Category Archives: racketeering

The Most Underreported Crime In America

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Yes, once again we’re talking about embezzling. I could, and probably should do a story a day on how board members are embezzling from Homeowners Associations. There are so many creative ways to steal from your neighbors. But a woman arrested in Broward County just forged the names of other board members and wrote herself checks from the HOA bank account.

Michelle Changer-Coe was the president of the Mainlands Seven Homeowners Association. She’s in jail facing charges that she stole nearly $200,000 from her HOA.

Actually, while I hate to say it, this HOA got exactly what it deserved. They elected this woman president despite the fact that she was convicted a number of years ago for grand theft/forgery.

Now the big question: How many HOAs boards and managers are not involved in embezzling?

(story on Broward County HOA embezzlement)

 

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.

 

 

Las Vegas Condo Owners Win $2.4 Million

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guest blog by Nila Ridings

August 15, 2014 will be a day Frank and Amy Taddeo will celebrate for a long time. Their cheap condo investment in Meridian Condos paid them millions in the courtroom, thanks to the stupidity of American Invsco and Koval Flamingo!

The two companies converted apartments into condos and spiffed them up. But the floor tiles they used illegally exceeded the load bearing limits of the structure. Lawsuits for breach of contract have been flying. Fortunately, there haven’t been any building collapses.

But where were the city engineers? City inspectors? Heck, even an interior designer would have questioned that much weight being added to the flooring.

It’s a rare court victory. But whether this family will collect has to be up in the air. There are 200 units in Meridian. If each owner won 2.4 million dollars in court that adds up to 480 million dollars.

(link to story in the Las Vegas Review Journal)

 

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.

Ward’s note: Dave Russell will be featured on Shu Bartholomew’s OnTheCommons.net radio show August 30th. It should be fascinating.

Marketing of HOAs

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guest blog by Beanie Adolph

Incredible! How can something so destructive of family life and of the American system of governance continue to dominate American housing?  MARKETING! Chant the lie over and over:  HOAs protect property values. THEY DON’T!  Promise Utopia but hide the reality.  Deny every plea for full disclosure – for openness.  In 2004, two realtors were discussing on an industry blog how to ensure a buyer knew “what he was getting into” and concluded “…if ALL the potential pitfalls are enumerated, no one in his right mind would purchase.”

Most buyers saw the opportunity of owning the home of their dreams at a manageable price with the added inducements of “amenities” previously available only to members of country clubs. There was, then, and still is the lie that HOAs protect property values. There was not and still is not any disclosure that:

  • The quoted cost does not include the extra costs, e.g. increase in assessments and all types of fees.
  • The Reuler-Hailey paper* states “… some HOA managers contract with HOA boards at below-market rates with the expectation of making up the difference from individual owners. How? With a myriad of specific purpose fees, such as resale certificate fees, document fees, collection fees, inspection fees, and violation enforcement fees.”
  • Most new developments are HOA developments and buyers really do not have a choice.
  • Buying into an HOA is far worse than co-signing a note with strangers. A note has a fixed amount, defined terms, and can be paid off. In an HOA there is a lien that can never be paid off. The homeowner is a guarantor for all debts incurred by the HOA, and his house is security for their spending sprees.
  • The reality is that amenities are not “freebies” but burdens that constantly deteriorate, and are the responsibility of the homeowner.
  • HOAs are private quasi-governments that regulate and control the behavior of citizens without the same due process and equal protection clauses of the 14th Amendment.
  • The HOA system places rules and regulations above the rights and freedoms guaranteed to all Americans.
  • Once an HOA is established the governing documents ensure its continuance forever.
  • The HOA Industry constantly lobbies state legislators to increase their power – their control.  Their bills usually have homeowner-friendly names but not homeowner-friendly results. Lobby Watch, June 1, 2011, revealed funds raised for PACs, the distribution to the legislators, and how they voted.

Why do homeowners endure this?

Two of the most powerful motivations are fear and greed.  Homeowners, legislators, and politicians bought the concept that HOAs protect property values.  No facts were ever given to support the statement, but prospects of pink houses, cars up on cinder blocks, and unacceptable neighbors were the threatened  alternative.  In one TV debate the CAI attorney must have thought one car on cinder blocks was not scary enough.  He described a non-HOA community adjacent to his where one house had “6 or 7 cars up on cinder blocks, grass overgrown, trailers out.” When the goal is to instill fear the argument has no limit.

It is a fact that property values are determined by the economy and affect homes in and out of HOAs.   According to an exhaustive study of Harris County homes, homes not in HOAs fared better. Fear was and still is a major factor.  But in HOAs the fear of being targeted with fines, fees, and foreclosure keeps most defenseless owners silent.

* Statutory Evolution of Condominiums and Property Owners Associations in Texas, by Sharon Reuler and Roy. D. Hailey, September 2002. Mortgage Lending Institute, U.T. School of Law