Tag Archives: Neighbors At War: The Creepy Case Against Your Homeowners Association

You’re A Brave Man, Greg Chumbley!

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You’d think that a prospective homeowner would be allowed to see the community financials when he’s buying a home, especially if it’s in the neighborhood covenants and ingrained in state law. But as I’ve long said, most HOA boards feel they’re above the law. And usually they’re right. Challenge them and they’ll take you to the cleaners.

That’s what’s happening in a developing story in Florida. The Village Walk of Naples has 850 homes behind its private gates. It employs eight people including the ‘town manager.’

When new homeowner Greg Chumbley asked the board of directors to show him the HOA’s financials they basically told him to take a hike. All Chumbley wanted to know is how much of his dues were going to pay for those eight employees.

The board claims that giving the public any record of its expenses might lower property values in the HOA. Really? That’s the kind of thumb-in-mouth attitude that makes a majority of Americans despise those gated communities. With all the tens of thousands of cases of neighborhood embezzlement, bribery and extortion that goes on in HOA Amerika it also raises a whole lot of understandable suspicion. “Light (truth) is the best disinfectant,” said a famous Supreme Court Justice.

Chumbley has now filed a lawsuit demanding that his HOA obey the law. The first hearing is December 1st.

Chumbley is a brave, brave man for a host of reasons. Not only is he “slapping this mule upside the head,” he’s doing it very publicly by releasing his phone number and ‘share button’ on his website.

Greg, you can’t imagine the number of admiring fans you have across the country. Please let us know how your case turns out.

Contact: Greg Chumbley,  239-300-6169

(link to press release on Chumbley’s lawsuit)

 

CAI Law Firms Fight Back

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CAI lawyers in Florida (and most likely elsewhere) are whining about one of the few court decisions that ever favored a homeowner against an HOA. It’s a case where the homeowner wrote a check for $840 with the notation, “in full and final satisfaction (of disputed amount).” The homeowner included a letter with the same basic language.

The HOA attorney instructed his clients to cash the check, but only apply part of it toward the original disputed amount. An Appellate Court has now ruled that since the check was cashed, the HOA cannot go after the $38,000 in additional fees it claimed was owed by the homeowner.

This is another one of those trashy HOA scams that have given the industry such a horrible reputation among American homeowners. If a homeowner claims, rightly or wrongly, that an HOA fine was improperly assessed, the HOA immediately begins tacking on late fees, fines, attorney’s fees, collection costs and interest. Florida law forces the homeowner to pay the most recent fees first. In other words, interest, collection costs, lawyers, fines, late fees, and only then can the homeowner ever repay the original debt.

It’s a beautiful system which has worked well for generations of Mafia families and for low-life debt collectors. While the debtor desperately tries to pay his original debt, the associated fines and interest keep rising, as do legal fees and collections. It’s a daisy chain that’s impossible to break. It’s a massive money maker for lawyers and collections agencies who, while doing absolutely no work, can raise their charges indiscriminately and perpetually until the homeowner is broken. Of course, the HOA prances in and seizes the home which it promptly puts up for auction. The lawyers then begin picking through the estate of the bankrupted homeowner. The system is fundamentally unfair to the individual homeowner who never has a chance to plead for his own day in court.

So in this rare decision where the Court ruled in favor of the homeowner, the tears and gnashing of teeth are being heard throughout the CAI community.

(CAI firm’s warning to the HOA industry)

 

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)

 

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)

 

To Spark Some Financial Brainstorming

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I just finished taping a TV interview in Denver on the future of Homeowners Associations. The host generally agreed with me that a financial tidal wave is coming that will slam into the nation’s housing market. It will begin with a collapse of the U.S. mortgage industry and HOAs will be the first to be decimated. With the unprecedented amount of federal debt, the ending of quantitative easing, Japan’s weak-kneed attempt to begin its own form of quantitative easing, Russia vowing to outlaw circulation of the U.S. dollar, China’s weakening international trade, a U.S. stock market trading (weakly) at all-time highs, threats of war in Ukraine, Iran, Syria, North Korea, the US/Mexico border, former Communist leaders predicting a return to leadership in East Germany. All the signals for world-wide financial disruption are there.

Outside the TV studio the host asked me a question I had trouble answering: “OK, if you believe all this is coming, where do you put your money?”

Whew! Talk about a million dollar question.

Some experts are advising stashing savings into commodities like silver, copper, any basic manufacturing materials. Others advise using your spare money to pay down mortgages to help you hold out for the long run. Still others say to get ready for hard times you need 9 months of food and water stored in the basement.

I’m not an economist, not even a great investor, and I’m certainly not a survivalist. But if HOAs are the first to be hit in the coming tsunami, why would a homeowner want to pay off a mortgage in an HOA house? With the massive potential for a troubled HOA to bully marginal homeowners with extra fines, fees, liens, legal fees and collection costs isn’t a paid-off HOA home a prime target for greedy (or desperate) board members and managers? Isn’t a supposedly ritzy HOA neighborhood a prime target for questionable slip ‘n’ fall lawsuits where each owner has to fork up money to pay off judgments and legal expenses?

Add to the mix the Nevada court decision (and pending replication elsewhere) the fact that a super-priority lien (the HOA’s petty fine for unmowed grass) can extinguish the first deed of trust (your mortgage) and you’ve got the formula for neighborhood nitroglycerin. It’s unstable at best.

We’re learning more each day about the risks of owning HOA property. Abusive boards, management companies and complicit law firms have brought all this seeming lack of stability about. So, what is the smart investment in troubled times?

Comments?

I’m all ears.