During the show with Pia Trigiani we ask whether or not HOAs can be fixed and wondered what our listeners think.  We asked for comments and with permission on the authors, here they are.  You can listen to the show in the archives www.onthecommons.info
 
Can HOAs be fixed?  Share your thoughts with us either on the blog in the comments section or by email to onthecommons@cox.net
 
Thanks,
 
Shu Bartholomew
On The Commons
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Community Associations Need Bail-Out Too!

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As you know we have fought hard here in Arizona to change the HOAs right to foreclose on a persons home.  We have at least succeeded in disallowing foreclosure for FINES/PENALTIES.  Thank CHORE and Eddie Farnsworth who CAI, AACM and all HOA Attorneys would like to see removed from the face of the earth. 
 
For the life of me I do not understand the thought processes that travel the brains of these people.  We here in Arizona with the assistance of Eddie Farnsworth tried to get a law passed that would require the home in foreclosure be sold for Fair Market Value, FMV.  This would at least leave the homeowner with $$$ instead of being left HOMELESS AND PENNILESS.
 
How many heartless men and women of CAI, AACM, HOA Attorneys, Developers/Builders are actually out there fighting against homeowners….SHAME ON THEM!!
 
Why have Pia and Molly Foley Healey in their leadership positions with CAI not used their power and influence to advocate for this??  Would they like for their children, mothers or family to be left homeless and penniless??  I am appalled at what CAI and others continue to advocate for…..the HOA Attorneys such as Carpenter, Ekmark, Maxwell, et al  actually outright LIED to the Legislators in their arguments AGAINST the legislation to help homeowners.
 
Actually in CHORES opinion, the root cause problem in HOAs are the HOA Attorneys and something must be done!
 
This whole mess is a very easy fixable problem and could be done, FINISHED by the end of every legislative session of year 2009.  But I now am resigned to the fact that those who fight us (and we know who they are) only care about their pocketbook and POWER with GREED hand in hand.
 
I have been asking for the Arizona Legislature to form a Task Force (a real one) to actually work to fix the many problems….so far nothing.
 
I hope I live long enough to see these things happen…..1) protect homeowners from losing their homes for as little as $50  and 2) see the creation of an agency (with teeth) that homeowners can get help from much like a homeowner can file a complaint against a Contractor who is out of control, 3)  management companies required to be licensed, bonded and registered by the States with punishments that hurt when they intimidate, harass and plain don’t take care of business.  (but of course CAI fights against this, along with all the others that feed from the assessment trough)
 
Shu, sorry this is so long but I am angry and I don’t want to hear anymore bullshit from persons like Pia who actually has power to change things….but obviously doesn’t want to!!!
 
Pat Haruff
President
CHORE
Coalition of HomeOwners for Rights and Education
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How should we handle the growing problems in HOAs? 
 
 
 
Basically, we need to inject Democracy to the HOA equation…this is pretty simple and we already have laws on the books to address the process, we just need to get the HOAs to follow the Law and we would see most of the bad HOAs disappear from the face of the earth within a year.
 
 
1. Institute term limits on the “contracted private enforcement regime” that includes ARC control, and the debt payment to pay for the private police to enforce the rules.  10 year terms are in the Texas property code, but there is also “automatic renewals” allowed – the automatic renewal must be eliminated as this creates perpetuities (prohibited by a numerated in the Texas constitution bill of rights).
 
2. Require that the extension/renewal of the contract require the successful petition of the present-day owners.  Should the HOA fail to get the signatures required within 180 days, the HOA shall be dissolved and re-structured into a non-profit corporation that operates on Donations.  Structure these so that the donations become a tax deduction or Tax Credit to the City – and the city will be forced to maintain the common areas (if any) thru raising taxes on all of the properties to pay for any shortfall.  The Tax credit to the city would encourage people to give to the HOA, as it would reduce their taxes to the city. (up to $200 per year would be good enough to cover the HOA fees any of my HOAs need)
 
Richard
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Oh where to begin.   I hope this doesn’t ramble.  I have had a lot of interruptions and I had hoped to get this email out earlier in the day.  I am standing by to watch the program on cox cable.  
 
The only thing nice about our HOA is you sort of feel a little safer as your neighbors are close and you have a gate that needs a little gadget to open but many just push their car into the  gate and it opens.  Other than that there is no benefit to living in our HOA.  It is a money pit.  And the board in our opinion is not doing an adequate job in the financial and athestic area.  Our HOA has been a money pit.   And you experience gastapo type boards with personal agendas and don’t conduct financial oversight of the homeowners monies and seems chronism is used in selecting contracted entities.  sort of a family affair.   family businesses.  We live in an HOA in Meza Arizona and we have been here since 1998.   Our home was 10 months old when we moved in, so we have been here from the beginning.   So we are well experienced why we must obtain  government oversight and audit of HOAs and prosecution of individuals who are found guilty of  improperly handling of homeowners monies, or just do away with HOA’s altogether.  This is along the lines of an individual who handles say Social Security benefits of another and is found guilty of not spending the person’s soc. money on that person but instead spends it elsewhere. When I lived in Rapid City South Dakota many years ago, a man was prosecuted and convicted of improperly handling another persons Social benefits and served time in prison.    Whether he was actually guilty or not he did not keep records that showed the person’s social security money was spent on that person.   He handled many person’s social security benefits.    Whenever one entity handles another’s monies, there has to be Govt. oversight to ensure monies are handled properly and proper accounting takes place .  To protect the public.  We, the homeowners, are the public.  Yearly audits need to be conducted and evaulated as to whether fiduciary responsibilites have been adhered to.  A State agency should be deligated with oversight, and must be available to hear complaints and render decisions at minimal cost to the HOA/homeowners.   
 
Board of Directors are not held accountable under State law and it is basically a free for all and they can do whatever they want, unless a homeowner spends the money & time asking for financial documents and takes it upon themselves to obtain and do their own “oversight” and auditing .  Which is what we are in the process of doing going back with our board of directors and management company going back to 2005.   But our HOA has never been adequately and properly managed.    It has been a nightmare.  
 
Bids are not properly obtained and much chronism can exist as board of directors have no statues or rules to follow and they pick their friends or family members to serve as the contractors.  And then of course set what to pay them.  They do not follow the bylaws.   Our copy isn’t even signed, so perhaps they don’t exist ?  How would we know – there is no state law  we can go to tell us if they are official as they aren’t signed.    There is nothing that tells us what state laws govern our HOA.   Who do I go to to ask.  our board holds maybe 2 meetings a year unless someone tries to get them removed and then boy do they scurry around trying to give the impression they are on top of all activities, but still not providing financial documents.  The mindset is that homeowners must ask for information.   We don’t agree.   Can you imagine some 150 plus people at a one to 1 and 1/2 hour meeting trying to discuss topics. We never get an agenda and never are notified more than 7 days in advance of a meeting.  The only reason is that particpation is really discouraged.   Boards need to conduct audits and even get a cpa to do an audit and put the information out to homeowners.   Boards are not following the process to elect new board members, which is by way of a selection committee that has to be comprised of members that are not currently on the board, and they also feel that a resume is needed.   Nothing in our bylaws requires that.    And they are trying to keep it at 5 members when in fact 7 were initially on the board when the community was built and the state laws nor bylaws restricts the number of people who can serve on the board so all homeowners could serve if they wanted to. 
 
I think that is one way to solve so many problems with HOAs  - state law should define the board of directors as the homeowners. which then prevents one set of individuals  making all the decisions for everyone and will ensure things are kept open, fair, and honest, and there is adequate and sufficient accounting of monies and expenditures and contracts and fullfillment of contracts, and no chronism, and provides for new rules approved by majority vote to be added to the bylaws.    Bylaws have to be updated and include State laws.   Ours sit as they were written in 1996 and are not signed and have never been updated/revised etc.     If we are to govern ourselves, then all homeowners within the HOA need to do the governing.  That is basically what the bylaws allow and state law allows but boards are often gastapo type boards, like ours, and don’t want other homeowners involved in any manner.  That is not the intent when HOA ’s were establsihed.   The board of directors was only established as four key postions on the board is of necessity – a president, vice president, secretary and treasurer and also includes other directors.   laws are non existent and/or vague and bylaws are so vague boards become quickly and easily out of control.  If all homeowners have a say and proper voting takes place, it will be a win win for all homeowners.   
 
State laws should require that rules made by HOA’s have to be approved by a 2/3 majority vote of members and proxy voting needs to be allowed.  And rules adopted need to be amended to the bylaws.   Doing away with proxy voting hurts homeowners.  Half of our homeowners live elsewhere and most of them are out of state.   
 
Right now we have the Fire safety building who can conduct hearings and an administrative laws judge will hear but that runs 500.00 to 2,000 – most homeowners would find that a financial hardship.  And the form is not what I would describe as really user friendly.  One would almost need to hire an attorney to help complete and file.  The boards don’t utilize this process as most would be found in the favor of the homeowner and that takes away from the board making money for the ? ????  So they use a lawfirm and rack up fees that all homeowners must assume.    Boards have the descretion to handle monies and while common sense would tell them to go the cheapest and most efficient way that benefits the community, they do not.   they are not concerned about what money is spent or to whom.  how the money is tracked.   what information is given to homeowners.  HOA’s are a nightmare.    
 
In 2005 our reserves were down to about 2,000.    They have increased thankfully but we are far from what we should have in reserves, and it is the homeowners monthly association fees that has most certainly been the reason why reserves have increased as our monthly association fees have increased by 15% for a steady 3 years in a row with no explanation as to why the increase is needed.  This last increase was in August 2008 effective for January 2009  – so the full year for expenditures had not passed when the decision was made for the 15% increase.   how could they establish what percentage if any was needed for the 2009 fiscal year?   Additionally they just spent hundreds if not into the thousands of dollars putting in baby foilage and trees – if we are that hurting for monies that money should not have been spent as it was.   We have at least 4 homes that appear to be in foreclosure and in 2005 there was some 9,000 owed in monthly association fees by 3 homes (not in foreclosure)- one was small about 600.00 – the board spent some 7,000 to collect that 600.00 and we don’t believe the other 2 accounts were collected on?   documents we will ask to review.  Was selective enforcement practiced?  We have 78 homes and our monthly fee was at 35.00 when we moved in 1998,.  they are now at 108.00 a month.  We have only one pool.   Which has been a money pit.  And is hardly used by anyone.   The board just spent a lot of money on plants going into our winter season, but then still went ahead with implementing this newest 15% increase.   
 
I am out of time.   But I have given some insight to all the problems with HOAs.   but the problems are with the board of directors.  It needs to be all homeowners on the board.   
 
A listener from Arizona.

 

 

 

 

A lot can be said about community associations — and nothing is good!
Today’s economy shows clearly that the system is failing the owners. The only ones profiting: Attorneys and service providers. Instead of protecting property values — as purchasers were promised as a sales gimmick for buying into community associations — they are creating huge financial liabilities for the homeowners. Homeowners are forced to pay for their financially irresponsible neighbors and/or for developers — at the brink of bankruptcy — who use homeowners as their private piggy bank to pay their unpaid bills. So called bulk contracts — the favorite kickback scheme for developers, community association managers and board members — are doing exactly the opposite: Instead of huge savings these contracts force owners to pay double and triple the actual amount, because neighbors don’t pay and/or lots of homes in the community are just empty.
The system is flawed — and band-aids and/or biased committees will not fix it. Nor will surveys claiming that a wide majority of owners is “very happy.”
Owners need real solutions — not service providers and board members hiding behind the business judgment rule.
The financial welfare of million of families all around the nation are at stake. Everybody cries for bail-outs: Owners living in community associations need a special bail-out: Accountability of the people in charge and laws that make sense and protect the owners — and strict enforcement of these laws!
And fast — before it’s too late for many families!
 

 

Warm Regards,
Jan Bergemann, President
Cyber Citizens For Justice, Inc.
http://www.ccfj.net/