Time to end predatory HOA lawsuits and foreclosures

By Deborah Goonan, Independent American Communities


HOA news across the U.S. continues to document a pattern of HOA abuse. Here’s more evidence that HOA fines over petty rules, aggressive collection practices, HOA lawsuits, and predatory HOA foreclosures are becoming the norm.


Texas HOA suing retirees because they disapprove of their flower beds

KHOU reports on another crazy HOA lawsuit. This time, believe it or not, an HOA is suing homeowners because they planted flowers in their front yard.

Shortly after Klaas and Dorothy Tadema moved into the Lago Mar neighborhood in Texas City, they decided to improve their home’s curb appeal with some flowers. Instead of being complimented on their efforts the HOA came after them with a vengeance.

The HOA hit the couple with a covenant violation notice, because — get this — their flowers aren’t tall enough to cover their home’s foundation.

When the Tademas didn’t immediately remove the plants, Lago Mar HOA fined them $200 per day for 15 days — a total of $3,000. And when that didn’t convince the couple to rip out perfectly lovely flowers, the HOA decided to sue them for “up to $100,000.”

Lago Mar is currently managed by Principle Management Group. Neither the HOA nor the manager would comment on the pending litigation.

The Tademas have reportedly hired an attorney and plan to fight their HOA.


Fined for working in the construction trades?

According to a recent report on WMBF, Myrtle Beach resident Marcos Andrade has been fined $1,000 by Burcale Commons HOA, over a covenant that disallows parking of commercial vehicles in the community.

Andrade, a carpenter by trade, rents a home in Burcale Commons. He doesn’t own a work truck, but a co-worker drives the company’s hardwood flooring box truck to Andrade’s house each morning to pick him up for work.

This prompted the HOA to send an email notice to Andrade, warning him that he will be fined $100 for each day he continues to violate the rule against commercial vehicles in Burcale Commons. Andrade says he rarely checks his email, and, by the time he did, the HOA had already piled on $1,000 in fines.

Another homeowner in Burcale Commons, Juan Rivera, is a plumber. He doesn’t park his work truck in the community overnight. But he did drive home for lunch on several occasions, parking the truck outside his home on the street during his lunch break.

The HOA warned Rivera he would also be fined if he didn’t stop parking his truck in Burcale Commons, even for a short lunch break. Rivera immediately stopped coming home for lunch, to avoid being fined.


Predatory practices gain the attention of AARP

As previously documented numerous times here on IAC, all too often, HOAs (property owners associations, condominiums, and cooperatives) abuse their power to collect past due fees and assessments, and to go after homeowners for disputed fines.


Georgia homeowners caught in web of ‘unfair’ HOA collections and foreclosures

‘Put it in the back yard:’ Yet another HOA restricting the American flag

Earlier this year, even AARP weighed in on the issue, citing several examples of HOAs sending homeowners’ accounts to collection attorneys.

AARP emphasizes the fact that many HOA collection attorneys take delinquent accounts off the HOA’s books by purchasing the debt. It doesn’t take a genius to realize this practice creates perverse incentives for attorneys. They’re free to run up thousands of dollars in legal fees, which they then seek to collect directly from the homeowner — under threat of foreclosure.

To be clear: homeowners nearly always repay the amount of their HOA debts, with interest and late fees, plus thousands of dollars in “collection costs” which go directly to HOA attorneys.

But, unless the homeowner is able to pay off the full collection debt before the foreclosure action is filed, the home is likely to be sold to the highest bidder at a foreclosure auction.

Typically, homeowners caught in this HOA collection trap often pay three, five, even ten times the amount of their actual HOA debt to these predatory attorneys, simply to avoid losing their homes.

Others lose their homes because they couldn’t afford to pay off the attorney fees.

It’s nothing short of extortion. But most state laws don’t prohibit the practice.


State laws don’t really prevent HOA fines from turning into liens

Technically, the Florida condominium and HOA Acts state that unpaid HOA fines cannot become a lien against private property.

But the HOA industry knows how to get around the law. When a homeowner sends payment of regular monthly, quarterly, or annual HOA fees, the association has the legal right, under Florida Statute, to apply that payment toward the unpaid (disputed) fine.

That automatically makes the homeowner delinquent on payment of HOA maintenance assessments.

Consumer advocates call this practice the “priority of payment scheme.”

Once the owner’s account is behind on HOA fees, it exercises its rights to add interest and late fees. Then it files a lien against a home for unpaid assessments. (Typically, unpaid accounts are sent to collections within 60 days, with a lien filed shortly thereafter.)

HOA horror story

The HOA horror story of Larry Murphree, a retired Florida veteran, is a prime example of how HOAs abuse this power to fine, lien, and foreclose on privately-owned homes.

Murphree got in trouble with his HOA in 2011, when he violated condominium association standards. His condo “crime?” Murphree had the audacity to place a small American Flag in a flowerpot on his front stoop.

Unfortunately, HOAs often enforce petty rules like this.

When the proud veteran chose to defend his right to display the flag under U.S. Law, Sweetwater by Del Webb condo association dug in its heels. The developer-controlled HOA board amended its rules to prohibit “unauthorized objects” in flower pots.

Then the HOA fined Murphree, calling his small American flag an “unauthorized object,” disallowed by its new rules. The homeowner stood his ground in defending the American flag.

Murphree explains how the HOA used the priority of payment scheme in this On the Commons radio interview. Murphree says that while he was in the hospital recovering from surgery, the Sweetwater HOA applied his automatic monthly payments to disputed fines.

By the time the homeowner realized what had happened, he was already hundreds of dollars behind on his condo maintenance fees. The HOA accused Murphree of being a deadbeat and shirking his responsibility to the condo association. They slapped a lien on his home, and threatened to foreclose.

The dispute dragged on, despite widespread publicity. Finally, after a 7-year legal battle, which racked up a fortune in legal fees, Murphree was forced to sell his home to avoid foreclosure.


S.C. Legislator says HOAs should no longer have the power to foreclose

Given the increasing prevalence and unjustifiable HOA abuse of power, it’s really no surprise that homeowner and consumer advocates are calling upon state legislators to outlaw HOA fines and foreclosures.

Last month, South Carolina’s House Rep. Todd Rutherford, D-Richland, pre-filed S.C. House Bill 4741, which would prohibit a homeowners association from foreclosing on the primary home of an owner, to collect unpaid HOA assessments, fees, and fines.

As currently proposed, the ban on foreclosures would apply only to HOAs governing planned communities of single family homes. It would not apply to condominium associations, where co-owners share common property.

HOAs would still be permitted to foreclose on homes owned by investors or seasonal residents who do not use the property as their primary home.

An HOA manager interviewed by WMBF defends the use of foreclosure to enforce payment of HOA fees and fines.


The fight for our rights

We can expect the HOA industry trade groups to oppose H. 4741, inciting fear that, without the threat of foreclosure, owners will stop paying their fees en masse. They’ll conveniently leave out the fact that HOA foreclosure is a punishment that almost never fits the crime.

And we can also expect that housing consumer advocates and journalists will continue to document the egregiously unjust and predatory actions of many HOA boards, their management companies, and HOA attorneys.

Hopefully, in 2020, state legislators will recognize that HOA foreclosures don’t help homeowners. Instead, HOA foreclosures primarily benefit HOA collection attorneys and bottom-feeding real estate investors, who profit handsomely when they pick up cheap houses at foreclosure auctions. ♦


HOA sues retired Texas City couple for up to $100,000 for flower beds that don’t meet guidelines
Klaas and Dorothy Tadema moved into their home in Texas City after their home in Dickinson flooded during Harvey.
Author: Chris Costa (KHOU)
Published: 1:38 PM CST December 7, 2019
Updated: 10:25 PM CST December 7, 2019

Myrtle Beach residents face HOA violations for driving commercial vehicles into neighborhood
By Samantha Kummerer | December 5, 2019 at 6:52 PM EST – Updated December 5 at 6:53 PM

HOAs Get Tough on Delinquent Residents
Older community association members who fall behind on fees face increasingly harsh treatment
by Joe Eaton, AARP, January 8, 2019

New S.C. bill could limit HOA power by eliminating foreclosures
By Samantha Kummerer | November 25, 2019 at 7:13 PM EST – Updated November 25 at 7:13 PM COLUMBIA, S.C. (WMBF) ♦♦

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