How to fight Back?

http://www.abc15.com/dpp/money/consumer/alerts/trouble-with-your-homeowners-association-how-to-fight-back

Did you see this article on the Home Page? Melissa, it says HOAs are there to protect our property values and in extreme cases you might have to take legal action. This ought to get some discussion going!

Tim,

Totally disagree about the function of an HOA NOT including protecting property values. Why the heck would they have rules that limit commercial vehicles, lawn heights etc.?

In fact, here is a quote from one of the marketing fliers used in the past in our community:

"Come join us and build your dream home with the peace of mind that your investment is protected by our home association rules and regulations."

Tim, I do agree the article says a lot of what is echoed here, except there are certain voices always stating never sue yourself And, that HOAs are not there to protect property values. Those are both very inaccurate statements IMO given the area of the country I live in. Johnson County KS is one of the highest income per capita counties in the U.S. There is not one upscale development that does not have an HOA, and they enforce the rules, especially when a violation may negatively impact property values.

All that does is provide a certain aesthetic value (which of course is subjective to the viewer) that may or may not bring in potential buyers. In my opinion, there are too many other things that affect property values that what type of vehicle can be parked in the area overnight and that lawn was recently mowed, simply won't affect.

I will concede that to some, aesthetics have a higher value than the quality of the local schools, the job market in the area, the crime in the area, availability of medical services, etc. Mind you, it's also possible that an Association who becomes over zealous on enforcement may actually turn away potential buyers.

Tim,

Agreed about the over-zealous comment but you violated ceteris paribus. You assumed something not evident. Over-zealous is a subjective term in itself. If the rules say minimum X square footage, then enforcing that might be over-zealous to some and not to others. Most probably would want it enforced, especially if they had already built there.

Senior communities probably are not interested in schools. Aesthetics are probably important to the majority of people, if not the vast majority. In our area, developments with waterfalls or fountains at their entrances are very common, and very popular and bring a higher premium to live in.

For most people, their home is their number one investment. Most want to make sure at a minimum that nothing is done to detract from that value. I live in what was at the economy's peak, a very transient area. Lots of corporate transfers. Given 2 developments in the same general area, i.e same schools, restaurants, stores etc., ones with HOAs typically had higher over-all values given similar size, design and construction of the homes.

Yes, I never want to live in another HOA community, or at least one that is still developer controlled. But that is because I will live on acreage next, not a community. If I had to move to another community, and wanted to do everything possible to protect my investment, I would most likely move to a non-developer controlled HOA community.

That does not drive prices down because the house or neighborhood is not attractive. A nice neighborhood does not drive prices up nor keeps them the same. Prices of homes are based on REAL numbers and not attractiveness. Yes, you may be willing to pay top dollar for a house because it is attractive, but that price of the home was still set based on real numbers.

Everyone falls for that "Romantic" vision that someone will drive by their house with their new spouse and fall in love with their house. No money is limited for them to offer. Seen that in plenty of Romcoms... The reality of doing something like that is not part of a movie...

Home value/prices are based on what homes in the general location of same size and similar layout have sold for in the last 6 months. This is to include foreclosures and short sales. If it is in a HOA your bank on approval of the loan has to factor in the HOA dues. Those dues factor into approval process. You could probably buy a bigger house in a non HOA for the amount you would pay in dues.

I was a Quality Manager for a few years. People did not understand why we had process and procedures written down but many times never used or referenced. That is similar to what happens in a HOA. It has all these rules and regulations but seldom seem to be put into practice. One does NOT have a quality product because of these procedures, they have a quality product because it is built IN the product. It is because the next person in line is always your customer. Their quality or values are based on what is given to them before and then what they do with it when they have it. HOA being good is also based on what you and your neighbors do with it. Your all each other customers and you have the rules and processes in place to make your HOA a valued place not your home of value....

This is from a NY Times article:

"When calculating the value of a property, an appraiser also factors in surrounding conditions. Neighborhood nuisances like an overgrown yard or a persistent odor could in some cases bring down the value of adjacent homes by 5 to 10 percent, said Richard L. Borges II, the president of the Appraisal Institute."

Here is the address:
http://www.nytimes.com/2013/02/17/realestate/neighbors-effect-on-appraisals.html?_r=0

You can download for free from Fannie Mae or the Freddie Mac website an appraisal form. Do not have a link cause using my tab to post this but did have a copy of the form on my computer at one time. You can clearly see on the appraisal form what appraisers look for and consider. You do not see some of the things like "conditions" of neighbors or even the home itself. They do not evaluate decor or aesthetics. That is for the home inspector and the buyer to evaluate and observe. It is rather surgical than mythical....

Melissa,

If your talking about Fannie Mae Form 2075, it should be noted that this is NOT an appraisal report form. They even state this in the instructions of the form:

"Form 2075 is not an appraisal report. When Desktop Underwriter recommends Form 2075, it has judged the reasonableness of the sales price as adequate collateral for the mortgage loan. Therefore, a property appraisal is not required for the specific transaction. "

However, if you are referring to Fannie Mae Form 1004 then that is indeed the Uniform Residential Appraisal Report established by Fannie and Freddy.

I wanted to point out the difference between the two as both show up when you do an internet search for "fannie mae" "appraisal form"

Thank you. Using my small tablet to post. Think posting the actual form will eliminate some of the myth out of property value and HOA. This is what the bank looks at to decide the money or risk they will take on the home. They will not lend money on something that will lose them money. Why loan 100K on a home that if they have to own in a few years in foreclosure that maybe worth 50K? They will accept a certain amount of loss or speculation but they try to offset that by larger down payments or higher rates.

HOA membership is a factor as the health of the HOA effects cerrain loan types or packages. FHA has a PUD form just for the HOA appraisal. It is one the buyer never sees as it is between the HOA and the lender. It is used to gauge the health of the HOA and if it is a high risk. The amount of rental property, number of outstanding debt, lawsuit involvement, and foreclosure/liens are factored. It does not involve itself in rule enforcement of the HOA or aesthetics of it. This form information is then used to decide the rate of loans or if they will provide loans due to the risk.

Overall, a HOA keeping, increasing, or even decreasing your home values is just a myth. It was a sales speech used by developers to induce buyers to purchase. Realty is one can not do this by aesthetics or rules. It is a numbers game. You keep your own home value by paying your mortgage and HOA dues timely and promptly. Once you do not do that, then that is when your home value and your neighbors go down.

No you did not do anything wrong. There are more factors involved in home values than what has been posted. However, was trying to make the point of that HOA do NOT have the purpose or responsibility of keeping your home VALUES. That is an urban legend and misguidance. Paying your HOA dues and house mortgage on time and promptly is a stronger factor than applying or being in a HOA.

Which kind of proves my point by your home value loss. The reason is because of failed mortgage payments, high foreclosure rates, and short sales that pierced the home buying bubble. If people had not been either forced or could not afford their mortgages, then we would have not seen this result. Being able to keep paying your mortgage and not having a reason for your HOA to foreclose or lien has more effect than aesthetics/rules enforcement.

What we had is scrupolous home lenders offering loans to people who had no business gettinga loan. They did not provide enough education or information out there for many to understand the risk they were signing up for. I myself fell small victim of this on one of my home loans. I saw the rate and payment of it balloon up almost out of control within 6 months of getting it. It was just a small loan but could imagine if it had been a full house loan this would have made me lose my house quickly. It would have made it impossible to refinance out of it and difficult to pay it. This was what made everyone values plummet.

I simplified things yes. However, on the larger scale you can see the effect of what happens if one stops paying even their HOA dues. It is a small drop in a large pond. That lien or foreclosure has to be reported. You have enough reported then the risk grows. That risk grows, rates go up and less potential buyers. Those who can not refinance or afford their home, it sells for less money. The lesser it sales, the lesser the asking price or appraised value of the surrounding homes. You now have effected your home values and those around you. Did a HOA really keep your home value? No. It does help with attracting potential buyers and spreading costs of amenities equally amongst everyone lowering individual cost. It effects your home values by virtue of not paying into it.

Tim, I usually agree with your comments. But regarding protection of property values all of the Declarations of CC&Rs of the HOA's we manage clearly state something very similar to the following direct quote:
"Declarant hereby declares that all of the Real Property described in Exhibits A and B shall be held or sold, and conveyed subject to the following easements, restrictions, covenants, conditions and obligations which are for the purpose of protecting the value and desirability of, and which shall run with the real property and be binding on all parties having any right, title or interest in the said real property or any part thereof, their heirs, personal representatives, successors and assigns and shall inure to the benefit of each Owner thereof."

Tim,

Our CCRs state something very similar which I have shared on this site before. And, it was read by my wife and I before we purchased. I think that is very common language.

Ok Frank, you are the second person (or perhaps the first since you posted it earlier) to provide such language.

I still believe that it's an indirect influence vs. direct influence on property values. As I stated earlier, without actual data of two similar developments (one with and one without an Association) we will likely never know for sure how much, if any, protection to property value an Association provides.

In reality, unless you are selling, refinancing or using your house as collateral on a loan, the real value of the property is in the eyes of the owner and that is all that should count.

Melissa,

That's what each owner is agreeing to when they purchase with said controlling documents.

Tim, we probably will never know; however, a well managed and well run HOA, in other words ones that finds the right balance between needed enforcement and harassment, would most likely cause the professional Vegas betters to put their money on witnessing an observed increase in property values in all likelihood in the community with the well functioning HOA.

Please carefully read what Melissa is saying. The developer says this as it is a marketing tactic? Geesh, somehow people want to be protected by an HOA and will buy into it but once the developer relinquishes control peoples' priorities regarding their most valuable investment mysteriously changes? Get real! Developers use this tactic because people respond to it. Prices are a function of demand and supply, and obviously developers and real estate agents believe more attractive communities, all other things being equal, will increase demand and hence values.

And what realtor doesn't mention 'curb appeal' every day?

"What everyone else in the location paid for their similar homes".

I have about 700 adults in my community. I would say about 20 adults know what a HOA is and 10 actually know how one is run and what it is there for. 1.42% and 2.85% are not real good numbers.

The last industry data I have for California is that we have 48,864 associations in the states, with 14.3 million residents living in those communities. That's a lot of people wandering around in the desert, lost.

Never buy into an HOA/COA community ever. Regardless of who is running the show, there is a cancer of corruption and power-grabs by all those who are working to earn money from COA/HOAs. The CAI is the cancer and, in my case, has embedded themselves on all fronts, from the management company, maintenance company, law firm and even the Board with money paid by them to the CAI for "membership" that is not permitted to be used for those purposes in my corporation. We have been taken over as is the intent of the CAI. A power grab by parties without anything to lose and everything to gain. It is not a coincidence that their national lobbying effort is so strong -- they have found the "golden goose" and can fleece it without repercussion. Only the pathetic owners suffer, not the corporations. And that is why being an "owner"/"member" of an HOA/COA is not a good place to be.

In my situation, the former developer is on the Board for decades. He has been actively involved in the decision-making as to construction issues as if he were the "god" of construction, but he is far from it and has made MANY wrong decisions that have resulted in major issues and loss for owners to their personal property (their own units). This "self-declared" contractor has been in some form of power and influence since this development was under his control in the 1980s.

At present he along with four others who gained their seats by Board appointment and then curious elections control EVERYTHING. We have no votes on anything, no committees, no say in the amendments, no power, no influence on anything that takes place here -- and they even have seized the illegal right to strip owners of their right to vote in the annual election and even run. As such, they pretty much even dictate the outcome of the election. We don't even get copies of amendment changes and votes are taken in secret by phone/email in violation of the law.

My Board of "Trustees" (insert laugh) also have exempted themselves from their removal (a power given to the owners and taken away by their sole discretion) and have (by amendment) decided to leave it to their own discretion to remove themselves -- as well as their own discretion to determine their own good standing in terms of their payment requirements that they mandate (by lien and lawsuits) on others. Dictators. And the NJ Legislature created laws with no governing body to enforce any of the laws which stop this insanity. It's a lawless state within a lawless state.

Without question, I know the governing documents, the law, my rights. But when you have people who seek to seize control by any means necessary and for self-serving reasons, you have been relegated to a serf. And Lord knows, there is no one acting "under color of law" who will step in to stop them because they all consider it a "civil matter." And direct you to sue... where judges have an absolute bias towards the corporations over the owners (owners are serfs, judges are kings, corporations are lords).

In truth, I will never understand how I pay property taxes to the state, county and town -- and yet all my rights as a land owner are controlled by five people who dictate everything having to do with my land and property. In listening to oral arguments in the Twin Rivers case, the NJ Supreme Court was so flippant that they basically made the same idiotic argument of "why not move?" As if doing so was like going food shopping. Idiots with no connection to the people and no understanding of the abuses suffered. The reality is the issue should be, "why don't they have rights if they own land in this state?" But the arrogance is too great. Power can never give up power. Judges like the lawyers to be the puppet masters of HOA/COAs -- and they are. No doubt.

Honestly, my friend. Never buy into a COA/HOA. I try to educate everyone I can to steer clear of them. Never buy into a COA/HOA ever, my friend. Biggest mistake I ever made. And I will NEVER make it again.

And clearly, since they will not serve the "best interest" of this association, I -- as a member - have the right to protect my interest. And I -- as a member -- will continue to sue until my investment is protected. If it's the only option I have, it's the option I will take.

(Oh yeah, my corporation has violated that law too by not having ADR as required by law. Another violation of the law... Another, another, another... and no one does anything about it.)

No. We aren't neighbors. But we are equal victims. Ownerships in HOA/COA provides common bonds. The Community Associations Institute (with no standing or investment in corporations) have bonded lawyers, contractors, insurance companies, engineering firms, maintenance companies, lending institutions, etc. as one happy family in which they (again, HAVING NO STANDING OR INVESTMENT RIGHTS) to act as one happy, large, monopolizing entity to devoid COA/HOAs of competitive bidding and diversity. The CAI, with their money, have become the voice of HOA/COAs via lobbying efforts that SERVE THEIR WALLETS -- and the filth in DC and elsewhere listen to them as if they have any say. They do not speak for owners -- they speak for their wallets. And the FTC will not look into their actions at all. Why? Start singing... "Lawyers, lawyers who need money, are the leeches people in the world...."

It would be funny if it weren't true.

With this said, we -- the owners -- are bonded in a combined disaster known as ownership without rights enhanced with legalized extortion. And I'm sorry for what you're going through too. We will all remain sorry so long as we have to endure the mistake of making the investment we made in that we have put our faith that there are laws in the country. But clearly... not when you live as serfs. We gave up all our rights... (and yet still pay state, county, local taxes!)...

A new posting about FHA approvals and protection for the fed/banks is going up in a few minutes by yours truly. Read it. You tell me if the government is not totally involved in these COA/HOA housing scams which profit only the scammers... just like they were with the mortgage meltdown... savings and loan scandal... oh, the list can go on. No chance at relief when the "head of the snake" is being lobbied by those who want to continue leech, pillage and pilfer off hard-working home owners who don't have the time, energy, strength or resources to fight (or pay politicians to fight for their interests, like the CAI has).

Tim why not report these posts rather than project your interpretation upon us?

I don't see any violation.

You disagree. Fine.

Rather than assume you are correct why not let the site's owner/moderator decide?

Tim, I had a feeling you had a military background. You seem to stay very on point. And I appreciate that. And I appreciate your service.

If my comments are filled with "doom and gloom," they are -- in fact -- just comments. If I am asked a specific question, I do answer it. I thought my posting on the FHA issue was pretty on point. But then again, you are a different person than I. And I have to respect your style. Keep your posts coming. They are great.

Chris and Tim,

Good job keeping a disagreement civil!

Tim,

I usually find myself in agreement with you, but reporting this to the mods seems to be uncalled for IMO. First, are you upset that this generated more discussion than you initially predicted? Chris's comments were in line with the theme of the article IMO. Too many of us have experienced similar tactics Chris expressed-an arrogant abuse of power. Calling it out is a great way to fight back!

I like hearing and reading about these types of experiences. It is good that more and more of them become public. The goal being to stop these behaviors without needing litigation. If enough uproar continues, maybe more states will enact protective measures like not giving developers unlimited control in perpetuity? Also, some non-developer controlled boards need to be reigned in as well and I for one am tired of the "move", "vote them out" etc. advice.

If HOAs are not there to protect your property, then they certainly should not be there to harass members the Board decides they don't like or who ask questions about how their money is being spent? If we can stop bullying behavior in our schools, we certainly should as a society be able to stop it in our communities.

Thank you!

Interesting conversation. I did an internet search on PUD form and found a few, including one from my own mortgage company – here’s the link if you want to take a look:

https://www.usbank.com/cgi_w/cfm/personal/products_and_services/mortgages/pdf/C12_PUD_Questionnaire.pdf

This one from Stephens Management Company asks about special assessments and for the number of owners who are 30 days or more delinquent in dues.

(http://www.stephensmgmt.com/stephensmgmt/document/condominiumpud_questionnaire.pdf)

And this one from SunTrust Mortgage asks if the association has any pending litigation with anyone for any reason and whether the master association covers the unit interior or “betterments and improvements made to the units.”

https://old.stmpartners.com/manual/bro/forms/bro1438.pdf)

I don’t know what other banks ask for on their PUD forms, but what I find interesting about these is that none of these questions address the appearance of the community. There are questions about mandatory assessments, if the community is developer or homeowner controlled, and if the association’s budget include a replacement reserve fund – plus they have to provide a copy of the current budget and most recent income statement and balance sheet.
I’ve always said property values are subjective and there are far too many variables that come into play, most that the HOA can’t control. It’s better to take care of the things you can control – maintain the property, enforce the rules consistently and fairly, and take steps to ensure the financial stability of the community – and let the market take care of itself. If everything is done property (and the stars are in proper alignment?) homeowners in these communities will be able to sell at a higher price than what they paid. The key is the homeowners (not just the Board) all working together to make it happen.

Chris,

I found some of your points enlightening. Thanks for posting.

Well, I think that that is the difference between our concerns.

I know I can affect change within my own Association.
I'm happy with the laws we have in VA and I would not want the laws of FL or CA to be included in the VA laws.

I can not do anything to directly affect change in your Association as I am not a member of it and I do not reside in your state (hence I doubt your State legislatures would listen to me). Additionally, I personally don't want to expend energy to make changes on a large scale (as I've spent enough of my energy just making changes within my own Association). However, I can offer suggestions and explain how I was able to make the changes within my own Association so you might be able to use that information to affect change in yours.

As I explained earlier, it's typically easier to resolve issues at the lowest level possible. Although it is possible to have changes at the macro level (State/Federal), realistically, it's easier for members to make changes within their own Association than to influence changes to State or Federal laws.

Frank,

Since your desire is to make changes at the macro level, what have you done to try and make that happen?

As for the stories - lets be fair, only the negative stories are being told as nobody wants to read about the Association that doesn't have issues. However, members of any Association may take what they learn from those stories and take steps within their own Association so the same issue doesn't happen to them.

Tim

Well, we will likely have to agree to disagree.

Considering there over 300,000 HOA/COAs in the U.S. and the number of stories, I really don't think there is "a ton of problems."

For example: The 2013 annual reportfrom the VA Office of the Common Interest Community Ombudsman reports only 268 complaints. The 2012 report had 311 complaints (reports from 2009-13 are available from the link I provided). 268 complaints would only be 14% of the 1900 HOA/COAs just in Fairfax County (northern VA). Additionally, my number of over 1900 doesn't include time shares which are included in the number of complaints. I suspect that the percentage of complaints is around 5% when you look at the number of Assocaitions in VA.


Considering that you want to affect change at the macro level (State/Federal) vs. the micro level (Association) I would expect that you would want as many to know about the specifics as possible since the support needed to affect change at a macro level is far greater than at the Assocaition level. However, the main thing is that you actually have specifics. Otherwise, you would be bringing issues to light and allowing others to come up with a way to deal with those issues. Often, when that happens, the actual statute (or amendment/rule/procedure if working at the micro level) is either too weak or too burdensome.

Frank I wish you luck in affecting changes at the macro level.

I'll stick with affecting changes at the micro level, as this seems to work for me.

And Tim, if you were only working on a micro level you would not be posting here, just reading for information that could help you with YOUR HOA. You are helping others, just like that pebble in a pond, your ripples are spreading