Thursday, July 27, 2006

HOAs Create Dreams and Nightmares

A new homeowner wrote that he has not only purchased a new lot in North Carolina to build a future house, but it appears he's also bought into a lawsuit between the new board of directors of the ruling HOA and its developer.

"My first concern is that this was something they started before I became involved and had no control over. Second it seems that this is really a personal battle with a few individuals on the board and the developer. Third, after researching what I could understand, it looks that even if they are successful, the developer could just fix the problem at any time and send us the bill for his troubles," he writes.

"I don't know why they wanted to jump right into litigation with this since it looks like there are a few other avenues to explore," he says, adding, "It's not that I can't pay the additional $400 they are demanding from me, it's that I'm worried this will just blow up in our faces and cost way more than anyone imagined if it's even successful."

Unfortunately, many homeowners find that once they buy a new home, they have also purchased into yet another level of government. While the local jurisdiction enforces state and local ordinances, homeowner associations govern and enforce items as small as the length of grass in the neighborhood, colors of the house and care of the common areas.

Whether we like it or not, homeowner associations (HOA) govern more than 240,000 communities in which 54 million residents live inside 22 million homes, according to the Community Associations Institute, one of the country's largest trade associations for HOAs. The group estimates that these groups collect more than $35 billion in homeowners dues.
For most homeowners, those dues can be as little as $10 per month or as high as several thousands of dollars each year. As you purchase your next home, be sure you don't just sign the bottom line of the HOA document disclosure without looking over items in the documents that will affect your life while living in your new home.

Most homeowner associations operate very similarly like a local jurisdiction. Board members from the community run for office on the board of directors. The biggest problem comes up when a nosey neighbor wins a seat on the board and uses this new-found power to run everyone else's lives.

As I was moving out of a condominium several years ago, many items had not been fully packed and some of the items were being placed into storage. Some were still on the balcony. One of the board members stopped me on the sidewalk to "instruct" me on the rules of what should be allowed on the balcony. Obviously, I was miffed at her air of authoritarianism, and, in fact, it was one of the reasons I was leaving the "compound." I had heard enough stories of this person and several other of her followers even getting access to keys to residents' dwellings to check to see if they were abiding by rules that governed the interior of units.

Friends would advise, "You should get an attorney." It's easier said than done and for most residents, there's just no resolve or money enough to create a legislative civil war to get someone out of your business.

Fortunately, not all other communities I've lived in were operated in such a manner. The board members were truly there to operate the association for the better of the community and to protect home values and conditions.

Nevertheless, if you find that you want to take matters into your own hands, the frustrated homeowner and HOA resident does have a few options when dealing with an HOA gone awry.

First of all, look through your HOA or condo documents for your recourse. It could be as simple as submitting a petition from a majority of the residents to impeaching the whole board.

Second, create a plan of action to bring your grievances to the board. Be ready to volunteer for an existing committee or for creating and serving on a committee or task force to address the problem.

Third, have patience. Your community wasn't build in a weekend and your complaint won't be addressed in one either.

If your grievance involves complaints about dues or special assessments, keep paying these fees while you're a resident or owner. If you quit paying these fees, you could put your case at risk. In addition, if dues payments become too far in arrears, the board could even foreclosure on your house to collect them.

Published: March 10, 2006

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