I’m so glad someone sent me this link. It’s a Skype discussion between some concerned HOA members in Minnesota and Dr. Gary Solomon. Solomon is one of the premiere experts on the national HOA scam and every second you spend watching this video will pay off many times over.
(link to Skype discussion between Dr. Solomon and Minnesota homeowners)
Spencer’s Plantation homeowners association is in the midst of conflict, according to a report from First Coast News, Jacksonville.
Defunct developer, Mercedes Homes, ended business operations in 2012. Since that time, SPHOA’s Board leadership has changed several times, dwindling from 5 members a few years ago to only 2 members as of June 2015. The management company has been changed twice, most recently a few weeks ago, according to public records.
According to the report, the new Board has been aggressively pursuing homeowners for various minor covenant violations, issuing hefty fines. A search of the Clay County Clerk’s database confirms that the past 2-3 years have seen a fair amount of activity, with the HOA filing liens upon properties that were later paid and satisfied by those owners.
Recall attempts by homeowners have failed to remove the Board President and Treasurer, and it looks like the matter will now have to go to arbitration with Florida’s Division of Business and Professional regulation (DBPR).
Do low annual assessments = fewer HOA conflicts?
One fact that caught my eye in the news report: Spencer’s Plantation includes 222 homes, with annual assements of only $250. Reading the Declarations online, this HOA’s common areas consist of a few storm water “lakes” and a small green space. This is a relatively small, no-frills HOA, especially for Florida.
There is sometimes a misconception that HOAs with minimal common area maintenance and low annual fees are somehow less of a hassle than elaborate gated communities with golf courses, club houses, pools, and the like.
But when I read through the Covenants, Conditions, & Restrictions (CC&Rs) for Spencer’s Plantation, I noticed that the Use Restrictions and aesthetics standards — what I like to call “Keeping Up Appearances” — or KUA Rules, are every bit as elaborate as those fancy master planned communities such as Celebration or The Villages.
So that means that the HOA Board can, and often does, end up with a few members who are gung-ho on enforcing those elaborate rules to the letter. And often, there is a property management company and an HOA attorney aiding and abetting those efforts. After all, these “service” providers make a living as HOA Enforcers.
Apparently, that’s what’s going on at Spencer’s Plantation, according to the homeowners that contacted First Coast New. It’s a familiar story that we hear about over and over again.
Don’t be fooled by the size or simplicity of the community. Be sure to read all of the CC&Rs, plus any related Rules and Regulations, very carefully. Better yet, hire a qualified real estate attorney to represent your interests from the time you execute a sale contract through closing. If reading and understanding the fine print and details raises red flags, better to walk away before the deal is done!
Read the story on First Coast News here:
In my book, Neighbors At War, I wrote about a nasty little piece of HOA theft called ‘transfer fees. ‘ They’re hidden deep within the text of your CC&Rs and the vast majority of home buyers never even see them. Sometimes they’re not even in the paperwork. But they can cost you hundreds to thousands of dollars at closing time. What are transfer fees? They’re a scam. They probably refer to photocopying costs which at ten cents a page shouldn’t cost you more than about ten bucks. But the transfer fee is pure slush that pours into the pockets of the nearest property manager or lawyer.
Stan Hrincevich is the HOA Warrior in Colorado who’s long been trying to educate legislators about this scam. And Stan is Enemy #1 on the CAI’s list of really bad guys. To me he’s Colorado’s biggest hero. His battles against DORA (Department of Regulatory Agencies) are legendary. The Colorado Legislature created an HOA Ombudsman’s Office to try to shut Stan up. Sadly, the Ombudsman has no budget, no power and is dumber than a box of rocks. The only thing this ‘Ombudsman’ ombuds for is his own salary.
That’s the background.
Knowing that this same kind of situation exists in almost every state in the union I’ve asked Stan for permission to reprint a recent news release he sent to homeowners around Colorado.
The HOA Manager licensing law requires disclosure of fees imposed by property management companies on home owners to be in their contracts with the HOA. If you know of anyone who has recently (after July 1, 2015) sold or bought into an HOA and paid an HOA Transfer Fee (this can be identified as a one liner on the closing documents) let us know. These home owners might be eligible for a refund and the management company fined. We will help in filing their complaint with DORA to pursue this issue.
The HOA Manager licensing rules are very weak for home owners and purposely left out specifics and justifications regarding fees imposed by management companies on home owners. However, there is still room for filing complaints and requiring HOA Boards and management companies to justify the imposition of the HOA Transfer Fees in HOA contracts and governing documents. Additionally, your HOA Board may also be required to inform home owners if they endorse such fees and to change the HOA governing documents/declaration to indicate the Transfer Fee is a financial obligation of the home owner upon the sale of their home (which may require a vote of home owners).
When someone buys a home in an HOA they are to be apprised of all financial obligations to the HOA as a home owner. This includes HOA dues and special assessments. The HOA Transfer Fee is rarely if ever disclosed as a legal obligation and therefore the property management company (and HOA) should be precluded from assessing this fee. The new licensing law precludes assessing fees unless it is in their contract with the HOA and/or supported by the HOA governing documents.
Filing a complaint costs zero and we will help as needed.
We will periodically issue this email requesting your cooperation on this topic.
Did you know that when you purchase a home — either new construction or resale — you might not own the rights to mineral resources beneath that home? If not, then you must take the time to read Reuters 2013 Special Report: US Builders hoard mineral rights under new homes, linked below.(1)
It may seem unbelievable, and might never have crossed your mind, that the builder of your home would write into the deed and sale agreement that mineral rights would not convey to the homeowner. What this means is that if there should be oil, gas, gold, or any other valuable resource lurking in the soil beneath your home, you would have NO rights to compensation for withdrawal of those resources. In fact, whoever holds those mineral rights — be it the developer or an energy company that has acquired those rights from the Developer — has the legal right to drill under your property and take those minerals, whether you like it or not. And because you don’t own these rights, you won’t be making any money on the deal, even though you’ll assume all the risks involved during the drilling or “fracking” process that is sweeping across the country.
And quite often, the developer does not openly disclose that the buyer gives up property rights, including mineral rights. Most buyers find out either at closing or thereafter. The fact that most new construction is part of a homeowners’ association makes it easy for the builders to bundle these mineral rights and then lease or sell them to a third party, often without the homeowners’ knowledge or explicit consent.
Below, you can follow links to two June 2015 reports on fracking: one from the EPA concluding that contamination of water supplies is “isolated,” (2) and another news release from the University of Pittsburgh, citing a study of the correlation between proximity of pregnant women to fracking activity and lower birth weights of their babies (3). But there are literally hundreds of news reports, and dozens of studies have been done on the subject. The oil and gas industry and the EPA tend to downplay the risks, while environmental activists tend to play up exposure to human health risks as a result of air, soil, and groundwater pollution.
For all of these reasons, when homeowners in North Carolina and Florida became aware of developer mineral rights hoarding practice, they demanded action from their Attorneys General. In both states, homebuilder DR Horton agreed to return mineral rights to homeowners in 2013. (4)
In Colorado, developers such as Lennar have incorporated mineral rights companies (5) as subsidiaries of their homebuilding corporation. In Weld County, drilling activity has been going on for several years just outside of Rinn Valley HOA. A 2011 report features Rinn Valley homeowners who have lived through the noise and disturbance of gigantic heavy equipment during the 24/7 drilling process, within 500 feet of their back yard. Now homeowners have to contend with unsightly tanks and round-the-clock trucks that collect gas, oil, and wastewater and haul it away. It’s way more intrusive than most homeowners ever imagined. (6)
Plus, there may be hidden risks. A CBS report on Colorado’s 2013 flooding highlights flood waters wreaking havoc on tanks at drill sites – tanks containing oil and toxic chemicals used in the fracking process. (7) Some of those tanks sat mighty close to Rinn Valley. Could fracking activity, combined with flood damage, have played a role in soil and foundation problems for Rinn Valley homeowners, where Lennar is currently involved in construction defect disputes? Maybe. Maybe not. Hopefully there will be some competent experts working on behalf of homeowners to determine the extent and cause of these defects.
As a home buyer, the best way to protect your interests is to thoroughly research the developer and to hire a competent real estate attorney to represent your interests from the point you sign a sale agreement through closing. Your attorney can examine the deed and provide title insurance, disclosing any irregularities to you before you get to the closing table with the moving van already packed to the gills. Do not allow the developer’s or mortgage lender’s title company to represent you at closing!
References:
1 Reuters Special Report: US Builders hoard mineral rights under new homes
2 EPA study shows Marcellus Shale fracking doesn’t cause widespread water pollution
3 Study cites lower birth weights near fracking – Pitt health study finds correlation
4 DR Horton Returns Homeowners’ Mineral Rights
5 Lennar Colorado Minerals LLC incorporate 2011
6 Gas drilling and fracking occurred adjacent to Rinn Valley Ranch (2011)
7 CBS News report on Colorado flooding and its effects on fracking sites (Video)
The focus in the news lately has been on condominiums, with city leaders bucking state law to go around legal protections for homeowners, claiming that if they do not ease up on construction standards, developers won’t be able to build enough “affordable” condos for first-time buyers.
Well, here’s a story of apparent construction defects affecting some pricey single family homes on the outskirts of Frederick, roughly 30 miles north of Denver. It seems Dr. Robert Landry, a veterinarian, his wife and two small children have had to move out of their home. Landry alleges that the family’s Lennar-built “forever home” is uninhabitable, because the foundation is sinking into soft soil, allowing moisture and mold build up, buckling wood floors, and kitchen counters pulling away from the walls.
The homeowner hired an engineer to examine the foundation and crawl space, and to conduct soil testing. The results of recent soil tests indicate that the soil is too soft to support construction of a home. Lennar claims that soil testing done in 2006 indicated a drastically different soil composition that was deemed suitable for construction.
However, in 2013, Colorado saw historic flooding, and Weld County – where Landry’s home is located – was particularly hard hit. Additionally, Frederick has a history of coal mining activity, and in recent years, nearby land has become the site of oil and gas drilling, and the controversial practice of fracking. (the subject of another blog) Several of Landry’s neighbors report similar damage to their homes.
A Google search of Lennar Homes in Frederick indicates the company is no longer building homes in Rinn Valley HOA, the site of Landry’s home. Landry has approached the Town of Frederick and the HOA for assistance, before bringing his story to local media.
Landry contends that new soil testing should have been done following the 2013 floods, prior to breaking ground on his home and others nearby. He questions why the Town of Frederick approved construction and issued occupancy permits for homes built on shifting soils, particularly without drilling deep piers into bedrock to support their foundations. The inspection officer admits that the Town’s policy is to simply accept the Developer’s reports, signed by the builder’s own engineers.
This is common practice in many states – the local government’s development planning officials are mostly paper pushers. As long as the Developer files the required reports with signatures, the project is good to go. And many site inspections are either conducted by the Developer’s chosen experts, or, if conducted by the city or county, such inspections are cursory at best.
In other words, as a home buyer, no one is looking out for your interests.
To add insult to injury, the Attorney hired by Landry says that it is impossible for homeowners to sue Lennar, because the Developer requires arbitration to settle construction defect disputes. Those consumer-hostile terms were written into the sales contracts for all homebuyers. (Similar terms are most likely written into the governing documents for the homeowners association, with regard to defects that occur in the common areas.)
Landry and his neighbors hope to convince Lennar to buy back their homes, so they can move on with their lives.
Source articles and video:
(homeowner blames builder for sinking house)
(earlier report, Shifting Soil Damages Brand New Home in Frederick)
(March 2015, Dr. Robert Landry asks for assistance from Town of Frederick with Rinn Valley homes)
