Property does not have rights People do

Homeowners learn the shocking truth: HOAs are undemocratic

By Deborah Goonan, Independent American Communities

Debgoonan@icloud.com

I’m pleased to see that more and more journalists are starting to investigate the tyranny that reigns in HOA-ville, U.S.A., enabled by state laws that defer to blatantly unfair HOA governing documents.

The undemocratic, corporate model of voting in the vast majority of mandatory membership HOAs has been a pet peeve of mine for years, and a hot topic here on IAC since its beginnings in 2015.

In June 2017, in response to vigorous online debates over how to resolve contentious HOA elections, I wrote a post entitled Rethinking HOA voting rights: Should HOA member votes be based on residency instead of property ownership?

At the time, the notion of making elections in HOA-governed communities more like elections for real government office seemed highly controversial.

Quite a few property owners argued in support of their right to cast votes in proportion to the number of parcels or units they owned in their HOA-governed community. They bought into the standard HOA-industry ideology: the greater your financial investment in the HOA, the greater your voting power in the corporation.

The HOA-industry, led by real estate developers, investors, and management trade groups, holds the political view that, in HOA-ville, the more property you own, the more control you should have over the fate of your community.

Conversely, if you reside in the community, but don’t own any property, it doesn’t matter what you think. You don’t get a vote, because “you don’t have any sking int he game,” according to HOA-industry status quo.

Three years later, as more property owners get caught on the losing end of the corporate HOA voting system, public opinion is starting to change.

The latest example of discontent comes from the Ahwatukee Foothills community in Arizona.

 

HOA run just like Nicaragua or Paraguay

According to homeowners interviewed for the Ahwatukee Foothill News, the management their HOA, and its election and recall process, is simply “not right.”

They say that their developers, Belkorp Holdings and Blandford Homes, run HOA meetings and count votes like politically-troubled Nicaragua and Paraguay.

Homeowners strongly object to the board’s process of awarding contracts without a formal and fair bid process. Frustrated, they recently attempted to recall their HOA board.

According to AFN, about 600 of the 4,400 property owners cast votes in the election. Individual owners voted in favor of recall by a margin of 4 to 1.

But Belkorp and Blandford still hold onto one vote for each apartment and unsold parcel they own — 466 votes combined. They cast all of their votes for three board candidates, outnumbering votes for homeowner-supported candidates.

The recall failed. And homeowners face an uphill battle trying to outvote the developers in future elections.

IAC has posted dozens of other examples of undemocratic HOA elections.


Related posts:

Retired Chicago condo owners could soon lose their home to deconversion

Leisure World MD owners seek democratic elections

NH property owners say HOA elections are undemocratic

GA state senator and colleagues lose HOA election, but refuse to give up seats on board

Poinciana: Developer maintains control of HOA following State ordered election


 

Elections in HOA-ville, U.S.A.

Consider the following important facts about HOA, condo, and co-op elections in the U.S.

First of all, states laws pertaining to elections in HOA-governed communities vary considerably. There’s no federal standard for HOA elections.

Some states, such as Florida and California, have enacted comprehensive election laws for condominium, cooperative, and homeowners associations. Most states require advance written notice of an HOA election, and allow members to vote by proxy. Other states simply defer to the Association’s bylaws, and rely solely on corporate law to govern HOA elections.

And here’s another stark reality: an incumbent board of directors can make it exceedingly difficult for newcomers to campaign for election.

Owners in small associations hold a bit of advantage, because board candidates can easily go door-to-door to meet their neighbors. But in larger communities, or communities with many seasonal and part-time homeowners, this traditional method of meet and greet is neither practical nor effective.

Another common board entrenchment tactic is to require board candidates to be selected by a nominating committee. HOA nomination committees typically consist of board members or friends of the board who are unlikely to choose candidates with opposing points of view on important issues.

The board or its committee also limit the candidate pool by setting all sorts of arbitrary “qualifications” to prevent members who oppose the board from getting on the ballot.

California is a bit of a pioneer. Its state law now requires that associations ensure neutral third party oversight of the entire election process. However, in most states, it’s common for members of the board, a community association manager, or the association’s attorney to collect and tabulate ballots and proxies, managing the entire voting process from nomination to election day.

The inherent conflicts of interest should be obvious, but, believe it or not, this loose “Wild West” method of conducting elections is not prohibited in most HOA-governed communities in the U.S.

 

Inequitable voting rights harm residents of HOAs

Americans will hotly debate the pros and cons of issuing Voter IDs. But for some reason, very few people are willing to talk about universal voting rights – One Person, One Vote – for residents of HOAs.

Why is that?

Roughly 69 million people reside in HOA-Governed Residential Communities (according to trade group Community Associations Institute) in the US. Many of them are disenfranchised by corporate voting systems, characterized by the following:

  • allocation of  votes per “unit” or proportion of property owned,
  • use of Representative Voting Councils at the Master Association level,
  • heavy use of proxy ballots, and, often,
  • a loosely monitored election processes.

Let’s face it. In many HOAs, voting is easily rigged – in ways that are sometimes technically legal.
Under the current voting system in place in most mandatory membership homeowners’ and condominium associations, you’re likely to see any of the following irregularities:

  • Investors can simply “bulk buy” control of the Board, then legally vote to spend Association funds as they see fit, even if most owners object,
  • An investor or developer-controlled Board of a condominium can vote for termination of the Association and force remaining homeowners to sell their properties, often at a loss,
  • Developers of planned communities are granted weighted votes, and can hang onto control of their affiliate-appointed Board for years or even decades due to various legal loopholes,
  • Secret ballots are not necessarily required for all voting, and only mandated for HOA board elections in a few states,
  • Board members or candidates can intimidate owners into giving up their proxy votes,
  • Ballot boxes can be stuffed, proxy forms or mail ballots “lost” or otherwise mishandled
  • Owners who are delinquent on their accounts for any reason (even fabricated reasons) are forbidden from voting in their Associations,
  • A handful of Master Association Voting Representatives from unequally apportioned Association Districts can legally vote on behalf of hundreds or thousands of owners without any input, and
  • Tenants are almost never allowed to vote, even though they have to follow all of the same HOA rules, and even though their rent often covers the cost of HOA fees for landlord-owners.

As a result of such governance practices, instead of a democratic process, millions of Americans can be subject to the whims of unaccountable developer or homeowner-controlled HOA boards.

Collectively, disenfranchised HOA residents stand to lose millions of dollars in wasted or misappropriated fees and assessments. In some cases, runaway HOA fees force owners to give up their homes.

 

Why is this tolerated in a free country?

In many U.S. real estate markets, buyers — and sometimes even tenants — must choose to live in an HOA or Condo Association by default. They have few non-HOA alternatives.

In fact, industry data suggests that nearly one in five Americans currently resides in an HOA-Governed Residential Community.

And the majority of new construction happens in planned communities with HOAs.

That’s documented by the U.S. Census Survey of Construction (SOC) which tracks the nationwide percentage share of new single family detached homes sold that are governed by HOAs.

As of 2017, that percentage has remained steady, in the range of 71-73%, since 2013. Although the data appear to indicate that HOAs have reached the point of market saturation, almost 3 out of 4 newly-built homes in the U.S. are HOA-governed.

 

Equal protection doesn’t apply to HOAs

Back in 1964, in his decision for Reynolds v. Sim on reapportionment of state legislative districts, Supreme Court Chief Justice Earl Warren wrote: (my emphasis added)

Legislators represent people, not trees or acres.

The Equal Protection clause requires substantially equal legislative representation for all citizens in a state regardless of where they live.

and…

Weighting votes differently according to where citizens reside is discriminatory.

By contrast, HOA boards in America technically represent properties in the community, not the people who actually reside in HOA-Governed Communities.

Even worse, residents do not elect a Developer-controlled Board.

Although most HOA members are also U.S. citizens, their voting rights are not equally protected in their HOA-governed communities.

Is this not discriminatory treatment of citizens who reside in HOAs and Condo Associations?♦

 

Sources:

Activist homeowners’ website: The Foothills Info 

Discontent spurs calls for Foothills reforms
By Paul Maryniak, AFN Executive Editor | Dec. 4, 2019 ♦♦