By Christopher Durso

Article Courtesy of "Common Ground"

From the July 2006 issue

Homeowner advocates have a lot of ideas for how to fix the association model. So do many industry representatives. But they part ways when it comes to HOA horror stories. 
[And CAI.] 

In March, an Alabama homeowner named Dorian MacDougall posted a notice on the American Homeowners Resource Center (AHRC) website announcing the publication of the HOAprimer, a "web book" designed to "ma[k]e it easy for the public to understand the problems that this industry presents to them." The project, MacDougall explained to AHRC readers, grew out of a desire to "bridge the gap" between the two groups that most often write about American housing—"academics (too dry and technical to be interesting) or homeowners (too emotional and overwrought to be credible)." Thus, the HOAprimer—the website for which speaks of the need to "awaken a sleeping public to a plague that is threatening to destroy the American dream of homeownership and undermine the common democratic principals [sic] so many have fought to preserve for over 200 years." That would be common-interest developments (CIDs), also known as homeowner associations. 

Among the HOAprimer's 20 chapters is one titled "The CAI: Putting in the Fix," in which MacDougall explains that the "original purpose of the CAI was to instruct homeowner board members in the proper ways to run a [sic] HOA," but that the organization "eventually degenerated into a nationwide organization representing the special interests of property management companies and lawyer's groups." CAI's purpose today? "[T]o see to it that the steady flow of cash from the pockets of CID homeowners into the coffers of their members continues unencumbered by any regulatory entanglements." 

Okay. So what does Dorian MacDougall really think? 

In his 1901 novel The Octopus, Frank Norris compared a giant railroad conglomerate to the titular octopus—large and sinewy, tentacles snaking everywhere, strangling hardworking wheat farmers with its oppressive business practices. A hundred years later, self-styled "homeowner advocates"—operating solo or as part of a group, and organized under names like AHRC, the Coalition of HomeOwners for Rights and Education (CHORE), Cyber Citizens for Justice (CCFJ), and Citizens for Constitutional Local Government (CCLG)—are convinced they've identified another, equally insidious octopus: the HOA industry, as represented by CAI. Indeed, they may not sign off on every single page of the HOAprimer, which is a sort of advocate's handbook, but when it comes to CAI, most of them seem to agree with the world according to MacDougall. Certainly all the activists who spoke to Common Ground—and many who declined interviews—hew closely to his view of an organization that pays lip service to representing the interests of everyday homeowners but in actuality is dominated by lawyers and managers whose sole motivation is making a quick buck. 

In an open appeal for stories about "unethical conduct by CAI members" posted on the AHRC website after Part I of this article appeared in the May/June issue of Common Ground, CCLG President George Staropoli described the industry as rife with professional abuse: "refusals to respond as any collection agency is required; the ‘hot potato' game where the management firm punts to the attorney who punts to the management firm, and in the meantime the only thing accomplished is rising attorney fees and penalties; collusion with the board to ignore the laws and government documents, and to make frivolous claims and arguments without merit; delays to jack up litigation costs; etc." 

Understanding that mindset is the key to understanding just about everything else advocates think and want, because their platforms and tactics are predicated on the idea that when it comes to the machinations of the HOA industry, homeowners are, to say the least, underrepresented. "[CAI and other industry representatives] claim they want to help the homeowners," says CHORE's Pat Haruff, "but you know what? I haven't seen anything they've done to help the homeowners. Everything they do is for the vendor. It's for the HOA attorney." Adds Shu Bartholomew, a Fairfax, Virginia–based advocate who hosts a weekly Internet radio show called On the Commons: "CAI has a lot of stuff. You've got the networking, you've got the resources. And the homeowners who are caught in the middle of this [don't] have those resources, [don't] understand the powers that associations have." 

Not surprisingly, industry representatives don't see it that way. CAI Chief Executive Officer Tom Skiba theorizes that advocates use "CAI attorneys" as shorthand for the industry as a way of "encourag[ing] a negative, emotional, gut-level response from their audiences and play[ing] on the perceived distrust of attorneys in our culture." But in reality, Skiba says, only 659—2.5 percent—of CAI's 26,000 members are attorneys, while more than 16,000 are association board members and homeowners. "Unfortunately," Skiba says, "the truth doesn't have the emotional impact of being able to blame everything on the attorneys." 

It makes a certain amount of sense that activists would focus on CAI and its attorney members, simply because much of this debate—especially in frontline states like Arizona, California, and Florida—is played out in state legislatures. There, advocates often face off against CAI's Legislative Action Committees (LACs), whose most active members tend to be lawyers. But fixating on CAI to the exclusion of other industry organizations—or dismissing those other groups as tentacles of the same octopus—obscures the fact that there are different facets to the industry. And that it's not unusual to find differences of opinion among CAI and, at the national level, the Institute for Real Estate Management and the National Association of Housing Cooperatives; in California, the California Association of Community Managers (CACM) and the Executive Council of Homeowners (ECHO); the Arizona Association of Community Association Managers; and, in Florida, the Coalition of Community Associations (COCA). 

"We are different organizations," CACM President Karen Conlon says of her group and CAI. "We have different priorities, which is healthy for an industry." But CACM usually gets tarred with the same brush as CAI. The AHRC website is particularly contemptuous: "Laws they lobby for, or against[,] cost homeowners rights and property." Likewise, AHRC dismisses ECHO, which is based in San Jose, as a "non-profit trade lobby group dominated by homeowner association foreclosure lawyers and litigation support group [sic]." But, according to Oliver Burford, ECHO's executive director, his organization's membership is actually dominated by homeowner associations—1,485 in all—with another 340 associate members. And, yes, they include attorneys. "We've got a very elaborate set of laws that regulate homeowner associations [in California]," Burford says. "Those laws are far more extensive than volunteer board members could fathom their way through." 

For their part, advocates say they too are frequently mischaracterized—as "anti-HOA." The truth, more than one of them says, is that they're "pro-homeowner." Says CCFJ President Jan Bergemann: "The idea behind [HOAs] is very, very good. I think it has a lot of good issues. But the system as it is today fails the owners in a lot of ways." Shu Bartholomew says some advocates are anti-HOA—but "certainly not all of them. Most of them are trying to tweak things and trying to make them work properly." And Haruff, who earlier this year finished a three-year stint on the board of her association in Mesa, Arizona, says: "I don't want to get rid of my HOA. I enjoy my swimming pool and my tennis courts. I couldn't have them on my own. The only thing everyone at CHORE wants is responsibility and accountability from the board of directors." 

Not every industry representative buys that. COCA founding member Richard L. Spears, for one, has called CCFJ members "homeowner association anarchists." Says Spears, who spent five years as president of his Orlando HOA and also served on CAI's national Board of Trustees in the 1990s: "There isn't any question in my mind—they're not going to be satisfied until homeowner associations no longer exist in the state of Florida. And they're going to try to do the same thing to condos." Similarly, Jill Van Zeebroeck, CMCA, PCAM, chair of CAI's California LAC, calls AHRC "probably the single most anti-HOA" group. "You read [AHRC's website], and you get a really bad taste in your mouth," Van Zeebroeck says. "It's attack, attack, attack, and no substance. How about this: If you don't like something, how about coming up with a solution?" 

Anti-HOA or pro-homeowner, anarchist or reformist—homeowner advocates do occasionally think about more than just the octopus. In fact, some of them have spent a great deal of time pondering, writing, trading stories with each other, and talking to legislators about what's wrong with HOAs and condos, and how to fix them. They don't always agree with each other—homeowner advocacy is as diverse as any other political movement, with zealots, negotiators, fringe elements, and mainstream operatives—but in interviews and on their websites, they return to certain themes. 

The HOA model is broken at best, inherently exploitative at worst. Take a look at some of the headlines on AHRC's website: "HOMEOWNER ASSOCIATION COMMUNITIES: DYNASTIES OF DYSFUNCTION." "A Culture of Lies." "THE LEGALISTIC RUSE OF HOMEOWNER ASSOCIATION GOVERNING DOCUMENTS." Here are some from CCFJ's website: "Condo board under review for misuse of funds." "Pet peeves: Condo owners fight no-pet rules." "HOA—Tenants forced from home." And from CHORE: "FL—Lien for $522,700 levied on each condo owner." "ALL—Property values are no reason to ban Nativity." "AZ—Some HOAs late to learn cost of street repairs." 

And on and on. Each advocacy group's website links to countless newspaper articles from across the country, highlighting one negative story after another—boards suing residents, residents suing boards, boards meeting in secret, managers sending warning letters and issuing fines over trivial violations, HOAs with inadequate reserves, condos without insurance. And the foreclosures—the websites suggest they're at plague levels, and often triggered over a few hundred dollars in delinquent assessments. Is it really that bad? Or is this just sensationalism on the part of advocates? "No, I don't think so," Bergemann says. "Most of the articles we are posting are newspaper articles—articles we can't even influence." Bartholomew thinks, if anything, HOA horror stories are underreported. "There's a lot more than people are willing to admit," she says. "A lot of homeowners will call me. There's been a lot of foreclosures, and [the homeowners involved] are embarrassed. They don't want to go public." 

But industry types think advocates have made hay—bitter, splintery hay—out of a few anomalous cases. Especially when it comes to foreclosures, which aren't tracked nationally and thus are impossible to measure, but which elicit a gut-level response from the general public. "We say there is no epidemic of foreclosures," Spears says. "Cyber Citizens for Justice has taken the few foreclosures they can find—because they always make the news—and tried to make them look like an epidemic." Another industry criticism is that advocates report stories selectively, omitting or downplaying key facts. Two years ago, for example, a California couple lost their home to nonjudicial foreclosure after failing to pay what began as $120 in assessments. "We agree that nobody should lose their home for $120, but there are other aspects to the case that have never been reported," Conlon says, citing a confidential source but declining to be more specific. "And because of that, the story was misrepresented in the press as well as from these homeowner advocacy groups." The result, Conlon says, is that "anecdotal stories" like this lead to well-meaning but misbegotten legislation. 

Paul Wean, Esq., who chairs CAI's Florida Legislative Alliance, says CCFJ uses its website to "publish what I consider urban myths. These are all the horror stories of people being foreclosed on by board members who want to get them out for cheap to buy their property.... They don't accentuate at all the 99.99 percent of associations that operate properly, without horror stories." 

HOAs are governmental entities and as such should be bound by constitutional strictures. This is something about which Staropoli feels strongly. He declined several requests for a formal interview with Common Ground, but laid out his position in an "open e-mail questionnaire." He wrote: "At the heart of the matter is the continued replacement of democratic local government, governments subject to the U.S. Constitution and 14th Amendment prohibitions, with contractual, authoritarian private governments that are not subject to the prohibitions of the 14th Amendment." Actually, that could be changing. In February, a New Jersey appeals court found that an HOA is bound by the state constitution when it comes to allowing residents to post signs, contribute to newsletters, and access community meeting space. The ultimate ramifications of the decision have yet to be felt, but, either way, CAI's Tom Skiba thinks Staropoli's logic is flawed. "The fact is that by statute, common law, contract, and decades of practice, community associations are not-for-profit entities," Skiba says, "and are and should be subject to the relevant and applicable business law, contract law, and specific community association or common-interest-development law in each state." 

HOAs aren't governmental entities per se, but still need more government regulation. That could mean a state ombudsman position, as Nevada has for HOAs and Florida has for condos. Or it could mean specific legislative provisions that delineate how associations can and can't collect assessments, conduct meetings, fund their reserves, enforce rules, foreclose, and so on. "What I think the middle ground looks like is, there has to be a government agency where everyone can go to find a solution to the problem without having to spend thousands of dollars in litigation," Bergemann says. "It's not that we want something for free, but these lawsuits are killing people." Shu Bartholomew doesn't think associations should have the power to fine or foreclose — although neither does she think homeowners can shirk their obligations. "They have to pay [their assessments]," she says. "But the teeth that associations seem to think are absolutely necessary are just a tool for abuse." 

Pat Haruff goes further than Bergemann or Bartholomew, all the way to an idea she admits few of her fellow advocates embrace. "I don't believe the board should have jurisdiction over anything except [maintenance of] the common areas," she says. "Because each time you change the board of directors, you get different opinions. Everybody's outlook on life is different. I might like the color purple, you might hate it." Until the Arizona legislature decides to strip associations of their elemental powers, CHORE is advocating more incremental changes, including the restoration of the state's homestead exemption, which would curtail an association's ability to foreclose, and the creation of a "dispute resolution agency"—not an ombudsman, Haruff says, because "an ombudsman has no teeth." She says: "We want [association boards] to fulfill and honor their fiduciary duty.... We want them to abide by their governing documents and state statutes." 

So do industry representatives, many of whom agree that board members are frequently ill-trained and that the association model can be abused. "Our perspective," Conlon says, "is that transparency by boards is very, very important—that the owners understand what is going on in their community, and that boards do a better job of communicating what is going on in their community." The problem, Conlon says, is that the legislative solutions supported by advocates in California often impose requirements or restrictions that force board members to seek ever more professional guidance—usually from attorneys. Scott Carpenter, Esq., co-chair of CAI's Arizona LAC, sees the same phenomenon in Arizona: "I tell Pat [Haruff] all the time, ‘This bill'—fill in the blank—‘will be the Attorney Employment Act.'" 

Spears thinks there's an even bigger problem with these types of legislative remedies—namely, the government doesn't belong in the equation. "COCA would like to see a recognition by the political powers that be...that the boards of directors of community associations are duly elected," Spears says, "and that if there's a problem with them, it's up to the people who elected them to make the change. Change should not come from the outside." 

But what if there's no other choice? What if HOAs are the only game in town? "Municipalities did not resist the spread of CIDs with their private governments," Dorian MacDougall writes in his HOAprimer, "because CIDs relieved local municipalities of the responsibility of providing expensive infrastructure, yet the CID residents continued to pay the same taxes to the city. This situation made it relatively easy for developers to get city approval for CIDs. Today, due to the enormous financial benefits afforded to both developer and municipality, the concept of CID housing has generally gained acceptance nationwide." 

Indeed, CAI estimates that among new housing stock, close to four out of five units are built in some form of common-interest community. In some markets it's higher. "It used to be that you had a choice about buying in an association," Conlon says. "But here in California—no. That's an unfortunate situation, but it's an overall housing issue." 

And, in terms of advocacy, it's a powerful argument. One activist, Kathy Johnson, has organized a group around it—Consumers for Housing Choice (CHC), founded in Delaware six years ago, although Johnson recently moved to Maine. CHC's mission: "To enhance the ability of consumers throughout the United States to choose to purchase housing not situated in mandatory membership residential common interest developments." Says Johnson: "It's clearly a different approach than the reformers. It's clarifying the marketing of it." 

Then again, Conlon says, even in a market where there's limited or no housing choice, people have options. "There are things and questions someone can ask before they move into a community," she says, "to make sure the community is managed well, is governed well." Indeed, interviews with people on both sides of the debate suggest this one area of common cause: Homeowners need to involve themselves in the process. And, according to Carpenter, everyone needs to be realistic. "There are people who believe that the homeowner association must function as a neighborhood in a traditional, help-our-neighbors, 1950s kind of sense," Carpenter says. "And my point is, we don't get along with each other as humans in any context, statistically speaking.... There will never be a community association where, by rules or CC&Rs or statutes, we can force people to get along with each other. We have to assume a certain static level of conflict in associations. And the question becomes, where do we intervene? That's the philosophical difference." 

Christopher Durso is the editor of Common Ground.