What was your biggest HOA mistake?

Just out of curiosity, what is the BIGGEST mistake your HOA Board has ever made? As in the biggest financial and/or legal repercussions.

Neighborhood A:

There was a neighborhood made up of 12 subdivisions. Each capable of creating their own HOA. Only 2 did. One of them decided it was the association for every section based on a letter they had from the developer back in the 80s granting them authority over the other sections while the developer was still involved. The board also changed their articles of incorporation to give them power over every other section.

Nearly 15 years some individuals got elected to the board of the HOA that the entire neighborhood believed was the rightful HOA and they decided it was time to start enforcing what little C&Rs we had and that the needed to do more all for property values. They got a new attorney and started sending out enforcement letters, they started pushing for new things, like a new perimeter wall or purchasing land to make a clubhouse. When homeowners rejected their plans they used a workaround, going to the county and getting a MSBU to tax homeowners for the projects they wanted (the county only needed a majority of returned ballots so the HOA got their wall and speed humps with only 20% approval).

The HOA then decided it was going to rewrite the C&Rs for every section, making them stricter and granting them sole control over the properties. The more controversial aspects were that the board can create "mandatory maintenance assessments" at any time they wanted (essentially special assessments) that they could place on every homeowner - even non-members. They did this buy collecting joinder and consent forms from only 51% of the homeowners in each section over a period of 3 years. Their were a few problems with this.

*First, since they collected the signatures over 3 years some of those homeowners moved away making their 51% in reality much less. They also misused their notary stamps and were stamping their own documents in the process.

*Secondly, they were converting negative covenants to positive covenants, which from my understanding requires 100% approval.

*The documents that they did file with the county after they got 51% stated that they converted even sections that did not approve the new covenants.

*They claimed that their rewrite kept the neighborhood voluntary so they did not fit the definition of a HOA per Florida law and so they did not have to abide by their covenants - something their attorney called a "gray area" of the law and that it would stick as long as nobody challenged it.

*They then used these new covenants to demand mandatory payments from some homeowners (other non-amended sections did not have to pay) or face legal action and they started to threaten collections. They also decided to press their claim as the Architectural Control Committee even on sections that did not amend, such as suing a homeowner who installed a metal roof after a hurricane.

*The original C&Rs of every other section apart from their own had a covenant granting a local philanthropic organization sole authority to amend the covenants. This clause was placed in the original documents because when the developer went bankrupt another developer stepped into place and the organization wanted to make sure development was protected. When contacted they viewed the actions of the HOA as in violation but since they were not being directly affected they were not going to get involved.

*And perhaps the biggest issue was that due to MRTA the covenants on the lots they were trying to annex expired, meaning that when they filed a document with the county placing new covenants on properties they had no legal right to, they clouded every homeowner's title.

When they started to do all this people raised questions. I attended a meeting where a homeowner who was a lawyer tried raising some of these issues and the board refused to let her speak. The president just banged his gavel saying he didn't want her to speak and then proceeded to let everyone else ask questions. Another homeowner warned them of the legal mess they were creating and attempted to offer solutions. When the HOA did not listen, that homeowner decided to sue, along with every homeowner who signed the document clouding his title.

As more homeowners became aware and started to ask questions the board decided to ban all non-members, delinquent members, and members who did not become in "good standing" more then 30 days before the meeting (preventing someone from trying to pay at the last minute to attend). They also started holding them in private locations when a lot of people showed up to their last open meeting. They tried to hold it in a real estate office and a neighboring gated community's clubhouse. When those places were faced with legal action from a resident of our subdivision the board rented a conference room at The Holiday Inn and would call up only a few people (presumably those in good standing) and tell them where the meetings were held.

During these meetings the board insisted that their attorney will represent every homeowner being sued, claimed that the lawsuit was over a disputed $100 assessment, and that homeowners shouldn't worry about a thing. They also would lie claiming to have common property that needed maintaining and if homeowners didn't pay their "fair share" the neighborhood would fall apart (they held no property at all). They also lied as to why they were holding secret meetings.

The HOA's solution to the legal challenge was to drag their feet, filing motion after motion and delaying discovery, until the homeowner suing would run out of money. The attorney would then sue for legal fees making (the attorney actually threatened my family providing us with irrelevant court cases and stating that they will win against us and force us to pay thousands if we continued to challenge). The problem with this was that the homeowner suing had the resources to survive a war of attrition.

As the court case progressed it was determined that the HOA lacked any authority to act ever since the developer exited the neighborhood. That made their agreement with the developer no longer enforceable. The judge also ruled that the covenants did in fact expire and not only did the HOA lack authority to do anything out of their own section, they lacked the authority to essentially place new covenants on a property. Their attorney made such horrible arguments, citing mobile home and condominium laws and cases while insisting they were not really a HOA (just in name only) and then gave the Tinkerbell defense - homeowners believed them to be legal therefor they were.

In the end the association shut its doors, the board members and their attorney face personal liability suits. Because of the HOA's actions, not only did they go bust, 50 homeowners are now facing lawsuits for their ignorance (they were offered the ability to settle and have their name removed as a defendant but only one accepted that deal).The legal proceedings are still occurring but according to the board at the last meeting they were running out of money and membership dropped off the map once they learned the homeowner won their lawsuit.

Basically, since the HOA shopped around for an attorney until they got the opinion they wanted, and then refused to listen to any and all outside advice and go against the majority they destroyed a perfectly good association.

So basically, the BIGGEST mistake both neighborhoods made was hiring a horrible attorney and not seeking a second opinion or listening to opposing viewpoints when something questionable popped up regarding something serious. While I wouldn't go running for a second opinion on every decision, when an attorney sells their actions as a legal "gray area" then you know something is up.

This attorney attempted to do this down the street in another neighborhood (he had done this all across Central Florida) and they were wise enough to decline his services. They wanted the same thing but were not willing to skirt the law to get it.

I wouldn't necessarily say power hungry. I do not doubt these people became board members with good intentions wanting to improve upon the neighborhood. I think the problem lied with them obtaining office and then refusing to listen beyond their inner circle. The board became a sort of echo chamber and groupthink set in. Of course then a lawyer on top of ignorance doesn't really help.

I think that Boards that try to force their will upon others using questionable legal tactics might constitute power hungry but that's just my own perception. As they say, the road to Hell is paved with good intentions

Another mistake I could see as being big is mismanagement of funds.

For instance, at the last meeting the HOA held they were discussing their budget. They were trying to determine which expenditures got a higher priority. The Treasurer (of all people) argued it was a wise decision for the board to prepay for the year pest control for the year on all areas they maintained, which amounted for less then a quarter acre worth of land (a couple entrance way planters and the cul-de-sac islands they took care of). The reasoning was that they got a 10% discount. Ignoring the fact that they were already in dire straits and that they were paying over $1000 for this service which was roughly 1/15th of their budget.

They also created new expenditures over the years like installing electric and water meters for the cul-de-sacs and entrances. Also by banning homeowners from their meetings at the free conference room at the library they now had to pay for a meeting location for membership meetings.

Nobody was willing to make a budgetary sacrifice. When they discussed shutting off the water the Treasure got mad that "her" flowers would die. When they discussed shortening hours for entrance light operation the director in charge of security feared the neighborhood would turn into some gang-ridden cesspool. They paid a lawn maintenance guy to mow what they called their "common property," which in reality was county property that the county would maintain if the HOA ended their use agreement. Everybody wanted something but nobody was willing to give up something.
They also refused to read the writing on the wall and when they made their budget they anticipated increased membership and included the properties in the contested areas. That more then doubled their budget.

I personally think this was due to nobody on the board really having a management background. Everyone joined the board wanting to do something but they did not have the skill set to make it happen.

The board more or less added things to justify their conversion attempts. There were no common properties or things that required maintenance before. They pushed to make what they called a "mandatory maintenance association" and then proceeded to add things. Then they would go to the homeowners and say "Look! We have all these things that require maintenance and we need you to pay your fair share!"

They also secretly tried to acquire land to build a clubhouse. That only came out in discovery along with their admission that they held no common property. They then went to the membership and... lied! They told everyone they had common property and as proof they showed pictures of the things they created, like the flowers in the county right-of-way.

My neighborhood had a lot of big mistakes. lol

We have had a couple of blunders; one was when we switched management companies and the old company would not hand over any documents to the new company until their 30 day notice was expired. During that time and the months after until the new company could get all the accounts in order, we had unpaid and late paid bills, and no late dues notices being sent. This could have been avoided had we board members known how to log into online banking and been able to pay the bills online and even gotten into the lock box.

The other thing was last year's president (I have been president for multiple years in the past, not last year, and now I am president again) did some bad things with our budget. We had signed on with a new contract with our cable provider and got a sign on bonus. We agreed to hold the bonus in a reserve account to apply yearly to the cable increases. Also we have houses that we hold the title to (we foreclosed our liens) and we rent out. Last year's president used the cable bonus and rental income and additional income in addition to our dues income, and then raised expenditures that same amount. The problem with this was that we were applying the rental income to pay the current dues, the owed dues, insurance and a small maintenance account on the rental houses, and the cable bonus was going directly to offset decreases. So since we did not really properly fund our operating and reserve accounts, we finally ran out of money this month and had to dip into our investments (we have savings thank goodness). I equate her padding the budget this way to inexperience although she fought me tooth and nail on the issues.

Accepting management of a townhome HOA without first becoming aware of all the maintenance problems in the common area and the exterior of the 16 building (89 units) involved without adequate reserves to correct them. And now that we know about the severe maintenance problems involved we feel an obligation to help them keep their nose above water.

"accepting management" relates to the property management company we own.