HOA’s Harm
Dishonesty: HOA Problem #1
Hiding Truths From Buyers/Owners
From the “public housing policy”, “consumer rights” and “real estate disclosure” standpoints, this is Problem #1 with HOA’s. It is certainly true that there are some HOA’s that do a good job of meeting many of the expectations the Industry purports to attain. However, the majority does not, as clearly evidenced by the plethora of media stories and websites devoted to HOA homeowner complaints Nationwide. Here’s What HOA Owners Experience... Realities Hidden by the HOA-Industry: Development/Construction *Sub-standard; defects *Frequent insider dealing *Local governments relieved of duty Infrastructure development/maintenance *Land/housing policy development/regulation Fiscal/Accounting *Financial instability - hidden losses, acctg. irregularities *High rates of assessment delinquencies *Failing golf courses that dominate finances Management *Functionality depends on how well HOA is run *Minimal accountability mechanisms *Lack of amenity development - changing needs, e.g., youth, families *Corruption *Insider dealings, nepotism, cronyism, theft *Inadequate fire/flood prevention measurers *Insufficient Long-Term, Strategic Planning *Resistance to “outside” ideas *High GM turn-over *Essential documents often “unavailable” (e.g., cost, can’t find, delays) Governance *Election irregularities - Ballot chain-of-custody ignored, low turn-out, director-recalls *High director turn-over *Low board productivity *Committee recommendations ignored *Low member involvement *Controlled by influential “VIP” cliques *Not representative of membership *Low board/admin. transparency *“Corporate Sovereignty” often invoked (over members-best-interests) Environmental Control (CC&R, Rule Enforcement) – *Often inconsistent and ineffective *Many non-compliant properties, continuously Community Relations *Poor Communication - Board-to-members; management-to-members *Bully Sub-culture *Member survey(s) ignored *Low-levels of racial-ethnic diversity *Verbal/physical abuse of members *Stifling of dissent *Dispute resolution un/under-developed or biased Maintenance/Upkeep (Amenities, Common areas) – *Often lacking, sub-standard *“Privacy”, “security” compromised Frequent inoperable gates Uncontrolled means of entry Contracting/Vendors - *Frequent insider dealing *Sub-standard performance without monitoring External Regulation *Minimal regulation by any governmental agencies at any level *Members pay property tax PLUS HOA “dues” History *HOA’s began 1950-60’s to eliminate “undesirables” *Most HOA’s have a history of at least 2 or more of the above BEST HOA Owner Satisfaction Review & Data HOA-Industry ….. DISHONEST CLAIMS: “Benefit claims” fall into four categories: 1. Highly dependent upon how well the HOA is managed 2. Totally False 3. Half-Truths, and/or 4. Just as true of traditional municipalities Development/Construction · Efficient land use - limits urban sprawl · Homes more affordable for low/moderate-income families Fiscal/Accounting · Effective collection of assessments · “Fiduciary” obligation = Association assets and homes better protected . HOA income used prudently and productively . Dues collected commensurate with member-service-level · Invested funds placed wisely Management - · Property value protected · More/better amenities than other communities · Everyone pays fair-share · Promotes community-sense-of-responsibility · Age-restricted communities · Pet-friendly as well as No-Pet HOA’s · Fees used to build and maintain community areas · “Privacy”, “Security” - on-site manager, gate personnel, or entry gates · Managers foster community spirit · Only reputable consultants hired · Long-Term planning developed · Amenities keep pace with changing needs/desires · Governing documents, association information available on website · Maintain community in the condition in which it was built Governance · Leaders live in the community - better understand needs · Promote higher level of civic involvement (vs. municipalities) · Concerns are addressed by board, management team · Community volunteers work diligently in-the-best-interest members · Rules & regulations representative of community’s shared values/interests · Board members are elected by homeowners: Homeowners can influence decision-makers · Governing documents clearly outline allocation, usage of funds and, obligations of the board and residents Environmental Control (CC&R, Rule Enforcement) – · Preserve the nature of the community · Protection against neighborhood degradation · Effective means to maintain community standards · Deter nuisance activity and promote conformity · Nicer Neighborhoods: · Rules are enforced · Homes look more upscale · NO eyesores · Gate around the community · Security monitoring · More peaceful, safe, and beautiful neighborhoods · Architectural controls preserves original community design · Shared neighborhood values: Promotes harmony among people Community Relations · Homeowners have a vested interest in reporting and correcting problems · Offers a sense of community · Promotes community bonding and communication among neighbors · Increased community pride · Associations inherently bringing people together · HOA addresses problems . Problems minimized due to penalties for breaking rules · Community activities and gatherings help bring neighbors closer · Attracts desirable residents Maintenance/Upkeep · Provide a safe, well-maintained living environment · Maintains all amenities · Typically do an outstanding job of maintaining amenities · Community common areas are well maintained · Trash pickup, road maintenance, storm water management, snow removal, etc. · Basic Maintenance Included (condos) · Plumbing, landscaping, and snow removal (condos) · Provide pest control - no scruffy dogs around, raccoons in garbage, or termites · Exterior and grounds maintenance (condos) · Dues cover the cost common areas and also the exteriors of each building (condos) Contracting/Vendors - · Lawns/landscape well maintained by third-party contract External Regulation · Less need for local government oversight of housing conditions · Often partner with municipal code compliance departments · Members are not at the mercy of the local municipality · Relieves the town’s tax burden since the entire community is self-sustained
HOA’s Harm
Dishonesty: HOA Problem #1
Hiding Truths From Buyers/Owners
From the “public housing policy”, “consumer rights” and “real estate disclosure” standpoints, this is Problem #1 with HOA’s. It is certainly true that there are some HOA’s that do a good job of meeting many of the expectations the Industry purports to attain. However, the majority does not, as clearly evidenced by the plethora of media stories and websites devoted to HOA homeowner complaints Nationwide. Here’s What HOA Owners Experience... Realities Hidden by the HOA-Industry: Development/Construction *Sub-standard; defects *Frequent insider dealing *Local governments relieved of duty Infrastructure development/maintenance *Land/housing policy development/regulation Fiscal/Accounting *Financial instability - hidden losses, acctg. irregularities *High rates of assessment delinquencies *Failing golf courses that dominate finances Management *Functionality depends on how well HOA is run *Minimal accountability mechanisms *Lack of amenity development - changing needs, e.g., youth, families *Corruption *Insider dealings, nepotism, cronyism, theft *Inadequate fire/flood prevention measurers *Insufficient Long-Term, Strategic Planning *Resistance to “outside” ideas *High GM turn-over *Essential documents often “unavailable” (e.g., cost, can’t find, delays) Governance *Election irregularities - Ballot chain-of-custody ignored, low turn-out, director-recalls *High director turn-over *Low board productivity *Committee recommendations ignored *Low member involvement *Controlled by influential “VIP” cliques *Not representative of membership *Low board/admin. transparency *“Corporate Sovereignty” often invoked (over members-best-interests) Environmental Control (CC&R, Rule Enforcement) – *Often inconsistent and ineffective *Many non-compliant properties, continuously Community Relations *Poor Communication - Board-to-members; management-to-members *Bully Sub-culture *Member survey(s) ignored *Low-levels of racial-ethnic diversity *Verbal/physical abuse of members *Stifling of dissent *Dispute resolution un/under-developed or biased Maintenance/Upkeep (Amenities, Common areas) – *Often lacking, sub-standard *“Privacy”, “security” compromised Frequent inoperable gates Uncontrolled means of entry Contracting/Vendors - *Frequent insider dealing *Sub-standard performance without monitoring External Regulation *Minimal regulation by any governmental agencies at any level *Members pay property tax PLUS HOA “dues” History *HOA’s began 1950-60’s to eliminate “undesirables” *Most HOA’s have a history of at least 2 or more of the above BEST HOA Owner Satisfaction Review & Data HOA-Industry ….. DISHONEST CLAIMS: “Benefit claims” fall into four categories: 1. Highly dependent upon how well the HOA is managed 2. Totally False 3. Half-Truths, and/or 4. Just as true of traditional municipalities Development/Construction · Efficient land use - limits urban sprawl · Homes more affordable for low/moderate-income families Fiscal/Accounting · Effective collection of assessments · “Fiduciary” obligation = Association assets and homes better protected . HOA income used prudently and productively . Dues collected commensurate with member-service-level · Invested funds placed wisely Management - · Property value protected · More/better amenities than other communities · Everyone pays fair-share · Promotes community-sense-of-responsibility · Age-restricted communities · Pet-friendly as well as No-Pet HOA’s · Fees used to build and maintain community areas · “Privacy”, “Security” - on-site manager, gate personnel, or entry gates · Managers foster community spirit · Only reputable consultants hired · Long-Term planning developed · Amenities keep pace with changing needs/desires · Governing documents, association information available on website · Maintain community in the condition in which it was built Governance · Leaders live in the community - better understand needs · Promote higher level of civic involvement (vs. municipalities) · Concerns are addressed by board, management team · Community volunteers work diligently in-the-best-interest members · Rules & regulations representative of community’s shared values/interests · Board members are elected by homeowners: Homeowners can influence decision-makers · Governing documents clearly outline allocation, usage of funds and, obligations of the board and residents Environmental Control (CC&R, Rule Enforcement) – · Preserve the nature of the community · Protection against neighborhood degradation · Effective means to maintain community standards · Deter nuisance activity and promote conformity · Nicer Neighborhoods: · Rules are enforced · Homes look more upscale · NO eyesores · Gate around the community · Security monitoring · More peaceful, safe, and beautiful neighborhoods · Architectural controls preserves original community design · Shared neighborhood values: Promotes harmony among people Community Relations · Homeowners have a vested interest in reporting and correcting problems · Offers a sense of community · Promotes community bonding and communication among neighbors · Increased community pride · Associations inherently bringing people together · HOA addresses problems . Problems minimized due to penalties for breaking rules · Community activities and gatherings help bring neighbors closer · Attracts desirable residents Maintenance/Upkeep · Provide a safe, well-maintained living environment · Maintains all amenities · Typically do an outstanding job of maintaining amenities · Community common areas are well maintained · Trash pickup, road maintenance, storm water management, snow removal, etc. · Basic Maintenance Included (condos) · Plumbing, landscaping, and snow removal (condos) · Provide pest control - no scruffy dogs around, raccoons in garbage, or termites · Exterior and grounds maintenance (condos) · Dues cover the cost common areas and also the exteriors of each building (condos) Contracting/Vendors - · Lawns/landscape well maintained by third-party contract External Regulation · Less need for local government oversight of housing conditions · Often partner with municipal code compliance departments · Members are not at the mercy of the local municipality · Relieves the town’s tax burden since the entire community is self-sustained BOTTOM LINE: HOA’s are severely flawed quasi-governments that, DO NOT primarily meet the needs of member/owners. BY DESIGN, they primarily meet the needs of - Developers Contractors RE agents HOA-Specialty Lawyers Boards The HOA Industry Local municipal, county and state governments Politicians, and HOA “VIP” members