The link below is from the Las Vegas Sun newspaper and the column is a so-so explanation of Homeowners Associations. For the completely ignorant it may have a couple of bits of knowledge. The major reason I’m linking it is not because of the column. It’s the comment by a reader about something happening in his own HOA. That single comment is more informative than a dozen Las Vegas Sun columns.
(link to Las Vegas newspaper. DON’T MISS THE COMMENT AT THE BOTTOM!)
Investigative reporters just LOVE websites like ScamBusters and Snopes. It saves us a lot of research time. Those sites are not always right and are subject to mistakes like most of the rest of us. But what a resource! Another of my favorite ones was CSICOP (Committee for Scientific Investigation of Claims of the Paranormal.) But that last one is a little esoteric.
I’ve just learned from one of my frequent email contacts that ScamBusters actually has a blog post about Homeowners Associations. It’s not perfect but it shows how suspicions about HOAs is going mainstream.
The HOA industry, and the politicians who support the industry – perhaps for dubious reasons – use the same talking point, over and over again:
“Vote the bums out!”
What a joke! As many have pointed out here on this blog, there are many factors that make a mockery of the fair election process in homeowners or condo associations.
The very first problem is that votes are allocated according to the corporate model of governance, and not based upon a democratic basis of “one person, one vote.” In Association Governed Residential Communities, voting interests (notice I did not say “rights”) are tied directly to the share of property owned within the association.
When investors or developers own most of the property, they hold a majority of the voting interests, and therefore control the Board by default. In this respect, life in an HOA is no different than living under a dictatorial, communist, or fascist regime.
Or, another way to look at it is that, as a homeowner, you become an unwilling pawn in a game of hostile corporate takeover.
But even in cases where the developer or investor group are no longer involved, owners can form voting blocs of like-minded property owners to prey upon the remaining owners. One common scenario pits absentee landlord owners against owner occupants. This is especially common in condominium associations.
In 55+ communities, where many of the owners are in their seventies and older, it can be difficult to find candidates for the board who are healthy enough to serve! That opens the door for relatively young but unscrupulous board members to take advantage of senior citizens living on fixed incomes, and dealing with declining health.
The HOA concept is flawed to the core. The foundation is shaky from Day One.
And on top of that, there are no consistent laws that offer adequate consumer protection.
Why have so many of our elected officials failed to recognize that the HOA industry has, in effect, created an alternative local governance scheme that circumvents Constitutional principles? And what’s more, at the local and state level, misguided housing and development policies have encouraged or, in effect, required the establishment of nothing else but Association-Governed Residential Communities across the state and throughout population growth centers in the US.
It’s time to end the denial of abuse of homeowners and residents of these HOAs, COAs. It’s time to recognize that the governance model is flawed, and that, quite often, the financial model is also precarious at best.
This is America, and people need to be able to not only freely choose where they want to live, but they also must be free to live in peace. Americans should not have to risk losing their property equity and financial nest egg — not to mention their physical and mental health — because they have been sucked into a dysfunctional “community” governed by a mandatory association.
If state and local policies keep pushing these HOAs and building condos, there will very soon be no other housing alternatives. The supply of non-HOA, non-condo property to buy is already in short supply in high-growth real estate markets.
I recently relocated to Central Pennsylvania, where HOAs are not as common as they are in areas surrounding population centers of Philadelphia and Pittsburgh. States such as Florida (where I lived for about 7 years), California, Virginia, Illinois, Arizona, Colorado, etc. have very high concentrations of HOA/condo property and a great deal of problems as a result. Local governments are increasingly required to provide financial assistance to failed or failing Associations with aging infrastructure and inadequate reserves. The industry does not want you to know about this! Advocates and concerned citizens, don’t allow your state to fall into the same trap!
Several states are talking about the need for laws requiring that HOAs be open and provide full disclosure to buyers and current owners alike. Several, such as Florida and California, have already enacted laws meant to prevent corruption and self-dealing.
But it isn’t working, because states choose not to enforce violations of the very laws they created. It is up to the owner to initiate a law suit in civil court, and most owners cannot afford to pay an attorney thousands of dollars to enforce open meetings, full access to records, and consumer disclosure statutes.
For example, Massachusetts is the latest state to attempt to enact disclosure laws. Critics call the proposed statute a “toothless tiger.”
(link to story in Newbury Port News on toughening condo owners’ rights)
On the heels of that report, I read two others this week about missing money in Association-Governed Residential Communities. Although I strive to keep current on news affecting homeowners and residents in HOAs, I also want to thank several of my readers who forward links to HOA embezzlement horror stories on a weekly basis.
Community Associations Institute (CAI) and state-level chapters have gone on record stating that these are “isolated incidents.”
Really?
Here’s another not-so-isolated incident In Lakes Northwest, Texas, where owners are investigating at least one board member suspected of embezzling money from the association.
(link to money missing from local HOA account)
And yet another incident, this one in Washington state, involving a husband and wife management team.
(HOA managers arrested over missing property funds)
CAI political lobby efforts put the blame on homeowner apathy. They say that owners just don’t get involved in self-governance of their association, unless and until conditions reach crisis mode.
While it’s true that most owners don’t attend HOA meetings and don’t pay much attention to how the annual budget is established, CAI is not telling the public – nor our lawmakers – the whole story.
The truth is, the corporate nature of Association-Governed Residential Communities vests considerable power and control to a few owners that serve on the Board of Directors. The board of directors wields considerable power and authority, but almost no accountability. Often, the Board will yield that authority to a management company, allowing the tail to wag the dog.
Unfortunately, when a homeowner, condominium, or cooperative association “elects” one or more rogue volunteers to the Board, it can be very difficult to detect corrupt activities and to remove unsuitable leaders.
It should be noted that during construction phases (which can drag on for decades in master planned communities), the Board of Directors is controlled by the developer. While some developers take pride in the quality of their work, others do not. Homeowners and residents can get stuck with a board of builder affiliates that limits transparency in order to shield the developer from liability for defective or shoddy construction or design.
Providing full and continuous disclosure of corporate association management and financial conditions is THE best way for homeowners or home buyers to be alerted to:
incidents of financial mismanagement, outright theft, or numerous complaints of defective construction.
Common sense: if disclosure laws were enforceable through more practical means, or enforceable through Attorneys General or federal regulatory agencies, and if developer or homeowner controlled boards and the managers that serve those board were truly held accountable, I believe we would reduce the opportunity of unethical developers, board members and community managers to shift the blame, lie, cheat, and steal your money.
So why are laws favoring swift and meaningful enforcement transparency and full disclosure so vehemently opposed by CAI? Why are state level CAI chapter leaders crafting “toothless tiger” bills that appear to benefit homeowners and HOA residents, but are essentially meaningless?
Why was I in Topeka testifying in front of the Kansas legislators today? HB 2557. Kansas now has this bill in the Local Government Committee being discussed to make amendments to the Kansas Uniform Common Interest Owners Bill of Rights Act.
The bill needs a lot of work but the legislators were all ears today. Some were very open about how they are hearing from more and more of their constituents that are having HOA problems.
House Representatives Scott Schwab and Amanda Grosserode both spoke in favor of the bill. I supported the bill with many changes and additions and strongly encouraged the committee members to learn who the CAI is and how they operate. Next came the CAI attorney and property manager who tried to convince the legislators all is well in the HOA neighborhoods. Kansas legislators were not buying it! Being a Realtor himself in Wichita, one representative spoke strongly about how HOA problems are getting worse and he’s hearing about it more and more. Afterwards, I spoke with him and he was very familiar with the case of Jerry Berg* being beaten with a crowbar by the HOA board member in his condo association.
(*Jerry Berg’s story can be found on this website http://neighborsatwar.com/2013/06/insanity-in-kansas-2/ He was also recently interviewed on Shu Bartholomew’s HOA radio show www.onthecommons.net)
Observing the discussion was a reporter from the Kansas City Star. Another was a homeowner who had been in a legal battle with her HOA, but will not speak on record for fear of more retaliation. A few more attorneys. And, last but not least, the Special Assistant to the Kansas Attorney General who asked him to attend and learn more about what is happening with the HOA issues in Kansas!
Readers…we are making headway. We are truly making headway. When I worked on the Kansas Uniform Common Interest Owners Bill of Rights Act back in 2008, 2009, and 2010 the term HOA or Homeowners Association was foreign to the legislators. Today, that is certainly not the case. It appears the legislators phone lines and emails are on fire with unhappy HOA member constituents demanding help!
For a chuckle, I’ll share this. The big time CAI attorney spews out the number of Kansas homeowners living in HOAs. He then says, and you see only one or two of them have complaints. (Okay, yes, I nearly jumped out of my chair!) Trust me, if homeowners were not so frightened of their HOA board placing them on their radar for abuse, I could fill buses with people to testify for this bill to pass.
I will not be able to take busloads of people to Topeka, but I’m asking for your help. Keeping in mind this bill is being written with the intentions of helping HOA homeowners and states seem to follow what other states do…would you please send a short note of support to the email below and ask the Kansas legislators to support HB 2577? I would love to hear that hundreds of emails of support were received from all across America. Let the Kansas Legislators know we are counting on them to blaze the trail for better legislation for HOA victims all across America.
rich.mergen@house.ks.gov
Subject: Local Government Comittee- HB 2577
Here’s a sample of what would be a sufficient email:
Dear Kansas House of Representatives:
As an HOA homeowner I am asking you to support HB 2577 because all across America we are experiencing far too much abuse and there is very little to no rights for us. We have limited protection and no place to go for help. Please listen to the homeowners, not the members of the Community Associations Institute (CAI).
I live in (name of your state) and I’m hoping my legislators will follow your lead.
Thank you for your public service and willingness to recognize the need for better legislation for those living in HOAs.
Your Name
City and State
http://www.kslegislature.org/li/b2015_16/measures/hb2557/
