Like city government, HOAs impose abusive fines and fees

By Deborah Goonan, Independent American Communities

Housing consumer advocates have spent the past several years exposing abusive fines and fees imposed by homeowners, condominium, and cooperative associations.

Unfortunately, most advocacy groups ignore HOA abuse, even though it closely mirrors the behavior of some oppressive local government leaders.

Local governments have long had the authority to impose fines for violations of health and safety codes. But recent trends reveal that city and county leaders are enacting more and more HOA-like rules and restrictions.

These new Ordinances attempt to enforce an “attractive” appearance of private property as necessary to protect property values.

 

The Junk Ordinance

An Indiana homeowner recently made me aware of a new “Junk Ordinance” in Hamilton County, which will become effective this Thursday, June 20th.

The ordinance applies to unincorporated areas, meaning “all real estate privately owned in Hamilton County outside a city or town.”

It starts off innocent enough — the County prohibits property owners from accumulating “junk,” which includes things like scrap metal, building materials, car parts, old appliances and furniture, among other things.  County leaders say these materials create health and safety hazards such as creating fire hazards, water pollution, and rodent infestations.

But then the Junk Ordinance crosses the line with vague and subjective HOA-style rules to prevent “unsightly” appearances.

According to an official press release from Tammy Sander of Hamilton County, residents must now limit the number of vehicles parked outside the garage of their homes.

“This ordinance also addresses excessive numbers of vehicles – operating or not,” says [County Commission President Steve] Dillinger. “You are no longer allowed to park more vehicles outside your garage than the number of bedrooms, as shown on your County property record card for the Residential Lot, plus one. So if you have a four bedroom home, you should not have more than five cars parked outside your garage at any time.”

Anyone in violation of the new ordinance will be subject to fines. Once notified of a violation, by either the Hamilton County Sheriff’s Office or the Director of the Hamilton County Planning Department, the homeowner will be given up to 60 days to rectify the problem. If the property is not brought into compliance, the homeowner can be fined up to $2,500 for the first offense and up to $7,500 for any future violations. If the property continues to be a problem, the County may forcibly remove any or all materials that are in violation and assess the costs of the removal to the landowner. SourceHamilton County Commissioners Update Junk Ordinance

Traffic jam parked cars

Onerous parking restriction

It takes a lot of nerve for County government to tell voters and taxpaying residents how many cars a resident “should” or “should not” have parked outside the garage at any time.

This ordinance has many problems. The most obvious problem: what if you don’t have a garage? The County already puts you at a disadvantage, because you cannot even own one or two vehicles that won’t be counted by County Code Enforcement, as long as they’re parked in a garage.

Tying the number of vehicles a household can legally park to the number of bedrooms in a home, plus one, is both ridiculous and oppressive.

To illustrate the point, consider parents living in a 3-bedroom house with 2 teenagers of driving age, and one young adult still living at home due to the high cost of rent.

Both parents and all three of their children work, and each owns a vehicle, but the home doesn’t have a garage. The household has five vehicles, but, under the new Junk Ordinance, they can only park four of them near their property.

Which one of these family members will be forced to park their car in a garage offsite, or get rid of it?

What if you have a garage, but you use it for household storage or for running a home-based business? If you live in a multi-generation household or you have kids in college, where will you park all of those vehicles?

What about overnight guests from out of town? Where should they park? Maybe Hamilton County doesn’t welcome out of town visitors?

County residents must now live in fear of hefty fines — up to $2,500 for a first offense — for the “crime” of parking a vehicle they own outside their home.

It’s totally absurd.

 

City of Chicago’s “impound system” subject of lawsuit

The city of Chicago’s vehicle “impound system” is another outrageous example of local government abusing fines and fees. City law gives local authorities the power to  seize your vehicle for a number of offenses, including unpaid parking or traffic tickets, unpaid fines, and minor drug offenses.

In some cases, authorities have impounded vehicles even when the owners did nothing wrong. For example, consider a lawsuit filed by Institute for Justice, on behalf of Spencer Byrd, a 51-year-old from Illinois. City authorities impounded Byrd’s vehicle, following a traffic stop, because his passenger possessed a small amount of heroin.

Byrd was later found innocent on all charges, but the City’s towing operator refused to release his vehicle unless he paid all accumulated charges, as authorized by City Ordinance. After nearly three years, those impound charges totaled close to $17,000.

Byrd is a carpenter, and the impounded truck also holds many of the tools of his trade, creating a much bigger economic hardship.

Another couple, Jerome Davis and Veronica Walker-Davis, had their car impounded when they took it to a garage for body repair work following an accident. In this case, a garage mechanic took their 2006 Lexus on a joy ride. When he was pulled over for driving without a license, police seized the vehicle.

Jerome and Veronica did nothing wrong, yet it took them nearly ten months and the help of a pro bono lawyer to negotiate towing fees down to $1,170 from $2,500. But by the time the couple arrived at the impoundment center, fees in hand, the city had already auctioned off their Lexus.

According to a WBEZ investigation, Chicago regularly sells impounded vehicles at auction for as little as $200, most of them reportedly to a single towing contractor.

Image courtesy of https://quincemedia.com (3D illustration by Quince Media)

Backlash against fees and fines — a growing nationwide problem

A recent WAMU / A1 / NPR podcast discusses Chicago’s impoundment system and other examples of abusive fines and fees for housing code violations.

WAMU guests discuss the City of Pagedale (Missouri), where the small town issued thousands of tickets for violations such as having mismatched window shades.

The panel also discusses a recent case in Dunedin, Florida, where a homeowner faced $30,000 in fines and foreclosure of his home, for having grass that was too long.

The discussion panel, including a WBEZ reporter, a Constitutional lawyer and a retired judge, all agreed on the root cause of abusive fees and fines: cash-strapped local governments are using fees and fines as a revenue source.

They claim that limitations on tax increases in cities and counties lead lawmakers to look for other ways to bring money into government coffers.

But as nationwide awareness spreads, civil rights organizations and advocacy groups are filing lawsuits, citing violations of Constitutional rights.

 

Sound familiar to HOA-ville?

In many ways, HOAs behave the same way as local and state governments. Fines and fees in HOA-ville are all about money and abuse of power.

Because many association-governed communities struggle to maintain the common property on a single source of revenue — HOA assessments — they have a perverse incentive to use fines and administrative management fees to prop up the HOA.

And, it’s important to know that professional community association management is a notoriously low-margin business. A management company that can offer periodic community standards inspections to find covenant violations (most do so for a fee) adds a lot more fuel to the fire.

The more rule violations the HOA manager spots, the more nasty letters they send to homeowners, the more money they earn in administrative fees.

Ditto for towing contractors and private security vendors who issue tickets for parking and traffic violations within an HOA-governed community. The more tickets they write, the more cars they tow, the more money they make.

HOA attorneys make money collecting unpaid assessment liens, many of which arise from disagreements over unpaid fines and fees.

Like the City of Dunedin, HOAs use threats of foreclosure to punish any homeowner who lets his grass grow too long.

Every service provided by or through an association-governed common interest community is privatized. And every single HOA service provider has an incentive to generate revenue through the process of rule-making, covenant enforcement, and imposing fines and fees.

 

 

 

Holding HOAs accountable

Americans have some recourse against their abusive local government officials. One option is to vote them out of office. Citizens can also report suspected financial crime and fraud to the Attorney General. And several nonprofit and advocacy groups offer legal assistance free of charge.

Not so for residents of HOA-ville.

For one thing, homeowners don’t have a reliable, democratic election process to hold their HOA board members accountable. Instead, HOA elections are built on the corporate model, where votes attach to the property, not the person who resides in a home.

Most HOAs also revoke voting rights for members not in good standing. Proxies and ballots are regularly mishandled, and are a frequent source of election fraud.

State Attorneys General and administrative regulatory agencies possess weak or nonexistent power to investigate complaints against HOAs or management agents. Therefore, most state laws lack “teeth.” They fall far short of guaranteeing homeowner rights and reining in HOA abuse.

The U.S. legal system is just starting to acknowledge that HOAs, although not officially chartered as public governments, are essentially providers of privatized community services.

 

Can we get these organizations interested in justice for residents of HOAs?

Given the striking similarities to abusive powers of local governments, I find it puzzling that no advocacy group stands up for the rights of homeowners and residents in HOA-governed communities.

It’s especially ironic because most modern HOAs exist for the very same reason as abusive government-imposed fines and fees: to prop up the revenue base for local governments.

Any successful efforts to curb abusive fines and fees at the local level are bound to be offset by ever more abuse by the fourth layer of government — the HOA.

When they can no longer get away with violating Constitutional rights and bleeding people dry with fees and fines, local governments will have to find revenue sources elsewhere.

Unfortunately, many local governments will become even more likely to offload infrastructure maintenance, public services, law and code enforcement to private associations. That can only create additional incentives for HOA fines and fees.

By not addressing HOA abuses on par with those of local and state government, advocacy groups risk shifting the problem from cities, counties, and states to the hyper-local level of association-governed communities.

If you agree, contact the following two advocacy groups:

The Institute for Justice is the National Law Firm for Liberty. IJ litigates to limit the size and scope of government power and to ensure that all Americans have the right to control their own destinies as free and responsible members of society.

The Fines and Fees Justice Center seeks to catalyze a movement to eliminate the fines and fees that distort justice. Our goal is to eliminate fees in the justice system and to ensure that fines are equitably imposed and enforced. ♦

 

References and News Sources:

Chicago Impounds Innocent People’s Cars and Soaks Them in Fines. Now It’s Getting Sued
Following a Reason investigation into Chicago’s punitive vehicle impound program, a new lawsuit alleges the practice violates Chicagoans constitutional rights.
C.J. CIARAMELLA | 4.29.2019 10:45 PM

 

Dunedin fined a man $30,000 for tall grass. Now the city is foreclosing on his home.
The man, Jim Ficken, is suing. Tampa Bay Times, By Kirby Wilson
Published May 8 Updated May 9

Podcast (WAMU/NPR) Thu, May 23 2019 • 11 a.m. (ET)
The Nationwide Fight Over Fines And Fees

Show produced by Bianca Martin. Text by Kathryn Fink.

Guests

  • Elliott Ramos Data editor and reporter, WBEZ; @ChicagoEl
  • Lisa Foster Co-director, Fines & Fees Justice Center; retired California judge; served in Obama’s Department of Justice leading the department’s efforts to address fines and fees;@FinesandFeesJC
  • Diana Simpson Constitutional litigator, Institute for Justice; @DianaKSimpson