Investigative journalists confirm abusive nature of HOAs, common interest communities

By Deborah Goonan, Independent American communities

 

Nearly eight years ago, when my husband and I purchased and moved into a nearly-new home in a master planned community, we had only a vague understanding of what it means to own and reside in an association-governed common interest community.

Like most first-time residents of homeowners, condominium, or cooperative associations, we had been sold on the concept of a well-maintained, attractive neighborhood, with someone to urge neighbors to abide by covenants and restrictions, designed to preserve property values. We had been attracted to added perks such as pocket parks, views of dozens of “lakes” and forest preserves, plus access to optional Country Club membership, where we could meet neighbors, make friends, and feel a true sense of community.

Then reality set in.

We quickly discovered that, as non-golfers, we were considered second-class citizens in our new community of roughly 1500 single family homes and townhomes. The members of the golf clique tended to ignore social club members. Upon introducing myself to one of my neighbors, she asked why we moved into the community if we don’t golf regularly.

Thanks for the warm welcome.

Ironically, golf members accounted for less than one in four households in the subdivision, but they formed a very influential clique in the community.

The developer of the planned community retained majority ownership in the golf and country club, which was operated as a separate for-profit entity from the HOA. But the lines of leadership were blurred, and, shockingly, many homeowners did not even understand that the HOA and the Country Club were separate entities.

Eventually, I made friends with a group of ex-golf members in the community. Disenchanted with their full golf memberships, they preferred to spend their money golfing at dozens of other courses in the region, rather than being tied to one golf club.

My best friends in the neighborhood had not picked up a golf club in years, if ever.

Not long after we moved into our home, which was sold as a lake view lot with a wooded preserve beyond, conditions of the common property behind our home — and that of our immediate neighbors — began to deteriorate.

I later learned that developer turnover of the HOA had occurred shortly before we purchased our home. That resulted in new management and new landscape and lake maintenance contracts, and a “hands off” attitude from the developer, with regard to common area maintenance.

Within months after our purchase, the HOA’s landscape crew stopped mowing the common grassy areas viewed from our back yard. By the time the crew would show up with their equipment, the grass was weedy and nearly hip-high.

An enormous, very dead pine tree loomed close to our house, leaning precariously to one side. It took quite a bit of persuasion to get the HOA to take down the tree, which they agreed to do only after I informed management that I would be providing notice to my insurance company.

Then the water level in the “lake” — which I later discovered was merely a retention pond — suddenly and inexplicably dropped by at least 3 or 4 feet, exposing the sandy shorelines and lakebed, all the way to the shallow bottom in some areas of the pond.

Because there was no vegetation to filter contaminants and stabilize the banks of the pond, shoreline erosion became a problem. In fact, a neighbor’s landscape crew took a tumble into the pond one day. While cutting the grass on a riding mower, the shoreline had simply given way. Fortunately, there were no serious injuries, but the shoreline along that portion of the pond was instantly transformed into a cliff. The HOA refused to repair the shoreline.

Then waist-high weeds took over the dry portions of the lake, and invasive aquatic weeds filled the bottom of the pond in shallow ends of the reservoir. That was followed by a fish kill, with its rancid odor and a swarm of vultures feasting off of the dying aquaculture.

By this time, the strip of grass that used to grow between the pond and the forest beyond had mysteriously died off completely, leaving bare dirt behind. Not even a weed would grow there.

After more than a year of viewing a dry mud pit at our end of the pond, a rainy season added about a foot and a half of water. Then came the blue-green algae blooms, which covered large portions of the pond, particularly behind our home.

During this period of time, my neighbors and I made multiple phone calls, emails, and in person visits to the community association manager, to no avail. Several of us began to attend HOA board meetings, in more or less fruitless attempts to get the HOA to investigate the environmental and health issues with the pond and wetland forest, and take action to clean up the mess.

Needless to say, within two years after moving into our home, the enchantment with our planned community and its HOA had worn off.

Still naive about the political and economic realities of life in association-governed communities, I read and re-read our governing documents and began to follow state legislative activity. Clearly, our HOA was violating its obligations. But, short of lawyering up and suing, there was no way to force the HOA to maintain the pond and surrouding landscape.

I contacted regulatory officials at the County and the Water Management District, but they balked at intervening, despite clear evidence of code and environmental violations.

A neighbor and I spent countless hours researching public records. What we discovered raised even more questions, none of which our HOA or local regulatory agencies would or could answer.

I joined several discussion groups of HOA industry experts, only to discover that many of them regarded homeowners as nuisances and ungrateful, ignorant malcontents.

But the most astonishing discovery I made was the pervasive, toxic influence of our developer upon our HOA, County government, the regional Water Management District, and state politics.

Weighted votes for developer owned parcels, decades of developer control. Votes in the Master Association divided by districts, essentially placing control of the association — even after turnover — in the hands of two dozen residents (most of them members of the golf club) in an association with a population of nearly 3000.

Local and state government enabling what amounts to hundreds, perhaps thousands of poorly-managed HOA oligarchies, with no meaningful authority to regulate HOAs. There’s no political appetite for reining in abuse, for fear of offending deep-pocketed developers.

Attempting to reform many association-governed communities is, for all practical purposes, an exercise in futility.

Eventually, after more than two years of considerable effort, the HOA was forced to address a few of the most pressing safety issues, and perform a cursory clean up of the pond. By that time, however, because of neighborhood hostilities toward those of us who dared to complain, we and several of our neighbors sold our homes and moved on.

I’ve spent the past several years documenting the inconvenient realities of life in common interest communities governed by associations. Some of my fellow colleagues have been writing, speaking about these important housing and community issues, and advocating on behalf of housing consumers, for decades.

And, now, finally, mainstream local media is beginning to investigate what we’ve known for years. It’s about time.

Below are three recent examples.

 

In Georgia, Rebecca Lindstrom, 11 Alive, reveals that, at best, residents of a developer-controlled HOA will end up with a benevolent monarchy. But many homeowners and residents of association-governed communities are not that lucky. This scathing report reveals how self-serving developers exploit homeowners and residents. 

HOAs are supposed to protect your home but some homeowners feel like hostages instead
Why state law protects housing developers rather than the people who own the homes…

In Georgia most developers craft the HOA covenants with the help of an attorney and continue to manage the HOA of the community until it’s finished being built. Covenants usually include a date when the community will be turned over to the homeowners to manage or a clause to transition it sooner if the development is built faster.

Most homeowners have no issue with that. The developer wants a thriving community so he can sell more homes.

But the intent of an HOA is to look out for the needs and home values of everyone. Homeowners in several subdivisions owned by the developer David Pearson, believe he’s only looking out for himself.

Read more (Video):

www.11alive.com/article/news/investigations/hoas-are-supposed-to-protect-your-home-but-some-homeowners-feel-like-hostages-instead/85-540256136

 

Several recent reports of catastrophic sinkholes in one well-known Florida retirement community raise some important questions.

Should it be legal to build homes on soft soils with limestone close to the surface? If so, should developers and home sellers be required to fully disclose  the community’s risk and history of sinkholes? Should full disclosure include the cost of sinkhole insurance and repairs of property damage, in addition to very real risks to personal safety?

Why does local government routinely allow residential construction on sites at risk for sinkholes?

The Villages is a Community Development District (CDD), developer-controlled, with multiple HOAs enforcing restrictive covenants in each section of the massive subdivision. 

Sinkholes at The Villages spark worries as prospect for more ground shifts increases

Jason Ruiter
Orlando Sentinel

April 4, 2018 1:00 P.M.

THE VILLAGES — Doris Morrill, a retired widow who lives in a lakeside home, awoke in the middle of the night to a loud and ominous creaking that others called “thunder.”

She got up to go outside to learn more, but when she tried the front door, it wouldn’t budge. Her house had shifted. She was stunned to discover a cluster of sinkholes had surrounded her home Feb. 15. Morrill was forced to leave her home in the huge retirement community 50 miles northwest of Orlando, where pockets of sinkholes have emerged the past couple of months.

“It’s horrid,” Morrill said at a recent Q&A session hosted by The Villages government, which more than 200 residents attended to learn more about the area’s risk for sinkholes. Two of the four families forced to evacuate after holes as large as 35 feet deep and 18 feet wide appeared have been able to return to their homes.

More than 400 such pits have been reported in North and Central Florida since Hurricane Irma because of extreme weather, said Anthony Randazzo, a professor emeritus of geological sciences at University of Florida and president of Geohazards Inc. in Gainesville. More are likely to occur as the state’s unofficial “sinkhole season” ramps up while Florida receives more rainy weather.

The Villages, which has historically reported high numbers of sinkholes because of the soft soil where thousands of homes have sprouted, has always been a problem in the Sunshine State — unbeknownst to many retirees who settle there.

Steve Mowers, 72, who lives across from Morrill and moved from upstate New York with his wife, Mary Ann, said real-estate agents made no mention of the possibility of sinkholes when they moved to the retiree haven.

Read more:

www.orlandosentinel.com/news/lake/os-the-villages-sinkhole-season-20180403-story.html

 

For video coverage of some of the sinkholes, see this WFTV Channel 9 report

Several sinkholes open in The Villages, threatening two homes
By: Kelly Healey , Myrt Price Updated: Feb 16, 2018 – 5:43 PM

 

 

Chicago area investors aligned with developers, exploit the corporate voting structure of association-governance to stage a takeover of the board and to force a termination and deconversion of the condominium. According to a lawsuit filed by condo owners opposed to termination, the investor-board seeks to force association members to accept lowball offers for their condo units, thus ensuring a higher profit margin for themselves and developers. 

Palatine condo owners sue over planned sale, deconversion to apartments

A group of condominium owners in Palatine has filed a lawsuit against the association’s three-member board, alleging that the board accepted a sale offer far below what the residences were worth in an effort to deconvert the more than 700 units to apartments.

The 32 plaintiffs, residents of the Woods at Countryside who own a total of 54 of the development’s units, are trying to prevent the $49 million sale, which is set to close April 27. The attorney representing the plaintiffs, David Rudolph, said the properties are collectively worth at least $70 million.

According to the lawsuit, real estate developers bought up units in the development through various limited liability companies to eventually gain a 75 percent stake, and therefore have a supermajority that allowed them to make the sale without the agreement of some residents. The three defendants, all linked to developers, were elected to the condo board, the lawsuit says. It alleges that the board didn’t fulfill its fiduciary duty to find a market-rate buyer for the property. Rudolph said he doesn’t believe that the board pursued other offers.

Read more:

www.chicagotribune.com/business/ct-biz-condo-sale-conversion-lawsuit-20180406-story.html

See also:

A group of “shocked” suburban Palatine condominium owners are trying to prevent their association board from allegedly under-selling the condo development for $49 million, allegedly for the board’s personal gain, claiming the price would short owners of what they could get if they independently sold their units by more than $25 million.
— Read on cookcountyrecord.com/stories/511386603-palatine-condo-owners-allege-association-low-balled-condos-price-shorting-owners-amid-forced-sale

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5 Replies to “Investigative journalists confirm abusive nature of HOAs, common interest communities”

  1. Deborah, your reality is my experiencel. All one must do is dig a little to find out that HOA obligations are rarely met and boards/MC’s will lie to cover-up. The secret meetings are out of control. Investigative reporters need to uncover more and then more. I can really relate to being snubbed. Some HOA Members will sue and should. It should be apparent that HOA boards need to constantly be aware that there are consequences to the bullying and illegal actions. Unfortunately, courts don’t often support the members .. Sue, sue and sue until the system changes to benefit all Members not the few who are friends of the board. Thank you for all you are doing to bring awareness to this.

  2. My fellow readers might recall the story of a Georgia HOA that restricted residents’ display of the American flag to 23 selected days of the year. That story was reported across the country, including here at IAC: independentamericancommunities.com/2017/05/28/its-memorial-day-weekend-here-come-the-hoa-flag-restrictions/. Well, that HOA was Village at Towne Lake – one of the David Pearson Communities subdivisions featured in Rebecca Lindstrom’s investigative report above. Here is the best and most up-to-date info I have read on the flag matter: www.tribuneledgernews.com/local_news/community-fighting-back-over-flag-ban/article_a34df2ce-426d-11e7-80cf-7f9b8b154c8b.html.

    I would be very interested to know how things are going for the poor captives, I mean homeowners. Are people getting violations? How often? For what? Does Pearson run a collections company, too? And I would be very interested to see some details of the owners’ lawsuits against Pearson/the HOAs. Also, what’s happening with the liens on people’s homes? (Read this from the Atlanta Journal Constitution: www.ajc.com/news/local/zooming-hoa-fees-spark-battle-with-builder/q52hgpFOuOnBdSpA9iFetK/). And I wish someone would publish the complete governing documents of the Pearson developments for all of us to see online. Why not?

    I believe that it is a fact that most American home buyers have no idea that they can be despotically ruled and used as bottomless piggybanks by a mere individual real estate developer in perpetual control of an HOA under a rigged scheme. I certainly haven’t heard that mentioned on House Hunters. Zillow doesn’t tell you that on the home facts sheet. Even the Declaration/Bylaws/CC&Rs you get maybe 3 days in advance don’t mention it outright. That this can happen to innocent, good-faith homeowners – many of whom have more years behind them than ahead of them – is abhorrent and unacceptable, and yet on and on it goes. Because the legislators and the governors (and the courts) have created and allowed this madness, they are the only ones who can to stop it.

    1. Who is the most likely to know when foreclosures or people are moving out of an HOA run community? It is the MC! “Call us when you’re going to list your house for sale”. As a result, the MC takes advantage of that opportunity and is first in line to buy up the problems they created. All you need to do is a Assessors peek under the MC owner’s name … you’ll learn lots. Or search the recorders records to see how often they flip them. This is what we get when Legislators WILL NOT require licensing or regulation. The most important asset for most people is the house … there are laymen as BofD’s who NEVER read the governing docs and then corrupt MC’s. And no gov’t agency will rein them in. Infrequently and I mean infrequently a judge will.

  3. Deborah:

    It is always an educational treat to read every post from you about HOAs.

    This most recent post was particularly informative because you shared the story of your own journey through the HOA world. As the old saying goes, “There is no substitute for experience.” Thank you very much for sharing all of your great posts and the story of your personal experience and educational journey. I would suggest that every person who lives in an HOA should be on your distribution list and looking forward to every post by you.

    Keep up the great job and thank you so much for all of your hard work and especially for sharing with the rest of us.

    Jim Bothwell    Waynesville, NC
    

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  4. Deborah G: Thank you very much for sharing all this information. Knowledge is a continual process and I am learning more about the process each time I read something you have shared.

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