Panel eyes oversight of housing groups

Article Courtesy of the Sacramento Bee
By Lakiesha McGhee
Posted September 17, 2004

With more than 36,000 homeowners associations in California controlling $6.3 billion in cash, a state commission wants to take a closer look at how these private governments are operating.

The California Law Revision Commission will consider a proposal today at a meeting in Oakland to create a new agency to oversee homeowners associations and assist resolution of disputes.

The proposal, in its early stages, is a response to nearly two years of study by the commission including written and public testimony, said Brian Hebert, assistant executive secretary to the commission.

Hebert explained that there is no public agency or board providing oversight of homeowners associations and their governing documents, known as covenants, conditions and restrictions, called CC&Rs.

The commission has heard stories about home foreclosures over trivial amounts of money owed and restrictive rules preventing homeowners from making improvements to their property.

The proposed agency, the Common Interest Development Bureau, would be within the Department of Consumer Affairs. According to a draft proposal, the bureau would help educate homeowners association officers and residents about their legal rights and obligations; collect data and anecdotal accounts of abuse; provide mediation outside courts; and as a last resort, issue citations for violations of the law.

The bureau would be funded entirely by homeowners associations through a small fee, according to the proposal.

"The law can be perfectly fair, but still not helpful if not enforced," Hebert said.

The only tool homeowners now have to protect themselves is to file a lawsuit, he said.

The California Alliance for Retired Americans has been pushing for legislation to regulate homeowners associations.

The advocacy group's first statewide convention for homeowners met this week in Sacramento. Monday's event, "Promises vs. Reality: Living in a California Homeowner Association," was attended by about 100 people.

The group's goal was twofold: to provide homeowners with resources and information that help them solve their problems -preferably outside of court - and to identify key areas for change.

Marjorie Murray, a lobbyist for the alliance, said there are 8 million Californians living in areas with homeowners associations, including hundreds of thousands of senior citizens.

"My head was swimming just listening to all the legalese and complex issues," Murray said of the testimony at the convention. "How do you get some basic understanding of your rights without going to an attorney?"

Murray said an oversight agency could be a step in the right direction, but she doesn't think homeowners should bear the entire costs alone.

State Sen. Denise Ducheny, D-San Diego, was the keynote speaker Monday and voiced her support for a bill awaiting approval by Gov. Arnold Schwarzenegger.

AB 2598, introduced by Assemblyman Darrell Steinberg, D-Sacramento, would strengthen current laws to make all records and contracts of a homeowners association open for inspection by members of the association.

"It's a question of how your tax dollars are being spent," Ducheny said. "You're going to ask me, you're going to ask your city council members, so you should be able to ask your HOA (homeowners association)."

The Governor's Office said Schwarzenegger has not taken a position on the bill.

Sacramento resident Lisa Lindsay, president of Wildwood Homeowner Association, said she was surprised by the negative reaction to homeowners associations expressed at the convention. She said her association has been open with records and understanding when it comes to late dues.

"I'm sorry for some of these people, but I think most homeowner associations are trying to do the right thing," Lindsay said, adding that associations that are abusing the rights of homeowners are creating punitive circumstances for others.

The most drastic stories that grabbed the attention of state lawmakers involve foreclosures over small amounts owed to the associations - dues that residents agree to pay for maintaining and governing their property.

For example, Thomas and Anita Radcliff of Copperopolis in Calaveras County lost their $279,000 house because of $120 owed to Copper Cove at Lake Tulloch Owners' Association.

Melissa Colburn of Chula Vista in San Diego County sued her homeowners association in 2002 after it sold her $230,000 town house because she hadn't paid her dues in three months. She said she later found out that she didn't receive her bills because her name was not on the computer mailing list.

"My own personal nightmare happened when I received a letter telling me that my house was being sold for $5,000," Colburn told the Sacramento homeowners convention.

She settled her lawsuit against the Villas at East Lake Shores Owners Association and reclaimed her two-bedroom home.

Disputes also have arisen over architectural changes that homeowners have made.

When Fair Oaks resident Ken Murray replaced his wood-shake roof last year with a $27,000 concrete tile roof in the interest of fire safety, he thought his homeowners association gave him a green light.

But Murray was sued by the WestRidge-Fair Oaks homeowners group and eventually forced to remove his new roof. Murray said he settled out of court to avoid additional legal costs.

Hebert said an oversight agency could help clear up such misunderstandings. The California Law Revision Commission could approve a tentative recommendation of the proposal today, he said. The next step would be to invite the public to review the proposal and to suggest revisions.