this what's in store for homeowners living in HOAs?
A MUST READ !
Tuesday, December 10,
"In the whole U.S., I would say in the whole world, there has not been another intruding, dictatorial act perpetrated on the owners of free residences as here. And ... for fifty years. A dictatorship that has lasted longer than any political dictatorship in the world, including in Cuba." -- Mrs. U. Deutsch
When I receive e-missives like the one above, in which people claim to have a Surreal Estate tale the likes of which I've "never heard before" and that will "no doubt amaze [me]," I prepare myself to be underwhelmed. But after sitting with U. Deutsch in her proper Westlake home and reading her point-by-point history of the rise and fall of the Westlake Homeowner Improvement Association (WSIA), the nonprofit homeowners' group for a massive development in Daly City, her hyperbolic turns of phrase no longer seem excessive.
Complete with California Supreme Court decisions, internal documents (from her secret source on the WSIA board), minutes from meetings and letters between opponents that are fulls of slurs, threats and byzantine bureaucratic maneuverings, her well-organized, meticulously highlighted documents chronicle the 52 years WSIA has existed -- for better and for worse -- as a sort of surrogate government for its 6,500 residences. Over the years, countless legal and personal battles erupted over the housing association's operations, resulting in lawsuits, accusations of criminal behavior and a deep-seated rift between pro-WSIA residents and those who believed the organization was a fraudulent, money-raising racket for power-obsessed board members and their hired guns.
The battle over the WSIA is a long one, and Deutsch, one of the founders of the resident-advocacy group Concerned Homeowners of Westlake, is its most persevering warrior. But what makes her tale all the more disturbing is not that the 30-year war between local homeowners and their homeowners association (HOA) has been unrivaled in its bitterness but that many other similar conflicts have been just as intense, with much higher stakes.
According to Evan McKenzie, author of "Privatopia: Homeowner Associations and the Rise of Residential Private Government," such entities have the power to effectively take away people's homes over seemingly small disputes. "It's happening all over," says McKenzie, an associate professor of political science at the University of Illinois at Chigago. "I saw recently on a Web site -- hoadata.org -- that there had been 15,000 legal filings in the Houston area ... between 1985 and 2001." Indeed, type "homeowners association" into Amazon and you get not only the usual how-to manuals but another genre of literature -- what can only be called "homeowner horror," wherein the monsters are homeowners associations, their lawyers and their property managers. There are even Web sites, like www.privatopia.info, that compile press links to stories about HOA battles. "Some have resulted in murders," says McKenzie, "and a whole lot of physical assaults."
Given that the vast majority of new construction
in the United States -- and especially in the Bay Area -- is built as "common-interest
developments," with homeowners associations following their own bylaws,
the story of the WSIA may offer a glimpse of what the future holds in store.
The ins and outs of the story of this development of single-family homes, built by Henry Doelger between 1947 and 1964 and comprising nearly a third of Daly City, are cumbersome and complicated at best, but here are some of the salient moments of the organization's 50-year history. When Doelger began selling the properties in 1949, he created a homeowners association with a "Covenants, Conditions and Restrictions" (CC&Rs) document to codify preservation of the spanking-white racial purity of the community. (By 1964, the WSIA was the largest housing association in California.) The "Restrictions" part of the CC&R prohibited homeowners from selling, renting or living with anyone "not of the white or Caucasian race" -- unless they were employed as live-in servants. Should homeowners break this cardinal rule, they would be obligated to pay $2,000 to each of their eight closest neighbors to offset the presumed decline in property values. (By 1948, the U.S. courts had already ruled that such racial restrictions were not enforceable, but this didn't deter developers from drafting them and homeowners from adhering to them.)
After the 1968 Fair Housing Act made it common knowledge that racial residential restrictions were illegal, the WSIA ceased to act as an arbiter of who was an acceptable resident and instead maintained "aesthetic standards" -- determining which plants could be planted in the front yard and whether lawns were kept sufficiently green. The only other service the WSIA offered residents was a tree-maintenance program that cared for the palm trees Doelger had planted on each lot. These trees had a life span of about 25 years, however, so most of them have since been pulled out or replaced.
But without common property to maintain, Deutsch argues, the homeowners association, one of the biggest in the country, had no reason to exist.
Of course, not all Westlakers agree. Norman Karasick, a member of the most recent WSIA board, tells me by phone that he considers the organization a necessity. "It's a political entity like other neighborhood groups. Like, you must have 40 of them in San Francisco. It's for political power. Well, let's not say 'power,' let's say 'input.'"
What is the raison d' etre of the homeowners associations? Karasick says such organizations are important in order to represent the community to city hall and to "resolve disputes within the community."
Yet, unlike many neighborhood groups, membership in the organization is not voluntary. For people like Karasick, this makes the group more effective because, with more members, there is "more political clout."
For others, however, membership felt like little more than a trumped-up means for fining residents.
For failure to pay yearly assessments, which are tiny amounts -- beginning at $7 per year and merely tripling by the late 1990s -- or engaging in unacceptable gardening practices, residents could receive fines, threats of lawsuits and liens on their properties, which often amounted to thousands of dollars in penalties. For many homeowners, the experience was especially confounding, since the WSIA guarded the CC&Rs closely and, during its early years, didn't hold public meetings.
Linda Telles, a resident of Westlake for 39 years, recalls that when she tried to attend a meeting in the 1980s, all conversation stopped when she entered the room. "They told me it was a closed meeting and they wouldn't open their mouths until I left." The second time, she says, she came with some fellow homeowners, but they were not allowed in the door. The third time she tried to attend, she found the doors locked and a sign explaining that the meeting had been moved to another location.
Sometimes, homeowners would discover their legal relationship with the WSIA only after they had signed on the dotted line and bought their new home. "We had already signed the papers at the title company, and we were leaving, when they said, 'Oh, yes, and one other thing -- there's a homeowners association,'" says Deutsch. "But then they said, 'But that's a good thing.'"
For 47 years, one lawyer and Westlake homeowner, Hartley R. Appleton, acted as the WSIA's legal counsel, aggressively pursuing the group's complaints. In the end, after receiving hundreds of thousands of dollars in fees, he retired. Deutsch contends that all along, he was breaking the WSIA articles of incorporation, which prohibit him, as a Westlake homeowner, from receiving money for his legal work.
Since Appleton's retirement in 1997, three law firms have represented the WSIA in too many cases to elaborate on here. Two cases have reached the California Supreme Court, many have played out in small-claims court and some have been highly personal, including two lawsuits filed in which residents accused their opponents of threatening to murder them.
Over the decades, hundreds of liens were filed against homeowners, and there were countless struggles over the most inane matters. Many homeowners discovered they owed $500 fines for removing the withering palm trees in their front yards or adding a strip of roses in the wrong place. Others got into conflicts with the WSIA for prohibiting additions to their properties even after they had received building permits from the city.
In 1980, some of the 51 subdivisions began the process of formally terminating their relationship with the organization, gathering the necessary notarized signatures from more than 50 percent of the homeowners and filing them with the county government in Redwood City. Over the course of the next three years, 12 subdivisions legally terminated their membership, but the WSIA ignored their claims and continued to levy assessments and slap liens on properties for undue assessments. In 1981, Deutsch helped found Concerned Homeowners of Westlake to organize homeowners against the WSIA.
In 1997, the homeowners from terminated sections sued the WSIA in small-claims court to recover assessments they had been charged. The homeowners won, and when the association appealed to the state Supreme Court, the original judgment was upheld. In 1998, the WSIA hired a new attorney, who decided to rewrite the CC&Rs and claim Westlake was a common-interest development, the same legal entity condominium developers organize under, in which shared property is maintained. To shore up this claim, the WSIA claimed it had discovered five tiny pieces of shared property, hitherto thought to be part of Daly City and Pacifica streets. The WSIA also hired a property-management company, which was paid more than $70,000 a year.
Although the details of these new covenants were not made public, many homeowners began to get nervous when they saw an item in a property manager's budget that made mention of foreclosure. Homeowners also heard that after a home sale, there would now be a transfer fee of $125 payable to the property manager. And, in a questionnaire sent out to homeowners, the property-management company inquired as to who the firm should contact in order to enter homes in case of emergency. All such fees and precautions are par for the course for a regular condominium complex, where there is shared property and property managers have many responsibilities. But for many Westlake homeowners, this was a red flag that they were losing their property rights.
"We had bought single-family homes, not condominiums," says Linda Telles. "The idea that they could now foreclose on us, that they could enter our homes -- that's when people got very angry."
Upon hearing about these new covenants and rules, even former association attorney Hartley R. Appleton, now retired but still a Westlake homeowner, chose to sign the termination statements in order to sever his relationship with the WSIA.
Homeowner Alicia Holdinghausen recalls that in 1998, many of her neighbors stood in lines in the rain for hours, waiting to sign documents with notary publics to terminate their relationship with the WSIA. "They were lined up around the block, all day long," she tells me. "I was helping at the table, and I started at 9 am and didn't get home until after 4 pm."
Again, the WSIA refused to recognize the terminations of the 19 subdivisions that compiled signatures. As a result, the neighborhoods' homeowners filed their papers with the California Superior Court, which again found in favor of the homeowners.
Now the WSIA has all but ceased to exist. The group's phones have been disconnected, and the last board of directors retired earlier this year. The property-management company terminated their contract, and all the lawyers have washed their hands of WSIA business. (None of the most recent group of attorneys returned phone calls requesting an interview.)
"It still exists on paper," says Deutsch, but she adds that it's just a shell. "We don't get any answers from anybody. We don't know where they stand. It's unconscionable."
Former board member Norman Karasick confirmed the WSIA's amorphous status. "It's still an organization, but it's ineffective. Nobody's in charge."
But questions remain about the fate of funds in the association's coffers. "We have reason to believe that there's still money in the WSIA accounts," says Deutsch.
Karasick maintains that "there was very little money. What's left, our lawyer is taking care of, and arranging for a caretaker." Karasick declined to name the WSIA's current lawyer, he says, "because I don't want to have him bothered."
Many of the key players who fought on one side of the issue or the other now live in subdivisions that voted themselves out of the WSIA or have moved out of Westlake altogether. This has left Deutsch holding the documents of what she sees as half a century of injustice and the knowledge that the work of the WSIA still could plague homeowners -- even from its wastepaper-basket grave.
Why? Because liens filed by the WSIA may still be on record with the county, and when people choose to sell their homes, they suddenly find they have a lien on their home filed by an organization that no longer exists. For this reason, Deutsch is still writing letters to the WSIA's lawyers, asking them to make a formal declaration that the WSIA no longer exists and to inform the title company that the liens have been removed.
Why would a homeowners association that deals with such picayune bits of money and is run by a volunteer board of directors become the locus of such acrimony and conflict? Is it just that some neurotic homeowners have too much time on their hands, or is it something more structural that is reshaping the American dream into a realm that few of us would recognize?