Three outrageous HOA lawsuits (March 2019)

By Deborah Goonan, Independent American Communities

This month: an Oregon HOA wants to end mandatory contributions to a builder’s nonprofit; a Pennsylvania homeowner appeals a case that seems like an obvious condo board conflict of interest; and the Texas AG fights an HOA’s attempt to incorporate as a city.

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Do you know what those closing fees are for?

Buying  a home is expensive. In addition to the purchase price, a buyer is likely to pay for home inspections, an appraisal, a real estate sales agent commission, lender fees, transfer taxes, and more.

All of those closing costs can add up to thousands of dollars.

Homeowners associations also charge fees for disclosure packets and transfer fees of resale homes, and builders often tack on additional fees for new construction.

But are those fees reasonable and necessary? Some home buyers don’t think so.
That’s why a homeowners’ association in Oregon is suing a nonprofit organization created by its home builder.

In 2007, according to a report in The Bulletin, Hayden Homes created First Story, an affordable home building corporation. Then Hayden Homes sold its new market-rate properties subject to a covenant that “requires one-eighth of 1 percent, or 0.00125 percent, of sales to be contributed to the nonprofit organization.”

That mandatory contribution to First Story, which is collected from resales as well as new builds, provided almost one fourth of the nonprofit’s $2.9 million revenue last year.

Home buyers effectively subsidize costs for affordable home builders, but they don’t gain any value or benefits in return for their involuntary contributions.

According to the report, Oregon made such fees illegal in 2009.

The Village at Cold Springs HOA asks the court to rule that their 2007 covenant, which mandates a charitable contribution to First Story, is void and unenforceable.

Sisters homeowners sue to stop mandatory gifts for charitable housing

Lawsuit say Hayden Homes’ community charitable fee is illegal in Oregon
Published March 15, 2019 at 09:55PM

KATHLEEN MCLAUGHLIN
THE BULLETIN
A homeowners association in Sisters says the deed restriction that Hayden Homes created to support its affordable housing charity is illegal, and it’s suing for the return of $2,690.

The Village at Cold Springs Homeowners’ Association filed a lawsuit Tuesday in Deschutes County Circuit Court against First Story, the nonprofit created by Redmond-based Hayden Homes. First Story intends to build 10 homes in ­McKenzie Meadows, a development Hayden has proposed near Village at Cold Springs. The homes are sold to qualifying families with zero down payment and zero-interest loans.

Village at Cold Springs residents have opposed the McKenzie Meadows master plan, which is scheduled to go before the Sisters Planning Commission on March 21. The plan calls for a minimum of 195 units, a combination of houses, townhouses and apartments.

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Sisters homeowners sue to stop mandatory gifts for charitable housing


Is it possible to hold condo and HOA boards accountable?

The Pocono Record reports an active appeal in the case of Carl Lanzisera v. Northslope III.

Lanzisera’s filed his original complaint in 2016. The homeowner briefly served on his condo board, but was reportedly forced to resign when he started questioning board decisions and recording board meetings.

The homeowner says the board approved spending $642,000 of a $700,000 reserve fund to replace siding on three of seven buildings in the community. At the time, board members owned units in the three buildings that were repaired.

Coincidence?

To make matters worse, the project ended up costing nearly $1 million.

With depleted reserves, the association has no money left to repair the remaining four buildings, which Lanzisera says have deteriorated even further in the past several years.

Nevertheless, a Monroe County Judge ruled that the board of Northslope III cannot be held responsible for its poor — and seemingly conflicted — decision, since it relied on experts who advised the association to repair the three buildings in the worst condition.

In Pennsylvania, and across the U.S., the court generally won’t question the decisions of an HOA board, unless there’s clear evidence of fraud, self-dealing or misuse of corporate funds. When a board relies on an expert opinion, it’s usually sufficient to satisfy the court that the board acted in good faith, even if the circumstances seem fishy.

In HOAville, the “expert opinion” is sort of like the “get out of jail free” card in Monopoly.

Lanzisera’s appeal was submitted on March 14, in Philadelphia’s Municipal Court, and a decision is pending.

So far, Lanzisera has spent more than $50,000 of his own money, in his quest for justice.

Decision appealed in development’s repairs case

By Bill Cameron, Pocono Record

Posted Mar 9, 2019 at 6:11 PM Updated Mar 10, 2019 at 7:29 PM

SHAWNEE — A judge has handed down his decision in a 2016 lawsuit against Northslope III, but resident and former board member Carl Lanzisera says his legal battle against the homeowners’ association isn’t over yet.

“It’s really criminal what they’ve done to the community,” Lanzisera said on Wednesday. “This whole thing is not only about Northslope III — it’s about a board’s ability to do whatever the hell they want without any common sense.”

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Decision appealed in development’s repairs case


Why is Texas AG suing Texans who just formed a new city?

In December 2018, a homeowner group called Spicewood Equity Protection Alliance, Texas (SEPATX) organized an incorporation vote in order to prevent quality of life disruptions by Spicewood Crushed Stone LLC, a rock quarry.

Double Horn Creek, with just 220 residents, is a small HOA governed subdivision near Spicewood Texas. An active quarry is now just a stone’s throw away from their homes.

Because their subdivision is located in an unincorporated area, Double Horn HOA was unsuccessful in stopping a tar pit from opening in the area a few years ago.

Last year, SEPATX decided to establish Double Horn as a city, so that homeowners could enact and enforce ordinances to prevent quarry dust and hazardous chemicals from encroaching on their neighborhood.

But now Texas Attorney General is suing Double Horn, because, they say, the homeowners did not follow the proper procedure to incorporate as a city.

A hearing for this lawsuit is scheduled for April 3 at Burnet County Courthouse.

State of Texas sues, saying new Burnet County city is invalid

By: Alyssa Goard, KXAN

Posted: Mar 19, 2019 / 07:11 PM CDT / Updated: Mar 20, 2019 / 03:05 PM CDT

Burnet County, Texas (KXAN) — A city that was voted into existence in December 2018 is now being sued by the Office of Texas Attorney General Ken Paxton. The lawsuit, filed in Burnet County, claims that the city of Double Horn is invalid and that all of the current city leaders need to be removed from office.

Of the 181 eligible voters in the area, 140 of them voted in a referendum election on December 6, with 53.75 percent of voters (75 voters) voting in favor of creating the city. The subdivision began looking to incorporate after Spicewood Crushed Stone, LLC submitted an application to put a rock crushing plant at 5550 East State Highway 71 in Spicewood.

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State of Texas sues, saying new Burnet County city is invalid