA, their attorney, or collection attorney alleges it, it must be true. I do know some HOA homeowners fall on hard times, and then, there are a few “deadbeats who don’t pay bills,” and some HOA homeowners who believe their monies are being abused, mis-spent, or stolen by their boards, and possible accomplices, and many times they are right, yet they can get no answers and no help. These HOA homeowners might withhold paying their dues in protest, and guess most rational and logical people would understand this, but it is not a good decision from the HOA homeowner abuses I have seen
There is a lot of thought behind this Bill and I appreciate the hard work of Representative Moore and everyone else. I understand some of the thought behind it, but I was under the impression so much of the HOA homeowner issues was the inaccuracy, or selectively discriminating for fining, etc., and all attached alleged collection costs, fines and fees, thus allowing the HOAs to foreclose, or creating the conflict to generate all these charges to foreclose non judicially. This provision addresses solely annual assessments, past due assessments (dues, maintenance charges) only, right? The same as is generally billed to every homeowner in the community for the “upkeep” of the community? What about special assessments for alleged maintenance issues by boards who do not vote, or follow the communities rules and regulations, state law, or other, and just send out unwarranted and fabricated bills?
I think it is unreasonable to expect some HOAs who cannot even keep books and refund, or credit back overages from previous years to a current, or upcoming years “assessments” to operate lawfully under this proposal, however, if it is an avenue to protect homeowners from predatory boards and not give the boards and their accomplices a new pathway to become more predatory, it has to be considered. I just do not want to see it become one more avenue for HOA HOMEOWNERS TO BE FORCED TO TURN OVER ANY MORE PERSONAL INFO THAN THEY ALREADY HAVE. I have seen these HOA boards and their accomplices violate every privacy and right of homeowners down to banksters handing over info on how much equity HOA homeowners have in their homes so the HOA boards and HOA attorney start lawsuits against those homeowners, specifically to drain their equity in the form of “legal fees that apply solely to them,” in liens, or liens for a “projected cost of a foreclosure” due to the unwarranted created conflict of the HOA board and attorneys. This is how innocent homeowners become homeless.
Additionally, there are two different NC programs (nchfa.com) paying these alleged HOA fines, fees, collections costs, assessments in arrears, and the liens to foreclose by HOAs, attorneys, or community managers, allegedly acting on behalf of HOAs with Treasury Department funds to prevent HOA foreclosures. This was confirmed to me by one of the programs directors. I don’t think this is the “right answer” either, because it may encourage selective abuses by some HOA boards and attorneys, and especially of vulnerable populations, but I guess it is better than nothing too. I also believe it is discrimination as they refused to help the numbers of victims of these crimes in the past in NC and elsewhere. You and I both know how despicable, abusive, destructive of the health, families, reputations and finances of the victims, and secretive, these HOA crimes; the selective discrimination and targeting, farming, slapping and combing innocent HOA homeowners for their homes and equity has been! The criminality is inexcusable, no matter who the perpetrators are, or who they know. It is especially, even more inexcusable, if some attorneys are involved in these abuses and property thefts. No one should be above the law and this includes, those in the past, who claim “to have written it.”
And those millions of dollars will have come from the dues paid by the members of H.O.A. corporations — $70 billion (with a “b”) per year — whether or not they support this measure.
That’s something else you can ask Jon Caldara about the next time you see him. He has long been an advocate of “paycheck protection” laws, which prohibit labor unions from using union dues for political purposes.
Why hasn’t Jon Caldara, the Independence Institute, or the Republican Party for that matter — all of which promote “paycheck protection” laws for union members — supported any type of legislation, or ballot measure, to prohibit mandatory H.O.A. dues from being used for political purposes?
The bill was refered to the Committee on Rules, Calendar, and Operations of the House http://www.ncga.state.nc.us/gascripts/Committees/Committees.asp?sAction=ViewCommittee&sActionDetails=House%20Standing_2 on April 20, 2015 (last action to date).
Here’s a list of all 130 bills currently in that committee:
H51, H52, H83, H103, H123, H124, H125, H142, H145, H179, H213, H214, H234, H239, H240, H249, H252, H272, H299, H324, H360, H384, H406, H409, H417, H425, H435, H448, H451, H453, H471, H480, H484, H485, H486, H499, H501, H515, H522, H535, H549, H572, H588, H589, H600, H614, H622, H627, H645, H656, H666, H670, H671, H677, H682, H690, H697, H701, H716, H718, H722, H732, H734, H741, H748, H749, H756, H767, H768, H770, H772, H773, H782, H784, H785, H787, H790, H801, H815, H821, H822, H825, H829, H834, H837, H843, H845, H849, H851, H852, H857, H859, H861, H862, H864, H865, H868, H883, H885, H897, H900, H928, H929, H931, H942, S15, S22, S71, S88, S95, S97, S101, S119, S120, S124, S127, S132, S185, S192, S211, S212, S247, S255, S273, S279, S288, S291, S299, S303, S313, S330, S332, S343, S345, S363, S371, S374, S378, S383, S386, S391, S400, S429, S435, S445, S446, S455, S456, S472, S477, S478, S480, S503, S508, S519, S522, S524, S534, S545, S560, S561, S566, S570, S581, S596, S597, S598, S600, S652, S654, S670, S675, S676, S678, S679, S694, S698, S699