PA: HOA “Private Community” consumer regulation proposed

UPDATE: After several amendments pushed by HOA industry lobbyists, and approval in the state House, HB 1774 died in the Senate. The amended version barely resembled the original bill proposal.

 

By Deborah Goonan, Independent American Communities

Another state, another attempt to regulate Association Governed Residential Communities, also known as “planned communities” or “private communities” in the state of Pennsylvania. House Bill R-189 has been introduced by Rep. Rosemary Brown, and several residents of private communities in the Poconos and other eastern PA counties testified in front of the House Urban Affairs Committee.

Owners shared their stories and their complaints about the current state of affairs – HOA boards, often working with their managers and/or attorneys, are selective about enforcing the rules, and often abuse their power. Some of them rig elections to stay in power, then they engage in expensive litigation at a cost to all owners. One owner testified that his Association is currently involved in a dispute over a $40 million storm water system upgrade.

The problems are widespread.

Opposition right from the start

But predictably, opposition to the bill is already mounting.

Marshal Granor, Community Associations Institute (CAI) property manager and John Carney, General Manager of Wallenpaupack Lake Estates Owners’ Association presented the committee with their usual HOA-industry talking points that caution against broad regulation and in favor of more “narrow” attempts at curtailing Owners’ Associations’ tendency to ignore or flaunt the requirements of the Uniform Planned Community Act (UPCA).

And the property managers that have everything to gain by maintaining the status quo apparently already have the ears of state and local politicians. Among them are Committee Chairman Scott Petri, a Bucks County Republican, and Chief Deputy Attorney General Basil Merenda, both of whom testified in favor of limited jurisdiction and authority for the AG office to investigate and mediate HOA issues.

Granor’s proposal is – not coincidentally – the same as exists in a few other states such as Florida and California: limit investigation of complaints to issues surrounding certain procedural and technical matters regarding the election process, as well as access to meetings and official association records.

Now, regular readers of this blog and other homeowner and consumer advocate resources know darn well that this sort of “compromise” results in minimal relief for residents of Owners’ Associations. You can literally read thousands of reports, blogs, and social media forum comments on HOA, Condo and Cooperative Association issues.

Same old song, same old dog and pony show?

Guess what? The very same abuses and complaints are repeated over and over again, in every state in the U.S., whether weak regulatory statutes exist or not. And those very same issues occur in Canada, Australia, the UK, and every other country that has adopted a similar legal framework centered on common interest or common ownership.

That could be the reason why many state committees and homeowner advocates cannot seem to come up with viable solutions, despite extensive discussion and debate.

Here’s one example.

A similar process just recently occurred in South Carolina. Angry owners testified in front of local lawmakers, demanding that they put a stop to HOA abuses. There was even a “study” done. The report of the committee included the following recommendation with regard to “education” of homeowners:

Recommendations: While the Community Association Institute (CAI) and other private entities offer educational resources to homeowners and managers, state government cannot place the sole responsibility of educating homeowners and board members on a private entity. See, Article III, Section 1 of the South Carolina Constitution prohibiting the delegation of legislative authority, and Eastern Federal Corp. v. Wasson, 281 S.C. 450, 316 S.E.2d 373 (1984), in which the South Carolina Supreme Court held that a tax on admission to movies rated “X” by the Motion Picture Association of America, a private entity, was an unconstitutional delegation of legislative authority. In order to provide accurate and readily available resources to educate homeowners, board members, and interested persons about the duties and responsibilities of property ownership in an HOA community, the General Assembly should authorize the Department of Labor, Licensing and Regulation (through its Real Estate Commission) and the Department of Consumer Affairs to seek reliable and unbiased information available from private entities (including attorneys and managers of differing perspectives) and provide for published and online documents and programs offering HOA education in the most efficient and cost effective manner possible, which may require separate productions for Board education than for potential purchasers and current owners.

At least the committee recognizes the obvious bias of CAI. Let’s give them credit for that bit of common sense.

However, the committee could not agree on licensing of community managers, a timeline for turning over control of an association from the developer to homeowners, nor dozens of other perplexing issues facing South Carolina residents of Assocation-Governed CICs.

So, in the end, nothing was done this Legislative session.

 

Whose interests do your government officials represent?

Why are some state and local government leaders falling lockstep behind CAI and its obviously biased agenda – one that serves to maximize revenue potential for the HOA industry, while also severely limiting accountability, transparency, and scrutiny over increasingly common financial misconduct?

Aren’t state and local governments supposed to represent the interests of constituents rather than certain well-financed, corporate real estate special interests?

Short of eliminating common interest communities (CICs) – and there’s many good arguments to be made for curtailing new development of CICs – homeowners and residents in Association Governed Residential Communities need a strong regulatory framework that offers broad protection of individual rights, and one that requires not only education, but also accountability for HOA leaders – particularly developers, community managers, and legal counsel serving those associations.

For those interested, here’s the news article about pending PA Bill R-189 from the Pocono Record.

 

Lawmakers hear about problems, concerns from private community residents

Excerpts:

The state Attorney General’s Office would be more likely to investigate or mediate alleged violations by operators of common interest private communities, under a bill sponsored by state Rep. Rosemary Brown, R-189.

Residents of Poconos private developments testified in Middle Smithfield Township on Wednesday to allegations that ranged from ignoring community bylaws, withholding requested documents, refusing to obey common interest property laws and falsifying community association board election results.

The problem, Brown told the House Urban Affairs Committee, is that residents too often have to engage in costly litigation to force homeowner association compliance with provisions of the state Uniform Planned Community Act.

House Bill 1774 would mandate the attorney general’s Bureau of Consumer Protection to “investigate or mediate” complaints filed by a unit owner against his or her property owners association alleging violations of community bylaws or the UPCA.

…

Marshal Granor of Community Associations Institute — a property owners association trade group — expressed worry that Brown’s bill “may open the floodgates to frivolous complaints” that will drain community association finances. Granor, who also manages home communities, said fraud allegations should be turned over to law enforcement. More “mundane” disputes should by handled by an internal industry mediation process, he said.

Granor offered a “compromise” that would limit Bureau of Consumer Protection investigative activities to disputes involving association meetings, quorums, voting by proxies, and efforts to obtain association records.

 

Read more here.