Tag Archives: HOA Embezzlement
On this rainy day in Kansas hearing such a happy and excited voice just made my day! I asked if the legal fees were covered. Enock said Liberty Council provided their defense at no charge. That information added to the excitement of the phone call.
Lies, Loans and Liabilities
guest blog by Dave Russell
Lies, Loans and Liabilities
So, your HOA has overspent, misappropriated funds or has simply “run out of money.” Now what? Well the answer here is simple, “let’s take out a loan!” That’s right, if your overinflated mandatory dues weren’t enough, your HOA is going to put you, the homeowner, on the hook for tens of thousands, if not millions of dollars for a loan.
Hypothetically, let’s say your HOA borrows a million bucks, you know, to “pay the bills.” What the homeowner may not realize is that the HOA Manager and/or the Management Company may possibly be receiving a minimum 10% “finder’s fee” for assisting the HOA in acquiring the loan. That’s right, a legalized kickback of over 100K for simply doing, well, nothing.
Call it what you want, a line of credit, or an extended line of credit, but it is still considered a LOAN. Is this really legal? Can your HOA board just simply borrow this money on behalf of its membership? The answer here is Yes and No. Yes, if your association doesn’t have any restrictions about “Loans” in their governing documents. No if there are restrictions regarding “Loans” in the governing documents.
Many associations do have provisions regarding loans however, those provisions are usually buried in a lengthy set of governing documents, that homeowners don’t read, or no longer have in their possession. In some cases, the governing documents require 2/3 of their membership approval before the HOA acquires a loan on their behalf. In some cases, your association may require the signatures of 2/3 of its membership before they sign those loan papers.
It happens often, loans being taken out without the required approval or signatures of the HOA membership. Maybe, I should have billed this story as, Fraud and Finders Fees vs. Lies, Loans and Liabilities.
I’ve seen this little scenario play out time and time again, and it’s wrong, simply wrong I tell you!
If your association is thinking about, or has acquired a loan, make sure it was, or is, being done legally. As the homeowner, you need to read through every governing document including, the CC&R’s, Bylaws, Rules and Regulations, and most importantly, the Articles of Incorporation, which are rarely ever read. Before your HOA makes you, the homeowner, liable for that loan, make sure they have done it legally and legitimately.
Candidate For Congress Is Listening!
guest blog by Nila Ridings
Over the past week I have been emailing back and forth with Andy Ostrowski. He’s hoping to become the newly elected member of Congress from Pennsylvania. Tuesday, November 4th is the critical day that will decide whether his goal has been achieved. Please get out and vote regardless of what state you live in. If you live in Pennsylvania give your neighbor, church friends, golfing buddies, yoga sisters, or the freshly registered voter from the college campus a ride to the polls!
Somebody out there in HOA Land put a ‘bug’ in Andy’s ear about the abuse and suffering home owners are dealing with in condos and HOAs. He had no idea how bad it really is. He had friends a while back who had problems with their HOA, but that was where his exposure to the insanity stopped. Our emails have ping ponged back and forth and most of you know I don’t candy-coat my words. Andy knows we need a hero. He knows we need a legislator who will work across party lines. And he knows we don’t need any more politicians in bed with the CAI! He gets it!
You’ll find his website at the bottom of this blog.
And now a message from Andy Ostrowski-
Homeowners’ Associations – A Need for Congressional Action
“During my run for Congress, I have met many people with many unique needs for assistance, and government action. None has been as compelling as those Americans who are involved in property ownership in Homeowners’ Associations (HOAs).
I was surprised to learn that some 60 million Americans own property subject to HOAs, and have heard many horrific stories about the abuses that they suffer.
Home ownership – the right to own property, and use it for the purposes of raising a family, and providing solace for all of our private affairs, is a core value in our constitutional republic, and, in many ways, is part and parcel to the “pursuit of happiness.” These HOAs, however, are creating the pursuit of misery.
I have a lot to learn, but have heard enough, and understand enough to know that this is a widespread problem across this country, and something that may require Congressional action to address.
The Community Associations Institute (CAI) is a trade organization that passes itself off as an educational organization designed to promote “professionalism, effective leadership, and responsible citizenship,” but is, in reality, a lobbying group backed by builders and developers, and bent on getting their access to legislators across the county to create a legislative field tilted heavily in their favor – and they have been successful.
HOAs, and their Boards, serve public purposes traditionally reserved for governments, and elected officials, and this reveals one of the true hearts of the problem – there is no accountability to oaths of office to uphold and defend the constitution. People who try to sue these HOAs are told that they are not government entities, and do not have the same responsibilities and duties as do their governments. They are creatures of corporate law, and planned development acts.
Individuals unknowingly give up core constitutional rights to private entities created under the authority of law, and subject themselves to foreclosure actions, fines, forced entries, and evictions without the protections of law otherwise available. It is the lack of accountability that we at least theoretically can demand from our government, through, at the very least, the right to vote, that is the source of the true harm in this area – one that affects the lives of 60 million Americans – this needs to change.
To tie this in with my particular expertise, these HOAs are often then protected by the courts, which are subject to the same crony influences that the legislatures are often subjected to, and is further evidence of how the system is tilted in favor of the big banks, and corporate and monied interests, and away from the rights of the individual.
There are many proposals around among the individuals being hurt and harmed, and I will be studying and considering them all. The AARP, for example, has recently voiced concern that homeowners associations pose a risk to the financial welfare of their members. They have proposed that a homeowners “Bill Of Rights” be adopted by all 50 states to protect seniors from rogue Homeowner Associations. This bill of rights should apply to all homeowners and Constitutional protections should also be restored for a fair and balanced playing field.
The plight of the individuals whose pursuit of happiness is being obstructed, and whose lives are being ruined, is one area that needs specific focus.
This is a true civil rights issue as it involves legislatures across the country enacting laws that cut off constitutional rights, and access to courts for millions of Americans, and I will fight to give government back to the people by fighting for the rights of these individuals.”
Website for Andy Ostrowski for Congress:
HOAs & Owner Involvement: An Oxymoron? (part 1 of 3)
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
Bribes, Kickbacks & Other Forms of HOA Honesty!
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.
