Homeowner's Associations. the Jury is Still Out on Some of Them
By Teresa Ambord
Homeowner's associations (HOAs) are springing up everywhere. A recent study showed one in six Americans live in HOAs. Some people love them because they help ensure that neighbors won't leave junk cars parked on the street to rust, or let their front yards go to seed, or paint their homes in orange and purple stripes.
Some HOAs provide outside maintenance, such as lawn care and snow shoveling, which is why these developments are the residence of choice for a lot of senior citizens. The idea is that in exchange for small monthly dues, the homeowner's association sets and enforces standards in order to protect property values for all residents. This is grassroots control, the way it was meant to be, allowing residents to make decisions that will benefit them and their neighbors alike. Good idea, right? Well, maybe.
There are many fine HOAs that provide good service to their residents and work hard to address neighborhood problems, and they do so with little appreciation. But there are also many stories of abuses from questionable HOAs, due to the simple fact that there is no governing body overseeing what HOAs do. Understandably, there is growing concern among residents of many HOAs that have become kingdoms for the ruling body. Horror stories begin with problems that are fairly minor, such as tales of self-important HOA officials patrolling the streets, fining homeowners for putting their trash out a bit too early on trash day, or leaving their cans out a bit too late. That's annoying. But then, so is the neighbor who leaves his huge trashcans on the street for days after the garbage pickup. The real horror stories usually end up in lawsuits, like when a homeowner misses a few dues payments and finds herself presented with an eviction notice. Think this can't happen when you own your home and pay your property taxes? It can.
In California's San Diego County, Melissa Colburn went to court in 2002 to stop her HOA from evicting her and selling her townhouse. What was her crime? She was three months behind in her HOA dues. Wait. it gets worse. The HOA sends monthly dues bills to each homeowner, but Colburn's name was not on the mailing list, so she never got the bills. But that didn't stop the HOA. She admits she should've checked to find out why she wasn't receiving bills, but she never dreamed her $230,000 home would be put on the market for about $5,000. Colburn was able to sue the HOA and get her house back, but it's hard to understand why any board of "elected" neighbors should be able to wield such power.
Here are some specifics to check for if you are considering purchasing a home governed by an HOA:
1. Ask to see the rules, usually called CCR, or Covenants, Conditions, and Restrictions. Do the rules sound reasonable? If you're not sure or the language is complex, ask your attorney to read the CCR.
2. The HOA should be able to provide you with recent financial statements so you can verify the fiscal health of the association. This should include a list of how dues are spent. Some HOAs show exorbitant expenses for such things as landscaping when there is no evidence of professional landscaping.
3. Is the HOA involved in current or recent litigation? Your attorney can check this out.
If you live in an HOA and you suspect questionable practices, you should know that the outcry of many association residents has some state legislatures on the alert. Some are considering the creation of agencies that can provide much-needed oversight for HOA boards. These agencies may also assist in educating members and officials alike, and settling disputes before an argument becomes a lawsuit.
Here's a website where you can read the latest news from people who keep an eye on HOAs. Click on "Resources" to read what the courts are doing: