Tag Archives: Realtor

Judge Rules Frisco City House Can Stay in HOA While Civil Case Pending

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guest blog by Deborah Goonan

On October 31, 2014, a District Judge in Texas ruled against a demand by a Homeowners Association that a group home in the neighborhood be shut down. City House has 8 residents, young women who would otherwise be homeless. But the legal battle is not over.

A report from the Dallas News which discusses key arguments in the dispute is linked below.

Chad Robinson, who represents the Plantation Resort 2 Homeowners Association, claims that neighborhood deed restrictions require that homes only be used by single families, people related by blood or by law. He acknowledges there are exceptions for such things as nannies or single renters. But he says eight unrelated women in a transitional living program cannot be considered a single family.

Monica Velazquez, attorney for City House, argued that the non-profit transitional living program operates similar to a single-family unit. “It’s what the home is being used for, not who gets to live inside.”

Darlene Horan, HOA Board member and Real Estate Agent, offered the usual, predictable testimony that if the rules aren’t followed, home values will plummet.

But where is the evidence behind such a claim? And what is the underlying intent of this testimony?

Ms. Horan’s argument is eerily similar to fear-mongering marketing claims of the 1940s-1960s – that families who are ‘different’ from the norm will ruin the neighborhood for everybody. “There goes the neighborhood!” The old fear tactic being used again, albeit in more covert fashion.

Instead of fretting about racial diversity, per se, now some HOAs are fretting about “single family use,” and attempting to conjure up a new definition of family designed to exclude certain types of households from moving into Utopia.

You can be certain that the City House residence will remain a target of this HOA board while a civil case is pending.

(link to Dallas Morning News story on City House)

 

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)

 

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)

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)