We are From CAI, and We’re Here to Help!


Once upon a time we believed the earth was flat. Then we got smart. Today we are told that associations protect property values. 

Just what is the official CAI position regarding this particular story and all the other embezzlement stories from around the country?  Maybe their position is that there are still plenty of management companies that have not yet been caught with their fingers in the cookie jar so this is “just an isolated incident.”  Koger Management Group was one of CAI’s elite members at one time.  So what now, CAI?

CAI has always opposed any kind of government oversight.  The only way Koger Management Group was caught, and is now being investigated, is because they had a real estate license.  Had it not been for that, it would be business as usual.  We have been advocating for some much needed independent and objective adult supervision in HOAs to protect the homeowners in mandatory membership associations.  If such a thing existed, how many other management companies would be under investigation today?

Kudos to Florida State Representative Julio Robaina for recognizing the need for this and for starting a pilot program in Miami-Dade to provide the oversight.

Here is the part of this story you are not likely to read in the papers.  My association, Lake Braddock, was also managed by Koger.  The official word is that “we” discovered that funds were missing BEFORE this story broke out and that “we” were able to recover monies that were allegedly embezzled from our coffers.  The problem is, “we” only audited the financial records covering a much shorter period of time than the period that these transfers and embezzlements allegedly were to have taken place and “we” do not plan on doing anything else about it because the president does not want to testify in court. So much for protecting property values! – Shu 

From the Washington Post
By Bill Turque
Friday, July 20, 2007

Losses Climb for Homeowner Groups
Accountant Says Management Official May Have Stolen $2 Million
RICHMOND, July 19 — At least $2 million was stolen from Northern Virginia condominium and homeowner associations, probably by a top executive of the Fairfax City company hired to manage their finances, a forensic accountant told state regulators at a hearing Thursday.The losses sustained by customers of Koger Management Group between 2004 and 2006, described in a report to the Virginia Real Estate Board, far exceed earlier estimates of $800,000. The total may grow as more homeowner associations conduct audits, said Jeffrey D. Barsky, the accountant appointed by the board to investigate the matter.  Read the Whole Story

Want to Sell Your House? First Pay the Management Company

When the disclosure laws were first enacted in Virginia, HOAs were allowed to charge for the actual cost of preparing the packages, but there was a cap of $50.  At the time, associations scrambled to justify charging $50.  A couple of years later, when the cap was raised to $100, overnight the “actual cost” had doubled from the $50 fee to $100.  There were no spot checks to ensure that the fee was justified so here was another law on the books no one really worried about.  As long as the homeowners paid it, what’s the harm?  And why would anyone quibble about it when clearly $100 was the law, right? They’re at it again. 

This year the Virginia legislature amended the HOA laws with respect to the disclosure package again only this time they got really creative with it.  Now, the disclosure package is sent by email unless the buyer requests a paper copy, the cap has been raised to $325 which now goes to the management company instead of the HOA.  I wonder how Sen. Jeanmarie Devolites Davis ever thought that one up.  Not bad if you are a manager, is it?  $325 for sending an email has to be the ultimate junk fee homeowners in associations are charged.  But the nicest thing is that managers get to charge this while on association time, so they are getting paid twice, if part of their contractual tasks are to take care of the paperwork.   

It’s a bit like going to the store and being charged for what you bought PLUS paying the clerk for ringing up your purchases, despite the fact that the clerk was being paid a salary by the store.  - Shu

From the Washington Post
By Elizabeth Razzi
Sunday, July 15, 2007

Buying a condominium? A house in a neighborhood run by a homeowners association? You had better stay on top of your e-mail.

A very large and extremely important document could be coming your way. Its arrival starts the clock ticking on a short period during which you can cancel the deal, should you desire to back out of your purchase contract.  Read the Whole Story

The Road to Riches Runs Through the Misery of Others


“But you signed a document promising to pay your fees on time” story.  Isn’t it time to take away the power to foreclose from association attorneys? Allowing this to continue is a lot like handing a three year old a loaded gun to play with.  As this report illustrates, the power to foreclose has nothing to do with ensuring that associations are adequately financed but everything to do with creating more billable hours for association attorneys. – Shu


Carey Codd Reporting 

Denise Wunders nearly lost her homes four months ago when she forgot to pay her $106-a-year maintenance fee. After racking up some late fees, the homeowner’s association’s lawyers got involved and her bill went into the thousands of dollars.“It was one of those where I said it’s tight, ‘I’m gonna put it aside,’” said Wunders. However, attorneys who represent homeowners associations say buyers sign paper work telling them of these consequences, and once their lawyers get involved, the bills start stacking up. Wunders faced a $4,000 legal fee.“The board of directors has a fiduciary duty to collect these assessments,” said Eric Glazer. “They have a duty by statute and they have a duty to enforce the terms of the document.”  Read Whole Story

Widow Doesn’t Water Lawn, Goes to Jail


This is yet another amazing story of the abuse of power.  But if the police can admit they have made a mistake and take steps to remedy the situation, why can’t HOA’s?  – Shu

From KSL TV – Salt Lake City Sam Penrod Reporting
Friday, July 6 2007

A widow and grandma spent the morning in jail, arrested for refusing to give a policeman her name when he tried writing her a ticket for failing to water her yard. The woman hasn’t watered her lawn in more than a year, and the condition of her yard violates an Orem zoning ordinance.  Read the Whole Story

But Officer, I’m on a Public Street – - Not!


Free tax money can be quite intoxicating.  Here is an example of what happens when the town center gets turned over to the private sector and “Billy the Bobby” is in charge of  enforcing the rules adopted by , in this case, the developer.  – Shu

From the Washington Post:
By Marc Fisher
Thursday, June 21, 2007; B01
In just seven years, the new downtown Silver Spring has become a bustling restaurant scene, a business center and a public gathering spot popular with all ages.Except maybe we should reconsider the “public” part.Chip Py, a longtime resident of Silver Spring, recently returned to an old interest in photography. While wandering through downtown after eating lunch there last week, he took out his camera and started to take shots of the contrast between the tops of the office buildings and the sparkling blue sky.

Within seconds, a private security guard was at Py’s side, informing him that picture-taking is not permitted, no explanation given.

“I am on a city street, in a public place,” Py replied. “Taking pictures is a right that I have, protected by the First Amendment.”

The guard sent Py to the management office of the Peterson Cos., the developer that built the new downtown. There, marketing official Stacy Horan told Py that although Ellsworth Drive — where many of the downtown’s shops and eateries are located — may look like a public street, it is actually treated as private property, controlled by Peterson. Read the whole story