Homeowner’s Associations are powerful big businesses, yet homeowners often remain involved.We moved to Texas from Louisiana about five-and-a half-years ago and settled into a brand new home in a neighborhood under construction.Fully equipped with granite countertops,
stone backsplash, fleur-de-lis bathroom tile, mature trees, and stainless steel appliances including a double door refrigerator.As I left the new house for the first time to go to work, the kid in me looked at the double door refrigerator I always wanted and knew I had “arrived.”Our little piece of the American dream also came with a mandatory homeowners’ association (HOA). (Luckily, the double door refrigerator is not subject to any deed restrictions.)
This was a change. I never lived in a neighborhood with an organization which could restrict what and how I cared for my home. All I knew about our Louisiana HOA was that they hosted a great 5k race every October; made sure the flowers at the front entrances were kept with care; the neutral ground was mowed; and when an issue came up with a sale of a part of the Country Club’s golf course the homeowners banded together to negotiate a compromise. No deed restriction letters, no fines, no mandatory assessments, no threats of lawsuits against homeowners and no foreclosures against homeowners for nominal fees. I have spent three years studying HOA issues and my shoulders are heavy with the knowledge and inability to try to correct what I see. I served on an HOA, served as an advisor to an 800 home HOA and serve as a city wide liaison to HOAs.
HOAs affect millions of people nationwide, but their finances and management get little oversight. In the mainstream media, HOAs get little attention. Every once in a while a news station does a story on an overzealous HOA which forecloses on a 95-year-old woman’s home for an unpaid assessment where the late fees and attorney’s fees tacked on are several times more than the actual assessment owed. HOAs are non-profits and should work with homeowners, not gouge them with fees higher than pay day loan lenders, which are for profit companies!
Every year at election time we hear politicians talk about change. No national politicians are saying, We need to get control on overzealous HOAs. No one is saying, We need to investigate why many HOAs cannot operate within their means and need to increase assessments nearly every year. No one is saying, Management companies need to make proper disclosures to HOA Boards about how they operate. The HOAs I have seen with the most struggles are those that are taken over by management companies with little input from homeowners, or those with HOA Boards that are reappointed and/or reelected year after year. HOAs are like mini-governments with less, if any, accountability. Yet, an HOA is where your vote and involvement can bring direct results.
We keep hearing the voting electorate is angry. Voters are ready to “throw the bums out of office.” Washington DC is a bad place and our local politics are not much better. Yet, I have not seen any Republican, Democrat, Tea Party, Coffee Party or Independent candidates for State wide or National office really concerned about the “Average Joe homeowner.” The likelihood is pretty high that a substantial percentage of the “Average Joes” live in HOAs and that percentage continues to rise. With HOAs, I keep wondering who protects the unsuspecting homeowners who the HOA is supposed to serve. All homeowners must be involved.
HOAs should be about community building. Board members should have mandatory orientation so that they know their roles, fiduciary responsibilities and have a resource to ask questions. HOA records should be readily available to homeowners. I have seen a management company deny a homeowner’s request for documents informing the homeowner that if they want to see the financial records of their own HOA they need to have their attorney contact the HOA attorney. Here is a rhetorical query: Why would anyone put up any barriers in sharing the financial records of a non-profit HOA with a member of that HOA?
HOAs are big business. Millions and millions of people are living in neighborhoods subject to mandatory HOAs or Condo Associations which have little, if any, oversight. A mismanaged HOA, where the common areas are not maintained or improved, can depreciate the value and marketability of everyone’s home in the neighborhood. Assessing improper fees, fines or violations to homeowners affects the community spirit. A well managed HOA could make your neighborhood one of the most desirable around. No one wants free riders. Everyone needs to pay their assessments, keep their homes looking nice and be good neighbors. The concept of HOAs is great, and only with active involvement of all homeowners can we make sure in practice that the goals of a HOA are managed well with the least amount of impact on our daily lives.
I never realized how much a double door refrigerator could impact my life and concerns about neighborhood issues. Don’t complain, be active.
Get to Know Your HOA
HOAs have direct and indirect control over your private home life and what might be your biggest investment—your home. It is not just a yearly fee. HOAs can be instrumental in representing the neighborhood’s concerns, building a community, and representing the neighborhood’s interests on a larger level whether at City Hall or in State and National issues. So, why is it that so few of us know much about the HOA and how it operates?
- Have you read your HOA governing documents—deed restrictions, articles, bylaws and architectural control regulations if any were adopted? Do you understand them?
- Do you know what contracts your HOA has in place? Do you know when the landscaping contract was last put out to bid? When the management contract was last bid?
- Are invoices being scrutinized or is the Board simply relying on management to pay all bills? Are the management invoices reviewed? Are large administrative fees being charged?
- What is being done to collect delinquent assessments from homeowners? Does your HOA have a management company that gets paid a late fee for each month a delinquent account remains delinquent?
- Does your HOA Board get copies of HOA bank statements each month to reconcile with management’s financial records? Does your HOA Board have direct access to the bank accounts? Where the money is being spent?
- Do homeowners just accept notices of deed restriction violations without questioning whether the Board is properly following the governing documents and whether the violation can legally be enforced?
- Why are there so many instances of homeowners never receiving any notice of new “policies,” which seem like secret rules?
- Why do homeowners accept the response that there just isn’t enough money when assessments are raised each year?
- Why does it take searching multiple Secretary of State records to try to figure out who really serves as the directors of some management companies and who has an ownership interest in those companies?
- Do the HOA attorneys provide proactive advice to the Board? Does the Board dismiss the HOA attorney’s advice even if all Board members have no legal acumen?
Deirdre Carey Brown is an attorney with McGinnis, Lochridge & Kilgore, LLP and HOA volunteer. She is a resident of Friendswood, serves on Friendswood City Council and welcomes everyone to consider Friendswood for their next home, business or just come out and visit Friendswood’s great family friendly restaurants.