Sad state of affairs

440 single family homes in our almost 20 yr old HOA. Since its inception, no CC&Rs have been enforced, and some homes (approx. 10 to 20) have become eye sores - abandoned, broken down cars in driveways, refrigerator on front porch, trash scattered around, etc. Homeowner apathy is rampant. Dues are very low - $95 a year. Approx. 20% in arrears. We almost fell into receivership last summer.

Fast forward to today. I am on the Board along with three others. President resigned recently due to personality conflict with myself and another Board member. We are trying our best to set this HOA on the right path. After we went door-to-door last summer getting proxies for our Special Meeting so we can elect a new Board, we achieved quorum at the meeting and were duly elected. Once in, we discovered there has been NO record keeping in nearly 20 years. No arch. request approvals, very little financial info from the last year, no meeting minutes (makes sense since there were no meetings occurring), etc.

We, as the new Board, have hired a competent HOA attorney, hold monthly Board meetings which are open to the members, held an annual meeting, create/deliver door-to-door monthly newsletters free of charge to the homeowners (generous member prints at work for free), rewrote our PM contract saving thousands of dollars each year, and have done many other tasks that have been neglected over the years.

My question is this: appox. 99% of homeowners are in violation of our CC&Rs in one way or another, namely weeds in lawn. Clearly there are more serious violators (see first paragraph). One homeowner, sandwiched between two blighted properties, emailed us complaining that she is trying to sell her home, but buyers are turned off by the way her neighbors aren't keeping up their properties. So, she wants the HOA to act immediately to fix the CC&R violations.

I feel for her. In fact, I live on the same street she does. However, if we go after one home for trash in the yard (CC&R violation), it is my understanding we would need to go after ALL homes with trash in yard or we would be selectively enforcing the CC&R on one homeowner. If we go after all of them, say 6 homes, it would potentially bankrupt the HOA with attorney fees.

I'm at a loss of what to do. Can my HOA be saved, or are we too far gone?

The great French Marshall Lyautey once asked his gardener to plant a tree. The gardener objected that the tree was slow growing and would not reach maturity for 100 years. The Marshall replied, 'In that case, there is no time to lose; plant it this afternoon!' -- President Kennedy

Set up a rough schedule for the following actioins. Be systematic and automaton-like in executing these actions. This may help you to avoid feeling overwhelmed.

If your HOA does not have a system of fines, get the HOA attorney to prepare one. Have the Board ratify and publicize it per the attorney's directions.

How much money, if any, is in your HOA's reserve fund? If there is money in the reserve fund, use it to hire the appropriate services (towing, landscaping etc.) to clean up the yards. Then bill the owners appropriately. Place liens on homes as the fines accumulate on them, pursuant to your HOA's governing documents and the advice of counsel.

Do not hesitate to increase the dues. The Board probably has a duty to do so, so it can enforce the covenants.

After a year or so, the Board should hire an attorney specialized in collections, to be used with those who are $7000 or more in arrears.

Unfortunately, we are unable to fine homeowners in the state of Indiana for CC&R violations. Thus, we do not have a fine schedule.

Per our attorney, he suggested the following for a CC&R violation:
1. Send letter from HOA
2. Send letter from attorney
3. Take to small claims court to get injunction against homeowner (this is the step that would bankrupt the HOA)

This may be conjecture, but I have a firm belief that those who are in serious violation of the CC&Rs (and aren't event paying the $95 annual dues) will laugh at any letter being sent to them, whether it be from the HOA or attorney.

Adam,
How can anything ever get enforced if you can not fine for violations? Seems like you are going to a gun fight without a gun.

Umm, nope, HOA fines still aren't allowed in Indiana - our HOA attorney told us there's state case law that says HOAs can't issue them because they aren't government agencies or some such. Once upon a time, I knew the case citation, but your attorney can probably tell you what it is. In any case, you could try to set a fine schedule, but you run the risk of somebody suing and winning.

Sadly, Indiana is still behind the times when it comes to a lot of HOA law. The law AugustinD is referring to was actually passed in 2009 and applies to those established after July 1, 2009. Older communities can vote to be governed by the legislation and some of the amendments that have been issued since then do apply to everyone. The 2015 stuff addressed the problem with people buying into HOA communities and not knowing there are CCRs, Bylaws and other stuff they must comply with. I believe buyers must also be told of any unpaid assessments and there's language about a grievance process for things like...CCR enforcement.

There are a few other things your attorney can tell you about - or you can check with the central Indiana chapter of CAI which has done seminars providing overviews of this stuff. Go to the national CAI website and follow the links. I live in central Indiana, so that's the chapter I'm most familiar with. I don't recall your saying where your community is located, so if it's not central Indiana, I don't know what's going on in the northern or southern parts of the state. In one of the last central Indiana chapter seminars I attended before leaving my board, we were told they were trying to educate state legislators on the need to give HOAs the authority to fine. Don't know how that's going because the legislature is consumed with other stuff (sometimes I think as a group they're not very bright - but at least we may finally get Sunday alcohol sales!)

Now, then to your question of how to enforce CCRs after years of nothing - this is yet another issue that your board will not fix overnight, but it is doable. I think the key is picking your battles - some violations are likely more irritating than others, so you need to determine what those are, start your enforcement from there. CCR enforcement is something everyone wants until they get a note in the mail and then they yell and scream about "it's MY house, dagnabit!" threaten to sue, overthrow the board, blah, blah blah.

We used to do annual surveys where we would ask people what was the most annoying violation they saw in the community, so you can start there. The people who care will let you know and possibly the ones who are doing it will also let you know what honks them off the most. Prioritize them and then advise the community that starting with these issues there will be more CCR enforcement. Remind everyone what CCRs are for - it's not about nitpicking or dictating everything, but trying to ensure the community remains clean, safe and attractive so those property values they care so much about will continue to increase.

With your attorney's help, you can consider what procedures are needed, starting from the polite letter to the nastygram and finally to legal action. In this, you will need to decide early how far you want to push because some people will push back. In fact, an attorney from the firm that represents my community once said in a CAI seminar that in the beginning there WILL be some pushback and it will get ugly. The board has to have the stomach to tough it out for a few years (yep, he said maybe 2 or 3 years) but it can work once people understand the board isn't intimidated. Personally, I'd recommend some sort of alternative dispute resolution process to be used as the last step before duking it out in court, and I might even determine what's worth going to court over (maybe you can live with a pink house in the middle of the subdivision).

PS - our former attorney once told us there's a way around the fines issue. I think it has to do with what you call them, when they're assessed and why, such as processing fees for sending out letters.

First get the perception of "The HOA is responsible for my Home VALUE". It isn't. It's all about making homes more "ATTRACTIVE" to potential buyers. Which then may increase desire for the homes making them sell at desired prices. Once you get over this perception, then things can come together a bit more. Meaning people are going to realize the value of having attractive homes/property not just for themselves but those around them.

Our HOA we never fined. Our documents allowed us to enter the property and correct the violation. We then could send the owner the bill for that correction. If they did not pay that bill, then we could lien them for it. Of course, we had to give them the proper time limit or options to do the fix themselves. However, with the knowledge that if we had to do it, there was no choices and will get a lien if don't pay. Usually people took action themselves after notified.

It is important to also write up the violations with exact references in the CC&R's they are violating. This addresses many issues. Like finding out they are in a HOA. As dumb as that may seem, many don't even know it. Another is that they don't even own a copy of the rules. Something can acquire through the courthouse. The HOA can provide them but can charge for copies if need be.

If it were me, I would start out simple. Like making people aware of the HOA existence/responsibilities. Bring a copy of the rules to each and every meeting. Reference the rules when asked questions. Don't have to answer right away. Just say you need to reference the rules before providing the answer. Send out letters to everyone with the new intent of the HOA. Those in violation send out a preliminary notice with reference to the rules in violation. Just to see the reaction.

We also organized a "Volunteer day". Where we had everyone come out to volunteer on small clean up projects. Like cleaning up the pool area, clubhouse, or the front entrance area. Get people interested in their neighborhood and options to do something. Put the energy of anger/frustration into something positive like cleaning and joining in.

May I add that suing to correct a violation is mostly a waste of time, energy, and money. A HOA as it being "incorporated" has to be represented in court by a lawyer or a designated representative of the HOA. (Of course most HOA's are going to hire a lawyer over "read it on the internet somewhere" volunteer). This does include small claims court.

The purpose of a lawsuit is to get a "judgement". Which is also what a lien is. The difference being that a lien you can't sell the property until it's paid. A court judgement, the owner can simply walk away without paying or even correcting. Why? The HOA doesn't have the right to the owner's social security number. So that makes it harder for certain options of garnishment or credit reporting. Plus it's like up to a 7 years has to be enforced. Which then it has to be renewed or that person is long gone. The HOA is most likely not even going to remember or have the resources to pursue.

So with us, the ability to fix the violation and send the owner the bill worked. We also were set up where you owned the house and the lot it sat on. Everything else outside of that was "Common area" owned by the HOA. So it is NOT considered trespassing. Plus the outside appearance of the home was also part of the restrictions. So we could repaint the home just like we had the right to choose the colors of the homes.

Each HOA is different of course. What may work for one may not the other. However, it's a good thing to find out what the HOA's rights are in enforcement. Can it fine? Can it lien? Can it foreclose? (Foreclosure is for unpaid dues). Once that is established like a fining schedule, then put those options into action.

Yeah I hate repeating advice from lawyers...