Category Archives: Handicap

Legal Pitfalls of HOAs

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guest blog by Deborah Goonan

One often-overlooked fact about homeowners associations (and condo, too) is that they are legally classified as corporations, separate and distinct from cities and towns. And just like any other corporation, anyone can sue the HOA or be sued by the HOA for any number of reasons.

What does this mean for the HOA owner? It means the Board has a duty to protect the Association against the very real risk of expensive lawsuits. Insurance policies can help, but only if the Board purchases the right coverage with limitations high enough to cover the risk. Even then, insurance companies have been known to refuse to pay some or all legal expenses or judgments, especially when Board or Manager actions have been deemed insufficient or reckless. When that happens, homeowners are often on the hook for unpaid insurance claims, hefty legal expenses and any other awarded damages.

Want some examples?

1) In the video linked below, you can watch what happened when the deck of an Indiana clubhouse collapsed during a December 2013 family gathering, hurling twenty-four people to the ground below, seriously injuring several of them. The builder claims the deck is beyond its ten year warranty period, and the HOA is responsible for its maintenance. If the HOA failed to maintain and repair the deck, the Association might be found liable for injuries resulting from its collapse. Will the HOA have sufficient insurance coverage for multiple lawsuits brought by the injured and their insurance carriers? Or will the insurance company deny payment because of something the HOA failed to do? Will insurance even cover replacement of the deck? All of that remains to be seen.

2) In the second news video linked below, in April 2014, neighbors in a Florida HOA said they were concerned because a man drowned in a retention pond. The HOA owns this pond as part of its common areas and is responsible for its maintenance. Retention ponds like this one are very common in Florida, and, as the attorney points out in the interview, it would be impossible to protect all of them with a barrier. Nevertheless, according to the attorney, the HOA can face liability for not adequately warning of potential danger, or knowingly or unknowingly creating any “unsafe” condition. There is very little this Association can do to prevent any child or adult from walking up to the pond and either jumping or falling in. Draining the pond is probably not an option in Florida’s tropical climate. The Water Management District requires retention ponds to prevent flooding and environmental contamination from storm water runoff. It is doubtful that all adjacent homeowners will agree to install a fence to prevent another drowning accident because, in many HOAs, lots adjacent to retention ponds are sold at a premium price as “water view.” Some HOAs expressly forbid fences of any kind, for any reason. All of these factors increase liability risks and insurance premiums for those living in an HOA.

3) Sometimes when an owner sues the HOA, things get out of hand. Such was the case of Maria and Sam Farran and their Virginia HOA, whose legal battle began in 2008, over the display of an Obama presidential campaign sign (that, according to the rules was four inches too big). After a protracted dispute spanning nearly four years, Fairfax County, Virginia judges ruled in favor of the Farrans in two lawsuits: the first over the HOA’s lack of a legal right to issue fines, and the second over the HOA’s secret meeting denying the owners’ requests (in apparent retaliation) to add a new roof and a deck. During the ongoing feud between the HOA and the Farrans, assessments reportedly increased from $650 to nearly $3,500 annually, mainly to cover legal expenses. After the dust settled in 2012, the HOA found itself unable to pay $100,000 in legal fees awarded to the owners, and had to declare bankruptcy. Now the community square, once used for neighborhood gatherings, is awaiting a new buyer.

Bottom line: if you own property in an HOA, due to no fault of your own, you may be on the hook for thousands of dollars in legal expenses, not to mention neighborhood strife, and possibly even bankruptcy of the Association.

(link to KSDK news story on deck collapse)

(link to News4Jax story on retention pond drowning)

California Drought Worsens

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Reservoirs that supply water to tens of millions of people in the Southwest are dangerously low. Folsom Lake northeast of Sacramento is typical of what’s been happening for the past few years in California, Nevada and Arizona. The LA Times article linked below says 99.8 percent of the state is suffering a severe drought.

How tough is it for homeowners to find buyers these days? What buyer can find a mortgage company that wants to risk its money when a disaster like this is unfolding? And what’s going to happen to home prices when half the homes in a neighborhood have For Sale signs in the front yard?

It’s stunning to know that HOA boards and managers have been fining homeowners who didn’t keep their Kentucky Bluegrass nice and green.

(link to LA Times story on drought)

Sod vs Mint

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guest blog by Nila Ridings

This might be breaking news: California is having a terrible drought! And Fran Paxton is trying to do her part to reduce water consumption for outdoor use.

Using her ingenuity, Ms. Paxton created landscaping using mint that requires little water. It even earned her a rebate on her landscaping from the local water district.

But the Twin Creeks HOA board in San Ramon demands she replace it with sod! Until she does they are fining her $50 per month.

In steps attorney, Micheal Mau who says the HOA could be violating the California law. He’s going to help Ms. Paxton settle this mess.

It’s no surprise that Twin Creeks board of directors says this case should not be settled on television. Heck no! It’s so much easier to bully the elderly out of the spotlight of television cameras. Good for Fran for calling out the investigative reporter!

(link to CBS San Francisco)

Red State vs. Blue State Conundrum

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One of our frequent contributors to this site used to be a researcher for a conservative think tank in Colorado. He says he recently dropped by the Republican booth at the Louisville town fair and made a point of asking opinions about HOAs. He asked about Captain Michael Clauer, the Texas man whose HOA home was illegally seized and sold while he was assigned to a war zone in the Middle East. It’s absolutely a violation of federal law for an overseas serviceman to be treated like that.

Well, our friend says the Republicans at the booth said, “Captain Clauer agreed to the covenants. He chose to live in an HOA. He didn’t have to buy into one of them.”

Jeesh! The ACLU occasionally stands up for a Constitutional right here and there. Republicans traditionally believe in smaller government and protection of property rights. The rampant abuses of homeowners by HOAs should be in the crosshairs of both the left and the right, the Democrats and the Republicans. But we’ve got idiots on both sides of the political aisle. With 63 million people living in HOAs, that’s a heck of a lot of votes. It sounds like we may have to do a lot more educating of people in both the red and blue states.

I’ve got to believe, though, that great masses of Republicans and Democrats believe HOA abuse has gone too far. The smart candidates ought to put HOA reform in a prominent place on their platforms.

Legislative Shenanigans in Arizona

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guest blog by Dave Russell

Here’s more background to the enactment of Arizona’s SB 1482 which will profoundly impact homeowners across the state.

You need to look no further than the “stakeholders” of the bill: The Arizona Association of Realtors, CAI and the Arizona Association of Community Managers, all of which have formed an alliance here in Arizona.

This was a bunch of individual bills all log-rolled into one. Individually, each one of these groups would never have let most of this pass.

The CAI convinced the Arizona Association of Realtors “that if we all work together, everyone can get what they want.” You know, except for the homeowners living in HOAs.

After the housing market crash, most Realtors are now managing rental properties to subsidize their dwindling incomes. Unfortunately, the Realtors ran into a snafu when it came to renting units in HOAs. It was those pesky, city sponsored, crime prevention programs, requiring criminal background checks and photo identification on tenants.

Probably one of the only useful things an HOA does is, preventing those convicted sex offenders and drug dealers from living next door to you and your children. Well the Realtors somehow decided that these programs were interfering with profit, and wanted the Arizona Legislature to eliminate them.

No surprise here, the Realtors worked their mojo with Rep. Michelle Ugenti (Realtor) and Sen. Gail Griffin (Realtor) to sponsor their unconstitutional legislation.

The Realtors can now rent to any criminal they want, as SB 1482 has abolished the basic requirements of every statewide HOA crime prevention program. The only good thing an HOA has done, so we toss that out the window.

The Arizona Association of Community Managers (offshoot of the CAI) can now have their property managers take the homeowner to small-claims court, and self represent. Of course the legislation doesn’t address how much the management companies and their HOA managers can charge the HOA for “legal fees” performed by non-attorneys. I’m sure those “legal fees” will exceed what a real attorney would have charged.

Now let’s not forego the unfair disadvantage to Mr. & Mrs. Homeowner, who probably never set foot into a courtroom. That’s right, it’s the inexperienced homeowner vs. the HOA gurus. Sounds fair? Not.

Arizona HOA legislation is almost like the hit show “Survivor” where the teams build secret alliances, while competing in challenges to earn either a reward, or an immunity from expulsion from the game in the next of the successive votes for elimination.