Recipe for HOA abuse: too much power, no accountability

By Deborah Goonan, Independent American Communities

Reports of fed up, frustrated, and fearful owners of property in association-governed communities continue to pop up all across the U.S.

Rebecca Lindstrom of 11 Alive interviews several homeowners of Greythorne, a Douglas County homeowners association, and their stories and complaints repeat a familiar pattern.

 

How far is too far: Do homeowner associations have too much power?

Rebecca Lindstrom, WXIA 10:43 PM. EDT March 27, 2017

DOUGLAS CO., GA – When we started exposing the seemingly unbridled power of homeowner and community associations, viewers sounded off. We received emails describing HOA’s as “horrible and greedy.” Some accused their boards of conspiring to “violate the law and victimize homeowners.” One viewer in Kennesaw asked “how are volunteers allowed by our law to have such a tremendous amount of authority over someone’s property?”

Investigator Rebecca Lindstrom found one neighborhood in Douglas County desperate to find a solution – and a voice for their frustration.

A constant theme here, and throughout metro Atlanta, are dues and the fines associated with paying them late.

Lindstrom talked with one homeowner who says she sent her dues by certified mail this year. She knows it arrived and she knows the check was cashed. Still, she received a letter in March claiming otherwise – and assessing her a $50 fee to boot.

“I want to know where my money went,” the woman said, asking not to be identified for fear of retaliation. She called the property management company newly hired to manage the HOA’s financial affairs. It took a few days but eventually she says she was able to talk with someone and get the matter cleared.

Read more (Video):

http://www.11alive.com/news/local/how-far-is-too-far-do-homeowners-associations-have-too-much-power/425843607

 

On a weekly, if not daily basis, I and several of my colleagues listen to similar complaints from homeowners with regard their HOAs charging excessive fees for late assessment payments or unpaid fines. In many cases, as in the case of Greythorne HOA, the homeowner can provide proof of payment – on time – yet the association persists with its demands for late fees, interest, and collection or attorney fees.

Sometimes a homeowner in a bind misses a payment or sends it a few days late. Then the HOA attorney, backed up by the HOA board, hastily files a lien on the home and penalizes the owner with fees that quickly spiral out of control. Fees can increase the original amount of assessment delinquency two, three, even ten times in just a few months.

Who benefits from those inflated collection costs and attorney fees? Certainly not the Association. Piling fees on top of a small HOA assessment debt only serves to make it more difficult for a cash-strapped homeowner to bring her account current.

In the worst case, an HOA forecloses on a lien to collect a few hundred dollars of past due assessments, and to pay a few thousand dollars to the collection attorney, throwing the homeowner into the street. (As happened not long ago in this Florida HOA.)

The vast majority of these horrific cases of HOA abuse are not publicly reported. Homeowners are too humiliated and fearful of further retaliation if they come forward with their complaints.

Faced with the threat of foreclosure, most homeowners will pay exorbitant fees just to make the problem go away.

Some would call that extortion.

Here are the facts that homeowners need to know:

Your Association does not have to document proof of the amount of your alleged debt before filing a lien against your property. The burden is upon the homeowner to provide proof of payment.

In 31 states, plus the District of Columbia, your HOA can foreclose non-judicially – without a review in court or a ruling by a local judge. (See here for a list of states that allow nonjudicial foreclosure)

Most states do not mandate caps or limits on late fees, collection costs, or attorney fees involving HOA assessment delinquencies.

For each payment you make to your Association, many state laws allow HOA attorneys to collect their fees before the Association gets paid, making it difficult or impossible for the owner to ever get current on assessments.

More recently, some associations have begun to work directly with an automatic credit reporting service, that can report the homeowner to a credit bureau following a single late payment to the HOA. The service does nothing to verify debts claimed by the HOA.

What are owners to do?

So what if homeowners in your community are fed up with an overzealous HOA board and their management -attorney tag team?

With few exceptions, owners have only two options: recall the board (and then fire the manager and attorney) or file a lawsuit against the HOA.

Neither option is simple or straightforward.

As you can see, homeowners in Greythorne have already attempted three times to recall their current board of directors. According to the report, each time the HOA attorney has found some excuse to prevent ousting the board that continues to pay his retainer fees.

What a coincidence.

It is not uncommon to hear owners complain that, try as they might, they cannot get rid of their overbearing, abusive, or incompetent board members – at least not without hiring their own attorney and fighting a bitter battle that often lasts two or three years. (For one typical example see here.)

 

Are there Legislative solutions?

It is encouraging to see state Representatives and Senators that are willing to fight for homeowners, such as Senator Donzella James. Those like her are truly a rare breed.

James is calling for a legislative study commission to try and come up with solutions that will help homeowners in association-governed communities.

Several states have already done so, but problems still remain, because state Legislatures have failed to act.

For more information, see Further Reading.

James is precisely correct when she states that there are no lobbies fighting for homeowners – but there are well-organized lobbies fighting for the real estate industry’s interests in perpetuating the fatally flawed HOA model of governance.

As long as state laws continue to grant HOA boards excessive power combined with very little accountability, we can expect HOA abuse to continue, if not grow worse.

 

Further reading:

FOX 13 Investigates: HOA attorney fees a homeowner’s nightmare

Read reports from three states that have already conducted studies on HOA, Condo/Co-op Association issues:

Florida (2016)

North Carolina (2102)

South Carolina (2015)

 

 

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2 Replies to “Recipe for HOA abuse: too much power, no accountability”

  1. HOA attorney sent me a defamatory cease and desist letter without cause, presumably at request of President.

    Rather than impose another hefty legal fee on the association I made a complaint to the State Bar. That way the attorney has to spend their own time to respond and can not bill the association. It will also gives pause against negligently following future client instruction.

    State Bar saw no fault in attorney’s negligence, perjury, harassment and elder abuse.

    Like

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