It must seem like embezzlement from Homeowners Associations is the most unreported crime in the country. These crimes happen with stunning regularity.
Why, oh why, do America’s homeowners allow their neighborhood banking accounts to be handed over to board members and management companies who have no financial accountability?
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Imagine for a moment that your company has transferred you to California’s Central Valley. Lots of warm days are in your future, you get a chance to dry out from all the rain and snow in your old home town.
Your Realtor has been driving you around several neighborhoods in Angels Camp: Saddle Creek Resort, Copper Cove and the little community of Copperopolis. Suddenly you see it! The house of your dreams! The yard is nicely kept, the rooms are large, the last owner has really taken good care of the place. “What’s the neighborhood like?” you ask the Realtor.
“Oh, it’s pretty good,” she says. “The HOA likes to keep things in order. They make sure everyone knows the rules and keeps the neighborhood neat. There’ve only been a couple problems here.”
“Problems? What kinds of problems?”
“Ah,” she says. “A few years ago, one couple didn’t pay their $120 annual dues. The HOA popped them with a lien and then sold their house at auction. It cost the couple $70,000 to get it back. The couple won’t do that again.”
“Whew! What else?”
“Hmmm,” says the Realtor. “Oh yeah. There was this disabled guy who couldn’t get into his house. He got permission from the county to build a wheelchair ramp. But he didn’t ask the HOA first, so they popped him with a fine of $15,000.”
“Wow!” you say. “That seems a little harsh.”
“No, not at all. It keeps folks in line. Keeps up property values.”
“Anything more?” you ask.
“No,” says the Realtor. “Oh yeah, almost forgot. There was one thing that happened here a few months ago. The office manager of the Copper Cove HOA, the same one you’re in right now, stole about $25,000 from the neighborhood treasury. She embezzled 18,000 bucks and used the HOA credit cards to buy all her gas and groceries.”
“Who has to make all that money up?” you say as you raise your eyebrows.
“Well, after she gets out of jail, she might have to do some restitution. In the meantime, a special assessment from all the homeowners will be used to rebuild the treasury.”
You take a long last look at that nice house, the neatly trimmed neighborhood and the blue skies.
“I think I’m going to look elsewhere,” you tell the stunned Realtor. “I lived in an HOA once. Nah, don’t think I want to do that again. See ya!”
http://www.uniondemocrat.com/News/Local-News/Copper-embezzler-sentenced
Florida has a new law that allows HOAs to evict a homeowner who’s behind on dues and lease the house to a tenant to make up for the lost money. The Bridgewater Community Association in Wesley Chapel has taken that to extremes.
Joanne McCarn says she missed a $225 dues payment in 2009 when her mother died. She claims she knew nothing about the overdue payment until recently. The HOA began tacking on late fees, attorney’s fees, and collection costs. By the time Joanne found out about her missed payment, the HOA was demanding $2,565, more than ten times the original amount. Joanne and her husband both tried to contact Association officials, who refused to talk to them.
The McCarn family had leased their home to a renter. But the HOA used the new Florida law to kick out the McCarn’s renter and put in a renter of their own. Joanne says it’s completely outrageous because the house hasn’t been foreclosed on.
“I still own this house,” she says. “The HOA changed the locks on the home and they call the sheriff if I come near the property.”
A Homeowners Association lawyer in Florida says the HOA’s actions are illegal. If so, then homeowners in the Bridgewater Association may be hit with a special assessment to cover a hefty lawsuit against the community.
For those of you wanting to make a short sale on your house, you’d better keep an eagle eye on your good old Homeowners Association. They’re starting to get pretty crafty in keeping the neighborhood operating budget full.
For homeowners who are suffering through the housing mess and living with underwater mortgages, working out a short sale might help you save some of your retirement nest egg. The banks take a well-deserved loss, but you’re happy because you’ve found a buyer and you’ve escaped your nightmare of a mortgage.
But wait! Your HOA has superior rights over your bank. If it moves quickly, it can snatch your home and foreclose on it before your short sale can go through. Just about any violation of HOA covenants can make your home a nice grab. If you were a little behind on dues, if your grass became a little brown during those months you failed to water the lawn, if you got fined for leaving the trash can outside, once you add fines, collection fees, legal fees, late fees and all the other fees that can be conjured up, your HOA can actually claim you owe it tens of thousands of dollars.
Like a rat trap, the HOA springs shut on your pending short sale. You lose, the bank loses, your potential buyer loses. Ah, but your HOA wins. It gets to put your house on the auction block. Sweet, huh?
Author of
Neighbors At War: The Creepy Case Against Your Homeowners Association
I wonder if it’s hard for these people to sleep at night. Stealing from neighbors? The ones you say “hi” to on the street each day? Maybe it’s just me, but I could never get used to the guilt. Your neighbors are trying hard to pay their bills, to put the kids through college, some of them even struggling to pay HOA dues. Other neighbors have lost jobs in this economy, and are wondering where the next bag of groceries are coming from?
Then some runny-nosed, gambling-addicted, coke-head of an HOA treasurer grabs all the neighborhood’s money for a quick run to Vegas.
The latest case involves a Homeowners Association treasurer from the Parkwood HOA In Durham, North Carolina. This yahoo only stole $150,000 to $200,000. This kind of theft doesn’t just happen because the crook is arrogant. It happens because the crook thinks you, the homeowner, are stupid. You’re too dumb to read the annual report. You’re too stupid to suspect a crime. You’ll deny to the bitter end that you were the one who was robbed.
But just try selling your home, Bunky, to another buyer. It’s required by law that you disclose all defects in a property, including whether the HOA treasurer had a blank check to transfer money from your Homeowners Association to the casinos.
That should do something for the offer price on the home you’re selling. After revealing that the HOA is now totally out of money, prepare to lower the asking price of your home by 20 or 30,000 dollars.
You’re a sucker. A sucker for living in a Homeowners Association where trust is the only promise you really get. A sucker for not realizing that governing covenants across the land are so poorly written that thousands of Homeowners Associations are in the same sad shape. Yep, Buddy. Welcome to HOA life. You’re a sucker.
Ward Lucas
Author of
Neighbors At War: The Creepy Case Against Your Homeowners Association
