SC HOA “mess” proves difficult to clean up

By Deborah Goonan, Independent American Communities

Every year, quite a few states launch legislative efforts to improve the “mess” that exists in so many homeowners, condominium, and cooperative associations.

More often than not, those efforts fail. More on why that’s the case in a moment. First, let’s look at today’s example of HOA dysfunction.

South Carolina is a hotbed of HOA controversy in recent years. The following Live 5 News report features Shadowmoss Plantation HOA in West Ashley. Shadow “Mess” – as it has been dubbed by frustrated homeowners – is the textbook example of everything that can and does go wrong in an Association Governed Housing community: lack of transparency, poor communication, financial mismanagement, an abusive collection process for past due accounts, and heavy-handed enforcement of petty rules. And, of course, Shadowmoss exhibits the typical “us vs. them” mentality that divides so many HOAs into opposing factions.

Shadowmoss is one of dozens of HOAs that lost big money in a widespread alleged embezzlement scheme by Karen Colie of Marshland Communities. Homeowners looking to overthrow the current HOA board say that the theft might have been prevented or caught earlier if annual audits had been done. The current board says they are awaiting the conclusion of a federal investigation before they order an audit.

Check out the article and Live 5 News video for details. Also, click on the link to the Shadow Mess website, and watch the 8 minute video from the September meeting. Incredibly, following the alleged theft of funds by Marshland Communities, the HOA board hired a new management company, CMG, without doing a background check. However, a homeowner did a public records search and quickly found that two local HOAs have filed legal complaints against the CMG. Both resolved their lawsuits with out of court settlements. Complaints alleged financial mismanagement of HOA funds. 

 

Shadow “Mess” complaints and HOA oversight in South Carolina
Wednesday, September 21st 2016, 11:34 pm EDT
By Carter Coyle, Reporter (Live 5 News)

Neighbors are butting heads and allegations are flying in a West Ashley neighborhood that’s already had a rough year.

Some residents of Shadowmoss Planation started a grassroots attempt to overthrow their Homeowner’s Association board, under the claim that the neighborhood has become a “Shadow-Mess.”

Several people contacted Live 5 complaining about a crack-down on fines and fees, saying there were liens and foreclosure actions pending against neighbors, and ultimately accusing the current board of not being transparent enough with the HOA’s financials.

The heightened interest partly peaked after the neighborhood’s former management company, Marshland Communities, and its owner Karen Colie, were accused in March of stealing money from dozens of local neighborhoods.

That situation is still a pending federal investigation.

The Shadowmoss board has now hired a new management group, but people like Rebecca O’Grady aren’t satisfied with the HOA board itself.

Read more, watch video:

http://www.live5news.com/story/33154029/shadowmess-complaints-and-hoa-oversight-in-south-carolina

 

A few thoughts come to mind.

First of all, one of the biggest flaws in homeowners’ associations is that the focus is on the properties (homes) and not on the people who live in the community.

Live 5 News interviews a homeowner that has been through difficult times – the death of his wife and numerous health problems. He feels he has not been treated right. This is a story that repeats itself over and over again in HOAs across the country, if not around the world. Why?

For some out-of-control HOA board members, and the management industry that they rely upon, the basic premise behind HOA life is (to paraphrase):

We expect all of you, as neighbors, to keep your property perfectly maintained and to be the perfect neighbor at all times. If you don’t obey the rules, it will hurt property values, and you will have to be punished by the HOA for your selfish and inconsiderate behavior. Likewise, if you do not pay your share of common expenses (assessments), then the other Association members have to pay more to make up for your failure to do so. So the HOA must have the right to punish you for being a deadbeat, up to and including taking your home away over a few hundred or a few thousand dollars.

In other words, the warped corporate concept HOAs starts with the assumption that your neighbors are naturally selfish and inconsiderate people, and that harsh methods are necessary to keep everyone in line.

But whatever happened to kindness and understanding, having compassion for the needs and circumstances of your neighbor, and working together to solve problems in ways that are constructive rather than destructive? Why can’t we create a positive environment rather than one that is negative and punitive?

I think Steve Taylor, the homeowner that suggested the hardship fund is on the right track.

Here’s another suggestion, echoed by two homeowners in video interviews on Shadow Mess: create a Helping Hands committee that can assist owners and residents in need with maintenance tasks. It would help lighten their load when burdened by life’s problems. We all face obstacles and suffering in our lives. Wouldn’t it be better to be there for one another than to be ready to pounce on one another for various covenant or rule violations?

A change of heart and a positive attitude might even restore harmony in the community.

 

The second thought to ponder is how can we convince our elected officials and policymakers to truly give a damn about their ordinary constituents, instead of being worried about offending moneyed special interests?

Re-read this portion of the above article:

There’s little oversight of HOAs and community associations in South Carolina. In 2015, the state formed a study committee of experts and legislators to discuss the best ways to guide the groups, educate HOA board members and offer a certification process to managers, for example.

Attorney Shaun Cranford was part of that committee. He’s the Chairman on the Community Association Institute’s Legislative Action Committee.

“There’s so many different issues that arise in an HOA that South Carolina needs to catch up with its neighbors in North Carolina and have those parameters. There’s almost 4,000 HOAs and several hundred thousand residents living in HOAs.

It’s time to have a Comprehensive Act so all associations can operate in a similar manner,” Cranford told Live 5 over the phone.

Representative Mike Sottile of Charleston was also involved in the study committee. He told us it basically never went anywhere last year because there were differing opinions on regulating HOAs. Sottile said it could come up again in the 2017 legislative session.

Here’s the basic problem. Our policymakers seem to be listening only to attorneys who work on behalf of industry trade group, Community Associations Institute (CAI). A Legislative Action Committee, for readers who don’t know, is effectively a lobbying organization.

Why aren’t policymakers paying attention to knowledgeable homeowners, consumer and housing advocates, and – here’s a radical concept – someone who is not an attorney? Since when did attorneys become the only qualified experts on common sense oversight and regulation?

Why does nothing get done? No doubt, it’s because some of those “differing opinions” oppose those of the special interests.

Our policymakers need to understand that CAI does not represent the interests of homeowners at large. Yes, the organization claims to represent homeowners by way of representing the interests of HOAs. But corporate and collective interests represented by an Association are quite often at odds with individual interests, as well as basic Civil and Constitutional rights of people who reside under the governance of a fictional HOA entity.

To put it more simply, an HOA is a somewhat complex legal concept for organizing real estate interests. But homeowners and residents are real people. 

In short, CAI represents HOAs, and to a certain extent, the minority of homeowners that serve on HOA boards. They primarily serve the interests of trades that support HOA governance – community association management and legal professionals.

I can say with confidence, after following and reviewing pervasive HOA social and economic challenges in every state in the U.S. – including states with plenty of HOA statutes that are supposed to improve communities – legislation that is written and guided by CAI will not solve any problems for residents of Association Governed Housing. In fact, CAI regularly works to kill consumer-friendly bill proposals and to amend current statutes to hand over more authority to HOA corporations or greater profit potential to HOA industry stakeholders.

Many of my colleagues across the country who work hard to enact common sense regulation, better disclosure requirements, and more accountability for HOA board members and managers, will attest to this fact.