neighbor, want to get together?
Let's meet in court!
|By Matthew Benjamin
Courtesy of U.S.News & World Report Inc.
Hank Speak only wanted to install a $3,500 solar panel on the roof of his house in the Garden Lakes planned community outside Phoenix. Then he ran into neighbor Donald Lamontagne, now head of the community association. Lamontagne, 41, considers it his duty to strictly enforce rules designed to maintain the upscale neighborhood and protect the value of residents' homes, which cost as much as $250,000.
The association declared the panel an eyesore and demanded its swift removal. A lawsuit that has generated more than $100,000 in legal fees ensued, pitting Speak, 67, a retired Air Force colonel, against a group he joined voluntarily but now thinks is wild with power. "It's a modern-day communism," says Speak. He won his lawsuit, but the association vows to fight on. "If you've got monstrosities in the back yard, this neighborhood will degrade very fast," says Lamontagne.
Such battles are popping up across the country. More than 42 million Americans now live in condos, co-ops, or planned communities with self-governing bodies distinct from their local city or county governments. These associations have wide-ranging powers, which include setting rules for exterior color schemes, for landscaping, and even for when garbage cans can appear on the curb–though residents own their individual homes.
Battles between neighbors have long been part of the American landscape and are the stuff of sitcoms, but disagreements over these neighborhood covenants are growing much more serious than simple spats. This spring, Richard Glassel, a 61-year-old disgruntled homeowner, allegedly burst into an association meeting at his Arizona retirement community and began shooting. Residents reported a long feud between Glassel and the association over property maintenance. The rampage killed two and wounded three; Glassel faces a death-penalty murder trial.
Serpent in paradise. Communal developments began as bastions of the rich more than a century ago. They became fixtures of the middle class escaping high property taxes and low-quality city services. Developers built communities in which residents pay flat fees on top of property taxes to share the cost of services like snow removal and street cleaning. Often, they also enjoy amenities like private pools and tennis courts. But what sounds like a homeowner's heaven has become, for some, its own kind of hell. "Associations . . . are preying on their residents," says Evan McKenzie, author of Privatopia: Homeowner Associations and the Rise of Residential Private Government.
The Internet and the airwaves are teeming with such rancor. Part of the anger over homeowner associations stems from their uncertain status. Though they are legally nonprofit corporations and yet de facto private governments, they often assume the powers of both without either's checks and balances. Would-be homeowners, particularly in fast-growth areas like Florida and the Southwest, are moving to communities with association-style government, unaware that a tiny, volunteer organization can prove more meddlesome than their elected representatives in Washington. "They have more power than the IRS," says Nevada state Sen. Mike Schneider of Las Vegas, where planned communities abound.
That power reaches far beyond the ability to dictate door color and fence height. Associations are governed by elected boards, which enforce a set of governing documents that homeowners agree to when they move in. Also, it's common for those homeowners to agree to nonjudicial foreclosure. That means the association doesn't need a hearing or a judge to sell a resident's house to collect fines and legal fees. Associations can also tax residents to finance lawsuits. Members must pay or face fines, lawsuits, or, ultimately, foreclosure. "They're a fee machine," says Houston lawyer Wendy Laubach.
She recently helped a Houston man avoid losing his house to foreclosure. While ill with a brain tumor, he fell behind on $600 in dues. His association sued to retrieve them, leading to $4,600 more in legal fees. When he couldn't pay in time, the association sold his house, valued at $55,000, for $17,000. The foreclosure has since been voided.
Buyer, beware. Some of the problems homeowners have with their associa- tions are self-inflicted. People move into planned communities, attracted by the tidy appearance but failing to realize that they will be held to the same tight standards. "There is a significant component of innocent ignorance," says Wayne Hyatt, a lawyer who represents associations.
There are ways to avoid unpleasant surprises, says Joni Greenwalt, the self-styled Ann Landers of the homeowner movement. She offers simple solutions for would-be association residents in her book, Homeowner Associations–A Nightmare or a Dream Come True?
Foremost, Greenwalt says, is reading association documents, especially the financial information. Most associations are supposed to maintain reserve funds to pay for repairs, but many fall behind. That can leave homeowners facing massive assessments. "Almost all associations are underreserved," says McKenzie.
Greenwalt suggests checking out who really runs the association. Is it the board or a management company? Ask about their operating style, whether they choose lawsuits over mediation. Make sure that the association's money is being handled by a bonded individual or a reputable firm. Take a look around the property, and talk to residents. The degree of uniformity will give a sense of what's expected. As a resident, attend meetings and resist signing open-ended proxies that allow others to vote for you. Most important, stay out of court. To avoid additional legal fees, pay fines first (even under protest), and contest them later. Greenwalt's Web site (www.homeownerassoc.com) provides other tips.
But the advice comes too late for many homeowners, who complain of a vicious cycle among neighbors. When associations know that their legal fees will be reimbursed, as is typical, they are more prone to sue. This stems from the common belief that the slightest deviation–a cracked flowerpot, an errant rosebush–will be the transgression that plunges a neat neighborhood in- to decay.
Happy customers. The association concept has its champions. Ellen Hirsch de Haan, president of the Community Associations Institute, cites an internal 1999 survey saying 75 percent of association members are satisfied with them. Upkeep of their property and safety are the main reasons. But, she says, "some people are better in a community that doesn't have restrictions."
In some regions of the country, homebuyers have few other options. Gilbert, Ariz., a town of 107,000 southeast of Phoenix, is one. The fast-growing town has zoning laws that all but require new homes to be built in associations. And most homes in the Orlando area are being built in planned communities.
Faced with angry voters on both sides, lawmakers are reacting. California Gov. Gray Davis recently signed a law preventing associations from banning pets. And Virginia adopted a homeowners' bill of rights this summer that requires associations to conform to the same open-meeting rules as local governments. But such laws are the exception.
For now, the preferred solution remains the lawsuit. And that makes Patricia Kegin, Hank Speak's neighbor in Garden Lakes, weary. She wonders if the litigation hasn't become too personal for the association's board. There's talk of removing board members who won't end the legal fracas. "Enough money has been spent," she says. "Let's move on."
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