I guess we learn things all the time and this one is interesting. It’s a paper published in the University of Cincinnati Law Review about the 2008-2009 mortgage meltdown. Lending institutions are way behind on dealing with all the foreclosed properties. They’ve hired property management companies to help deal with the overload.
Now there’s been a rash of lawsuits by homeowners late on their payments who’ve come back to find that their homes have been trashed and their personal property stolen. Seems it’s being done by these third-party contractors hired by the mortgage companies.
I wonder if there’s any spillover by management companies that foreclose on liens on people in Homeowners Associations?
As the 2016 Presidential election campaign heats up, so do political sign controversies in homeowners associations. Here’s a perfect example from Florida, a dispute over a Hillary Clinton sign in a resident’s window.
Howard Finkelstein (2) is Public Defender for Broward County in Florida, but he moonlights as a legal analyst for the local Fox News affiliate. According to Finkelstein’s analysis, an HOA can deny a resident’s right to display a political sign as long as their documents are “written correctly,” and if the homeowner took this to court, she would “probably lose.” However, an HOA cannot allow some types of political signs (such as the one we see in the video about gun ownership rights) and not others ( a sign supporting Hillary Clinton).
That would be Selective Enforcement: that’s the kind of inconsistency that gets HOA Boards in trouble, the kind of stuff that leads to billable hours to the Association attorney to defend the indefensible. Guess who pays for this folly? Why, that would be all the homeowners.
Of course, Howard brings up the standard argument that because it is not the government, a private HOA can make up rules prohibiting signs. Or, as I like to say, the standard industry claim is that the Bill of Rights Need Not Apply, including your guarantee to Free Speech under the First Amendment.
But, is that absolutely true or is subject to interpretation?
Recent Case Law opens the door for future challenges
In 2012, the NJ Supreme Court, in Mazdabrook vs. Khan(3) ruled that an Association’s restriction against placing a political sign inside a condo unit’s window was unconstitutional under state law. Of course, the facts in Mazdabrook bear a striking resemblance to the action taken by Valencia Morris at The Enclave at Cutler Bay. Ms. Morris was threatened with a fine if she did not remove the small political sign she had placed on the inside of her unit’s window.
More recently, in 2014, in Dublirer vs 2000 Linwood Avenue Owners (4), the NJ Supreme Court upheld that the Association violated the state’s Constitution when it denied the owner of a Fort Lee Co-op the right to distribute campaign leaflets as he contemplated running for a seat on the Board.
In both cases, the NJ Supreme Court ruled that even a private organization such as an Association-Governed Residential Association, cannot restrict “too much speech” and rejected legal arguments for the Associations that a homeowner “gives up” Constitutional rights by taking title to an HOA property.
Now, some FL attorneys will argue that the NJ Constitution offers greater protection of rights involving private organizations. So let’s compare the two state Constitutions on the issue of free speech.
6. Every person may freely speak, write and publish his sentiments on all subjects, being responsible for the abuse of that right. No law shall be passed to restrain or abridge the liberty of speech or of the press. In all prosecutions or indictments for libel, the truth may be given in evidence to the jury; and if it shall appear to the jury that the matter charged as libelous is true, and was published with good motives and for justifiable ends, the party shall be acquitted; and the jury shall have the right to determine the law and the fact.
SECTION 4. Freedom of speech and press.—Every person may speak, write and publish sentiments on all subjects but shall be responsible for the abuse of that right. No law shall be passed to restrain or abridge the liberty of speech or of the press. In all criminal prosecutions and civil actions for defamation the truth may be given in evidence. If the matter charged as defamatory is true and was published with good motives, the party shall be acquitted or exonerated.
Now, I’m not an attorney, but these two provisions seem to say essentially the same thing.
Are the winds of change blowing?
Allow me to leave the reader with one final thought, courtesy of the First Amendment Center at the Newseum Institute. In their recent survey (7), they asked: Does the First Amendment go too far in the rights it guarantees? Below you can see the results. (click on the graphic to enlarge)
Looking at perceptions of First Amendment rights for different age groups, it’s quite clear that younger generations are not going to put up with private corporate HOAs restricting speech! Time is on our side.
I’ve whined about this sort of thing repeatedly: HOAs shutting down little kids’ lemonade stands just because some witch on the board thinks that kids’ activities destroy the neighborhood. Ah, how I long for the good old days when the presence of kids and their activities actually increased community property values.
Speaking of property values, I wonder if one of our Florida friends could track home sales in the Hawk’s Point HOA and see how they compare to home values outside any HOA? I would bet dollars to donuts that…naw, I’ll wait until the data comes in.
Spencer’s Plantation homeowners association is in the midst of conflict, according to a report from First Coast News, Jacksonville.
Defunct developer, Mercedes Homes, ended business operations in 2012. Since that time, SPHOA’s Board leadership has changed several times, dwindling from 5 members a few years ago to only 2 members as of June 2015. The management company has been changed twice, most recently a few weeks ago, according to public records.
According to the report, the new Board has been aggressively pursuing homeowners for various minor covenant violations, issuing hefty fines. A search of the Clay County Clerk’s database confirms that the past 2-3 years have seen a fair amount of activity, with the HOA filing liens upon properties that were later paid and satisfied by those owners.
Recall attempts by homeowners have failed to remove the Board President and Treasurer, and it looks like the matter will now have to go to arbitration with Florida’s Division of Business and Professional regulation (DBPR).
Do low annual assessments = fewer HOA conflicts?
One fact that caught my eye in the news report: Spencer’s Plantation includes 222 homes, with annual assements of only $250. Reading the Declarations online, this HOA’s common areas consist of a few storm water “lakes” and a small green space. This is a relatively small, no-frills HOA, especially for Florida.
There is sometimes a misconception that HOAs with minimal common area maintenance and low annual fees are somehow less of a hassle than elaborate gated communities with golf courses, club houses, pools, and the like.
But when I read through the Covenants, Conditions, & Restrictions (CC&Rs) for Spencer’s Plantation, I noticed that the Use Restrictions and aesthetics standards — what I like to call “Keeping Up Appearances” — or KUA Rules, are every bit as elaborate as those fancy master planned communities such as Celebration or The Villages.
So that means that the HOA Board can, and often does, end up with a few members who are gung-ho on enforcing those elaborate rules to the letter. And often, there is a property management company and an HOA attorney aiding and abetting those efforts. After all, these “service” providers make a living as HOA Enforcers.
Apparently, that’s what’s going on at Spencer’s Plantation, according to the homeowners that contacted First Coast New. It’s a familiar story that we hear about over and over again.
Don’t be fooled by the size or simplicity of the community. Be sure to read all of the CC&Rs, plus any related Rules and Regulations, very carefully. Better yet, hire a qualified real estate attorney to represent your interests from the time you execute a sale contract through closing. If reading and understanding the fine print and details raises red flags, better to walk away before the deal is done!
In my book, Neighbors At War, I wrote about a nasty little piece of HOA theft called ‘transfer fees. ‘ They’re hidden deep within the text of your CC&Rs and the vast majority of home buyers never even see them. Sometimes they’re not even in the paperwork. But they can cost you hundreds to thousands of dollars at closing time. What are transfer fees? They’re a scam. They probably refer to photocopying costs which at ten cents a page shouldn’t cost you more than about ten bucks. But the transfer fee is pure slush that pours into the pockets of the nearest property manager or lawyer.
Stan Hrincevich is the HOA Warrior in Colorado who’s long been trying to educate legislators about this scam. And Stan is Enemy #1 on the CAI’s list of really bad guys. To me he’s Colorado’s biggest hero. His battles against DORA (Department of Regulatory Agencies) are legendary. The Colorado Legislature created an HOA Ombudsman’s Office to try to shut Stan up. Sadly, the Ombudsman has no budget, no power and is dumber than a box of rocks. The only thing this ‘Ombudsman’ ombuds for is his own salary.
That’s the background.
Knowing that this same kind of situation exists in almost every state in the union I’ve asked Stan for permission to reprint a recent news release he sent to homeowners around Colorado.
by Stan Hrincevich (www.coloradohoaforum.com)
The HOA Manager licensing law requires disclosure of fees imposed by property management companies on home owners to be in their contracts with the HOA. If you know of anyone who has recently (after July 1, 2015) sold or bought into an HOA and paid an HOA Transfer Fee (this can be identified as a one liner on the closing documents) let us know. These home owners might be eligible for a refund and the management company fined. We will help in filing their complaint with DORA to pursue this issue.
The HOA Manager licensing rules are very weak for home owners and purposely left out specifics and justifications regarding fees imposed by management companies on home owners. However, there is still room for filing complaints and requiring HOA Boards and management companies to justify the imposition of the HOA Transfer Fees in HOA contracts and governing documents. Additionally, your HOA Board may also be required to inform home owners if they endorse such fees and to change the HOA governing documents/declaration to indicate the Transfer Fee is a financial obligation of the home owner upon the sale of their home (which may require a vote of home owners).
When someone buys a home in an HOA they are to be apprised of all financial obligations to the HOA as a home owner. This includes HOA dues and special assessments. The HOA Transfer Fee is rarely if ever disclosed as a legal obligation and therefore the property management company (and HOA) should be precluded from assessing this fee. The new licensing law precludes assessing fees unless it is in their contract with the HOA and/or supported by the HOA governing documents.
Filing a complaint costs zero and we will help as needed.
We will periodically issue this email requesting your cooperation on this topic.
NOTE: THE COLORADO HOA FORUM PROVIDES INFORMATION AND OPINION ON HOA ISSUES BUT SUCH INFORMATION SHOULD NOT BE CONSIDERED LEGAL ADVICE. WE ARE NOT LAWYERS. ALL LEGAL ADVICE ON COURT CASES AND OTHER LITIGATION SHOULD BE HANDLED BY A LAWYER.
