Saturday, December 27, 2014

Misrepresenting who Represents HOAs and HOA Home Owners

The latest misrepresentation of who represents HOA home owner's interests comes by way of Colorado Public Radio (CPR) and their article "Could limiting defect lawsuits bring more condos to Denver?" .  The article's point person for an opinion on what is best for HOAs and thus HOA home owners is no less than the Community Association Institute (CAI).  The problem is that this organization doesn't and never has represented HOA home owner's interests.  Their members are property managers (PM) and lawyers not HOAs or home owners:  let's get it right!   The CAI spends time and money in State and Federal legislatures lobbying to ensure legislation promotes their interests and mostly at the expense of HOA home owners rights and wallets:  against ending/limiting of the unjustified and illegally applied HOA home sale transfer fees costing HOA home owners millions each year (pocketed by CAI members not HOAs);  oppose limits on fees, fines, and add-on charges on HOA home owner debt (a million dollar+ income supplement to property managers and HOA lawyers and not a dime to the HOA);  blocking efforts to implement a recommendation in a Colorado State study that supports out of court dispute resolution for home owner complaints that would save HOAs and home owners in legal costs and not require lawyers to settle disputes;  and opposing legislation that would require home owner approval prior to using HOA funds on costly litigation or major capital expenditures.

When our State legislature and regulatory agency required guidance on writing legislation, guidelines, and ethical standards to implement a new law to mitigate abusive practices in the  (PM) industry they relied on the CAI for expertise.  Licensing is implemented to protect homeowners against the abusive practices of PMs (the CAI's members) so why the undue influence in writing rules from the very industry that caused the problem in the first place?  This is what happens when an organization is accepted to incorrectly represent HOA home owners.
Then there is the CAI's objection to a requirement in the proposed construction defects legislation that mandates home owners vote on the use of their HOA funds prior to the HOA entering into costly litigation.  This would effectively decrease the number of HOA law suits, ease of access to HOA bank accounts enjoyed by HOA lawyers, and save HOAs millions each year in litigation costs (but the CAI is only protecting home owner interests, right!)

Just one more example to seal the case on misrepresenting the CAI to be home owner centric.  This involves their lobbying efforts with FHA/HUD and the State legislatures to allow the continuance of the abusive HOA home sale Transfer Fee.  The fee is charged by, amount determined by and retained by property managers in the sale of a residence in an HOA to prop up PM income: no benefit to the HOA.  If not paid at home closing it can preclude the home sale.  What else it can preclude is FHA/HUD loan approval/insurance on home sales as HUD doesn't allow the presence of these fees in the home sale transaction.  Thus this fee can dampen home sales and the building of affordable housing that benefits from  HUD loans.

CPR is not alone in getting who or what the CAI is wrong.   The Denver Post, our legislators, television, and other media outlets are all equally wrong.  When confronted they seem to be unaware of who or what the CAI represents, their legislative actions, how they make their money, and who are their paying members.  Informed and accurate reporting and legislating would ask these questions. Interesting to note that when the media indicates the CAI represents HOAs and home owner's organizations they can't or don't try to identify just one: there aren't any!  This ongoing, unquestioning and inaccurate practice of who or what represents home owner's interests is problematic and detrimental to home owner interests and ensures the governance and oversight of HOAs will continue to be skewed against home owners until the media and legislators get it right.

Friday, December 19, 2014

HOA Home Owners: "figure it out yourself" says legislator

HOA home owners seeking solutions to ensure their home owner's rights should not look to some legislators for solutions if the response from one legislator is any indication.  Our organization recently received a response from a State legislator in regards to our request to sponsor legislation to provide for an out of court binding dispute resolution process for home owner complaints (because court is too costly, litigious, and time consuming for ordinary folks).  This legislator said "they (HOA homeowners) should figure out their problems themselves" and the government has no role in HOA issues.  Really! 

Well government caused the problem by allowing legislation to be mostly written by developers, lawyers, and the Community Association Institute (CAI) to ensure their financial interests were protected.  Legislation was written with the absence of any viable means to enforce these laws or HOA governing documents from the home owner's perspective.  If government broke the intended good of HOAs and the laws they created they should fix it. 

I don't see this particular legislator (and others) directing businesses and interest groups to figure it out for themselves.  They are liberal in handing out subsidies to farmers, tax breaks for large corporations, tax rebates and incentives to businesses, imposing tariffs on imports or working to open barriers to free trade, restricting pollutants or chemicals in our food, etc.: all to help "in figuring it out".   This attitude about not legislatively helping HOA home owners from abusive practices and basically unenforceable laws is no less than dismissive of home owners and hypocritical. 

What HOA home owners are asking for, unlike the help provided to businesses and special interest groups, are remedies that don't cost taxpayers a nickel but save home owners, taxpayers, and HOAs millions each year in legal costs and ensure enforcement of property rights.  HOA home owners deserve more respect when asking for legislative support especially when they ask for so little.

Monday, December 15, 2014

FHA-HUD Loans and Affordable Housing Problemed by HOA Transfer Fees

The HOA Transfer Fee charged, retained, and amount determined by property management companies (PMC) on home sales in community associations poses an impediment to HUD loan approval.  This fee was made illegal on residential home sales in 2011 except in HOAs.  Why: 1) legislative influence by interest groups and 2) because the fee is a means to prop up profits for PMCs on the backs of home sellers without having to justify work for the fee (in other words it is charged only because it can with tactic endorsement from Realtors, mortgage companies, HOAs, developers, and home sale closing  agents).  Note, the fee is not mandatory nor can the home seller shop for a better rate (ranging from $50 to $1,000+) and if not paid the home sale is held up.   If you are applying for an FHA/HUD loan and the HOA or condominium charges a transfer fee related to the sale of the home, the loan most likely will not be approved.  This third party fee benefiting the PMC and representing redundant charging by the PMC for work already compensated for in the PMCs's contract with the HOA is not allowed under FHA guidelines.  Thus, the HOA Transfer Fee, costing home owners millions a year in Colorado, unjustifiably and financially burdens home owners and impedes loan opportunities to low and moderate home buyers.  The time to end this fee is now and we at the Colorado HOA Forum ask our legislators to sponsor a Bill to limit/end this abusive, unproductive, and harmful fee.

If you purchased a home in an HOA (single family dwelling, townhome, condominium) over the past two years and your closing documents indicate an HOA Transfer Fee was assessed, please contact the Colorado HOA Forum  We will work with home buyers/sellers to request a refund of this fee and apprise the FHA of this improper fee. 

Sunday, December 7, 2014

Can an HOA do this or that? Ask a different question

The questions too often asked as to whether an HOA can do something;  “is that against the law”; “but State law indicates”; or “my HOA governing documents state I have the following rights but....”.   In most cases the questions reveal a violation of home owner’s rights under the law. The question you should be asking is the one you really don't want the answer to.  You bought your home in the HOA with the understanding that you give up something (home owner’s rights under the covenants, controls and restrictions) to get something (a neighborhood with stable home prices, aesthetically appealing, community amenities, etc.).  You understand that an HOA is a local government of its' own managing the affairs of the community and can collect dues/fees and penalize non-compliance.  This all seems acceptable as you are protected by a full set of home owner’s rights to ensure abusive practices are mitigated, financial accountability is demanded, and governance is executed with open elections, meetings, and management practices. 

Then one day you have a problem with the HOA being in non-compliance with your governing documents.  This could be anything: your rights to records access; meetings and resulting minutes are not conducted according to the by-laws; the HOA reserve funds are depleted or maintenance of common areas is poor and you want answers; the HOA is taking on debt without home owner approval and you want specifics; election irregularities; your fence that was previously allowed and approved is now resulting in fines for covenant infractions; and on and on.  You want answers and an ability to protest for your rights.  You get no answers.  The whole house of cards on HOA home owner’s rights collapses and you ask "can they do that", "isn't that illegal".
In the world of HOA law home owners find out too late that enforcement of covenants, controls, and restrictions is mostly one-sided.  Fortunately, most HOAs comply with their own governing documents and HOA State law.  However, when the all too frequent dysfunctional HOA Board with its' "lifer" and over energetic members govern with secrecy, bullying tactics, and disregard for the law home owners quickly find out what can go wrong and is wrong with our HOA laws.  They are mostly NOT enforceable from the home owner’s perspective. The only venue for complaints and enforceable decisions on HOA home owner complaints is our costly, litigious, and time consuming court system.  This matches the limited funds and time of the home owner against the unlimited funds, time, and HOA attorneys of the Board.  Is this a level playing field?  Any wonder why home owners don’t/can’t pursue their HOA home owner rights?
So the answer to the question "can they do that" is really "what are you going to do about".  The answer you don't want to hear is "not much".   A system where HOA home owner complaints can be handled in an out of court venue with binding decisions that is accessible and affordable is needed.  This will improve upon the enforcement of HOA governing documents ensuring both community and home owner’s rights are affective.   HOA legislative reform is needed and is the only way to handle this imbalance in HOA governance.