Category Archives: HOA

In A Million Years, Never Thought I’d See This Happen

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Colorado is a ‘cool’ state. The University of Colorado was named by Newsweek Magazine as the nation’s ultimate party school. People are healthy, alcohol abuse is low, but this is the first state that legalized recreational marijuana. There are hundreds of ‘maryjane’ stores all over the state.

In Colorado politics, as you can imagine, the heavy population centers are solid blue, the agricultural areas are red. And about the only thing that causes riots and tear gas battles is when crowds of young people are celebrating an end-of-season victory by the Broncos, the Nuggets or the Avalanche. On those nights, damage to store windows and police cars can run into the millions. A ‘cool’ state with an edge.

Our early history had an ugly side, it was the second home of the reconstituted KKK back when the Klan promised it was no longer opposed to the presence of the Negro race. Our history is checkered with 156 lynchings. Interestingly, the Klan only lasted about five or six years here before being run out of the state in the late 20s. And most of the lynchings were of white gold miners who’d gotten involved in fatal confrontations over bar girls, or the ownership of gold claims.

These days, Colorado is racially diverse and probably more tolerant than most other states. Here, we really recognize only two races, those who ski and those who don’t.

Oh, I should tell you there’s lots of population growth and private homes are being built by the hundreds of thousands. For many years, all new development has been in mandatory Homeowners Associations. As a result, we are the de facto “Homeowner Association Central” for the Western Plains. And HOA abuses here are legendary. Everything you see happening in Florida, Arizona, Nevada and Texas is happening right here in Colorado. Some of the largest embezzlements from HOAs in history were right here in the Denver area. In fact, it was here that I first started to write my book, Neighbors At War!

Since our gun laws are pretty loose, and since HOA neighborhoods are so angry, we keep waiting for the first gun violence to break out during the annual HOA meeting. It hasn’t happened yet. With our cowboy mentality, it’s only a matter of time, I suppose.

Meanwhile, I was really stunned to see a new group arise which is trying to get some common sense laws past a legislature that can sometimes do some pretty stupid things. A press release on a proposed HOA law is linked below. The proposal makes so much sense that I predict another eruption from the folks at CAI (Community Associations Institute). The CAI knows our state well, and in the past they’ve screwed up some pretty good proposed legislation.

But see if you don’t think this proposal is based on common sense.

(link to HOA proposal in Colorado)

 

Get Ready for the Housing Crash!

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In the past I’ve shared with my friends my fears about the coming tsunami of world economic collapse and a housing bubble unlike any this country has ever seen. My degree is in Political Science and not Economics but I am a successful investor and money manager. I also do a lot of reading about economic issues.

So, what’s my concern today? A new CNBC report talks about coming interest rate increases and how that will cause ‘massive volatility’ in the markets. The interest rates that are coming will crush the mortgage and housing industry.

After years of moderating and running this blog and years of writing and researching my book, “Neighbors At War,” I firmly believe that people in Homeowners Associations are going to be the first ones slammed by the coming mortgage crisis. I’ll list the reasons why HOA properties are Bull’s Eye Number One.

1. Potential home buyers are getting a whole lot wiser about the dangers of HOA living. The HOA industry has done no favors to homeowners by earning such names as ‘the lawn Nazis,’ ‘HOA Nazis,’ ‘the HOA Mafia.’ People aren’t stupid. They read these stories of the bullying of people in Homeowners Associations, the assessing of ludicrous fines, the abusive (if not illegal) practice of artificially running up legal fees in an effort to get homeowners to try to stand their ground against bullying. The more a homeowner tries to assert his property rights in a dispute, the bigger his financial fall when the HOA wins. This kind of knowledge in the hands of homeowners and home buyers means HOA property values can only go down.

2. A massive wave of foreclosures hurts HOAs more than non-HOA property. An HOA which has 15 to 25 percent foreclosures is pretty close to bankruptcy. Lose 25 percent of your dues, you have to savage the remaining owners for dues increases. If not, the community swimming pool turns green, the lawns don’t get cut, and the roads don’t get plowed. A potential buyer won’t make an HOA investment when he sees the neighborhood falling apart. On the other hand, non-HOA property owners have no problem surviving when a large number of foreclosures hits a neighborhood. Those properties are quickly bought up, especially in neighborhoods where homeowners have voluntarily worked to keep their properties looking good.

3. HOAs which restrict the percentage of rental property do themselves no favor. Being able to rent your condo or house in an emergency is a great escape valve for a homeowner. It saves his equity and he doesn’t have to turn the property over to foreclosure. HOAs with ‘no rentals’ regulations will be the first to suffer catastrophic collapse.

4. Idiotic court decisions like the recent one in Nevada, in which a super priority lien (HOA fine) can extinguish a first deed of trust (the bank’s mortgage) create a lose/lose situation for mortgage companies. Why would they invest in such a state? Why would mortgage companies not demand massive down payments and arbitrary monthly dues to handle an HOA’s excesses. Such new mortgage requirements will crash property values, and the coming financial tsnami will ensure those neighborhoods crash first.
Readers of this blog will have many more reasons why the approaching economic collapse will hit HOAs first, and I encourage you to leave those reasons on our comments page.

(link to CNBC article on coming collapse)

 

 

Crooked Pennsylvania Judges

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All too often among people who frequent this blog, we’ve seen injustice by virtue of actually having been dragged into a court of law to argue one side or another of an HOA case. I get lots of email from homeowners who feel they’ve been looted, not only by an abusive HOA but by judicial rulings as well. And I’ve spoken with attorneys who feel their homeowner clients did not seem to get fair and balanced rulings from the bench. Indeed, only a tiny fraction of HOA court cases ever come down on the side of the homeowner. Logic would tell you that such rulings would favor approximately half of those who stand before the bar. Instead, rumor has it that homeowners have about a one percent chance in court against an HOA.

The massive impact of the CAI (Community Associations Institute) cannot be underestimated. True, the CAI lobbies legislatures on behalf of Homeowners Associations. This is kind of a half truth, since CAI really lobbies on behalf of the vendors of Homeowners Associations, e.g., the lawyers, the property managers, the suppliers of HOA services. And they blatantly lie when they testify, as they often do, that they represent homeowners. But judges, many of whom, are well-connected and live in Homeowners Associations, cannot possibly be ambivalent about their support of the HOA system. Judges are human beings, and human beings are all ‘little walking bundles of bias.’ And many of those same judges are closely linked to law firms where fellow attorneys make a great deal of money from suing homeowners who live in associations.

So, when our friend in Pennsylvania sent us the following link about the spreading scandal among judges in her state, the immensity of the scandal set us back on our heels. Cash for kids, child porn sent from one judge to another, it just takes your breath away. We, as homeowners, want only to have a chance of fairness when we enter a court of law. If we’re forced to stand before the bench, while feeling contempt for the lack of human decency sitting there in judicial robes, well, it just demolishes our faith in the system.

(link to news story of scandals in robes)

 

Builders, Professionals seek to avoid liability for Construction Defects, with support from local and state government

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guest blog by Deborah Goonan

Colorado has been making news on HOA websites lately. In direct contradiction to Colorado state law, Lakewood city officials have recently passed an ordinance that prevents condo owners from suing developers for construction defects.

There are two sides to the issue of construction defects. Builders want to avoid litigation in lieu of binding arbitration, with the opportunity to correct defects. They maintain that defects are often minor, or that defects are a result of poor maintenance by the HOA, rather than shoddy construction.

Homeowners, wary of uncooperative Builders that may drag their feet taking corrective action, or may balk at making necessary repairs, are reluctant to give up their legal rights to sue in the courts.

But Builders have an ally in the form of the Colorado Metro Mayor’s Caucus, pushing for statewide legislation that reduces builder liability for construction defects. You see, the Mayors believe that reducing liability for construction defects will reduce building costs, and convince Developers to build new affordable housing in the form of condominiums.

Instead of working in the best interests of constituents, writing legislation with balanced legal protections for condo owners, proposals aim to gut existing statutory rights to file a lawsuit, requiring mandatory arbitration instead. Anyone who has been involved in arbitration knows that the filing costs are substantial, with results usually slanted in favor of Big Business.

Avoidance of liability for construction defects is a hot button issue, so much so that Colorado attorneys are actually encouraging developers and general contractors to include mandatory arbitration clauses in the Condo and HOA governing documents. Attorneys also recommend requiring Developer approval to amend (or remove) that arbitration requirement following turnover to an owner-controlled Board. (See link below)

Critics in Colorado point out that affordability is probably more affected by factors such as student loan debt and stagnant wages, rather than higher building costs involved with obtaining construction insurance.

Meanwhile, on the east coast, there are similar ongoing battles in my home state of Florida.

In Florida, the controversy centers on whether or not developers, general contractors, and design professionals should be liable for construction defects affecting common area infrastructure – roads, storm water drainage systems and structures, street lighting, and other essential elements – that affect the habitability of homes a the subdivision.

In response to Maronda Homes vs. Lakeview Reserve, where Lakeview HOA sought to sue Maronda for defects that resulted in storm water flooding and deterioration of roadways, Developers and construction firms sought to avoid liability for defects to common areas that are “unattached” to the homes, or that do not result in direct damage to individual homes. In 2012, the Florida Legislature passed, and Governor Scott enacted, FL Statute 553.835, preventing HOAs from filing suit to recover damages from construction defects to common area infrastructure. Attorneys and homeowners alike opposed this consumer-unfriendly legislation, but real estate development interests lobbied for its passage, and most state Legislators voted in favor of the amendment. The law basically states that homeowners are stuck with the cost of making repairs to defectively constructed roads, storm water ponds, swales, underground drainage, and the like.

“Too bad – Buyer Beware!”

However, in 2013, the Florida Supreme Court found that 553.835 shall not be applied retroactively in the case of Maronda v. Lakeview. The Court also left the door open for a constitutional challenge in defect suits brought after July 1, 2012, when the law became effective. The statute still stands, awaiting that challenge.

In the meantime, design professionals (architects, engineers, designers, surveyors, etc.) successfully lobbied for passage of their own protective legislation, FL Statute 558.0035, limiting individual liability for professional negligence claims.

Notice that nobody seems to lobby for quality construction, and protection of owners’ health, safety, or financial interests. Instead, Legislative focus is on reducing construction and legal costs for builders and related professionals. While it makes sense to inhibit frivolous defect lawsuits or fraudulent claims, it makes no sense at all to eliminate accountability of Developers and others who designed and created HOA subdivisions for personal profit.

Furthermore, it is outrageous that legislators continue to circumvent the judicial process by passing laws that limit the rights of constituents.

Florida references:

Florida Supreme Court rules that a homebuilder’s implied warranties apply to subdivision improvements that provide “essential services” to homeowners

http://www.lexology.com/library/detail.aspx?g=7c45caa0-800b-4874-b394-b8957310cb50&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+Other+states+section&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2013-07-24&utm_term=

Florida Condominium Law Protects Condo Owners from Construction Defects

http://www.floridacondohoalawblog.com/2012/05/articles/construction-issues-contractual-disputes/florida-condominium-law-protects-condo-owners-from-construction-defects/

FL Statute 553.835 Implied warranties (effective July 1, 2012)

http://www.flsenate.gov/Laws/Statutes/2012/553.835

Florida Statute 558.0035: Limiting Design Professional Negligence – See more at:

http://www.jimersoncobb.com/blawg/2013/06/florida-statute-558-0035-limiting-design-professional-negligence/#sthash.4j7R4QnE.dpuf (effective July 1, 2013)

Colorado References:

Building lawsuits could be reformed

http://durangoherald.com/article/20141130/NEWS01/141139971/-1/taxonomy/Lawsuits-in-building-defects-may-be-reformed—

How to guarantee the HOA can’t litigate condo construction defect claims

http://www.lexology.com/library/detail.aspx?g=b768d3c2-c021-4701-83eb-59bdc1998b87

Embezzlement Arrest In Aloha State

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Ah, that island paradise where everyone would someday like to be. Warm breezes, exotic fragrances, tropical birds, macadamia nuts and pineapples. White kukuis, cottage roses, and yellow hibiscus. Yellow ilima, red ohia and Pele’s sacred lihua blossoms. It seems that Hawaii has just about everything. Even HOA embezzlers.

Yes, Toni Ann Floerke-Politsch is a bigtime condominium manager. She heads a management firm on Oahu. Prosecutors in Honolulu have charged her with stealing more than $100,000 from condo owners who trusted her to manage their properties. She’s now charged with fourteen counts of felony theft.

You’d think that once you make it to Paradise, you’d be able to have a little faith in the people around you.

A message to Toni: Kapakahi, keke’e donkey pilau haole basuda. Many wish you uku pile ukus in jail.

(pidgin-english-hawaiian word translator)

(link to KITV-News story on Toni Ann Floerke)