| "We Can't Wait to Get Our Hands on Your Money -- Or Even Your Home." |
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Rancho Santa Fe, Cal. A gardening violation. That's what landed Jeffrey DeMarco in hot water with his Rancho Santa Fe, Calif., homeowners association a few years ago: He planted too many roses on his four-acre property. Peeved, the association fined him monthly and sat back as the bills mounted. Then it placed a lien on his property and threatened to foreclose, according to DeMarco. He took the board to court, but lost on the grounds that he had violated the association's architectural design rules. (In addition to planting roses, he also had regraded the site.) In the end, he got stuck with the association's $70,000 legal bill and lost his home to the bank. "Mr. DeMarco came into the community and wanted to step outside the rules," says Walt Ekard, the association manager. "That's a detriment to everyone." Think it couldn't happen to you? Think again. Many people who belong to homeowners associations do not understand just how much power these groups have over them -- until they miss a payment or otherwise run afoul of the board. Fall a single day behind in paying your monthly dues, for instance, and the association may slap you with a fine. Fall 90 days behind and it may place a lien on your home and threaten to foreclose unless you pay up immediately. And because you often hand over the right of property trustee to the association when you agree to the by-laws, in some cases "you don't even get to go to court," says Evan McKenzie, a lawyer turned political science professor in Chicago and the author of Privatopia: Homeowner Associations and the Rise of Residential Private Government. Your best defense, if you can afford it: paying what the association says you owe, then arguing. Most associations work on a "balance forward" accounting system, in which your payments go toward the outstanding balance. By delaying, you'll just accumulate more late fees. |