Buying into a community group

For many, homeownership means abiding by HOA regulations
BY MICHAEL GARTLAND
Of The Post and Courier Staff

(This story includes some quotes from me and also from Shu Bartholomew. It is interesting because the reporter went into the issue of municipal dependence on HOAs. Here's the whole story because the link requires registration.)

Ben Allen didn't worry much about the rules he and his neighbors would have to follow when he moved into his Snee Farm home in Mount Pleasant five years ago.
"We picked the house first and read the covenant last," he recalled.

The letter of the development's law became more important to him last summer, though, when a neighbor decided to install a pre-fabricated garage.

"We wanted construction to stop," he said. Allen lobbied against it, saying it wasn't permissible under Snee Farm's covenant, but the Snee Farm Community Foundation, his homeowners association, had already approved the project.

The neighbor building the garage happened to be a member of the association's board of directors.

"We felt because he sat on the board they showed him more leeway, so we challenged it" in court, he said.

His story is not uncommon. In Charleston County, homeowners association disputes often wind up in small claims court. Last year, the county's small claims magistrate heard about two cases every week.

There are about 500 homeowners associations in Berkeley, Charleston and Dorchester counties; across the country, about 250,000. Most act as small governments, handling responsibilities such as landscaping, zoning enforcement and road and drainage repairs. They have the power to exact fines on residents, put liens on homes, and some can foreclose if all other discipline fails. Some even sue the cities within which they're situated.

In Snee Farm, the homeowners association sued the town for installing speed humps, a traffic calming device that some residents opposed.

Often people who buy a new home--and into an HOA--aren't aware of the powers such organizations wield. Some don't allow flags to fly or satellite dishes to be visible. Others forbid open garage doors and cars propped up on cinder blocks. Problems also can arise when the people running the associations, which have budgets that often reach into the millions, don't have the training or staff to handle the financial responsibilities.

Evan McKenzie, a political science professor at the University of Illinois in Chicago, has been tracking and studying homeowners associations for 20 years and has written a book about it titled "Privatopia: Homeowner Associations and the Rise of Residential Private Government."

Part of the reason HOAs have increased from 500 in 1960 to a quarter million today is because cash-strapped municipal governments can't always afford to build roads and other necessities that new developments require, McKenzie said.

HOAs often pay for landscaping and roads previously financed by cities and towns.

"It's like a subsidy for local governments," McKenzie said. "Governments actively promote it."

Not only do municipalities save money on costs absorbed by HOA fees, but some charge developers fees for the impact on infrastructure that development brings.

Mount Pleasant Planning Director Joel Ford said homeowners associations have benefited the town over the years.

"We would have needed more in tax dollars to support (that) development," Ford said.

Typically, local governments don't exert much control over homeowners associations. North Charleston Planning Director Bill Gore said the city formally recognizes HOAs but has no say over how contractual disputes are resolved within them. Such disputes could involve zoning and infrastructure matters, issues typically seen as the purview of government.

"They have to attend to those agreements on their own," Gore said.

Developers benefit from the relative independence their communities have from local government. Paying for their own infrastructure enables developers to have more control over scale.

"It's very lucrative for builders to build this way because they can get much higher densities," McKenzie said. "Streets are a large expense. If you can make streets 5 or 6 feet narrower than the town allows, then that's all profit."

In the long run, though, these benefits can translate into problems for residents. Shoddy infrastructure often comes back to haunt residents who pay for repairs out of increased homeowners fees. Problems also can arise because some HOA directors have no experience handling the money or problems that accompany a planned development.

"They don't get any training, they don't know what they're doing, and they've got a lot of responsibility," McKenzie said.

Complaints about how property is managed have been common at Snee Farm. Some residents and members of the HOA's board of directors said decisions are made without voting, and that Michael Hart, the board's head, has taken on responsibilities that are not his to assume.

Hart said he does not manage the property, but enforces covenants and restrictions. He added that the community has never looked better.

"Nobody is claiming fraud or any other crime, but we are concerned with mismanagement," said Emilie Carey, who is on the board of directors and has lived in Snee Farm for 10 years.

The lawsuit filed against the town of Mount Pleasant over speed humps is central to the issue, and is yet to be resolved. Carey claimed the board never voted to sue or to hire a lawyer, but Hart denied this. "Everything is voted on by the board," he said.

Not all associations are as contentious as Snee Farm's.

Jim Trusso, president of the Little Oak Island Condominium Association at Folly Beach, said the biggest issue the group faces is homeowner ignorance of community living.

"People don't know or have a good grasp of what condominium or community living is all about," he said.

Michael Parades is trying to change that. He's a local property manager and the South Carolina chapter president of the Community Associations Institute. Educating homeowners and the 3,500 HOAs in the state, he said, is key to making them work smoothly.

"We're trying to get more homeowner participation," he said. "Most homeowners don't understand what they've bought into when they buy into a homeowner association."

Reaching out to untrained HOA managers is also key to making sure the communities are run more efficiently.

"Community managers need to know a lot of things. They need to know legal (matters), they need to know about insurance, they need to know about maintenance," he said. "In South Carolina, there's nothing that says you can't get into community management."

Many HOAs hire property managers to handle chores such as maintenance and tracking down residents who are overdue on fees.

At Bayview Farms on James Island, the homeowners association only gets involved if legal action seems imminent.

Karen Rapchick has served on the homeowners board at Bayview for three years and said that usually a small claims court notice is enough to get residents to cough up fees. Sometimes, though, they have to go to court.

"We just started using the smalls claims court two years ago for dues issues," she said.

Other associations will foreclose on homes.

Michael Michalak is vice president of the Autumn Chase and Lakes Homeowners Association and said that while this West Ashley community hasn't taken anyone to court, it has forced one resident to move.

"We foreclosed on two places," he said. "They paid. One stayed, and one moved."

Nationwide, there are few laws governing HOAs. Local governments typically take a hands-off position, McKenzie said. Over-regulation is certainly a consideration, but McKenzie fears under-regulation could lead to trouble for the associations and the people who depend on them.

Since HOAs are private, they don't have the safety net that relatively small municipal governments have. Town, city and county governments can be bailed out in case of a financial emergency.

"Who's going to bail out a homeowners association?" McKenzie asked. "They have no institutional friends."

Shu Bartholomew started a radio show devoted solely to homeowners association issues after serving on one. Her show, On the Commons, is broadcast in northern Virginia on Saturdays and on the Internet. The show allows people from all over the country to have discussions about problems that arise in home ownership and in homeowners associations.

"We've been able to put a lot of issues on the table," Bartholomew said.

Five years after moving into Snee Farm, Ben Allen hopes he can resolve some issues of his own. The case regarding his neighbor's garage, a case he brought last October, is still being heard in Charleston County Court of Common Pleas. He hopes it will be resolved soon through mediation.

"We got a better understanding, basically by digging a little bit," Allen said.


Michael Gartland covers East Cooper. Contact him at 937-5902 or mgartland@postandcourier.com.




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