Category Archives: Home Assoc

Bribes, Kickbacks & Other Forms of HOA Honesty!

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It’s not even an open secret that the typical HOA board member and common area maintenance company probably gets kickbacks from vendors. THEY GET KICKBACKS FROM VENDORS! Get over it. Don’t even question it. It’s about as common as worms on a sidewalk after a spring rain.

Since HOAs make their own laws and since government oversight over such things as kickbacks, bribery, extortion and embezzlement is approximately zero this kind of nonsense will continue indefinitely.

Jan Bergemann, one of the heroes of our movement just posted something unbelievable on his website. Actually, it’s not unbelievable. It’s just sad.

http://www.ccfj.net/CCFJCAMBribe.htm

More Embezzling, This Time New Mexico

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Yes, I know it’s wearying. But homeowners across the country just don’t realize how vulnerable their unregulated, uninspected, unwatched board members are to temptation. Egads! Give an ignorant board officer or property manager control over several million dollars in HOA funds….tell him or her that nobody’s watching, nobody’s prosecuting. Of course they’re going to steal! They will!  In fact, they’ll steal more and more as long as they think they’re getting away with it. Obviously, I’m exaggerating, but not by much!

The latest embezzlement apparently involves hundreds of thousands of dollars missing from Rio Rancho, New Mexico.

LOL! As I recall, this neighborhood had a very shady reputation right from the beginning. Some very suspicious characters (former Florida swampland salesmen) bought up tens of thousands of acres back in the 50s and 60s for pennies an acre. It was absolutely dry, worthless desert land. They advertised on the radio and in TV Guide, “Buy a five acre ranchette in Paradise for just 199 dollars. Know how I remember? My own parents bought  a parcel . In fact, it’s still in the family’s estate if anyone wants to buy it….cheap!

Anyway, decades later people actually started building houses, and Intel set up a big computer operation there to take advantage of the cheap labor. So fifty years later there’s actually a development….and a Homeowners Association. An Association that’s now complaining because some swine embezzled hundreds of thousands of dollars from the HOA bank account.

Life goes on.

(link to story on embezzling investigation)

HOA Residents Try To Bail Out

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guest blog by Deborah Goonan

The HOA, Association of Poinciana Villages (FL), wants to become a city. In fact, a group of residents have been attempting to become a municipal corporation for several years. The group has recently completed a feasibility study that it will submit to Florida Legislature.

It seems as though the large subdivision of Poinciana is tired of being underfunded and getting no services from Osceola and Polk Counties, despite the fact that 47,000 residents pay taxes to both Counties and the state of Florida. Their mature HOA cannot provide needed services provided to residents of nearby cities of similar size. Apparently the residents pay assessments, while the developer does not. The residents are tired of Developer Avatar retaining majority control since 1971 and want each resident to have voting rights, instead of a 9 member Board of Directors voting on behalf of each of Poinciana’s Villages. What a concept!

Who can blame these residents? After all, compare PUBLIC local government (municipal or county level) to PRIVATE governance in HOAs.

*A municipality has access to property and sales tax revenues, low interest loans, issuance of municipal bonds, state and federal grants. * The HOA is limited to collection of assessments that are NOT based on assessed property values. (often the $50K home pays the same assessment as the $500K home and even commercial property owners) The HOA has very limited access to financing through loans.

*A municipality can take advantage of economies of scale, and can cooperate with nearby towns and cities, or enter into local agreements to provide needed services. * HOAs have no option to collaborate with neighboring communities or public entities to provide needed services. In fact, its governing documents (the so-called CC&Rs contract) often state that the local governing entity will NOT provide such services, because the Developer has given away owner rights to these services as part of the development agreement at the time permits were issued.

*Local government elected officials are compensated, are publicly vetted, and they generally possess experience relevant to their respective roles. They often have term limits. Should these officials fail in their work, they are usually voted out of office in the next election. If they engage in unethical or illegal conduct, they will eventually be investigated, and held personally liable, without constituents having to bring a legal suit. *The HOA Board is comprised of volunteers who are practically immune from personal liability and oversight. The burden is placed upon owners and residents to investigate wrong-doing or spend personal funds in filing a civil suit.

*Voting and elections in a city – one vote per registered adult voter vs. one vote per unit (dwelling) owned. That means tenants vote, and each adult in the household gets to vote. No one in the community gets more than one vote. * The HOA Developer is granted weighted voting rights and appoints the Board as long as he controls most of the votes. After turnover, Boards are often elected by representative voting members, proxies, and other dubious means. Of course, allocation of voting rights is inequitable: the more property one owns, the more votes one has. They and the managers they hire often lack necessary personal and professional skills to do the job.

*The city has sovereign immunity, limiting its legal liability. * The HOA is a corporation that must insure itself against potentially high legal liability.

This is one evolving story to monitor closely.

(article on Poinciana seeking municipality status)
(PINCHOS residents group statement on reasons to incorporate)
(Letter from PINCHOS to Florida Legislators)

 

Let Me Vent About The CAI!

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guest blog by George Staropoli

How dare Susan French (lead ‘editor,’ of the 2000 Restatement of Servitudes, 3rd; co-author of Community Associations Law (1998 & 2008) with Wayne Hyatt, CAI national leader) take the attitude, accepted by the publisher, ALI, that this treatise is geared toward private governments because that’s what the people want. Did any group have her ear? (The Restatement is the common law treatise used by the courts when statutory law is silent.)

“Susan French begins with the assumption that . . . we are willing to pay for private governance because we are unable to pay for these amenities . . . individually. Therefore this Restatement is enabling toward private governance so long as there is full disclosure . . . and so long as decisions are made according to established and fair procedures.” (Foreword, p. IX). (My emphasis).

What part of reality did she miss? That people love HOAs? That there are fair procedures?

The Restatement speaks of private governance, which apparently French really meant as private government without being subject to the US Constitution. Section 3.1(2), Validity of Servitudes: General Rule, declares that the servitude cannot “unreasonably burden a fundamental right” (p. 347). What is a reasonable burden on a fundamental right? Does that control the Constitution? Is this private citizen law? After a long discourse on protecting fundamental rights, comment h makes it clear that,

“The question whether a servitude unreasonably burdens a fundamental constitutional right is determined as a matter of property law, not of constitutional law. Constitutional law decisions may be useful, but are not controlling, in determining when a servitude goes too far. When private parties create and enforce servitudes they are not governmental actors.” (p. 359-60).

Well then, what do we need the Constitution for? What do we need legislators for?

Who or What is The Community Association Institute? (CAI)

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guest blog by Stan Hrincevich, (www.coloradohoaforum.com)

Homeowners Associations (HOAs) are comprised of three entities: home owners, HOA Boards and their legal counsel, and the property management company (PMC). Problems can arise from any of these but for those who follow HOA issues the involvement of PMCs can be most problematic. PMCs affect HOA governance with their direct involvement in operational and financial matters and through their trade organization, the Community Association Institute (CAI), which has undue influence in HOA legislative activities that craft HOA law. For decades the sole source for Homeowners Association (HOA) information for the media and the State Legislature has been the CAI. Why not? Their name implies they represent the concerns of community associations and home owners: aka HOAs. Legislators “trust” this organization to represent home owners and citizen interests but most have no idea who or what they represent.

Legislators actually think their membership and funding comes from HOA home owners and HOAs: WRONG. They have trusted this organization for decades and have allowed them to set the rules in HOA governance and financial management. Yes, they craft the legislation that sets the rules for their industry and interests and ensure through their actions that HOA State law and HOA governing documents are highly enforceable from the HOA Board’s and PMC perspective and very weak for home owners. Due to this close relationship between the CAI and legislators across the country, HOA legislative reform has been very difficult and the few Bills that have passed have been watered, are more cosmetic than effective, and in no way help with enforcing home owner’s right

If you visit CAI or their legal affiliate web sites and read their literature you would think they represent HOA home owner interests. Wrong! Their membership is mostly comprised of PMCs and lawyers. The CAI is an organization that derives most of its’ income from selling their educational classes. Nothing wrong with this but read below on how they commingle this business with legislation. Then there is CAI “the trade organization” for PMCs. Nothing wrong with this either except that they have ensured all State HOA laws aren’t written to hold PMCs accountable for their actions.

Then there is the connection between the CAI and HOA lawyers who have ensured through their legislative influence that no binding, affordable, and accessible out of court dispute resolution process is available to resolve HOA home owner complaints. This of course ensures HOA legal enforcement from the home owners perspective against abusive HOA Boards and PMCs remains in our litigious, time consuming, pay-to-play court system making HOA law mostly ineffective.

The CAI and the entities they represent and work with in State legislatures have thwarted HOA legislative reform for decades. Recent examples:

*killing an HOA Transfer Fee Bill that would have limited the fee and required explanation and justification of the fee (this costs home owners in Colorado $10 million a year);

*opposition to a Bill that would have required HOA home owners to approve the use of HOA funds prior to entering into expensive legal actions;

* opposing an out of court binding dispute resolution process for home owner complaints (leaving home owners with only our pay to play court system for the most minor dispute resolution);

*their involvement in writing Colorado legislation to license property managers resulted in using such legislation to promote their sales of educational courses and hence drive up the cost of such required educational courses for property managers;

*opposing the limiting of HOA fees, fines, and administrative and legal fees on HOA debt; opposing term limits on Board members when others are available to serve;

*obstructing legislation on protections of home owners against liens and foreclosure for HOA debt; attempts to promote legislation that would expand the independent authority of Boards in governing HOA operations (without home owner approval); and the list goes on and all anti-home owner.

You can blame the CAI for the lack of HOA reform with their legislative intervention but much blame also goes to our political process that makes money the name of the legislative game and places unfunded citizen groups at a disadvantage.

The CAI and its constituents are the most anti HOA home owner group in the nation and in Colorado they most certainly are a wolf in sheep’s clothing and our legislators and the media are only beginning to realize their role. The beginning of HOA legislative reform and improved governance thus begins with dispelling the belief that the CAI represents home owners; revealing their history and actions in HOA legislative reform; curtailing the CAI’s influence with our Government agencies, media, and legislators; and having HOA home owner groups recognized in our legislature and in the media to offer a home owner centric perspective to improving HOA governance.