An Opinion By Deborah Goonan, Independent American Communities
House Rep. Rosemary Brown (R – 189th Legislative District) held a press conference on April 25th, urging Governor Tom Wolf to sign HB595, a bill that, according to Brown, will “assign additional powers to the Office of Attorney General’s Bureau of Consumer Protection in regard to how Home Owner Association (HOA) complaints are handled.”
Specifically, the bill affects Planned Communities, condominiums, and housing cooperatives.
As you view the 15-minute video of the press conference (linked below), listen carefully to what is claimed — and not claimed — with regard to the intent of HB 595.
Here are some key statements made in the press conference:
At the 1-minute mark, Rep. Rosemary Brown admits that her office has received a high volume of constituent complaints with “serious, possibly fraudulent qualities.”
At 1:25, Brown states that “HB 595 expands the power of the Attorney General’s Office, Bureau of Consumer Protection to mediate and investigate complaints from private communities on the issues of voting, proxies, quorums, meetings, and association records.”
She goes on to explain that every newly established association-governed community will be required, by law, to have “alternative dispute resolution established.” No details were offered as to what mandatory ADR by HOAs would look like, or how it would be implemented.
Brown also states that all HOAs will be “strongly encouraged” to establish an ADR system, because without one, complaints can go directly to the Attorney General.
This is a blatant admission that HB 595 creates intentional barriers to prevent HOA residents from filing complaints with the AG Bureau of Consumer Protection!
At 2:10 -2:25, Brown is careful with her words, explaining that the AG can offer mediation and investigation of complaints only “if necessary” and “if fraudulent activities are occurring, causing violation of a resident’s rights.”
Think about this statement. It’s key to understanding why HB 595 is merely window dressing — a paper tiger in terms of enforcement of state law and protection of owner or shareholder rights.
How is a resident supposed to prove fraudulent acts or violation of one’s rights, if the resident cannot gain access to association records such as meeting minutes or no-bid vendor contracts? How can a resident document wrongdoing if a member is not permitted to attend or participate in meetings, or if meetings are held in secret, or if no minutes are recorded?
But a resident cannot file a complaint with regard to these issues until that resident has, for example, paid up a disputed fine (otherwise, the member is not in good standing).
Why must a housing consumer, a member of an association-governed community, be expected to spend hundreds or thousands of dollars exhausting the association’s ADR process first? Why must there be a 100-day waiting period, essentially a delay tactic that benefits a rogue association board, giving a potential fraudster more than 3 months to alter or destroy evidence, or even pack up and leave town?
What is the value of the AG providing mediation after the HOA resident has wasted time and hard-earned money on pointless ADR with an uncooperative board?
Isn’t the purpose of the Bureau of Consumer Protection to evaluate the merits of each complaint, rather than assuming up front that no complaint has merit unless the aggrieved resident plays by the HOA’s one-sided rules?
Following her personal statement, Brown introduces four guests to testify in favor of HB 595. The four guests are:
1. Spiros Bilianas, President-Elect of the Pocono Mountain Association of Realtors..
2. Michele Clewell, Secretary for Middle Smithfield Township. At the 5 minute mark, Clewell describes HOA as an “unwritten form of government,” and says “HOA boards are answerable to those that they serve.”
(The question is, who exactly do HOA boards serve? It’s not always residents of the community. The board could be serving a developer, an investor corporation or real estate trust, a real estate broker, or even themselves.)
Clewell claims that all HOAs elect their board of directors (simply not a fact), and that instances of “unanswerable” boards are merely “anomolies.”
3. Kathleen Moran, one of Brown’s retired staff members, after more than 5 years of service in the 189th district. At 6:45, Moran admits, with regard to HOA resident complaints she has fielded, “some of the deeper concerns can be quite serious and fraudulent.” At 7:45, she expresses optimism that HB 595 will offer “strong mediation and investigation” and will “help protect residents’ rights.”
Moran says she currently resides in a Pike County HOA.
4. Suzanne Marks, board Secretary of Saw Creek Estates HOA, and a member of the HOA Task Force created by Rep. Brown.
At 9:15 minute mark, Marks boasts that she is “very involved” with Community Associations Institute (CAI), a trade group that represents the interests of the HOA industry, particularly management companies, attorneys, and other service providers to association-governed communities.
Right after that statement, Marks goes on to explain that small associations don’t have the revenue to fight lawsuits brought against them by homeowners. Therefore, she thinks it’s “absolutely essential” that Governor Tom Wolf sign HB 595.
By the way, it cannot be stressed often enough that CAI recruits HOA board members, then sells them on the necessity of their expertise and services.
Additionally, CAI regularly implies in its public statements that it represents the interests of all homeowners and residents of association-governed communities. In reality, the organization prefers to deal mainly with board members, since the association’s board has the authority to sign service contracts with trade group members.
But the best part of the Press Conference is when Rep. Brown takes questions from those in attendance, at about 10:45.
There was only one question, from an off-camera, unnamed male member of the audience:
In terms of the areas that you cited that an individual could actually bring a complaint to the Attorney General…I think…four different categories. In terms of issues that fall outside of those categories, is that covered?
Of course, the short answer is NO.
Brown clarifies that, under the terms of HB 595, the AG would only take complaints on five issues: voting, meetings, proxies, quorums, and association records. And then, only if certain unreasonable conditions are met.
Let’s pause to consider the kinds of serious complaints that the AG would not address:
- Failure of the association to properly maintain the common areas, or private home exteriors and landscapes, as specified in the covenants and restrictions. (Services that members pay for!)
- Allegations of conflict of interest involving board members or agents of the association, including managers, attorneys, and collection companies. (Although the AG might be able to refer you to another agency to file complaints involving managers, attorneys, or real estate agents or brokers.)
- Board members abusing their authority by imposing excessive fines, selectively enforcing rules, or bullying residents or even fellow board members. Other abuse might include imposing unreasonable collection costs, threatening foreclosure over minor debts or offenses, withholding parking privileges, or using aggressive tactics to take over the association’s board.
- Complaints involving the board’s decision to employ unlicensed or unqualified contractors for maintenance, repairs, or improvements to the community. (But you could file a complaint against an unlicensed contractor.)
Now, consider Brown’s explanation of why HB 595 provides very limited assistance to owners and residents of HOAs.
Here’s her statement, at 12:15 —
We tried to narrow it on the scope to specific issues that we thought would be the most fraudulent, and would really attack the residents’ rights at the highest level. And, while doing that, also being very careful that we did not expand the cost of the Attorney General’s Office, which is very important. Because, whenever you work with a state agency, and including more work and more issues coming their way, you could raise the cost of that agency. And we have to be very careful that the Attorney General’s Office was able to handle these complaints, with expanding the cost of government.
Apparently HB 595 is an unfunded “exapansion” of AG, Bureau of Consumer Protection service.
Because, after all, several state Legislators are absolutely paranoid about expanding the budget or the power of state government, even for legitimate purposes.
Never mind that, by the state’s failure to enforce its laws and protect the rights of its citizens, the power and cost of association-governed communities has expanded exponentially in the past four decades.
But I guess some Pennsylvania government leaders would rather pass the cost of expansive hyper-local government to citizens — in the form of HOA assessments and loss of property value from deteriorating or dysfunctional private communities — than raise state taxes by a few pennies to provide meaningful regulation of the HOA industry.
Governor Wolf and housing consumers in Pennsylvania need to know that:
1) CAI does NOT represent the interests of housing consumers. CAI is a trade group that represents the interests of its members — most of whom are community association managers and attorneys who will benefit from forcing ADR on consumers before they can even file a complaint against their HOA — even for something as fundamental as the HOA’s failure to provide access to records or to run a fair election.
2) HB 595 does NOT necessarily provide for the AG to “investigate and mediate” complaints, even with regard to a very narrow scope of jurisdiction. Read the bill — the AG, via the Bureau of Consumer Protection can only take a complaint, if and when the unit owner/shareholder meets the two conditions that erect barriers to justice.
Here’s an excerpt of HB595, so you can read what it actually says. Note there is no explicit duty of the Attorney General, Bureau of Consumer Protection to either investigate or mediate HOA disputes.
§ 3322. Complaints filed with Bureau of Consumer Protection.
(a) General rule.–A unit owner in good standing may file a complaint with the Bureau of Consumer Protection in the Office of Attorney General in the event of a violation by the declarant or the association of sections 3308 (relating to meetings), 3309 (relating to quorums), 3310 (relating to voting; proxies) and 3316 (relating to association records).
(b) Condition.–If an alternative dispute resolution procedure is available to the unit owner under the association’s declaration, bylaws, rules or regulations, a complaint may not be filed by a unit owner with the Bureau of Consumer Protection until the earlier of:
(1) the unit owner exhausting the alternative dispute
resolution procedure without a resolution between the unit
owner and the association; or resolution.
(2) at least 100 days have passed since the unit owner
commenced the alternative dispute resolution procedure and
the unit owner and association having not reached a
(c) Immediate filing.–A complaint may be filed by a unit owner with the Bureau of Consumer Protection immediately, if:
(1) an alternative dispute resolution procedure is not
available to the unit owner under the association’s
declaration, bylaws, rules or regulations; or
(2) the association refuses alternative dispute
resolution under section 3321(b)(2) (relating to alternative
dispute resolution in condominiums).
The Pocono Record produced this clip from the Press Conference
To view the full 15-minute press conference, follow this Facebook link to Rep. Rosemary Brown’s videos, and see “Press Conference on HB595”
Here’s how the Attorney General’s office, Bureau of Consumer Protection typically handles a complaint:
(Emphasis added in bold.)
When we receive your complaint form, it will be reviewed by our staff. The Bureau of Consumer Protection receives more than 50,000 complaints per year, so it may take some time before we can thoroughly review your complaint. We ask for, and appreciate, your patience.
Depending on the nature of the complaint, one of the following courses of action may be taken:
It may be referred to a local consumer group or to another state or federal agency. When your complaint is referred, you will be notified by mail of the name and address of the referral agency or group, so that you may contact them for information concerning your complaint.
If your complaint is appropriate for this office, we will attempt to mediate your dispute through the services of our Consumer Mediation Unit, and you will be sent a letter with your complaint file number. Please keep your file number for future reference when contacting this office.
If your complaint is suitable for mediation, an agent will contact both you and the business with whom you are having a dispute and attempt to mediate and resolve your problem. Please note that most contact is by letter.
If mediation efforts are not successful, you may be advised to seek relief either through a private attorney or through small claims court. The Mediation Unit cannot act as your private legal counsel or offer legal advice.
In certain instances, when there is a compelling public interest or where there are a number of complaints against the same business, the Bureau of Consumer Protection may file a lawsuit in state or federal court seeking relief on behalf of consumers.
Reading HB 595 in conjunction with the scope of duty for the Bureau of Consumer Protection, and listening to the press conference linked above, the intent of HB 595 should be crystal clear.
HB 595’s unstated purpose is to provide the appearance of consumer protection, while preventing valid complaints from being accumulated in the public record. It’s part reputation management, and part enabling legislation that invites continuation of a rogue HOA board’s culture of unaccountability and corruption.