HOA industry downplays problems, AZ Legislators resist regulation

By Deborah Goonan, Independent American Communities

Keep Calm and Leave Me Alone

Every month there are several HOA articles written by or for the benefit of the Association Governed Residential Community industry. After several years of reading countless articles on common interest development issues, it’s easy to pick them out. They’re the articles that prominently feature statements from Community Associations Institute (CAI) attorneys and management company executives, either touting how “satisfied” HOA residents are or how “minor” disputes are simply a result of lack of education for owners and board members.

Truthfully, I can predict 99% of the usual talking points.

And sometimes the articles also feature commentary of state Legislators working on laws that are supposed to rein in excessive HOA power, or offer additional protections to housing consumers. More often than not, CAI lobbyists seem to have convinced the Legislator(s) that homeowners exaggerate the nature of HOA disputes, and, therefore, regulation is unnecessary.

Here’s another one of “those” articles, making its rounds on social media

 

Two Sides to Every Story: Sorting Through HOA Disputes

 

Here are a few of CAI’s talking points, followed by the Other Side of the Story – the side that CAI won’t tell consumers.

 

Talking Point #1:

The HOA management industry is fond of lamenting about apathy – owners not attending meetings, not voting in elections, and not reading the CC&Rs.

The other side of the story:

Fact: HOAs are not designed for widespread member participation! Think about it. Most HOAs do not have a meeting place in the community that is large enough to accommodate a majority of homeowner members. In fact, small associations don’t have any meeting place at all. Meetings take place in a member’s home.

And consider this: nearly all homeowners and condominium associations begin life under the control of a developer/builder who appoints the board for several years or many years, depending on the size of the community. During that time, there is no encouragement of homeowners to participate. Then, all of a sudden, at turnover of control, members are expected to actively participate in HOA matters.

The truth is, most HOA boards – just like most local governing boards – believe that if a lot of owners show up at a board meeting, it’s a sign of trouble, not civic engagement within the Association.

And, I hate to break it to CAI, but many board members have also not read the CC&Rs! But even if they have, it doesn’t mean they understand them or abide by them. Nine times out of ten, the HOA Board will ask the HOA attorney to read and interpret governing documents on their behalf.

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Talking Point #2:

HOA boards try to enforce the CC&Rs and rules the same way for everyone, but have little control over homes owned by absentee landlords who are current on assessements, and little power to go after banks who hold title but delay foreclosure for months or years.

The other side of the story:

The truth is, it’s much easier to collect fines from owner-occupants than absentee owners and banks. And, in some associations, collection of fines is a significant source of revenue in the annual budget. Perhaps one way to make up for the shortfall from non-collectible accounts? Or a way to harass unpopular homeowners? Or just a way to indulge the obsessive side of some overbearing board members?

For abandoned properties, the association could pursue health and safety code violations through the local municipal or county government, or even choose to do basic lawn care to alleviate the eyesore and threat of vermin.

But some prefer to scout the neighborhood for violations and opportunities to fine members for relatively minor aesthetic offenses.

But why do some Associations tend to have so many absentee owners in the first place? One reason is structure of HOAs as corporations with additional voting interests per unit – this kind of ownership promotes acquisition of real estate purely as an investment rather than a full-time dwelling. It’s especially appealing to investment firms that buy multiple units at discounted prices. This is something you just won’t see in neighborhoods without a common interest community and mandatory HOA.

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Talking Point #3:

Many of the rules and restrictions exist to protect the HOA from liability. Therefore, we cannot allow children and their guests to play in common areas, where someone might fall, get hurt, and sue the Association for millions.

The other side of the story:

And that’s another fundamental disadvantage of HOA living: it exposes homeowners to additional liabilities they would not have, if not for the common interest or joint ownership of assets.

Homeowners and residents outside of common interest developments can allow their children to play freely in public parks, walk on public sidewalks, and ride bikes on public streets and trails with no worries of huge personal financial liability if someone happens to suffer injury or fatality.

What is the purpose of having common green space in your HOA if you cannot really use it? Is green space only for observation? Why are owners expected to spend thousands of dollars per year mowing, fertilizing, and keeping a useless lawn beautiful?

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It’s not all about the Rules

Of course, all of these talking points are meant to downplay serious problems in HOAs, as if every single one could be boiled down to minor disputes.

But HOA problems are not really about the “rules.” Rules are merely a tool used to put financial and social pressure on owners and residents to comply with the arbitrary HOA agenda of the day.

The bigger problem is all about the money: how HOA assessment dollars are collected and spent, how much revenue is generated through fines and junk fees, and how unscrupulous board members and management companies are enabled to pick the pockets and steal equity from homeowners due to lack of common sense regulatory oversight.

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