Home Owner Association Problems

24 Replies

I read this weekend that somewhere around 55 million Americans live in some sort of community or complex where a home owner association HOA is in charge. This is a HUGE number! Most HOA Boards are inept, and run by volunteers. There is no real government body to oversee these HOAs, since they are a very specific form of corporation normally. I have personally had some issues with HOAs, so this is an issue close to my heart. :crazed:

That said, I'd like to hear what kind of problems or issues people have had with their HOA.

Glad you brought this one up.

One of my first deals was a townhouse that I took "subject-to" and didn't do my due diligence.

Turns out, the townhouse (which was only worth about $100k) had a HOA that was like $300 a month!

I thought I was getting a sweet deal because my payment was only like $600 on the underlying loan on the property. That HOA fee shot my chances to hell of getting cashflow in that market!

It wouldn't be so bad except that the HOA wasn't taking care of anything! The swimming pool looked more like a science project gone wrong, the property had pest problems that they were supposed to fix (but didn't) and when a hurricane passed through the area, a lot of the roofs in the complex were damaged and had blue tarps and they NEVER fixed them, although they promised to.

Not only that, they were putting liens on peoples properties to collect because everyone stopped paying the fees.

Turns out, that Association had been bought and sold like 5 times in the previous 2 YEARS!

Lesson learned: Research BOTH the amount of the HOA fee and the financial status of that management company... :badwords:

You hit it on the head about researching the financial status of the HOA. May HOAs are teetering on bankruptcy. Their volunteer boards are not regulated and are rarely qualified to do the job.

I'm going to take a different point. I've lived in TX for almost 30 years and have always lived in communities with POAs. Some good, some mediocre and some not so good. Of course there is no government agency to oversee them, THEY ARE THE GOVERNMENT. It's up to the GOVERNED to oversee them. Of course most POA boards are VOLUNTEERS, that's what you want! One of the biggest problems in the US today is that our elected officals have become PROFESSIONALS. They have no interest in serving the GOVERNED, only the interests that give them the most POWER (read money).

It's incumbent on YOU to keep your POA board in line, get involved, stay involved. You don't like they way they operate? DO IT YOURSELF, that is run for office. I've served on several POA sub- committees, a couple of POA boards and I've SUED TWO POAs, successfully both times. And I'm a person that DESPISES being on boards and committees, but sometimes you've got to do it.

I'm not suprised about the $300/month POA dues. That's why I've never owned a condo. Back in the '80s when some Houston condos were being sold in the $5K range they stil had POA dues of $250-$300/month, and that was 20 years ago. I figured it was enough to repaint and reroof every year of so. I just passed.

BTW, usually in a POA election YOU can take over a board with about 6-8 people. I know because we did this in a subdivision with about 500 homes, we got 3 guys/gals to run and had an aggressive door knocking campaign (about 3 hours each) and we won 3 seats with about 60 votes!

Don't sit around complaining, throw the buggers out!

all cash

One thing that I learned from sad experience is that it is
wise to ask for the past 2 or 3 years of minutes of the annual
meeting before you get to far.

Find out what the real problems are because usually they
get discussed at these meetings.

Hey, great advice everyone. I've had the usual problems with HOAs--namely that you pay too much, seems like you get too little in return, and some of the board members have mini-god complexes.

I looked into getting onto the board myself and was surprised at how easy it was. From there, much easier to make a direct contribution. And, frankly, it gives a really good perspective and some appreciation for these *volunteers* who spend their time trying to keep the grafitti and trash off your doorsteps.

Apparently I've never done adequate due diligence with HOAs b/c I've only asked a handful of questions each time and usually settled for verbal responses from the management company or the board. Based on all cash and others' comments, it sounds like smart investing to get copies of the minutes for the past few years and annual reports, etc.

Good tips!

I'm so glad you formed this new section. As a developer, I'm currently the president of two HOAs. I've been involved in . . . . let me think a second . . . five lawsuits regarding HOAs. I have a lot of experience here. I think all cash's comments are dead on.

I'm tired now but I'll post some stories and try to give some advice here.

P. S. I spent the day with an attorney who is working with me to get control of a board where the current board members aren't obeying the bylaws or holding proper elections and are "stealing" money from the association.

Originally posted by "all cash":

BTW, usually in a POA election YOU can take over a board with about 6-8 people. I know because we did this in a subdivision with about 500 homes, we got 3 guys/gals to run and had an aggressive door knocking campaign (about 3 hours each) and we won 3 seats with about 60 votes!

Don't sit around complaining, throw the buggers out!

Easier said then done. We've all seen the Seinfeld where Jerry's dad ran for the board and ran into disaster. That spells out EVERY HOA I've seen. Sometimes it is easier said then done, especially when the people running the HOA are crooks. Those type of people will do anything to keep their positions including lie, cheat, and sue. I've seen it happen.

I prefer to stay far away from any community with an HOA . . . these organizations can really only lead to problems unless they are properly regulated.

Originally posted by "biggerpo":
Those type of people will do anything to keep their positions including lie, cheat, and sue. I've seen it happen.

Ditto.

We own maybe 10% of the lots in a subdivision where the HOA has spent over $500,000 in HOA funds since being elected in 2004 under questionable circumstances.

Originally posted by "Wesley":
Originally posted by "biggerpo":
One thing that I learned from sad experience is that it is wise to ask for the past 2 or 3 years of minutes of the annual meeting before you get to far. Find out what the real problems are because usually they get discussed at these meetings.
Wesley,

Often even members can't get copies of the minutes. How do you think an "outsider" will? Heck, in my hoa, the board won't even post the agenda, even when there will be guests speaking on local issues that directly affect the neighborhood. This is a way to keep control. People would show up if they knew there would be information given that will affect their daily lives.
Do you really want to know the problems? There are several internet forums available. Search and sign up. There are state specific forums available, also. Read not only the forums for the board members, but also the ones for the homeowners.
Search the net using "CAI" or "Community Associations Institute" to see what you come up with. That is a nationwide group of attorneys who represent themselves, lining their pockets with the money form homeowners and hoas.
There are over 60 million people in hoas, and no, most of those people do not know or understand what they're getting into or the wide power of the board members.
Check your own state legislation for the last few years to see what a few legislators have been trying to push through for the homeowners, and often fail because of lobbying efforts of CAI. Find out if your state has a mediation board for homeowners to appeal to against their board. If not, the troubles are possibly more severe, because the costs of remedy are to high.
There are a few hoas that have ALL their docucments (except financial) available to to anyone on the net, and getting that financial info is probably not possible unless you know where the skeletons are and are able to drag them out.

Originally posted by "jharris":
Originally posted by "biggerpo":
Those type of people will do anything to keep their positions including lie, cheat, and sue. I've seen it happen.

Ditto.We own maybe 10% of the lots in a subdivision where the HOA has spent over $500,000 in HOA funds since being elected in 2004 under questionable circumstances.

Yes, they do. And most state laws, and the insurance companies, support the boards to the hilt. The homeowners have little or no recourse. CAI lobbies lawmakers to keep laws against homeowners active. Most any HO who may try to do something is targetted, made an example of. People are afraid to speak up because the power of the boards is unlimited.
As a builder/developer, you could place term limits on your board members, so that no board member can sit for more than 2-3 years, not allow former board members any official status, put in a requirement that no CAI attorney or company can be hired by the board, or hire a management co that uses CAI people.
You could make the foreclosure possible ONLY after all other avenues of collecting dues be utilized, including the same debt collection techniques other dreditors are able to use. You could write in your docs that even if foreclosure is done, that the home WILL be sold at fair market value, and the homeowner is to be given every cent beyond the dues owed, and no more than a certain percentage beyond the dues amount be kept for administrative fees--no more than say, 2000-3000 dollars.
As to the spending of that 500,000, some states require a periodic independent audit. You should be able to get copies of the financial info of your own association (except debtors) and should be able to find out about this. With this much money, this may be something that is criminal, and comes under criminal law. Even if civil, it may be seen to be egregious enough to take to court. People are now finally suing the hoa, or the occassional board members individually, I think, and winning.
Good luck with this.

I recommend you run for the board on the HOA and take a turn in the seat of a board member. Most problems are miscommunications and many board members are no where near as "evil" or "vindictive" as some members of this thread are hinting at. Are there bad people and bad HOAs? Yep. Are there huge egos on some of these boards? Absolutely and without question.

But, stop complaining and do your part--just like with politics, if you're not voting, and you're not running for office, in my mind, you forfeit the right to complain very loud. Anybody can point fingers and spot faults. Jump in and try to make a difference. If you've already done so and these are still your views, then I'm sorry for the HOA you were on!
[i]
[btw, I'm no longer on a HOA, I just don't like taking the assumption that there is a group of people (in this case the board on the HOA) that are evil, viscious, and just waiting to screw you. It's been my experience that as you get to know those people better, they're operating under generally reasonable assumptions in a generally reasonable manner; it was me who lacked sufficient information.][/i]

There are a lot of boards who have a lot of problems. They are volunteers and many of them lack the required skills. They also apparently lack good resources (http://forums.biggerpockets.com/viewtopic.php?p=35583#35583) from which they can learn to do their jobs better.

-Jeff

I was one of those who hated HOAs. I couldn't stand getting letters from the "weed police", it was like they had a camera on my lawn and sent a letter at the first sign of a weed. In one of the association newsletters they said they were going to be holding an election for a board seat that was opening. I figured this was my chance, if you can't beat em join em! So I was elected and I am now the president of the HOA. Let me tell you, I have a whole new understanding of what it takes. Get on your board or at least get involved with committees. You will probably find that you look at the board differently. It is also a great networking opportunity for your business.

BTW, I don’t get letters from the “weed police” anymore, that is one benefit of being board president.

8)

Originally posted by "takleberry":
I recommend you run for the board on the HOA and take a turn in the seat of a board member. Most problems are miscommunications and many board members are no where near as "evil" or "vindictive" as some members of this thread are hinting at. Are there bad people and bad HOAs? Yep. Are there huge egos on some of these boards? Absolutely and without question.

But, stop complaining and do your part--just like with politics, if you're not voting, and you're not running for office, in my mind, you forfeit the right to complain very loud.

Have you ever heard that economists get embarrassed if they are caught going to the polls? I think there was a treatment of this in Freakonomics, but my microecon professor in college also mentioned it. In other words, the time put into voting is not worth the expected benefit.

Similarly, it is not really a question of whether joining the board would help the situation. It is simply a question of whether the cost of time spent on the board plus the cost of the HOA fees makes it as smart of a choice as other options.

Sounds to me that the likely conclusion is that it does not.

If you put in even 15 hrs per month dealing with trying to fix and manage the HOA properly, even if you value your time at a ridiculously low rate of $20/hr that's $300/month on top of the actual HOA fees. Do you really think you're getting $500-$600/month in value out of your HOA?

Sitting on the HOA board takes me no more than 2 hrs per month. We have an HOA management company that handles all of the day-to-day issues. As a board member I have 4 meetings per year plus one election meeting if there are any open seats. In between meetings I review the management companies action list on a weekly basis and occasionally have to deal with an issue that might arise. To me it is worth that small amount of time to be involved in my community.

8)

I'm the president of the HOA where I live currently. I have read the horror stories and even lived in one where the entire board up and quit becuase the residents were complaining so much. Now they have a company managing it and its worse than ever. I was elected pres from the builder turn over. I ran specifically to keep this one from getting out of control. So far, so good.

My Dad spent 10 years at the president of his HOA because nobody would volunteer. I'm in the same position. Although I won't stay once my term is up.

We have our 10%'s. People who complain about anything and everything. The vast majority of my neighbors are great people. I know everyone that lives here because I get out and walk around. That's funny because some of the neighbors don't even know each other.

Most of my difficult decisions are difficult because I am pressed between a neighbors perception of what something should be and some zoning ordinance that says it can't be that way.

Aside from the initial set up after it was turned over from the builder, I spend a couple of hours a month working on HOA item. We have two or three meetings a year, so that's not that difficult.

Hi All-

We went to our HOA meeting earlier this year just for them to provide us with 6 month old financial statements and to inform us that they don't know how long the builders are going to take to complete the construction around our sub-division, (of course the developers are in charge of HOA until they are finished). The developers also wanted to gloat about the new expansion plans they have for our sub-division, so you might as well say they are going to be around for quite some time. We argued to them when they showed us these new plans that they had not completed building the houses in the "first phase" so how could they abandon our area to start a "second phase". This is outrageous.

Oh, and our HOA dues continue to rise each year, so when we asked them about the cap they informed us that there was not a cap.

We are looking to get out of here when we get the chance!!!

Thomas,

I feel for you. When I took over our HOA from the builder I briefly contemplated suing them for incompetence. (Wish that was legal). Missing or non-existent tax forms, the accounting was done free hand on a piece of notebook paper, boiler plate rules that were more befitting a condo property than a SFH like ours. I spent a fair amount of time with the IRS, our attorney and theirs trying to straighten everything out. In addition to that I have spent the entire three years of my term chasing the builder down in order to get them to complete just the items listed on the RDP (Residential Development Plan), much less the things that they didn't do correctly. We sued to take their bond and that finally go them moving.

Fortunately, we have the voting ability to change our rules so we have been able to tailor them to fit the community, not the builder.

Sorry yours hasn't gone well.

You may already know this, but the builder has legal obligations to provide the homeowner's with timely information. You should have also received the Bylaws and other documents related to how the HOA is constructed and operated when you closed on your home I don't know the laws in Texas but I would start with that.

Good Luck,

Jason

I found this site by searching for HOA Problems in Google. Some stories are very interesting, and a lot worse then mine. That still doesn't make it any better that my HOA insists on sending me letters that my lawn needs mowing, even though it's mowed once a week, in compliance with the covenants. I'm at the point where I think I'll take pictures of the lawn every day, and I'll send the pics to them via email.

Originally posted by Joshua Dorkin:
You hit it on the head about researching the financial status of the HOA. May HOAs are teetering on bankruptcy. Their volunteer boards are not regulated and are rarely qualified to do the job.

Josh, while they may appear to be unregulated all non-profits/not for profits are regulated under state law. One issue is that when any officer or director acts in such a manner being contrary to the stated by-laws they become personally liable. They must also act for the benefit of corporation. This is a broad swath for compliance. Fiscal responsibility is not hard to show in many cases, discrimination is another issue and some states are more liberal in enforcing ownership rights.

I have worked from within to systematically remove board members one at a time but by listing several of them for removal at the same meeting...this puts those targeted members in a non-voting status at that meeting. Gotta get your ducks in a row but it can be done.

Many HOAs in our area have been sued for unreasonable fees paid to overlooking contractors when services were not performed and courts have put the brakes on them.

I have worked with one HOA resident group, forming another mini-HOA basically by organizing residents and then call a special meeting under state law. This gets the attention of board members when they learn that screwing around can make them personally liable for damages.

So check your state laws concerning duties and responsibilities of officers and directors....

OMG - SO much I could tell. Horror stories to make you cringe. It would take very unique circumstances for me to live in a place with an owner's association. I was in-house counsel for a unit owner's association: 374 units in 28 buildings over 25 acres. I managed the day to day operations, the finances, and all legal matters. We had so many active cases at any given time it was unbelievable.

At one point I had 13 active cases with the same attorney as opposing counsel (there were still many more active cases, but this was with the same attorney). This attorney sued me personally. She was a menace to society and thankfully was disbarred.

We had one foreclosure case that had been open for 10 years. I remember one day police were called for shots fired: turns out someone had just finished with an orgy (honest - I kid you not - actual group sex) and decided to celebrate by shooting his handgun out the upstairs bedroom window (maybe he ran out of "ammo" with his other "gun"?) I was threatened with a shotgun one day because I had a car towed. I carried a .45 with me every day. Someone was robbed and murdered in the middle of the afternoon in one of the parking lots. Someone had a friend/relative with access to a street/parking lot line painting truck, came in one day and created parking spaces in the entrance to one of the parking lots and parked his car there with a for sale sign on it (wanted better visibility for the car for sale I guess....) I had the car towed (this narrowed the entrance too much). I could go on for far longer than there is room to type here....

BTW - I understand not all places are like this, but I also have represented other HOAs and have seen too many of the problems that are so easily inherent with HOAs....

HOAs are a joke, and only the lawyers are laughing.
HOA meetings are not subject to Open Meeting Laws, their elections...no election laws apply. Chain of custody of ballots...a joke.
My HOA actually recorded in their minutes that they would fraudulently manipulate the ballot to pass something they wanted.
You can't make this stuff up!
No one goes to their meetings because they are rigged. No one participates in their elections for the same reason. The most sociopathic personalities in the community are drawn to positions of power in HOAs like flys to garbage.
I am suing my HOA because the thing they wanted was to aquire was the power to fine the homeowners.....completely unacceptable!
I am attempting to get the court here in MA to declare that fines are unlawful/unconstitutional.
It will be a cold day in hell when this pathetic tin pot tyranny can levy fines against me or my neighbors...
What fun huh?

Election laws and open meeting laws only apply to government bodies. HOAs are not part of the government.

Principles of corporate law apply to HOAs. Unit/Lot owners can sue the HOA, but it is an extreme hassle that takes time, money, and emotional capital.

And yes, they are well known for attracting personality types who are very regimented and seem to enjoy exerting control over others.

Governmental powers without constraints....the very definition of a 3rd world banana republic.

And folks wonder why they are such a cluster @#$#

Are Americans really that stupid?

There is an issue with this, specially in Alaska.

Since FHA guidelines changed and a vast majority lost their ability to sale. What is interesting is that "HOA" is an actual non-profit or profit business. They should start budgeting for education so that the Boards understand the impact of their votes. If they were paid a "benefit" with "education", then those voted on might actually care to work and watch their PM company in charge. I see A LOT of fraud, mis-management, and lack of correct coverages that add up to making these places fail and dissolve. Then you have a "neighborhood" of dis-organization and drop in values.

With the boomers downsizing and moving to HOA's, this may correct over time cause demand is increasing and boomers have a tendacey of taking charge, but they also over leverage and over spend.

It will be interesting to watch and definitely and opportunity to buy low and sale for a good price in a few years, IF the HOA can come together as a true business.

we just had our HOA board elections (FL) (mothers place) ... I can't complain the place is extremely well run

BUT I did vote for all the ex-military guys...:)

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