HOA Home Owners Push for Workable Dispute Resolution

Colorado home owners mostly live under Homeowners Association (HOA) governance. This living environment has many advantages but one trait currently gives HOAs a deserved bad name.  If a home owner has a dispute with their HOA Board or property management company (PMC) they are mostly left with our costly, litigious, and time consuming court system which doesn't work for home owners.  The State's HOA Office completed a mandated study on dispute resolution offering several out of court solutions.  One recommendation was an out of court binding dispute resolution process whereby complaints are filed and settled in an out of court venue at an affordable cost.  Home owners don't want a costly dispute resolution process (court) or discussion of their complaint with the hope of a solution that costs them hundreds of dollars without any guarantee of a decision (mediation).  Home owners deserve a process already used in Colorado for some professions and is planned for HOA PMC complaints: out of court binding dispute resolution. It's quick, fair, low cost, non-litigious, doesn't require high cost lawyers, no cost to taxpayers, and renders finality to a complaint.  It's time to provide HOA home owners with a workable, affordable, and accessible dispute resolution process that promotes vs hinders problems resolution.  www.coloradohoaforum.com

HOA Special Assessments: Costly Without Home Owner Oversight

If you live in a Homeowners Association (HOA) you are subject to special assessments with or without your knowledge or approval.  Your HOA Board is empowered to levy a special assessment for most any reason at any amount, at any time on each property owner.   Special assessments can occur when HOA Boards approve self-interest projects or community beneficial capital improvements, to pay for costly law suits approved by a Board, or to replenish depleted reserve funds due to mismanagement or unexpected expenses.  Special assessments can range from hundreds to thousands per household and must be paid.  Don't pay the assessment and your financial obligation can compound through interest and administrative charges.  Wait too long to pay and your property can be foreclosed.  Special assessments can happen without home owner knowledge or approval and without  dollar limit and it is all legal.

Colorado State HOA law and HOA governing documents empower Boards to financially manage the community and only indicate they must act in a fiduciary capacity (a statement that is open to a wide range of interpretation with little accountability).  Nothing in HOA law requires a Board to discuss, notify, or gain approval through a vote of residents when spending HOA funds on costly endeavors .  Boards are also empowered to create enforceable special assessments, no questions asked.  Problematic in this issue is that even when special assessments result from Board financial mismanagement, extravagant spending, or reckless decisions home owners only find out about the dire financial consequences after the fact and through their wallets.  Unless criminal intent is involved, no Board member will be held accountable

Reining in the independent authority of HOA Boards to spend without the consent of home owners that often results in special assessments will require legislative action.  Until this happens, home owners are left with our costly, litigious, and time consuming (pay to play) court system to challenge HOA Board actions and this simply doesn't work for home owners.

 

HOA Home Owner's Wallets Emptied Over Fees

HOA dues, transfer fees, debt collection fees, special assessments, legal fees (law suits and HOA lawyers) can become overwhelming and home owners have little control over any of these financial obligations.  Worse yet, if these fees and assessments aren't paid on time you can be fined without limit and have your home foreclosed for the smallest amount.  Add to this the infamous $100 a month debt notification letters from the HOA lawyers that are not contestable.  Try to sell your home in an HOA and you can be assessed a transfer fee ranging from $150 to over $1,000 without any justification or explanation.  If you don't pay it you can't sell the home.  Then you can be stuck for the cost of your HOA Board entering into costly litigation or a capital improvement projects without home owner knowledge or approval resulting in thousands, if not tens of thousands, of dollars in special assessments.  If the HOA Board is reckless with finances and drains the reserve funds all home owners can be assessed an amount to replenish the fund and this can be very substantial: don't pay it and the amount owed will compound and also can lead to foreclosure.  Your monthly HOA fee can also increase without home owner approval and without limit and it's pay it, pay it on time, or more excessive fees and assessments.  One more thought about all these HOA fees if you live in a gated community.  Even though you pay county and other state and local taxes for street maintenance and snow removal, the local governmental entity will not provide snow removal or street maintenance and repair in your HOA (you pay through HOA dues).
Most HOA dues and assessments are legitimate and support the operations and maintenance of the community.  It is also true that what one home owner doesn't pay in dues others must make up for so reasonable penalties are appropriate.  However, the abusive and reckless authority of some HOA Boards in (mis)managing a community are weakly constrained by HOA governing documents or State law.  These ruling documents mostly require home owners to contest HOA Board behavior and burdensome assessments in our costly, litigious, and time consuming court system.  Thus HOA law enforcement from the home owners perspective involves the limited financial resources of a home owner against the unlimited bank account of the HOA: a pay to play legal system favoring HOA Boards.
The HOA living environment can provide home owners with a rewarding life style.  Most communities involve some form of HOA governance and it is mostly impossible to buy a home in a new development without an HOA.  Understanding HOA governance and home owner's rights and financial responsibilities prior to moving into an HOA is incumbent upon the home buyer and will mitigate post purchase problems.

CAI Chalks Up Wins in HOA Reform Off Wallets of Home Owners

The defeat of Colorado SB 14-220, Construction Defects, joins HB 14-1254, the HOA Transfer Fees Limitation Bill that morphed into a token and ineffective "Disclosure" Bill, delivers a double blow to HOA home owners.  SB 14-220 would have saved home owners millions of dollars by moving litigation from the court room to out of binding arbitration and protected home owners from HOA lawyers raiding reserve funds with frivolous law suits and pursuing costly court cases without home owner approval.  HB 14-1254 was addressing the $15 million a year in unjustified and non-contestable fees on HOA home sales.  It was changed to a Bill to require that home owners be notified of the fee without any specific details on charges, the fee amount (ranging from $50- to $1,150) was left to be determined without question by the property management company and let stand the practice that if the fee wasn't paid the home couldn't be sold.  Both Bills were heavily lobbied for change/defeat by the Community Association Institute (CAI) whose members and the legal industry stood to lose tens of millions of dollars in fees income off the backs of HOA home owners.  The success of the CAI in stifling any meaningful HOA legislative reform and controlling information and votes in the legislature must change or home owners will lose.

CAI Again is Anti Home Owner in Construction Defects Bill

Pending final version of the Bill we offer the following for your consideration:

An HOA construction defects Bill is anticipated to be introduced to the Colorado legislature.  It would allow home owners to litigate construction defects damages in an out of court venue and to limit the powers of HOA Boards in using HOA funds in construction defects litigation.  Guess who objects to this Bill?

 Denver Post article , “HOAs vow to fight change to defects law”, April 23.  The content was from interviewing CAI (Community Association Institute) spokespersons who vehemently oppose the Bill.  Where do begin?  First, HOAs are not opposing this Bill.  There is no identified HOA organization opposing this Bill nor does one exist.  The CAI surely doesn’t represent the interests of HOAs or HOA home owners.  Next, the CAI claims home owners would be denied their legal rights to a jury trial in construction defects cases.  Interpretation:  the CAI wants to force home owners in construction defects cases and in the most minor HOA complaints (such as a records access complaint) to take their disputes to court.  Court is too litigious, costly, and time consuming for home owners.  Thus, the current system requiring court makes pursuing one’s legal rights not feasible.  The Bill doesn't strip any home owner of their right to sue for damages.  The Bill will allow for an affordable and accessible (out of court) venue via arbitration for home owners to litigate damages using their private funds.  Next, the CAI objects to a provision in this law that would require home owners to approve any construction defects class action suit that would use HOA funds.  This clause in the Bill is intended to protect and empower home owners from HOA Boards that could otherwise independently and without home owner awareness pursue high cost legal cases without their approval.   HOA legal cases often result in material financial loss to HOAs and subsequent special assessments to replenish HOA reserve funds all without home owner involvement.  This provision empowers home owners.  Then the CAI indicated that out of court arbitration costs would not save home owners or HOAs in legal costs.  The CAI makes things up as they go along.  An individual’s court case on construction defects can easily run $20 – 30,000 or more and if you lose add the contractor’s legal costs.  If the HOA takes on the case using HOA funds in a class action suit the costs can easily run in the hundreds of thousands of dollars.  What would it cost to compensate one or a few arbiters for a day or two of work?  Again, the CAI has proven to be the most anti-homeowner organization in the State and throughout the nation. 

 

This Bill can provide home owners with a previously inaccessible and affordable out of court venue for dispute resolution (arbitration), save home owners and HOAs on legal costs, and empower home owners by having a say in how their HOA funds are spent.  The final version of this Bill is yet to be known but you can bet when the CAI comes out against a Bill it surely is not in the interests of home owners.

State HOA Office Study Recommendation Avoids Costly and “milk toast” HOA Dispute Resolution

The Colorado State HOA Office completed its’ study on HOA dispute resolution.  One of the recommendations deserves actions:  “Implementing a binding arbitration program would be a cost-effective and expeditious means by which many of the disputes between homeowners and HOAs can be resolved”.  This would be the single most important and effective piece of HOA legislation passed in decades.  Cost savings to HOA’s and home owners will be millions of dollars a year in legal costs. The proposal can level the legal playing field that currently pits the limited funds of a home owner against the unlimited funds and legal resources of the HOA.  The program would resolve problems based on HOA law and HOA governing documents vs. legal proceedings and manipulation.  Complaints would be resolved in a timely manner before compounding.  HOA complaints would begin and end out of court through an initial inexpensive filing fee and end with a binding decision rendered by a trained HOA arbiter.  Home owners could still choose to go to court vs using this process thus no legal rights are forfeited.  The process is not complicated, doesn’t require lawyers, will not cost taxpayers, and is easy to implement.

HOA complaints mostly don’t belong in a court room and such proceedings cost taxpayers in court costs and unduly overload our court system with cases. HOA complaints mostly concern non-compliance with State law and HOA governing documents and certainly don’t require lawyers and complicated and costly legal proceedings in a court. 

This solution is NOT the flawed mediation process that requires home owners to gamble hundreds of dollars on a mediation session in the “hope” of gaining an agreement on dispute resolution.  Mediation has been a recommended dispute resolution for decades in HOA legislation and is minimally effective.  Mediation adds time, process, and cost for home owners on dispute resolution with no guarantee of finality.  The agreements in mediation can be “walked away from” by either party without prejudice thus sending the parties back to court:  the very thing trying to be avoided.  Mediators are not licensed and don’t require any HOA educational or training standards. Mediators hearing your case can thus be anyone.  This “profession” has less standards and rules than beauticians, plumbers, manicurist, etc. Mediators claim to resolve up to 50-60% of cases heard but what about the other 40% who are thrown back into court and the uncounted complaints that are never filed due to an inability of a home owner to gamble hundreds of dollars on the uncertainty of mediation? 

The recommendation of the State study can resolve the flaws of dispute resolution through the courts and mediation.  The out of court process involves using trained med-arbs (mediators with arbiter decision making authority) in an out of court venue. The cost to taxpayers is zero as the system would be self-funded.  The State’s HOA Office would oversee this process.  It already has an infrastructure in-place for filing complaints and collecting fees.  The process is similar to handling home owner complaints with HOA property managers through the Department of Regulatory Agencies (DORA).  Thus, DORA has administrative models, precedence, and experience to implement this system. 

Objections are surely to come from lawyers, the Community Association Institute (CAI), and mediators who have spoken against this process based on their economic stake in continuing the current litigious and costly dispute resolution process.  However, with thousands of complaints and inquiries received by the State’s HOA Office and legislators it is time to focus on solutions and problem solving vs continuing on the current path that has tainted HOA governance and made HOA laws ineffective for home owners.

Out of court binding dispute resolution is affordable, simple, fair to both HOA and home owner, provides cost savings to home owners, HOA’s, and taxpayers, provides timely complaint resolution, is accessible, doesn’t require anyone to give up their legal rights, and results in decision and finality in disputes.  The State’s recommendation awaits legislative sponsors.

Colorado HOA Forum   www.coloradohoaforum.com

 

 

 

HOA Issues Not Sexy but Costly to Home Owners

Homeowners Association (HOA) issues continue to avoid the political limelight and continue to cost home owners millions of dollars a year in unjustified and abusive fees and leave home owners with an inability to enforce their HOA governing documents and State HOA laws.  It would seem HOAs deserve more consideration from our legislators when over two thirds of Coloradans live under HOA governance and the State’s HOA Office has received thousands of home owner complaints.  HOA bills have been passed but ALL are basically unenforceable from the home owner’s perspective.  They require residents to take their complaint to our costly, time consuming, and litigious court system that is impractical and unaffordable for most homeowners.  Furthermore, most well intentioned HOA reform Bills have either been watered down to provide more illusion of reform than effectiveness and/or written by the special interest group, Community Association Institute (CAI), whose practices the Bill was targeted to restrain.  The most recent example of the illusion of HOA legislative reform is HB 14-1254.  The Bill was intended to limit the unjustified, abusive, and costly ($15 million a year to home sellers) HOA transfer fee imposed by property managers (made illegal on all residential home sales except HOAs in 2011).  Again, a well-intentioned Bill, rewritten by the CAI with the improper and tacit approval of DORA (Department of Regulatory Agencies), into a meaningless disclosure Bill with no restrictions. 

The only explanation for the continued lack of exposure of HOA problems and ability of our legislature to pass effective HOA laws seems to be that the issue simply is not “sexy” enough for the media and/or an inability by politicians to turn HOA matters into voter motivation.  Our organization, Colorado HOA Forum, considers HOA issues a sleeping giant based on the growing numbers of citizens living under HOA governance and the increasing number of complaints received by the State’s HOA Office and our representatives.  Those politicians realizing the importance and potential voting block of HOA residents can only benefit from the unquestioned metrics of this citizen interest group.