HOA sees the light on $20,000 fine

Article Courtesy of The Herald-Tribune

By Tom Lyons

Published July 8, 2011

Some people who can't make their house payments get into a fight with a bank. Lakewood Ranch homeowner Linda Conti had no desire to do that.

Her mortgage had been a financial disaster from the first. She couldn't afford her payments and expenses, which were much higher than she had realized. She went through her savings trying to keep up, until she just couldn't.

And because she bought in January of 2006 the worst time, at the crest of the real estate boom her house's value had plummeted to far less than half what she owed.

She just gave the house to the bank with a deed in lieu of foreclosure. And, acting on legal advice she now thinks unwise, Conti moved out of the house even before any order or bank request. No eviction drama or court procedure required.

But banks were stalling on taking over homes, because the housing market was so glutted. The bank didn't take the house. Conti feared the empty place would deteriorate and become impossible to sell. And so, while paying rent elsewhere, she did her best to keep the house in good condition for sale, though she would never see a penny of the eventual sales price. For quite awhile she paid the electric bill, to prevent mildew.

But the house just sat.

I first heard about her situation a few weeks ago, when a cash buyer was anxious to close. The bank had agreed to the short-sale price.

But the closing agent found bad news that endangered the deal. Conti had committed a dire violation of the Summerfield/Riverwalk Homeowners Association rules: She had not kept the house's front-yard lamp lit.

Dreadful, but true. And such serious omissions have consequences, in the form of $50 fines daily fines. The HOA board refused Conti's request to waive them.

The HOA had no objection to the house sale, of course, but insisted on the fine payoff at closing. With interest, the total charge was just over $20,000.

"Yes, I said $20,000 for an unlit yard lamp!" Conti told me. "I believe that the mafia would give me a better deal."

The closing agent, Renate Rodgers, said the discovery caused her to all but lose hope for the sale. Other deals had fallen through for similar reasons, and far less money. And in this neighborhood, the HOA had contracted with a law firm to make sure such fines weren't ignored. What buyer would ever pay an extra $20,000 for a house now valued by the county property appraiser at $134,000?

A no-sale would be bad for all concerned, including the neighborhood. It would mean one more unoccupied house with a "for sale" sign as a permanent fixture.

Rodgers hoped publicity might push the HOA board into being reasonable. I found that unlikely. HOA boards intent on rigid enforcement of rules and fines, and refusing to compromise, rarely see the light just because of a newspaper story.

But, maybe just coincidentally, shortly after I contacted the HOA's property managers, the board voted to waive the fine. All of it.

Rodgers is thrilled, though there is one remaining obstacle: The law firm did not waive its fee, for writing few letters and such, so it appears someone will have to pay about $2,000.

But the agent thinks the sale will happen.

"There is no doubt in my mind that your phone call brought attention and urgency to the matter," and made the difference, Rodgers said. "We can make this work now!"

I credit the HOA board with paying attention not just to rules, but to what's best for the neighborhood during tough financial times.

Sometimes, whatever the rules, there's a lot to be said for being reasonable. This time, I bet it will even help get that lamp back on.