By Deborah Goonan, Independent American Communities
As 2017 comes to an end, housing and consumer advocates that are concerned about legislative reform need to keep a close eye on what trade group Community Associations Institute (CAI) is up to.
In case you missed it, here is CAI’s legislative agenda for 2018.
Unfortunately, too many state legislators willingly accept CAI’s claim that it represents homeowners. But technically, CAI represents the members of its trade group, which include service providers to association governed communities: community association managers and management companies, attorneys that represent associations, vendors and service businesses that sell their product or services to associations (either directly or indirectly through a management company), and a small number of board members of homeowner, condominium, and cooperative associations.
CAI certainly does not represent the interests of all homeowners and residents of more than 330,000 association-governed communities.
Therefore, their political agenda is often not aligned with the needs and desires of housing consumers.
Let’s consider each item on CAI’s agenda, to drive home that point.
Notice that CAI is primarily interested in balancing the rights of individual property owners (or shareholders) with that of developers, home builders, and construction professionals. That implies that home and apartment buyers are fully expected to compromise their rights and their financial interests in matters involving unsatisfactory or defective construction.
A true consumer advocate would pressure the residential building industry to make buyers whole with respect to their losses and damages, and might even lobby for punitive damages in substantiated cases of neglect or reckless disregard for building codes or safety standards.
In this case, CAI is deferring resolution of the short-term rental controversy to each association’s governing documents. Terms written into the official governing documents determine the so-called “contractual” rights of owners to rent all or part of their properties on a short-term basis.
This is a way to pass the buck on the issue, a way to avoid taking a stance one way or the other. CAI knows full well that when a developer or group of investors either holds or acquires a sufficient percentage of units and voting interests, they can easily amend governing documents to allow short- or long-term rentals, outvoting the interests of owner-occupants in the community.
CAI members include attorneys and managers who serve residential developers, investor groups, and real estate brokers. Therefore, the group will not favor the interests of owner-occupants vs. non-resident investor owners.
Alternative Dispute Resolution (ADR)
CAI has been pushing ADR for the past few years. And based upon legislative proposals I have reviewed, CAI would like to mandate ADR before any association member can file a lawsuit against the association. On the other hand, CAI makes no effort to require associations to engage in ADR before suing one of its owners or residents.
That agenda is a bit lopsided.
By the way, ADR can take the form of Mediation or Arbitration, which can be binding or non-binding. (For a brief comparison see this article at mediate.com.)
And, of course, ADR can be beneficial for some types of disputes, as long as both parties voluntarily participate in good faith, and both parties get to choose the Mediator or Arbitrator.
For example, ADR might be a good option to resolve disputes involving architectural standards or covenants requiring certain landscape maintenance standards.
Take this case in Omaha, where homeowners were sued for painting their house blue, or this case of a bitter neighborhood dispute over free-roaming dogs, dead roses, unapproved paint colors, and a lawn in need of better care.
On the other hand, it would be highly inappropriate to require ADR regarding “disputes” that occur when the association denies access to financial records, fails to maintain the common areas, or engages in unfair collection practices.
Last year, the Pennyslvania-Delaware Chapter of CAI proposed to mandate ADR before homeowners would be permitted to file a statutory violation complaint with the Bureau of Consumer Protection of the Office in the Attorney General. Thankfully, the bill was halted in the Senate.
CAI supports its management members who wish to charge “reasonable” fees for providing sales disclosure documents. In practice, this means CAI lobbies to charge unlimited fees for copies of governing documents, statements of account or “estoppel” letters, or any other budgetary or financial documents requested by home buyers.
But consumers are pushing back on unnecessary and excessive fees for disclosure documents. In Illinois, a class action lawsuit was recently filed to address this very issue.
Both Colorado and Florida homeowner groups have been fighting the battle against excessive management fees for several years. The truth is, the management industry created the “need” for archiving and accessing documents, in order to create additional revenue streams for their industry. In case you doubt it, see this post with greater detail, and screen shots from the website of Associa Management Company.
Solar Rights & Electric Vehicle Charging Stations
Here is another example of CAI’s failure to take a stance on the issue of solar power or electric vehicle charging stations. Again, their policy is to defer to each association’s governing documents. Therefore, whoever controls the voting interests in each association determines the rights of all of its members.
Consumer and energy advocates, on the other hand, seek to enact state laws that prevent association-governed communities from prohibiting an owner’s rights to install solar equipment and charging stations for electric vehicles.
Last year, solar rights laws were enacted in Utah and Texas, despite CAI’s insistance on allowing each association to preclude rights by way of onerous covenants and restrictions that might make it difficult or next to impossible for owners to install solar energy equipment on their own private property.
To summarize, advocates for HOA reform must be aware of the legislative agendas of trade groups such as CAI. They must also inform state legislators and association members in their states that, when it comes to private property rights of homeowners and shareholders, CAI lacks a comprehensive consumer perspective.