An attorney representing an HOA once advised a board that the fees being charged to just some of the homeowners was in violation of the Declaration. He explained it by saying; “…. you are on less than concrete legal foundation. Most homeowners don’t avail themselves of their rights but should you be challenged you can make a decision based on the economics of the litigation”. In other words, if no one questions any of the board or management decisions or challenges certain policies, the HOA is home free. The one thing in the above quote that I agree with is that most homeowners never challenge anything and passively obey all the rules. However, for the few homeowners who simply won’t just accept what they are told, especially when things just don’t seem to add up, there may be a pot of gold at the end of the end of their rainbow.
Robert Stern joins us On The Commons this week. Robert is a successful businessman who owns several houses on both sides of the country – all in homeowner associations. He is a financial executive, a CPA by trade and he knows his numbers. He is also no stranger to being on boards and understanding how associations work. True to form, when he bought his house in Henderson, Nevada, he ran for, and was elected to, the board of directors. But being in the leadership did nothing to protect him from being involved in a couple of lawsuits.
But Robert is a busy and energetic man who has written several books. He chronicles his journey through HOAs in his latest book, “HOA WARS; What Happens in Vegas Can Happen Anywhere”. In this book he talks about the people he met along the way including the activists who chose to speak up and try to right a wrong or two. He explains how he found and why he returned $1.2 Million to his fellow homeowners. He also talks about yet another law suit his association filed against him. The book has all the makings of a hollywood movie and who knows, maybe one day his story will come to a screen near you. But until that happens, check out his web page at http://hoawars.tateauthor.com where you can read all about him and order his book. Be sure to tune in and listen to him tell his story, explain what to look for and how, if you avail yourself of your rights, you too may find a pot of gold hidden in the musty records of your HOA.
I strongly disagree with Robert on a few things.
When a buyer cannot get access to the financial records and they are lied to about the financial state of the HOA there is NO WAY to know what you are buying into. Board minutes are part of the corporation and here’s what I encountered when I inquired for the records prior to purchase. “That information is for members only! It’s proprietary information and only members can see it.” Therefore I was not able to see anything before making the purchase. In Kansas there are no laws that require full disclosure of the financial state of the HOAs to the potential buyer. That is why my HOA has a million dollar loan hanging over its head and those who have purchased since it was taken have no clue when they buy into the HOA that they are on the hook for their portion of that million dollar loan. They can receive an assessment just like all other members.
I also disagree with Robert saying to check those records to know what you are getting into. Any HOA that looks good today could make a 180 degree turn tomorrow. Money in the bank today could be embezzled tomorrow. Money in the bank today could be spent on outstanding bills tomorrow or for the settlement of a lawsuit. As Shu stated every HOA is one vote away from becoming a nightmare. And asking people who live in the HOA what it’s like is going to always get you “IT’S GREAT!” Nobody is honest with potential buyers because if they are all trying to get out they sure don’t want to discourage buyers. And they sure don’t want to expose the truth and find themselves being sued by somebody for a libel and slander claim. HOAs will stop at NOTHING to sue a homeowner.
From my experience of studying HOAs extensively for over seven years, I must say most board members do not have good intentions. Most are hungry for power. Have nothing else to do with their time than to make their neighbors’ lives a living hell and many are self-dealing profitable projects to themselves or somebody they know and accepting kickbacks.
Training for board members is done by the CAI or the Realtors (sometimes both) either way the board members are learning from people who have a vested interest in making money off the homeowners. Most board members are of the age they already think they know everything and no amount of training by anyone is going to change who they are.
I have no read Robert’s book. I plan to though. One or two HOA circumstances does not allow anyone a full comprehensive view of what HOAs in America are really all about. Sad but true.