By Elaine Roberts Musser
How many of you live in a homeowners association? It is estimated that in the year 2010, HOAs governed nearly 25 million American homes.
What is an HOA? In California, it is a nonprofit public benefit corporation run by a board, composed of homeowners like you and me. An HOA governs the “common areas” of a housing development, which can simply include community open space, a clubhouse or a gateway to the development. In the case of townhomes, the common area might encompass communal roofs and walls. The common area is defined within the HOA governing documents (bylaws; covenants, restrictions & conditions; operating rules).
In California, HOAs are governed by the Davis-Stirling Act, a part of the state civil code. In theory, state and federal laws provide protections to homeowners against abusive practices by an HOA and the industry that supports it (management companies, attorneys, collection agencies).
HOA fees can range anywhere from a few dollars per month to thousands. Anytime you purchase a home, make sure to find out if the development is governed by an HOA, and how much the monthly fees are.
Because there is no ombudsman or clearly delineated oversight of HOAs in California, other than the state Attorney General’s Office, the field is wide-open for rampant homeowner mistreatment. Here are some examples I came across in my own law practice:
* An elderly woman with multiple health problems smelled smoke in the common area. She was fined $200 for calling management instead of the fire department. When the outraged woman rightly refused to pay the bogus penalty, she was repeatedly fined for various minor infractions, such as a leaf showing through her fence, dead potted plants on her porch, etc.
Because this feisty senior would not knuckle under to such financial harassment, the heat was drastically turned up by the HOA. She was suddenly slapped with a phony assessment of $16,000, which was beyond her means to pay. After a short time, foreclosure proceedings were launched on her residence. My client died of a massive heart attack while I was attempting to give her legal assistance.
* A woman had inherited a townhome from a deceased relative. She mailed the monthly assessment checks from out of town. New management was hired by the HOA board, and the address where the payment was to be sent changed. But homeowners were not notified until after the due date, along with a claim that homeowners owed “late fees.”
As an absentee owner, which made her more vulnerable to financial manipulation, this lady’s payment was actually placed in a drawer somewhere. They claimed she never paid her monthly assessment, even though she showed up in person at the management’s office with a check in hand.
Before long, the alleged “debt” spiraled out of control from a mere $500 to more than $6,000 in late fees and collection costs in a matter of a few months. My client spent $12,000 hiring a local attorney to take the issue to arbitration as required. Unfortunately she was forced to capitulate to all collection costs and late fees because she had no more funds to take the matter to court.
* An elderly gentleman, a United States veteran, was being discriminated against by his HOA. Why? Suspecting foul play, this resourceful guy asked to inspect the HOA’s financial records. Subsequently, the HOA board sought legal assistance to avoid its obligations to turn over the requested paperwork.
The attorney representing the HOA reasoned the homeowner did not technically own his house because the deed was in the name of the VA until the loan was fully paid off. Therefore the homeowner could not make a documents request, nor attend HOA board meetings, nor use the HOA amenities.
A newspaper reporter referred this gentleman to me. Once I contacted the VA, and The Sacramento Bee brought public attention to the issue, the opposing attorney conceded his position was indefensible that my client did not own his home.
If you choose to live in a housing development governed by an HOA, you give up rights. Many homeowners do not realize this before moving into a residential area with this sort of citizen governance. You may not be able to paint your house the color you want, or you can be fined for leaving your garbage can out at the curb too long.
And because California allows non-judicial foreclosure for the failure to pay assessments on time, you can lose your house if you are more than $1,800 or 12 months in arrears. It is frightening to think an HOA management company, an attorney representing the HOA and the hired collection agency can set the foreclosure machine in motion without court oversight, while possibly gaining financially from this questionable process.
My advice? Avoid housing developments governed by an HOA. If you do decide to purchase a home in a residential area controlled by an HOA, do the following:
* Ask people living in the neighborhood if there are problems within the HOA prior to purchase.
* Make sure to read a copy of all governing documents, so you are aware of what the rules are before you buy.
* As soon as you move in, try to get elected to the HOA board. It is the only way you can truly keep an eye on what is going on. Embezzlement of funds from HOAs is not an unknown occurrence.
— Elaine Roberts Musser is a Davis resident and an attorney in private practice. Her areas of interest include homeowners association law, elder law, family law and consumer advocacy.