Tag Archives: HOA Hell

Outrage of the Week: Object to Development, Get Sued by Developer

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guest blog by Deborah Goonan

Add another shady, abusive tactic to the HOA playbook. When taxpayers show up at the planning commission meeting, and speak out against development of yet another HOA or Condo project, if you’re the Developer, just give your attorney a call. Then threaten a lawsuit.

When a Planning Commission denies a Zoning change, or the two parties cannot agree on a development plan, it is quite common for the Developer and Landowners to file a suit against the government, hoping to arrive at a reversal of the Zoning decision or at least a mutual compromise.

But for developer John O’Flaherty (through law firm Ungaretti & Harris) to sue 22 concerned citizens and activists, who publicly objected to the proposed development plan, is stepping way over the line. Legal experts are calling this maneuver nothing more than a SLAPP suit, (Strategic Law Suit Against Public Participation), aimed at intimidating private citizens – who have no power to make Zoning decisions – from expressing their opinions in accordance with free speech under the First Amendment of the US Constitution.

Taxpayers and homebuyers are increasingly learning of the risks and pitfalls of covering every empty plot of land with yet another privately governed HOA.  FHA has balked at financing condominium projects for the past several years. That is no secret. Even if you’re not apt to buy a condominium for yourself, as a taxpayer, why should you favor your local government allowing development of another potentially risky mixed-use project? What is the potential long-term tax revenue, weighed against hidden costs and non-tangible social costs of a housing model that is failing all over the state of Illinois and the country?

What’s next? Maybe developer’s attorneys will start to sue news reporters, bloggers, and consumers who tell their Realtor, “Don’t show me any condos, and no HOAs!”

(link to Chicago Tribune story on Park Ridge)

Don’t Be Gay In A Texas HOA

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One of the most fundamental problems with the American HOA system is that it actively encourages apathy among its residents. In a hostile neighborhood, homeowners are afraid of being targeted for public shaming or humiliation. It makes neighbors paranoid of each other, afraid to be activists. After all, most of us want to live in private homes in a human quest for peace and quiet. That, in turn, makes people unwilling to participate in the governing process. Stay home, don’t make waves, don’t stand out from the crowd. Beyond all else, don’t show up at HOA meetings.

Bam! That’s the dynamite!

Once you remove a majority of the neighborhood from the governing process, small-minded power-hungry dictators are free to threaten, defame, cheat, steal, and embezzle with pure abandon. It’s hog heaven for human swine. With tiny majorities behind them they rise to the top where they create neighborhood havoc, usually by finding and tormenting a handful of targeted ‘unwanteds.’ An unwanted homeowner can be anything from a single mom to a family with a Down’s Syndrome child, to unmarried couples, black families, Jews, gays, lesbians, essentially anyone the dictator on the board thinks can be easily targeted. It’s fundamentally good war strategy. Don’t give the enemy a reason to fight back, turn the enemy against itself. Churn up chaos and drive homeowners further behind their shield of apathy.

That brings us to a crazy situation in the Gilbert Homeowners Association in Dallas. A single man owned a condo for years but his domestic partner is not listed as an owner. He’s deemed by the HOA to be “a guest.” The HOA board in its lawsuit against the couple said, “Ken Ray (the guest) is not an owner of the condo….under current Texas law he is, therefore, not a member of the Association.”

It gets a whole lot crazier. The two men claim they tried to get the association to repair a leaking sprinkler back in 2008. The repair never happened. The two domestic partners began to get a little more aggressive in trying to get the HOA to fulfill its obligations to repair the damage. One of the men discovered the contractor who was supposed to do the repairs was a daughter of a board member. The homeowner demanded to see the HOA’s financial records.

That’s when the proverbial “ship hit the span.”

The two domestic partners claim they were indirectly threatened with “use of a firearm.” Their sprinklers were purposely turned off damaging their landscaping. The front gate entry code was changed so that the buzzer went to the management company, not to the mens’ condo. Threats were made to physically remove “the guest” from HOA property. The men were prohibited from hiring their own contractors to repair damage caused by the board’s neglect.

The lawsuits and counter-suits mean the eventual legal bills will stretch into the hundreds of thousands of dollars. A jury verdict against the HOA could conceivably stretch into the millions.

If so, one more American HOA could be forced into bankruptcy. It’s happened before.

“I see stupid people. They’re everywhere. They walk around like everyone else. They don’t even know that they’re stupid.”  -slight rewrite from The Sixth Sense, 2007

(link to Dallas Observer story)

 

National Association of Home Builders’ Federal Agenda

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guest blog by Deborah Goonan

To further challenge the misguided notion that buyers, owners, and residents in HOAs need no federal legislative policy, we will now examine what NAHB is doing on the Congressional level. Although NAHB’s scope and mission is more broadly defined, and encompasses the multi-family rental sector, a significant portion of new residential construction designed for home ownership will undoubtedly be governed by HOAs. Therefore, this analysis has relevance to HOA Reform efforts.

In March 2014, NAHB conducted its “Bringing Housing Home” campaign. Regional conferences were held for the purposes of allowing NAHB members to meet with their respective Congressional leaders to discuss important federal issues for home builders.

NAHB addressed four Priority Issues:

1) Housing Finance Reform:

On this issue,  “NAHB has made recommendations to Congress outlining a plan by which Fannie Mae and Freddie Mac would be gradually phased into a private-sector- oriented system, where the federal government’s role is clear, but its exposure is limited.”

NOTE: While CAI appears to oppose expanded privatization of mortgage financing, for fear that such a system would result in unfavorable lending standards for HOAs, NAHB appears to more fully embrace it.

While both NAHB and CAI insist upon a federal role in housing finance, they fail to support a federal role in oversight of governance and management standards for those communities.

2) Immigration reform:

NAHB states that “foreign-born workers account for 22% of the construction labor force nationally,” and NAHB contends there is a current labor shortage. Therefore, NAHB favors an immigration policy that will remove the current cap of 15,000 immigrants for construction industry. They further urge Congress to enact legislation “… preventing state and local governments from creating their own versions of verification requirements for employers. This is essential for any business that operates in multiple states.”

If NAHB is successful in convincing Congress to relax E-Verify standards for immigrant construction workers, what might this mean for HOA buyers? NAHB seems to be making the argument that labor shortages are driving up construction costs, but does not state that increasing the labor supply will result in lower sale prices for buyers. At this point, there does not appear to be a shortage of available homes for sale. The main purpose of NAHB lobbying appears to be aimed at reducing labor costs for home builders.

Yet there are no legislative efforts by either CAI or NAHB to reduce operating costs for HOAs. Indeed, Developers and CAI-backed HOA Boards want to maintain carte blanche on their ability to generate revenue from homeowners the form of regular and special assessments. It is up to owners in HOAs to press Congress for reasonable limitations upon the HOA’s ability to demand ever more money, with nothing to show for it.

3) Tax Reform

NAHB favors maintaining the Mortgage Interest Deduction on first and second homes, and maintaining Low Income Housing Tax Credits for construction of multi-family rental housing.

So why not extend a comparable tax deduction to homeowners in HOAs for assessments – at least the portion that pays for services that would otherwise be provided by local governments? After all, to some extent, HOA homeowners are subject to double taxation. Why should non-HOA taxpayers of similar size homes have a tax advantage over HOA homeowners?

4) Flood Insurance Reform

NAHB successfully lobbied Congress to pass legislation that keeps flood insurance rates affordable in the short term, while buying more time to reevaluate flood maps.

On the surface, that appears to be a good thing for some homeowners in high-risk flood zones. But at the same time, this new legislation has not provided any mandate or disincentive that would prevent Developers from continuing to build in flood prone areas.  In the future, inevitable increases in rates will hit HOA owners hard. If FEMA continues to remain underfunded, all taxpayers will feel the pinch.

In conclusion, for every major federal legislative issue that CAI and NAHB pursue, there are related or competing federal issues for HOA owners and residents that have been largely ignored for decades.

Isn’t it high time we change that trend?

(link to NAHB assessment of 2014 election)

(link to NAHB Federal Lobbying Campaign)

CAI seeks Federal Legislation, So Should Homeowners Rights Advocates

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guest blog by Deborah Goonan

CAI makes it abundantly clear they oppose federal regulation of HOAs. Yet the HOA industry has relied heavily on federally backed mortgage financing to support a behemoth HOA housing empire created of, by, and for Developers.

The height of industry hypocrisy is made apparent when we take a close look at federal legislation that the HOA industry promotes before our Congressional leaders.

CAI recently conducted its “August 2014 Recess Advocacy Campaign,” where members were urged to meet with Congressional leaders in their respective District (local) Offices.

CAI is currently focused on three key federal issues. Let’s look at each one, using CAI’s own words, my emphasis added in italics for clarity.

1) Mortgage finance reform

CAI’s goal is to ease access to federally backed mortgage financing. Congress is planning to replace Fannie Mae and Freddie Mac with a new finance system that will likely be more dependent on private lenders with potentially diverse (strict) lending standards. CAI members are instructed to remind Congress that the  “current national standard for community associations has reduced complexity and duplicative work by associations when providing information to mortgage lenders. Eliminating community association standards will drive up association cost, create confusion, and lead to impractical requirements that interfere with the responsibilities of association boards.”

2) Disaster relief fairness

CAI laments that Association insurance policies do not always fully cover repair costs after natural disasters, and reasons that HOAs should be eligible to receive FEMA disaster relief because, “Residents of community associations should be treated equally with all other taxpayers … Owners in community associations must likewise receive the same federal benefits as all other residents within a local jurisdiction in the aftermath of a natural disaster.”

3) Amateur radio parity in associations

 “CAI opposes unnecessary federal intervention in the operations and governance of community associations… Community associations do not need an Act of Congress to work through differing points of view that are simply best settled by neighbors talking to each other.”

Take note of CAI’s interesting perspective for protecting the rights of HOAs.  But are these advocacy efforts beneficial to HOA owners?

Historically, loose mortgage standards have led to high default rates, and failure of Fannie Mae and Freddie Mac, which has proven to be more harmful than helpful to HOA owners. CAI seeks FEMA benefits for HOA common areas that lack adequate insurance coverage and protective measures such as surge protection. They do not advocate for FEMA relief for individual homes or units.  The more important concern should be why are so many HOAs lack inadequate insurance protection in the first place? The odds of squeezing funding out of a cash-strapped FEMA for HOA common areas is slim to none, particularly since FEMA views corporate HOAs as businesses. (I wonder where they got that idea?)

Now, let’s examine the People’s perspective. Why do advocates seek federal legislation aimed at HOA reform, and improved alternatives to HOAs? Why support federal standards and oversight?

First, federal standards would reduce complexity and confusion that results from a mosaic of ever-changing statutes across the country. Furthermore, mandating national democratic governance standards tied to Constitutional rights will prevent individual states from enacting state-level legislation that primarily serves the interests of the local real estate industry.  If state-level advocates exchanged notes on what policy works and doesn’t work, it could save potentially millions of dollars spent on lobbying for or against potentially harmful or ineffective legislation.

As advocates, we seek equal justice under the law, on par with other taxpayers. Are HOA residents not entitled to the same federal benefits of the Constitution through the 14th amendment, and under the same Bill of Rights as the rest of our fellow Americans? Are we, as individuals, not entitled to consumer protection in the form of policy that holds HOA leaders accountable to the people? After all, we pay taxes just like our counterparts that do not reside in the HOA regime! We should be treated equally!

And, recall that it DID take an act of Congress to remind HOAs that Americans have the right to display our country’s flag. Yes, Congress passed the American Flag Act of 2005, a law that some HOAs still flagrantly ignore and manipulate by creating twisted rules under the dubious authority of a “contract.” Disputes still occur with the neighbors that should be able to settle disagreements by simply talking to each other. After all, homeowners and HOAs never need to hire a $400-an-hour attorney to settle those differences, right?

With CAI lobbying at the Federal level, it becomes even more important that HOA Reform advocates do the same.

(link to CAI’s August 2014 Federal Advocacy Campaign)

Screaming, Hair-Pulling HOA Fist Fights

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So you’re thinking of spending your ‘golden years’ in a beautiful peaceful retirement community? You want to live in a neighborhood where neighbors really care about each other?

You have so many really wonderful choices of communities to live, places like Mainlands 3 in Tamarac, Florida. Warm air, well-kept lawns, ocean breezes, bird songs filling the air, happy people wishing each other “Good morning,” or “Good afternoon.”

Before you get too excited, check out the video linked below. It would be hilarious if it wasn’t so tragic. It graphically demonstrates what’s going on in hundreds of thousands, if not millions of Homeowners Associations across the country.

(link to WPLG-ABC News, Miami)