Friday, March 27, 2015

The Story of my HOA

Continuing about my house, let me tell you about the neighborhood. The place I live is a large neighborhood just outside of the city limits. It is former farmland and was purchased by a general contractor in the early 90s and he developed it over time.

The central feature in the subdivision is a lake. The lake is contained by a man-made dam which has to be inspected and maintained. Inspections and maintenance cost money.  How to pay for this? The developer decided to create an HOA and grant the HOA ownership and responsibility for the dam. Since most of the lakefront property was going to be used as housing lots, it was probably decided that creating an HOA to maintain a lake that only a handful of residents would be able to access would not fly very far so one of the lakefront lots was designated as a park for the neighborhood. From the park, all homeowners should have access to the park and have an area for recreation and gatherings. It sounds like a pretty good plan.

Reality didn't quite work out that way.

What actually happened was the developer decided the HOA was his personal favor granting machine. He decided, as he built and developed houses, he would selectively exempt buyers from the HOA. Amazingly many of the homeowners around the lake were exempted from membership in the HOA. Also his friends and family earned exemption. But the suckers who were strangers and lived away from the lake? They totally were required to join the HOA to pay for the lake. Looking at a coded map of the neighborhood which shows which homes are required members and which are not shows how completely random and non-random the membership is.

Each new section of the subdivision was developed under a separate covenant filing. In one part of the neighborhood, the fences have to be chain link and in another the fences have to be wooden. In one part, goats and chickens are allowed, in others they are disallowed. Different rules for different houses built at different times. Why did he decide to make up new rules all the time? I cannot say, but it is a mess to manage. That is going to have to be rectified over time.

It is my understanding that since the subdivision was still in development, the developer was not obligated to create an HOA board until a certain percentage of the lots were built. The neighborhood was completely at his mercy until he decided it wasn't. It is also my understanding that way back in the beginning, he collected HOA dues.

The park, which was to justify the entire neighborhood maintaining a lake which legally belonged to the lakefront homeowners, never really came to be. An narrow asphalt road was laid down, a basketball net erected, and a tiny wooden gazebo installed. The grass was almost never mowed. Since no attempt was made to maintain even these small improvements, the "park" soon fell into disrepair and no one except an undesirable population from mostly outside the neighborhood even attempted to use it. 

Eventually he stopped collecting dues, stopping acting like an HOA existed, and, I guess, maintained the dam on his own dime.

When we moved into our house in 2007, there was no mention of an HOA. It wasn't on the real estate forms. It wasn't on the title insurance. It wasn't anywhere. We lived in ignorance for months until a neighbor mentioned the HOA in passing one day. I was positive I had never seen anything about an HOA. She said not to worry because the dues were never collected. I scoured our documents once again and confirmed that an HOA had never been disclosed to us and I put it out of my mind.

Then in June 2010, when I was nine months pregnant with Sam, we received a notice in the mail. The developer was relinquishing his control of the HOA, there was to be a membership meeting in July to vote on a board, and we owed a certain sum in yearly dues. I was livid and I wasn't alone.

The meetings that followed featured yelling. A lot of yelling. It seems that we were not alone in being completely uninformed about the existence of the HOA. Many were adamant that not only were they not current members, they were never going to be members. At those first meetings, a board was elected. Well, elected is a strong word. A few people volunteered and that was the end of it.

After I emerged from my postpartum haze, I researched the state law concerning HOAs and discovered that it did not matter if it was disclosed or not. If our property was listed as a member property--and it was--we were automatically members and had to pay dues. The only recourse was for us to sue the title company for non-disclosure and even then damages are limited to the dues. So, so not worth it. As much as I was annoyed, we accepted that we really and truly were members. We write our yearly check and try to stay out of the neighborhood drama.

It seems that many will never come to this acceptance. Many still don't pay their dues to this day and have multiple liens on their property. Every HOA meeting descends into insults and yelling.

So we had a new board. That meant the control of the neighborhood was finally in the hands of the homeowners, right? Not quite.

The first immediate problem with the HOA was the dues. The homeowner's dues had not been collected in nearly a decade and the by-laws required a quorum vote by all the membership to raise the dues more than 10%. That was never going to happen. So we had dues that were ten years behind inflation--which I was personally glad for--and a decade's worth of neighborhood neglect to fix.

The second problem was the people who volunteered to be on the board. They understood what they were about and what was at stake. There was a reason they immediately jumped on the train. Most of them lived near the lake. One of them actually owned the property which contained the dam. While it was generally accepted, although not completely undisputed, that the HOA had to maintain the dam, there was disagreement about what maintenance meant. The board member who owned the dam wanted his property mowed weekly during the growing season. The other board members agreed and so it came to be. Then as time went on, more and more vacant lots were deemed necessary for the HOA to mow. And, lo and behold, most of those vacant lots were next door to properties owned by board members. Other vacant lots weren't so high on the priority list.

The third problem was all the associated legal wranglings. The developer refused to turn over the park land to the HOA. The HOA members were refusing to pay dues. So the board was simulateously suing the developer over land and paying a lawyer big bucks to explain over and over that yes, you really can't decide you aren't an HOA member just because you don't want to be and yes, the HOA has to maintain the dam because that is what the founding documents require. And they were paying legal fees to issue liens.

The vast majority of the dues were being eaten by legal fees, paying for the yearly dam inspection, and the rest of it was spent mowing grass on or near board member properties.

After about a year, the board decided they were tired of it because they got yelled at a lot, and they single-handedly hired a management company. Hiring the company quadrupled the HOA dues. Now *that* was an ugly meeting. Of course, they had no standing to quadruple the dues and it was never going to pass a vote, so the management company left just as quickly as they came.

This was the state of affairs for some time.

After the management company debacle, there wasn't much movement with the HOA until it became apparent the board members weren't that interested in holding another election for their replacement.
They would not hold an election until a quorum was established which is fine enough, but they wouldn't resign at the end of their terms and they would not make any extra effort to creatively establish quorum aside from being physically present at the yearly meeting. If quorum wasn't established at the meeting, they just decided they would stay in office for another year. This was a source of discontent.

A lady in the neighborhood decided getting the old board out of power and a new board elected was going to be her special project. While I generally agreed with her objections, her methods lacked a lot to be desired. Her major point of attack was to argue about what a quorum is. She fundamentally did not understand why quorums existed or how to calculate one.

The by-laws stated that quorum was established by the presence of 50% plus one households of eligible voting households in the HOA. Only households with dues paid up-to-date were eligible.

It blew her mind that with every new household that came to grips with the idea that yes, they had to be members of the HOA and pay dues and then *actually* paid their dues, the number required to meet quorum would change. She desperately wanted quorum to mean the majority of those who show up.

Now I have to give her credit because she hounded and harassed the board into finding creative ways to meet quorum. They were so tired of her, they finally agreed to proxy ballots and canvassing the neighborhood, and doing all the things they should have been doing all along. In the process we got a nice argument over whether ballots returned blank or marked abstention should counted towards quorum requirement. Obviously yes, but that would have been too easy.

Eventually the old board was removed and a new one elected. The cranky lady immediately turned her sights on the new board and demanded that her understanding of the word quorum be put to a vote. And so it was. Or something. We got a ballot in the mail, but we haven't had the yearly meeting yet. And she is back to arguing that we don't have to maintain the dam (except we do). I expect the next meeting to feature more yelling as well. Have mercy as I get to listen to people argue over the meaning of clearly defined words.

But the unnecessary mowing ceased, the HOA quickly gained title to the park, the cleanup has begun, and things are all around on a better track. Many still don't pay dues, but what are you going to do?

That's the HOA here.


You know, in retrospect, June 2010 was a pretty rough month. I was nine months pregnant. I was passed over for promotion for the second year in a row. I had a horrible respiratory illness where I was prescribed precautionary antibiotics because they didn't want an infection so close to delivery. All the other people in the household were sick too. And the HOA got dumped in our lap.


Anonymous said...

What a nightmare! I don't know how you've stood the uncertainty.


entropy said...

HOAs are from the devil. They are the playthings of busybodies and control freaks. We are looking at moving and will not consider a house with an HOA.

I am glad it is getting better for you though!

JoAnna Wahlund said...

Good grief, if you lived in AZ I'd think we were neighbors. We're having similar HOA nightmares here.

MrsDarwin said...

MOVE. :)

Just kidding, because I know that's not always feasible. But we moved out of a fairly low-drama HOA, and I swear I'll never consciously move back into one. I hate HOAs with a vengeance. They're unAmerican. I

Jenny said...

Grace would love to move to Delaware. She talks about it a lot. She had a good time running those sidewalks.

What's frustrating is that I specifically asked about an HOA before we offered and I was told that there wasn't one. I don't like HOAs either and would prefer to live without one.

But yes, moving is not feasible and HOAs are thick on the ground here.

Joy said...

Eeek, what a terrible situation. I mean, could be worse but still.