Can less than 20% of your neighbors force you to join a new HOA?

Photo: Morguefile.com free image of an unidentified stormwater retention lake in a subdivision.

By Deborah Goonan, Independent American Communities

UPDATED, November 7, 2017

Can your neighbors impose an HOA membership on you, after the fact? In Illinois, Apparently, the answer is YES.

The News-Gazette reports the results of Monday’s meeting to vote on whether or not to create an HOA in Timberline Valley South. 94 YES votes outnumber 11 NO votes for the newly created HOA.

So the property rights of at least 11 homeowners have just been compromised by imposing mandatory restrictions and assessment obligations by way of the new HOA.

Additionally, assuming that roughly 40 homes were represented at the meeting to create an HOA (exceeding the 20% quorum requirement for 195 homes), up to 155 additional property owners were no-shows at the meeting. While some might have been represented by proxy, it is safe to assume that an unspecified number of homeowners did not complete a proxy or vote on the matter one way or the other.

I think quite a few residents may be surprised to learn that they are now mandatory members of a homeowners association.

See report below, with a few details regarding the vote:

Subdivision easily approves HOA in step toward reclaiming lakes

Tue, 11/07/2017 – 7:00am | Natalie Wickman

The News-Gazette

CHAMPAIGN — Members of a northwest Champaign subdivision voted to form a homeowners association Monday night, putting them closer to regaining ownership of two retention basins that the county auctioned off without their knowledge.

The next step in the saga, which began in May, comes with a choice — attempt to legally reverse the auction sale or buy the basins back.

A packed room of Timberline Valley South residents voted 94-11 in favor of creating an HOA. The vote comes six months after Nasty Joe’s LLC bought the two large retention basins for about $1,800 in a county auction, surprising many residents who didn’t know the basins’ drainage taxes hadn’t been paid for years.

After the vote’s result was revealed to a round of applause, several members of the seven-person board thanked voters and promised that their HOA won’t act like Big Brother.

“I want to keep out of people’s business, keep the neighborhood nice and build up a maintenance fund,” said board member Jeff Decker. He noted that the neighborhood is lucky that the basins haven’t required maintenance yet.

“We’re trying to make this as minimalist as possible,” said board member John Costello. “I want to run a very tight budget, and I’m not looking to spend anybody’s money that they don’t want to be spent.”

The yearly dues will be $100 for residents whose properties abut the basins and $50 for those whose properties don’t. In exchange for the higher dues, lakeside residents’ votes count double.

Board member John Hauge said there are 195 homeowners in Timberline Valley South and a minimum turnout of 20 percent was required for the vote to proceed Monday. It was “well over that,” he said.

Read full article:

http://www.news-gazette.com/news/local/2017-11-07/subdivision-easily-approves-hoa-step-toward-reclaiming-lakes.html

The new board promises not to go on a power trip or a spending spree. Time will tell if the board honors those promises.

But all HOAs are just one election or one financial setback away from controversy and chaos. In the near future, when the HOA board has to collect more money for legal fees or dredging both ponds, will homeowners happily pay up, without protest?

 

Original post, November 3, 2017

Last spring I wrote an article about a neighborhood in Champaign, Illinois, facing a nasty dispute over two lakes that serve as detention basins. Actually, the “lakes” are two small detention ponds that were auctioned off at a County tax sale, to collect a few hundred dollars of unpaid taxes for an inactive drainage district. The new buyer of the lakes, Brian Nastruz, purchased the drainage ponds for $1,800, in the name of his shell corporation, Nasty Joe’s.

Nastruz has threatened to turn the lakes into a catfish farm or a houseboat community for fraternity members. In essence, Nasty Joe’s is a corporate bully looking for an opportunity to make money, hoping to shake down homeowners to buy back the lakes to make the problem go away.

Seems a bit like extortion…

When the tax sale happened in May, officials from the City and County of Champaign began insisting that homeowners of Timberline Valley South must form a homeowners association to fight back against Nastruz, and ultimately take over ownership and future maintenance of the two ponds.

The full details and my analysis at the time are available here:

Will tax sale of two lakes for $1,800 convince owners to create HOA?
IS THE CITY OF CHAMPAIGN USING HOSTILE BUYER OF STORMWATER LAKES TO PRESSURE HOMEOWNERS TO FORM HOA?

 

Well, now there’s a follow-up report in The News-Gazette. Homeowners are planning to meet and vote on establishment of an HOA on Monday.

 

Champaign subdivision with lake issues to vote on creating HOA

Fri, 11/03/2017 – 7:00am | Natalie Wickman

CHAMPAIGN — Months of tension will come to a head Monday when residents of a northwest Champaign subdivision whose retention lakes were bought out from under them vote on the one measure that could get the basins back.

That night, residents of the Timberline Valley South subdivision will gather at Parkland College to vote on forming a homeowner’s association — the one thing that wasn’t in place in the spring when an out-of-town group bought the lakes at a Champaign County auction.

Read more:

http://www.news-gazette.com/news/local/2017-11-03/champaign-subdivision-with-lake-issues-vote-creating-hoa.html

 

Outrageous assault on property rights

So, let me get this straight.

Homeowners purchased their properties knowing there was no HOA – and, in fact, for many of them, this was a huge selling point. No doubt, quite a few homeowners would not have gone through with the purchase if they knew they would have to deal with HOA restrictions and assessments.

Mortgage lenders  for homeowners have issued loans without the HOA rider. Insurance policies are not underwritten for the additional risks and liabilities that come with a mandatory homeowners’ association.

Both the City of Champaign and the County issued construction permits for these drainage areas, and, ultimately, occupancy certificates for new homes going back as far as the mid-1990s. Government officials did so without hesitation, despite the fact that no HOA was ever established to take care of ongoing maintenance of the lakes.

Champaign County then enabled $3 yearly taxes to remain unpaid for many years, and allowed an out-of-town buyer to purchase the ponds at auction for $1,800, apparently without ever adequately notifying interested property owners.

Now both City and County governments expect homeowners to pay to dredge the ponds that the Fountain Head Drainage District never maintained.

Government created the problem, and now they expect private citizens to pay for their past oversights.

Where is it written in Illinois state law that all storm water ponds must be maintained by private owners or an HOA?

I’m betting that no such law exits.

I’m also betting that there is no law in Illinois that says a municipality or a County is absolutely forbidden from accepting drainage areas for public maintenance.

Do any of the homeowners’ deeds have restrictive covenants that obligate them to take care of these lakes? Are there CC&Rs attached to their deeds, either requiring an HOA, or allowing for the creation of an HOA after the fact?

So far, there’s no evidence that anyone has the right to impose lake maintenance, or an HOA upon homeowners unwilling to give up their private property rights.

It is highly likely that the City or County can legally step up to the plate, undo this hostile auction, and take care of both ponds from this point forward. They just do not want to do so.

Because, up until the suspicious and unprecedented auction, those drainage ponds were public property.

I trust that anyone reading this with evidence to the contrary will let me know if I am mistaken.

Is this “election” to create a new HOA valid?

Who are the organizers of this meeting on Monday night? What gives them the right to call for this vote, to issue ballots, to collect and tabulate ballots? Will a disinterested party, such as a Parliamentarian, be overseeing this vote to ensure transparency and integrity?

What is the legal basis for giving owners of “lakefront” property twice the voting power as owners of property that is not adjacent to the lake? The HOA does not exist at this point, so how can proposed HOA corporate Bylaws be imposed at this time?

Since owners are effectively voting to be bound by a contract, shouldn’t each property owner’s rights be given equal weight?

What is the legal basis for establishment of an HOA that has not been established before the first lot was sold?

This is the biggest issue, in my opinion.

Should state law permit the imposition of a mandatory HOA upon each and every property owner in the neighborhood, without unanimous consent?

If state law does allow for an HOA mandate after the fact, does this not create a “taking” in violation of the 5th Amendment of the U.S. Constitution?

If I were forced to agree to join a private association, against my better judgment, then I should, at the very least, be compensated for the loss in my property value. If I were then coerced into paying thousands of dollars to dredge two ponds that I never wanted to own, I would want to be compensated for that unfunded mandate upon my personal finances.

This charade in Champaign should serve as a wake up call for all housing consumers.

Illinois citizens should challenge any statute that forces a property owner to become a member of a mandatory association-governed community, after purchasing a home without HOA requirements or restrictions.

 

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2 Replies to “Can less than 20% of your neighbors force you to join a new HOA?”

  1. Very interesting article. I think someone may want to look at the plat to see if the lake was included in the subdivision. At best it should have been recorded as dedicated by the developer as a public lake.

    Liked by 1 person

  2. “I want to run a very tight budget, and I’m not looking to spend anybody’s money that they don’t want to be spent.”

    Yeah, right! Just give it a couple of years and an old retired guy as president who has nothing better to do but spend their money and all that will change.

    Like

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