Thursday, December 08, 2011

CAI Survey: HOAs Still Reeling from Economic Slump

CAI Survey: HOAs Still Reeling from Economic Slump
This is a CAI press release on the results of a survey they did. Among other findings, "Forty-six percent of community managers say their client associations face “serious” problems as a result of the housing and economic downturn, while 10 percent describe the impact as severe...About a quarter of community managers say more than 5 percent of their units are vacant. This is largely due to foreclosures, the inability of nonresident owners to sell or rent their properties or owners simply walking away from their mortgages—and homes. Another 30 percent of managers report vacancy rates of 3 to 5 percent."

I just gave a couple of presentations to Chicago-area attorneys on this general subject, before seeing these results, and I was (as usual) pessimistic about the financial situation condo and HOA projects are in.

Thanks to Shu for flagging this.


Anonymous said...

"the inability of nonresident owners to sell or rent their properties"

Which explains why the CAI wants to restrict renting in HOAs.


On May 15, 2008, the Indiana Supreme Court issued a decision that is a major victory for community associations of all varieties. The case pertains to covenants that totally ban rentals.
. . .
The Justices, in a 3-2 decision, held that there were legitimate, non-discriminatory reasons for the covenant and that both the evidence in this case and common sense tell us that owner-occupants have a much better incentive than tenants to not only preserve property values, but to actually enhance property values.
. . .
This case has been watched closely all across the country, especially by community association attorneys and the Community Associations Institute. This is because: (1) so many associations already have rental restrictions of one sort or another, and (2) this was the first case in the United States that specifically addressed the application of fair housing laws to rental restrictions set forth in covenants.

Anonymous said...

As an example about the absurd rental policies, the Professor posted a story a year and a half ago, about a Navy pilot who was transferred from Virginia to Florida, and fined $300 a month for renting out his condo.

I'm sure there are plenty of other stories, but it was the first one to come to mind.

What are HOAs going to do as the number of Americans who become renters increases?

Anonymous said...

CAI and its members are directly responsible for the inability of involuntary HOA members to be able to rent out their property. CAI has promoted restrictions on renting to the great detriment of the owners of HOA-burdened property. Indeed if one looks at CAI policies in general, one can see policies designed to impose financial harm on homeowners. Given its own policies, CAI shouldn't be surprised at the financial havoc wreaked.

Interestingly, this newest admission illustrates that prospective purchasers do not want to buy HOA-burdened property. So owners can't rent and can't sell. So much for the myth of "preserving property values". Certainly value is not being preserved for the owner who can't sell and can't rent.

Fred Fischer said...

This rental issue along with many others is just one of the shortcomings of privatized housing governance. Since those who exclusively create the covenants, operating rules and corporate HOA entity for CIDs have primary only a duty to the bottom line (sales).

Unfortunately for CID members Developers have granted themselves more control over member’s properties than in the past. Leaving many developer friendly CC&Rs that although may have been appropriate to aid in the developer’s property sales. They now become after build-out burdens, property de-valuers and a major source of conflict, confusion and additional legal and managerial costs for the members. Who cannot reasonable amend or remove them because of the supermajority voting standard that the developer left behind.

Finally until State legislators or the courts realize that “human beings were never meant to live in corporations” and return private property control back to the owners and elected public officials. CID members will continue to suffer the endless shortcomings, risks and tendency towards corruption that comes with private monopoly’s which association governance represents which will most likely get worse. Since homeowner association governance is primarily driven by profit and income motives to benefit others (not members) as compared to public government which is required to have social objectives.

Anonymous said...

> Finally until State legislators or the courts realize
> that “human beings were never meant to live in corporations”

Corporations are people. See Stephen Colbert's video at

If Stephen Colbert had any guts at all he would have retired the O’Reillyoid character in January 2009, renamed the show the Hopebert Report, and starting aping the likes of Chris Matthews or Keith 0lbermann. But his video about corporate personhood is right-on-target.

See also 1 U.S.C. §1 (United States Code), which states:

In determining the meaning of any Act of Congress, unless the context indicates otherwise-- the words "person" and "whoever" include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals;

and my comment about corporate personhood at (still pending approval, so it may or may not get published by the blog owner).

"Living in corporations" is exactly what legislatures and courts want for us, so we can "enjoy" the same rights at home as we do at work.

Anonymous said...

from the 5 question survey:

4. What is the current rate of assessment delinquency?
01% to 05%: 37.4%
06% to 10%: 29.6%
11% to 20%: 24.2%
21% to 30%: 06.2%
more than 30%: 02.6%

What is not explained is whether "assessment delinquency" means just regular assessments, or failure to pay any arbitrary fines and fees imposed by the HOA.

Tom Skiba denies that this "priority of payments" scam accounting system is taught by the Community Associations Institute. But for some strange reason, it is very common throughout the industry.

By adopting policies that take a homeowner's regular dues payment and applying it to arbitrary fines and fees, often into the pockets of the HOA's attorneys, HOA boards are artificially inflating the level of delinquencies.

Industry spokespersons then claim that these delinquencies are hurting the community, such as by lowering property values and making it harder to get FHA loans, and therefore HOAs need more powers over homeowners.

If the CAI was so concerned about the harm delinquency rates are inflicting on homeowners, they would be demanding that their members put an end to the "priority of payments" bookkeeping practices. But the HOA lobby is not going to let a crisis go to waste when it can be used to expand their powers. The entire HOA industry is a very well run racket, fueled by the dollars collected from homeowners to be used against them.

As Professor McKenzie wrote on March 14, 2007:

Here's how I think CAI [Community Associations Institute] wants things to end up: The BODs [Board of Directors] would have nearly absolute power over homeowners, whose only options, if they feel they have been mistreated, would be to elect a new board or sell their home and move somewhere else. The association attorney and property manager would (and do) control the BODs. CAI trains and organizes the attorneys and property managers. The states would require certification of property managers. CAI would provide that certification. The out-of-control owner-run insurgent groups would be shut out of the policy process and branded as loons and nutcases, and their websites would be shut down. The press would get off the "HOA abuses abound" angle, and instead go to CAI for comment on community association issues, and print the PR line. Particular complaints about abuses would be conclusively presumed to be either a) lies and distortions spread by neighborhood malcontents who couldn't get along with Mother Theresa, or b) unrepresentative anecdotes that fail to capture the true level of mass satisfaction with HOA life. And the state legislatures would pass UCIOA [Uniform Common Interest Ownership Act] and move on from HOA legislation to other matters, like selling the state tollway system to Spanish and Australian corporations to finance free health care and early childhood education for all. Happy ending. That's the desired endgame as I see it. Maybe Tom can correct me if I am wrong.

In response, Tom Skiba wrote that "we aren't convinced that additional government regulation is always the best approach. We believe that individuals and businesses, educated and informed, are vastly better equipped than governments to make decisions effecting their own homes, businesses, and well being." Except of course when they demand that the federal government, through the FHA, subsidize HOA-burdened property. Because individuals and businesses who are truly "educated and informed" know the risks of investing in CAI/HOA-burdened property.

judith l. corey said...

HOAs should be reeling from the increasingly obvious batsh*t level of CRAZY HOA info that's reaching the public!
From ludicrous sanctimonious Board-claimed 'infractions' to 6 figure fines for inane BS - Oh yes, the word is getting out there.
No one is lining up to buy into the CAI sponsored BS anymore, are they? If anyone is looking for a HOME they'd do extremely well not to throw in with the bunch of soon-to-be CAI and HOA losers.
The internet isn't going away folks...Word to the wise: Regulate your crazy little OCD selves before you're holding nothing but crumbling vacant crap homes. Because NO ONE REALLY wants to buy into this insanity anymore.
Oh, but if you really, really do - please see my vacant home for sale on a very nice golf course in New Orleans, because I'll never move back to that nasty hell on earth, the BS is BAD FOR MY FAMILY'S HEALTH...And I should know, I'm a doctor.
Good day.