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Article Courtesy of The Huffington Post
By Jack Hanson Published
September 20, 2016
Last year, a Las Vegas attorney was sentenced to 10 years in
prison for his role in a “massive”, multi-million dollar HOA fraud scheme
involving conspiracy, double agents, recruitment of Board members, election
rigging, and wire fraud.
Not even a year before, an 82-year-old Condominium Association President in West
Palm was arrested and charged with allegedly embezzling over $20,000 in
Association funds to finance a long distance affair.
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In Polk County, Florida,
the President of an HOA Board was arrested for threatening to
shoot a father whom he believed to be trespassing in his
community (he and his son had been visiting a neighbor and
riding jet skis in the common lake).
In the same county, a mother and son were arrested for stealing
in excess of $120,000 from their HOA’s coffers while the mother
acted as Treasurer of her Board.
In April, a San Antonio HOA President and a former city
contractor were charged with defrauding an Association out of
more than $300,000 by writing bogus checks for repairs on things
like a community pool that never even existed.
While these examples are extreme, major league scandals
involving HOA and COA Board members are not uncommon. The
reality is that these are just the tip of the ice machine in the
community pool’s cabana.
With 66 million Americans and climbing currently living in
common interest communities such as Homeowners’ Associations,
Condominium Associations, retirement communities, vacation
timeshares, and gated subdivisions, both the benefits — enhanced
control over their environment and property values — and the
problems — bureaucracy, legal imbroglios, unexpected
expenditures, and fines for everything you can imagine — have
become a part of the American way of life. |
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66 million Americans and climbing currently live in
common interest communities such as Homeowners’ Associations,
Condominium Associations, retirement communities, vacation timeshares,
and gated subdivisions. As a result, both the benefits and the problems
have become a part of the American way of life.
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When a common interest community, such as a gated subdivision, is built, the
developer is in control of the HOA or COA — which handles management of the
neighborhood — until 90% of the houses are closed. Then the Association is
turned over to the residents, who, at that time, elect a Board of Directors
whose raison d’etre is to enact and enforce provisions that protect the
homeowners’ investments.
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Over the last two decades
as the head of The Melrose Management Partnership, I have
managed, on behalf of well over a thousand Associations, over
200,000 dwellings in 500 communities, as well as overseen
Melrose franchisees who manage dozens of communities. I can tell
you that Board member misunderstandings, machinations and
malfeasance can result in chronic mismanagement of all of
aspects of life in common interest communities. While proper
Board management enacts and enforces provisions that are
intended to protect homeowners’ investments, quality of life,
and security, Board mismanagement can bring these efforts to a
screeching halt.
As I attest to in part one of my HOAs Gone Haywire series — When
Homeowners Association Living Goes Haywire: How To Prevent The
Common Problems Of Living Under An HOA or COA — a more informed
homeowner can prevent most Association-related conflicts,
imbroglios and disappointments. Just a basic understanding that,
to a degree, you have to give up being king or queen of your
domicile in exchange for being part of your neighborhood
democracy can take you far. |
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An HOA or COA Board member’s job is to regulate property
— such as the maintenance of sidewalks — not people’s behavior — such as
when children play on them.
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The same goes for being a member of an HOA
or COA Board of Directors: above all else, your job is to run a democracy, not
an autocracy. It’s also very important to understand that the job is of a very
sensitive and personal nature because it involves something very sensitive and
personal at its core, which is someone’s home.
An informed Board member who understands this simple fact can prevent most of
the common pitfalls of Association management.
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Should you find yourself
on your Association’s Board, here are a few major key points
that can help you protect homeowners’ investments, quality of
life, and security, while also helping you avoid ostracism from
your neighbors — or being slapped with a lawsuit — along the
way:
Hidden agendas are for politicians, not Board members: The first
thing to understand about an Association Board is that it’s not
uncommon for members to have some kind of hidden motive or
reason behind running for elected office. The pay isn’t great
(read: the pay is nonexistent) so often residents get on their
Association’s Board with a specific agenda: they want to change
a bylaw in their favor, then resign; they’re looking to fine a
neighbor who doesn’t mow the grass to their liking; or, in
extreme and rare cases, they’d like to pilfer from the huge
reserve funds that Associations tend to carry. The unfortunate
results of this dynamic are often endless Board meetings, turf
wars with residents, red tape, and even the occasional court
date.
If, however, you get on a
Board thinking of the common good first and foremost —
effectively managing the budget, bettering resident
communication, enforcing the Declaration of Covenants,
Conditions and Restrictions, or CC&Rs — there will be fewer
problems, and you can spend more time lounging at the community
pool and less time going to court with your neighbor over hedges
that are an inch higher than stipulated. |
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Being on a Board or a Committee just to be on a power
trip — like having residents’ cars towed every time they turn their back
— does not enhance quality of life. It disturbs it ... not to mention
turns neighbor against neighbor.
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If you’re going to go on a power trip, save it for work — not your Association
Board: What you want to avoid is turning your community into a police state
simply because you saw an opportunity to wield power. Can you use your position
as Board President to make that trampoline you’re sick of looking at in your
neighbor’s back yard a fineable offense? Probably. Should you? Probably not. If
you’re on a Board and your need to exert power over your neighbors disturbs
their quality of life instead of enhancing it, you’re a member for all the wrong
reasons.
Your job is to control when the pool gets cleaned, not when your neighbor’s kids
ride their skateboards: Associations essentially exist to control property, not
people. When Board members try to influence behavior, such as deciding when and
where children should play or whether a resident has too many parties in their
home, the result is usually drama that would rival what you see on your favorite
soap opera.
I’ve seen a Board member make it her
personal mission to stop children from playing in the street,
going as far as hiring a security guard to camp out and take
pictures from the bushes to “catch them in the act”. I’ve seen a
man so angry at his neighbor over his perceived bad landscaping
that, after trying and failing to get the neighbor fined, he
vandalized his own garage door by spray painting the word “rat”
in red and framed his neighbor for the act. Seriously. That
happened. Remember, your role as a Board Member is to enforce
the rules, not to dictate human behavior. It’s best to let
residents solve their personal issues themselves.
Have a problem? Pass the buck to a committee!: Everybody has
their own strengths and weaknesses and their own important
issues they’d like to tackle within an Association. Committees
are an excellent way to channel that energy toward common goals.
If a resident is passionate about, say, landscaping and does
nothing but complain about it, then who better to become
Chairman of the Landscape Committee? They will either fix the
problem or come to the realization that their remedies aren’t as
simple as they may have assumed. |
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If the residents want the neighborhood to have the kind of landscaping
they might see on a Real Housewives episode, they need to know that they
have to pay for it.
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A
word to the wise: don’t think that committees are exempt from those power
dynamics I mentioned earlier. There was one Association whose parking committee
was so tow-happy that we received calls multiple times per week from upset
residents who couldn’t even have family over without first obtaining guest
parking passes. A dentist missed appointments with multiple patients because his
car was at the tow yard, maintenance men returned from jobs to find that their
work trucks had vanished, even home healthcare workers taking care of the
elderly weren’t exempt from the committee’s strict rules. You should probably
think twice before allowing a committee to enact such extreme measures in your
own community.
Be responsible for your decisions, but not legally responsible: If you’re on the
Board, make sure they have Directors and Officers Liability Insurance. This
protects you from personal liability for the decisions you make on behalf of the
Board. Can you really afford to be slapped with a discrimination lawsuit from an
aggrieved homeowner who genuinely believes their outlandish request for a
fuchsia fence was unfairly denied? If not, you’ll want to be insured.
If the residents want the neighborhood to look like something on TV, make clear
that they’re going to have to pay for it: If Board members and residents want
common areas to be mowed every week instead of once a month, the homeowners are
going to have to pony up. If there are complaints about the gates not being
properly maintained but current dues don’t cover the kind of repairs that are
needed, then the problem is with the budget, not the gates. As a Board member,
it’s your job to match expectations of the Association’s services with the
budget.
I always advise arranging quarterly meetings with guest speakers — it’s the best
way for residents to know where and how their money is being spent. Let the
landscape contractor, the security company and the insurance provider come in to
talk about what they’re being paid for and exactly what to expect. That way,
when the roses by the gate are looking a little worse for wear, the residents
won’t blame you for not calling the landscaper who is only contracted to stop by
once per month.
I want to make clear that this article is not meant to dissuade anyone from
running for a position on an Association Board. Most of the Board members we
work for are honest, have integrity, and truly want what’s best for the
community as a whole, not just their personal bottom line. But the reality is
that it only takes one resident with beef against another, one power hungry
homeowner, or one neighbor who wants to change the rules to suit their personal
needs to put the kibosh on an otherwise healthy HOA or COA Board. It’s also true
that Board dynamics can change with one election, meaning a Board that works in
the best interests of its homeowners today might be replaced tomorrow. This
article is simply intended to help shed light on these pervasive problems so
that you prevent these kinds of conflicts in your community.
A Board is true democracy at its core. You’re (theoretically) working toward the
greater good of a community, but you’re also signing up to be judged by a jury
of your peers and to have your every action scrutinized. Should you find
yourself on the Board of an HOA or COA, follow these tenets and you can be a
part of enhancing quality of life and property values in your community instead
of getting in the way of them ... and you won’t have to worry about a neighbor
being out to get you because you had his mother-in-law’s car towed on Mother’s
Day.
When Homeowners’ Association
Living Goes Haywire -- Part I |
