Consumer Notice: PA HOA, Condo, Co-op pending legislation

By Deborah Goonan, Independent American Communities

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Well, I cannot say I am surprised, but I had hoped things would be different in my home state of Pennsylvania.

Several weeks ago I wrote articles about HB 1774 (here and here), legislation proposed by State Rep. Rosemary Brown (R), intended to give the Attorney General’s office authority to “investigate and mediate” disputes in homeowners, condo, and cooperative associations in the state.

The orignal bill offered broad oversight potential. But then, along come lobbyists from CAI (Community Associations Institute) PA-DEL, and next thing you know, the scope of authority provided to the AG has been narrowed to the point of near insignificance.

Now there are only 4 types of complaints that the AG will investigate and mediate:

(a) General rule.–A unit owner <-IN GOOD STANDING may file a
complaint with the Bureau of Consumer Protection in the Office
of Attorney General in the event of a violation by the declarant (sic)
or the association of sections 3308 (relating to meetings), 3309
(relating to quorums), 3310 (relating to voting; proxies) and
3316 (relating to association records).

So if your HOA fails to hold meetings, conducts association business without meeting quorum requirements, tampers with ballots or proxies, and refuses to provide access to records, the AG office might be able to assist.

However, what’s not in the bill is just as important as what’s in the bill.

For example, if the owners suspect members of the board (developer appointed or homeowner controlled) or manager of self-dealing, unfair or unethical contract awards, theft, fraud, or embezzlement, under the language of this proposed statute, those matters would not be investigated by the AG – not even for the purposes of referring the matter to the District Attorney if applicable.

The AG will not investigate unfair or abusive collections practices, discriminatory or selective enforcement of the covenants, bogus or abusive fines, or failure to deliver adequate maintenance services that are supposed to be provided by your assessment dollars.

And, worst of all, note that the current version of HB 1774 also limits AG services to members in GOOD STANDING.

That means a corrupt HOA Board or Manager need only manufacture a late payment (misplacing your assessment check or failing to post it in a timely fashion) or charge you a fine for some arbitrary violation to convert your membership to one that is not in good standing.

Think about the increased potential for abuse.

 

 

 

CAI lobbyists are misleading legislatures

Now, in all fairness to Rep. Brown and PA state Legislature, this is typical modus operandi for CAI. The trade group – mainly controlled by community association management firms and attorneys – uses the exact same formula for watering down proposed regulatory oversight in all 50 states and the District of Columbia.

As soon at the state chapter gets wind of any attempt to scrutinize irregular behavior of HOA board members, management companies, attorney firms, and any of the industry’s trade partners, lobbyists from CAI swoop in with the following seemingly benign rhetoric. (My emphasis added in bold.)

Community Associations Institute’s Pennsylvania Legislative Action Committee (CAI) represents the interests of an estimated 2.8 million Pennsylvania residents, comprising nearly one‐fourth of the state’s population, living in approximately 10,000-12,000 condominium associations, cooperative associations, and planned communities (homeowner associations) throughout Pennsylvania. CAI’s members include volunteer homeowner leaders, professional managers, professionals, and other practitioners who provide products, support, and services to community associations.

It is entirely untrue that CAI’s PA LAC represents the interests of all residents living in Association Governed Housing.

The organization’s membership consists almost entirely of attorneys, association managers, insurance companies, reserve engineers, and other service providers who make their living and substantially profit from assessments collected from property owners. With the exception of a small membership of “homeowner volunteer leaders” (i.e. HOA Board members who write contracts with HOA vendors), there is virtually no representation of homeowners at large in CAI at the state or national level.

Legislators in Pennsylvania and other states need to recognize that basic truth. CAI is not a consumer advocacy organization, nor is it a political advocacy organization that represents millions of residents living in Association Governed Housing.

In fact, most homeowners have never even heard of CAI. And given that CAI estimates that roughly 70 million people reside in Association Governed Housing nationwide, the organization’s 34,000 trade group members represent a tiny fraction of more than 333,000 associations.

More fundamentally, to say that any trade group represents the interests of its consumers is preposterous. It insults one’s intelligence.

Does the National Automobile Dealer’s Association (NADA) represent vehicle buyers and owners? Does the National Association of Home Builders (NAHB) represent the interests of homeowners? Of course not.

Trade groups sell products and services to consumers. Trade groups, including CAI, lobby for political advantage that maximizes their profit potential and limits what they see as “burdensome” regulation.

Other PA legislation in the pipeline

By the way, there are additional legislative proposals in Pennsylvania that also affect residents in Association Governed Housing, all of them driven and supported by CAI, that happen to have limited incidental benefits for homeowners.

For example, one legislative proposal would limit the necessity of HOA foreclosures in favor of issuing a personal judgment against a delinquent homeowner. While garnishing a homeowner’s wages might be preferable to foreclosing on their home, there are still problems associated with a lack of accountability of HOA leaders. The fact is, a personal judgment may be unjustified if the debt owed to the association is legally invalid, and if collection practices did not comply with the law.

That’s why HB 1774, with its proposed AG oversight, is so critically important to consumers, and so vehemently feared by CAI’s PA-DEL chapter.

What I also find amusing is CAI’s objection over filing fees charged by County Governments. CAI rightfully wants to put a cap on these fees. Yet the very same organization lobbies for no limitations on the junk fees they can charge home buyers and sellers for disclosure documentation – also known as “transfer fees,” “estoppel fees,” “disclosure packet fees,” and similar fees. Nor does CAI favor limitations on attorney fees or collection costs, which commonly double, triple, or quadruple the actual assessment delinquency for a homeowner.

Looking at the big picture, it should be obvious to all state legislators that CAI does not represent the interests of their constituents. To the minority that recognize this truth and vote accordingly, thank you.

To those who vote for whatever CAI recommends without hesitation, I urge you to reconsider the impacts on consumers and voters in your District.

Consumers who reside in, or are considering buying into, Association Governed Housing should take note: the industry is practically unregulated, and, all too often, your state legislators are not representing your interests.

 

 

 

References:

For anyone interested in reading the legalese, you can read the current version of MB 1774 here:

http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2015&sessInd=0&billBody=H&billTyp=B&billNbr=1774&pn=2702

 

See the Bills that CAI is tracking and lobbying for and/or against here:

http://www.cai-padelval.org/legislative/pennsylvania

 

 

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2 Replies to “Consumer Notice: PA HOA, Condo, Co-op pending legislation”

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