Tag Archives: Realtor

Due process? Fugeddaboudit!

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guest blog by Robert E. Frank, USAF (Ret.)
      founder, HomeOwnersCoalition.Org & veterans advocate

John Tarlton likes the idea of due process, but seems to think something like 3.4 would be too costly for small organizations. It says: “4. The parties may present witnesses and all witnesses shall be subject to cross-examination by the opposing party and may not, without the consent of all the parties, be present when other witnesses are testifying except for the alleged violator who may be present for the entire hearing and may testify if he or she so chooses.”

Really?? Too costly to ensure fair challenges and cross examination to possibly false statements by someone in the hearing process (including directors, CAMs, etc.) who wish to do possible harm (minor or extreme) to a member? While false statements might be innocently made in board hearings, under no circumstances should they be allowed to stand. Our nation allows rigorous challenges against false witnesses, and justice demands nothing less.

I believe competent association managers and/or volunteer directors can figure out low-cost ways to protect the vital interests of both members and the association without violating something as basic as the “right” to challenge false witnesses and expose “possible criminal violations” by false hearing statements. Regardless, if the rule is worth enforcing, and the member violation is worth charging, the board’s cost of defending the accuracy and appropriateness of the charge is an unavoidable cost.

I say possible criminal violations because the outcome of most board hearings is cash coming out of the pockets of members. Any submitted/accepted false witness statements by anyone in the hearing process could be grounds for various types of common criminal statute violations including theft, extortion, etc.

Having personally seen false claims being accepted by boards against innocent members that resulted in arbitrary/unfair hard cash penalties and sometimes extreme impacts against out-of-favor members, I cannot imagine why industry professionals would tolerate policies for such to be created or allowed to exist in any developer-sponsored CC&Rs. Protection of all due process rights could/should be embedded in every CC&R.

Judgments by HOA/Condo Boards must ALWAYS be seen as done fairly, justly and above board. We professionals must demand nothing less than EQUAL justice for ALL members–not just the favored few.

And, IMO state legislatures are derelict in their duties if they allow CC&Rs to contain provisions where the basic due process protections for all owners and other occupants are not guaranteed.

Individual rights MUST prevail in this nation–EVEN in HOAs and Condos. The majority cannot be allowed to overrule such individual rights to protect property and freedom. It is embarrassing and deeply troubling when so many of the professionals in this HOA/Condo business are able to look the other way and ignore this major flaw in our governance practices.

Since the costs of operations are borne by, and benefit, all members, failing to protect all due process rights for all individuals under CC&R governance rules is indefensible–in my view.
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This situation should remind us of Patrick Henry’s passionate demand for liberty or death…. Our personal property rights have been “taken” and we have no choice but to reclaim them for our survivors in the future.

Open Letter On HOAs To All Policy Makers

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guest blog by Deborah Goonan

Although HOA horror stories and reports of financial failures of common interest developments are reported daily in the media, industry proponents claim these are “isolated” incidents, that most people are happy under government by CC&Rs, and that buyers actually want more of the same.

When I or others attempt to discuss realities from the HOA resident’s perspective, we hear “HOAs aren’t for everyone,” “move if you don’t like it,” and “stop whining and complaining.”We are told our democratic proposals for reform are “fantasy” and “unrealistic.” Tell me, when did Democracy become taboo?

Today, in response to this arrogant drivel, I was inspired to write the following Open letter to CAI, State, and Federal Policy makers:

For more than a decade, HOA homeowner advocates have proposed many solutions to problems that vex HOAs: one vote per resident, ballot voting for elections, increased government oversight, better buyer disclosure, reforming laws that are skewed in FAVOR of the HOA corporate entity to eliminate the power imbalance it creates for owners. But we have faced consistent opposition every step of the way, not from fellow owners but from special interest groups: notably developers, real estate investors, Real Estate BARs, and management companies – including CAI. In all fairness, it is becoming increasingly apparent that even CAI members and attorneys disagree on policy matters, to include “eminent domain for condos.”

You may think that dismissing those of us that have the audacity to speak out against injustice and bad policy as “whiners” is an effective strategy to silence us. But all that does is prove the arrogant, dismissive attitude that prevails in the industry and our state Legislature that backs the special interests.

I recognize that Florida’s condo takeovers – a seven-year-old practice that is just beginning to get national attention – are a result of their financial failures. I do not object to their dissolution. What I object to is the injustice that results – kicking folks out of their homes, often forcing them to take huge financial losses, and with no effort to make these people whole. It was an injustice to sell those condos at artificially inflated prices in the first place, not to mention all the bad mortgages that resulted in many thousands of foreclosures and personal family tragedies. It was bad policy and greed that led to the failure of many condo and HOA communities.

And at the same time in Florida, millions of dollars are being invested in brand new high-end luxury condos. The folks in the middle and lower income ranges are merely collateral damage. And you can bet that the loans for all those displaced condo owners will become non-performing mortgages. No wonder the banks balk at financing for condos.

Other states also experience similarly owner-unfriendly issues, including local elected officials that seek to relax building codes, and reduce construction defect liability for Developers.

Furthermore, the financial and social model of common interest developments is unsustainable, which will ultimately lead to increased costs for local and state governments as these HOA communities mature. We are already seeing increased evidence of condemnations and HOAs that must appoint receivers because no one wants to serve on the Board of a failing community.

I am thoroughly disheartened by discussing HOA issues with people who refuse to acknowledge the truth and simply do not care about homeowners, tenants, or taxpaying citizens that do not toe the line and conform to the HOA corporate agenda.

I call upon reasonable, responsible, and compassionate State and Federal leaders to recognize that corporate communities are incompatible with American values of Democracy and Equality, and that HOAs exist primarily for the benefits of Real Estate interests. Americans must not be expected to relinquish their rights, freedoms, and financial stability for the sake of increasing the property tax base with high-density development.

Thank you.

 

HOAs and Owner Involvement: An Oxymoron? (part 2 of 3)

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guest blog by Deborah Goonan

Debunking the myth that owners can actually change their HOAs

CAI’s educational booklet makes the assumption that owners elect their Board. In reality, the Developer appoints the Board – or at least one or more members of the Board – for several years, or even decades during construction. When the developer still controls the Board and possesses weighted voting rights, isn’t owner participation essentially a moot point?

Have HOA proponents, and CAI in particular, ever considered that a homeowner, having had no opportunity to elect the Board or amend documents during many years of developer control, is unlikely to ever make a successful transition to widespread participation in voting? And by the time it is no longer developer-appointed, what if the Board is still controlled by a small minority of investors or developer affiliates, who hold the majority of voting rights? This situation is far more common than CAI industry professionals would lead us to believe.

Vote the bums out!

As for CAI’s oft-prescribed solution to dissatisfaction – electing a new Board – is it really that simple? Not really. Post-turnover election procedures are based upon written provisions of the governing documents, possibly subject to limited statutory guidelines. The fact is, HOA governing documents are not reviewed and approved for compliance with constitutional voting procedures. Therefore voting systems are generally built upon the following components:

–Inequitable allocation of voting rights (votes allocated by number of units owned or proportional share of ownership)

–Voting processes that often involve proxies and/or representative voting systems that disenfranchise residents

–Typically, tenants cannot vote

–Members can have their voting rights revoked as a result of an alleged violation or dispute, or for being delinquent on assessments. (If you were told you could not vote at the polls as a result of being delinquent on your property taxes, would you accept that?)

Although laws in some states address a few of these issues individually, no statute addresses all of them, most notably equitable allocation of voting rights. Some states mandate ballot election for Board members, but not for amending governing documents.

Quite often, loopholes allow existing HOAs to avoid compliance with applicable statutes, with the qualifying phrase “unless otherwise stated in the governing documents” inserted before election and voting provisions. And because there is no national standard, the relative fairness of elections and voting varies considerably from state to state and from one Association to another. Obviously, more realistic solutions are needed.

See Part 3: Exploring Solutions

Link to CAI’s publication, Community Association Living

HOAs & Owner Involvement: An Oxymoron? (part 1 of 3)

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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

 

Something Has To Be Done!

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We really do need to get national legislation, at least against some of the most outrageous HOA actions. The case linked below is actually a rather common problem in HOA Amerika… keeping a homeowner locked out of his gated neighborhood if he’s violated some minor covenant.

Jim Bartels of Fairview, North Carolina got into some kind of dispute with his HOA. The result? They installed a gate and wouldn’t give Bartels a gate code. The HOA board claims they can do that because he’s ‘not in good standing’ in the neighborhood.

A while back I blogged about a different case in Florida where a single mom was locked out of her neighborhood. She had to have someone drive to the gate and physically let her in. At the time I mulled over potential family emergencies and whether the whole neighborhood could possibly face a massive negligence and outrageous conduct lawsuit.

A lot of actions by HOA boards are outrageous. Some actions are despicable.

(link to WLOS News)