Could HOAs hurt the value of your home? | LOCAL NEWS | KHOU.com | News for Houston, Texas: "Homeowner activist Beanie Adolph said she’s found “solid evidence” that some HOAs in Houston are not protecting the value of homes. In fact, she says they’re doing the opposite. Adolph is convinced that HOAs do more harm than good when they threaten to foreclose, which is legal under Texas law. With the help of her son, who is a lawyer, Adolph has sorted through seven years of data from Harris County. She says in Houston neighborhoods where HOAs filed foreclosures, property values went up 32 percent. In subdivisions where HOAs didn’t file any foreclosures, prices increased 59 percent."
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With a link to their updated HOA data base.
2 comments:
It's also likely that in areas where there are high levels of HOA foreclosures there are also substantial numbers of mortgagee foreclosures and associated distress sales and REOs. These would have a far greater negative influence on property values than the HOA foreclosures.
What this story illustrates is the predatory use of frivolous litigation in HOAs. Tort reform and civil justice organizations should be sitting up and taking note of how current state policies favoring the privatization of local government creates a petri dish for frivolous and wasteful litigation such as this.
The second paragraph deserves a "hurrah". The first paragraph seems logical but it's not accurate and it's why people need to be very wary about purchasing a home in an HOA in Texas, if they have a viable alternative.
The laws here allow the HOA to collect civil damages of $200/day for a "breach" - but only the HOA gets to collect in the event of a breach. The law also permits fining. In addition, although the public policy stated via the judicial and legislative branches is to disfavor restrictions on land, there is a statutory scheme that rewards and favor restrictions
For example, the attorney fee statute of Texas Property Code 5.006 has been interpreted to permit ONLY the party enforcing a restrictive covenant to get attorney fees if it prevails. This one-way statute ensures that homeowners can rarely collect attorney fees. All the HOA attorney has to do is to make an accusation and start racking up fees with the threat that the accused homeowner will be liable for them. The accused has to pay their own attorney and is threatened with the possibility of having to pay the other attorney with absolutely no possibility of recovering attorney fees, if the homeowner prevails.
Needless to say the HOA attorneys will collect those civil damages and attorney fees directly from the homeowners.
There are neighborhoods in Houston where lenders are reluctant to lend because the HOA foreclosure rate is so high. They are nothing but foreclosure mills for the attorneys who are empowered to threaten foreclosure in order to extort other fees and conduct from homeowners.
In HOA after HOA, the attorney and management company will "advise" the Board to adopt a policy such that homeowner assessment payments are applied last to assessments and first to management company fees and HOA attorney fees. Then the HOA attorney and management company accuse the homeowner of being in violation and "assess" fines and management company collection fees. The homeowner tries to pay their assessments but the monies are diverted to the coffers of the HOA attorney and management company - off the books of the HOA.
Thus all the management company and HOA attorney need to do to make money is to accuse homeowner after homeowner. Those that try to fight find themselves victim to fee statutes that reward only the HOA attorney. It's a very corrupt system that is highly profitable for industry "professionals" such as the Texas state senator that personally authors, votes on, and modifies legislation to protect his unscrupulous business practices.
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