Thursday, December 31, 2015

Russia eyes trillion rubles from privatization in 2016: finance minister | Reuters

Russia eyes trillion rubles from privatization in 2016: finance minister | Reuters

Here's the way they tell the story:

"Russia aims to raise 1 trillion rubles ($13.53 billion) from privatization next year, Finance Minister Anton Siluanov said in an interview aired on Thursday, signaling a major acceleration of plans to sell state assets. These plans, ambitious on paper, have largely ground to a halt over the last three years against the background of poor stock market conditions, exacerbated by a plunge in oil prices and Western sanctions linked to the Ukraine conflict. However, the same negative economic developments also mean that the government is increasingly strapped for cash, giving it an incentive to speed up privatization as an alternative to raising taxes, cutting spending or exhausting fiscal reserves."


Privatization in Russia is basically another word for corruption, and here they go again. In the US privatization usually means contracting out, regulated monopolies, concessions, franchises, or vouchers. In Russia, as in Europe, it usually means selling off public assets that were built and maintained at public expense, and that now become the property of some plutocrat who is, of course, not paying huge bribes to government officials, so don't ask. In case you were wondering what could be left to privatize, after they sold off the government industries and farms in the early 1990s, the answer is simple: oil companies. After all, as somebody put it, Russia has become a big gas station that produces almost nothing the world wants except oil and gas:
 "He added that "in the first instance" the state oil firm Rosen (ROSN.MM) was being prepared for privatization. Bashneft (BANE.MM), a smaller oil company that was renationalized last year, is also under consideration."

Cintra, Macquarie file bankruptcy on Indiana Toll Road |

Cintra, Macquarie file bankruptcy on Indiana Toll Road |

This is from September, 2014, but I just ran across it. This article lays out the way the "private-public partnership" (PPP) works, using the vaunted Indiana Toll Road privatization as an example.  It starts when a state or local government decides that bonds, taxes, and user fees won't do to pay for a highway or other major infrastructure, so they consult some big investment bank about "creative financing" arrangements. The bank finds some gigantic pools of money floating around--sovereign wealth funds, hedge funds, and so forth--and they "lease" the asset from the state, using bonds to pay themselves back. The lease is for longer than the useful life of the asset.  They set up a shell corporation--called a concessionaire--to operate the highway as a toll road. The toll doubles so the consumer gets hit, the investors get huge profits up front during the next 5-10 years, and then, when the asset is used up and needs work, they bankrupt the shell concessionaire.  The losses fall on whoever gets stuck with the asset after the music stops, or the whole deal gets repackaged for a new investor.  As the article explains:

"They structure the deals to be extremely long leases so that they can depreciate the road as an asset on their taxes. They put very little of their own money at risk as the equity (a mere $800 million out of a total $3.8 billion), and allow the private bond investors and/or taxpayers to take on the risk for the vast majority of its debt. The companies get their own equity back with some profit in just a few short years of collecting tolls. This leaves the other investors to the take the actual losses just about when the road is going to go bankrupt, and often when the road is also in need of major maintenance or rehabilitation."

And at the point the public is stuck with a used-up highway or other asset that they actually need to use to, you know, get to work.  Now, you might think that this scam could be run only once, but it has been done many times. Does it surprise you that Texas thinks this is a great way to do things?  What is even stranger is that this sort of thing is all the rage in Washington. The Treasury and DOT produced this paper: "Expanding the Nation's Infrastructure through Innovative Financing."  It is quite enthusiastic about PPPs, despite the way they work out in practice, often to the detriment of the public:'s%20Infrastructure%20through%20Innovative%20Financing.pdf

But then again, given that so many Americans have been brainwashed into hating the very idea of government, it is no surprise that they allow themselves to become victims of privatization schemes. All you have to do is promise people that "the private sector" is more efficient and that you will eliminate "waste, fraud, and abuse," and ordinary people go along with schemes that cost them jobs and money and wreck the public assets they need. But don't try and tell them that, because they heard The Truth from Fox News or Rush Limbaugh.

If you need more, here is a three-part series that explains it.

Thursday, December 24, 2015

FBI: Financial Fraud Inside the Investigation of a Las Vegas Construction Boss

"When a federal judge sentenced former Las Vegas construction boss Leon Benzer to nearly 16 years in prison in August, it marked a final chapter in a $58 million fraud scheme that took investigators nearly a decade to unravel. Over a period of many years, Benzer brazenly sought to gain control of numerous condominium homeowners associations (HOAs) in the Las Vegas area to secure lucrative construction and other contracts for himself and additional conspirators. To date, 44 individuals, including numerous state officials, have been convicted of crimes in connection with the fraud—which has been described as one of the largest public corruption cases in Nevada history."

This is a summary of the Benzer HOA takeover fraud investigation. The photo above is an undercover operative receiving a $20,000 bribe from one of the principals in the fraud. It was in a baby wipes box. How domestic.

Monday, December 21, 2015

Illinois condo law author arrested for 1973 murder

 "He helped craft laws on which hundreds of condominium associations in Illinois are based but he is also a suspect in two murders. On Monday afternoon, Dr. Donnie Rudd, age 75, will be in a courtroom in Rolling Meadows, northwest of the Loop, for his first hearing since being extradited from Texas."
Donnie Rudd is a man of many parts--lawyer, scientist, maybe murderer?  At one time he had a law practice in the Chicago area with 2000 clients, most of them HOAs. He was one of the co-authors of Illinois condo law:  "Rudd has degrees in law, bioscience, bioengineering, and chemical engineering. He has more than 40 patents, mostly related to cell regeneration, repair of human tissue, and curing diseases to vital organs. He has written 15 books and more than 160 professional publications. In 1983, with state representative Ellis Levin, he co-wrote amendments to the Illinois Condominium Property Act."

However, the police also think that he murdered two people, so there's that.

Sunday, December 20, 2015

Isolated example number 12,345

DENVER - The owner of an Aurora-based community association management company voluntarily surrendered his license after there were complaints he was diverting homeowner association funds for his personal benefit, the Colorado Division of Real Estate announced Friday.
David W. Martin is the owner and designated manager of PMG Enterprises Inc., a community association management company.

Massive HOA faces claims of assessment collection abuse

"Poinciana Villages, with nearly 70,000 residents and 23,000 homes, would be one of the largest cities in Central Florida if it were a municipality. Instead, it's one of the largest private homeowners associations (HOA) in the United States. But now the HOA is under fire for what residents say is a persistent and ongoing effort by outsourced debt-collection agencies to inflate back dues with thousands of additional dollars in legal fees and late charges. Some of the estimated 4,000-plus homeowners whose debt was sold — more than 1 of every 6 homes in the association — say they've never received a line-by-line breakdown of what those fees actually are. And by the time they're able reach someone at the agency, their late fees and legal fees have doubled, tripled, quadrupled and more. At issue, residents say, is the possibility of thousands of owners losing their homes because of ballooning debts that were originally only in the hundreds of dollars."

Because there aren't enough stories of individual owners losing their homes in HOA foreclosures with bogus charges, so it is time for mass-production foreclosure, using private debt-collection agencies.

HOA fraud king Leon Benzer gets 15 1/2 years in prison

"Former construction company boss Leon Benzer, the man behind the massive scheme to take over and defraud Las Vegas-area homeowners associations, was sentenced Thursday to 15 ½ years in federal prison.  U.S. District Judge James Mahan also ordered Benzer to serve five years of supervised release after prison and pay $13.4 million in restitution. Benzer, 48, who pleaded guilty to conspiracy, fraud and tax evasion charges, is to surrender to prison authorities Nov. 6."

So ends the biggest white collar crime prosecution in the history of Las Vegas--eleven HOA taken over by a fraud ring and used to steal millions of dollars. But (see post below) we are not going to see the evidence, which remains sealed by virtue of the US Attorney's office and the federal judiciary. My view is the public needs to learn from this case. We have here the worst example ever seen of HOA private governments being taken over by vendors--contractors and lawyers, mainly--who used them like ATMs. These were people who knew the HOA industry from the inside--who knew how easy it can be for a small group of self-interested people to take over an HOA board of directors, because of the culture of non-participation that prevails in far too many common interest developments. This is a serious problem all over the country--in fact, all over the world.  Nothing is going to change this situation--most people just don't want to be bothered with paying attention to the affairs of their HOA. Their lives are too busy already.  The day will never come when owners live up to the ridiculous expectations that this institution imposes on them. The people who own units in CIDS are just consumers of a mass-produced product, and they need to be protected against the possibility that predatory industry insiders might take advantage of them. I realize that most lawyers, managers, and contractors are trustworthy, but owners have insufficient protection against those who are not. The prosecutors and judges need to open these files so the public and the media and the academy can see exactly how this scheme worked. Then legislators can take the necessary steps to fix this--starting with mandatory full public disclosure of the financial status of every single HOA and condo association.

Evidence in Las Vegas HOA prosecution remains sealed

"A total of 43 defendants either pleaded guilty or were convicted at trial in what prosecutors say is the largest public corruption case ever in Nevada. Prosecutors opposed dissolving the two protective orders — especially the one that covers the leak investigation, which focused on concerns that Quon was getting confidential information from the Nevada U.S. attorney's office and possibly elsewhere. The Justice Department in Washington took the reins of the HOA investigation after those allegations surfaced. The leak investigation delved into personal and romantic relationships of public officials who have not been charged criminally or disciplined administratively, Justice Department prosecutors argued. Foley shared the government's concerns in his order. "The government has made a sufficient showing that disclosure of these documents would potentially cause unfair prejudice to the individuals who were the subjects of the investigation, but to whom no charges, criminal or administrative, were ever brought," he wrote."

It has been reported since the start of the prosecution that Washington took over the prosecution because people in the local US attorney's office, and possibly one or more judges, were passing information to attorney Nancy Quon, one of the principals in the fraud ring. She committed suicide. And now the US attorney's office and the federal judiciary have decided that nobody gets to see the evidence in the HOA fraud case--6 million pages of documents.  Is that because it includes evidence that might make the US attorney's office and the federal judiciary look bad?

Wednesday, November 25, 2015

Police bust weekly mahjong game played by elederly women

Local cops, having solved all the other crimes, decided to bust a mahjong game. The perpetrators range in age from 87 to 95. Who called the cops?  Condo management. It would appear that in fact they didn't violate any law, but I suppose the giant wheel of justice will have to grind all this into dust and answer that question.

Tuesday, November 10, 2015

When residents clash with homeowner associations, some states step in

"Has your homeowner association fined you for painting your house purple? Have you ignored requests to pay annual maintenance fees for your condo’s clubhouse and swimming pool? Has your association refused to let you see its financial documents These are the types of conflicts that frequently erupt between residents and homeowner or condo associations. Some can get quite heated – or downright nasty. A small, but growing number of states are trying to tackle the problem by creating ombudsman or homeowner information offices to handle the deluge of complaints that often land at state and local agencies. The goal is to educate residents and association board members about their rights and responsibilities under the law and help settle disputes before they wind up in court."
More state oversight of HOAs and especially condo associations is necessary, but it isn't clear what form it should take. I think ombudsperson offices are a good start, but not everybody agrees with that approach.

Read more here:

Wednesday, November 04, 2015


Joel Kotkin shows that sprawl and the exurban lifestyle are as popular as ever. This means more new HOAs and condos, so the die-hards who think they are going to abolish CID housing may want to read this.

"It’s time to put an end to the urban legend of the impending death of America’s suburbs. With the aging of the millennial generation, and growing interest from minorities and immigrants, these communities are getting a fresh infusion of residents looking for child-friendly, affordable, lower-density living."

Wednesday, October 28, 2015

New Jersey: More accountability for HOAs?

"More than 1 million New Jersey residents live in communities with homeowners associations. The top Republican in the state Senate said people pay hard-earned money in dues to these associations, and they deserve some transparency. Senate Republican Leader Tom Kean (R-Westfield) said he is pushing to expand and update the “Planned Real Estate Development Full Disclosure Act,” which hasn’t been changed since 1993.

“This legislation focuses on accountability as well as transparency,” Kean said. “It’s time to update a 22-year-old law.”
Kean has introduced the “Association Homeowners’ Protection Act of 2015″ (S3235). The measure would require:

  • Homeowners associations to provide a copy of homeowners’ association insurance policies, which are needed to start personal home insurance claims processes. The association member would have to request the copy and it would have to be sent via email within 24 hours, or hard copy within 48 hours.
  • Homeowners associations to offer a 24-hour emergency phone number for members.
  • Homeowners associations to provide information including contact numbers for board members, as well as the most recent budget and all insurance information.

“That should be a transparent flow of information, so people have access to how their money is being spent,” Kean said. “The over 1 million New Jersey residents who are part of these associations pay hundreds, if not thousands, of dollars every year to be part of these associations. It’s simple common sense that they should have access to timely information.”

Is that what you call R-E-S-P-E-C-T?

"Pontiac — A Bloomfield Township condominium association wants to foreclose on a property owned by legendary soul singer Aretha Franklin for non-payment of more than $11,563 in fees and maintenance assessments. The lawsuit, filed by the Hills of Lone Pine Association, an exclusive gated community in Bloomfield Hills, names Franklin, Ally Financial Inc. and CitiMortgage Inc. as responsible for the unpaid assessments on a 4,148-square-foot condo valued at $695,380."

Monday, October 26, 2015

State condo ombudsperson offices becoming "a thing"

"Has your homeowner association fined you for painting your house purple? Have you ignored requests to pay annual maintenance fees for your condo’s clubhouse and swimming pool? Has your association refused to let you see its financial documents?
These are the types of conflicts that frequently erupt between residents and homeowner or condo associations. Some can get quite heated — or downright nasty.
A small, but growing number of states are trying to tackle the problem by creating ombudsman or homeowner information offices to handle the deluge of complaints that often land at state and local agencies."
Yes, they are. Because the old model--no regulation of the relationship between BODs and members except civil litigation--is failing.

Monday, October 19, 2015

Active duty sailor loses home to unpaid HOA fees

Here we go again:

"JACKSONVILLE, Fla. -- The home Mark Bryant purchased in 2006 is modest but he loves it. "I worked real hard for my house," he said. While stationed at Mayport, the gunner's mate purchased the house in the Creekside subdivision with hopes of returning to Jacksonville when he retires.  "Now it is being taken away from me due to a wrongful foreclosure," he said. Bryant is still active duty in the Navy, stationed in Virginia. He lost his home because of $750 in unpaid homeowners association fees. "It has been stressful," said Bryant. How did this happen? His documents show he was stationed in Bahrain during the two years the fees went unpaid -- 2012-2014. Bryant said he was never notified. Court records show an unnamed woman was served in Virginia at a previous address. Bryant said the unnamed woman in the record is not his ex-wife. "When I got back from deployment October 2014," said Bryant, "there was an eviction notice on the property, and that is the first time me actually knowing." The HOA fees went from $750, but when you add interests, late fees, court costs, attorneys fees, it jumped to $4,734.03. The property was foreclosed and sold for $10,300."

Concord (VA) homeowners struggle to get roads paved

"The Holiday Forest subdivision in Concord has been fighting a 40-year battle to get all of the neighborhood’s roads paved."

Yes--but the state doesn't want to do it because they are private roads.  The picture concerning who is responsible for the hefty price tag now is complicated:

"A 1975 letter from VDOT to the then county administrator stated “I was amazed to find a number of streets constructed in a rather haphazard manner with apparently no regard for proper drainage design.” To pay for maintenance of the unpaved roads, the homeowners’ association collects $100 per house or $90 from an undeveloped lot. Goldman said they have an annual budget of $15,000 to $17,000 to maintain the roads. If the association were to raise rates, homeowners can cancel their membership in the association, as stated in association’s by-laws. The by-laws also state the association will dissolve in 2025, he said. When the subdivision was created in the 1970s, the old subdivision ordinance stated if all new lots were five acres or more, all roads within the subdivision were privately maintained and not maintained by VDOT. The subdivision was developed by Holiday Forest Corporation. “Also over the years, the homeowners have complained about the roads and decided they would rather have state maintained (roads),” said Campbell County Community Development Director Paul Harvey. About half of the roads in Holiday Forest have been taken over by VDOT but five miles still remain unpaved and under the care of the property owners’ association."

Monday, October 12, 2015

As flood recedes, skinflint South Carolina faces huge infrastructure tab, limited federal aid

"COLUMBIA, S.C. (AP) — Long before the historic floods of the past week, crumbling roads, bridges and dams and aging drinking water systems plagued South Carolina — a poor state that didn't spend much on them in the first place and has been loath to raise taxes for upkeep. Now the state faces hundreds of millions if not billions of dollars' worth of additional bills to fix or replace key pieces of its devastated infrastructure."
Here we have before us the best evidence to date that the current rage for privatization of infrastructure is a terrible idea.  South Carolina has gone the full magilla with this approach and where has it left them?  

The Associated Press

Halloween yard displays go over the top

It's that time of year again, when people decorate their homes in traditional fashion with simulated bloody torture victims wrapped in plastic. Nothing says Halloween like somebody nailed to a cross upside down in the front yard, with syringes jabbed into his neck. At least, that's what some people think. And then the neighbors freak out. No doubt the HOAs will soon swing into action. Personally I generally settle for a few pumpkins, which makes me popular with the squirrels. 

Sunday, October 11, 2015

Private dams = bad infrastructure

The US media love to run any story from anti-government propagandists about anything a local government does wrong. But look how they ignore the failures of privatization. Most of the nation's dams are privately owned and many of them are supposed to be maintained by HOAs. Here's a rare story where, if you read down far enough, you can get to the point. Developers built thousands of dams, didn't build them right, and private associations have been maintaining them, with results that are not impressive, as evidence by recent events in South Carolina: "...while states might pay or contribute to the repairs of those dams that are publicly-owned, most dams in the country are privately owned, which puts the onus on private parties and associations."

Condo owners to dump Trump

Trust fund baby and pseudo-populist charlatan Donald Trump is involved in lots of condo deals. Some say that he is no longer a real estate developer in the true sense of the word, and hasn't been since the early 1990s. Now he makes big bucks renting his name for other people's projects, which leads lots of ignorant, gullible rubes to buy in (probably the same dunces who think he'd make a great president).  If things go south and the project never gets built out, and the lawsuits rain down, he just says he was only paid to put his name on the development and has no responsibility. Here's another lawsuit with some troubling allegations:

"The building's residents and condo owners had invested in the namesake, a 70-story waterfront tower along Panama Bay, on the strength of Trump's reputation. But during the four years that Trump Panama Condominium Management LLC had managed the property, Central America's largest building, a team installed by the Trump family was accused of running up more than $2 million in unauthorized debts, paying its executives undisclosed bonuses and withholding basic financial information from owners.
The Trumps had done all of this through fine-print chicanery, the board said. A clause in many residents' purchase agreements prevented them from voting against the Trump company's wishes. That allowed the Trumps to install their top employee as chairman and the residents' representative on the board — even though the Trumps' actual stake in the building's residential area was merely a storage closet on the 15th floor."

Saturday, October 10, 2015

Why I've been off the air

I've been keeping up this blog since 2003, but this summer I went off the air for several months because of some events that absorbed a great deal of my time and energy.  My mother died in July at the age of 93, in Pasadena, California. I became the executor of her affairs, there have been many things to attend to, and the emotional side of a loss like that is never easy, as I'm sure you know.

At the same time, through a chain of unusual circumstances I ended up teaching an intensive summer course on urban politics at UIC. Then on the heels of that, I went to Australia for a week to give the keynote address at a conference on condominium housing (which they call "strata title").  This was a fantastic conference in an amazing country, but by the time I returned I was behind in my work. To add the final straw, I was made head of the Political Science Department at the University of Illinois at Chicago, and I've been on the learning curve with those additional responsibilities, in addition to teaching two Fall courses with a total of 172 students.

All three of my children started at new universities--two as freshmen and one as a graduate student--and that meant move-outs and move-ins.  I certainly logged some travel miles--this summer I had trips to Israel, Australia, Phoenix (driving back with my oldest son in a 1997 Nissan Pathfinder with 200,000 miles and no air conditioning, in July), Los Angeles, and Springfield, IL.

So that is why I haven't been able to stay current with this blog--but I hope people will continue to send me items, because I'm back on the air.

Is living in a steel box the future of housing?

Coming to a condo association near you, someday?

Friday, October 09, 2015

South Carolina: HOAs do a terrible job maintaining dams, causing massive flooding

I've been away from this blog for quite a while because events in my life made it hard for me to focus on it. I have a lot to report on and I'll try to get to it over the next week or so.

First up:  the media has reported extensively on the massive flooding in South Carolina. One angle hasn't been reported much, even though it is at the heart of the problem.  South Carolina is one of these states where they brag about how low their taxes are and how useless government is. But the reason the flooding is so bad is...privatization. They keep taxes low by not spending much public money on maintaining infrastructure like, oh...dams, for instance. Instead they trust developers to build them, and homeowners' associations to maintain them.  And surprise, surprise!  Many HOAs are doing a perfectly terrible job of maintaining the earthen dams that keep water from wrecking other people's neighborhoods.

Tuesday, June 30, 2015

Feds fighting to keep Las Vegas HOA fraud files secret

"Federal prosecutors are fighting to keep secret the mass of evidence in the long-running investigation into the scheme to take over and defraud homeowners associations. Lawyers with the Justice Department’s Fraud Section in Washington filed court papers late last week opposing the Las Vegas Review-Journal’s request to dissolve two protective orders that withhold documents in the high-profile case from the public. Attorney Maggie McLetchie, representing the newspaper, argued in court filings June 9 that the public has a right to see the evidence, most of which has long ago been turned over to defense lawyers. With most of the 42 convicted defendants sentenced, the epic case is essentially over."
Kind of makes you wonder what they don't want the public to see, doesn't it?  Permit me to do a bit of speculating. I have no special inside knowledge of any of this, but I have read the press coverage carefully, particularly Jeff German's exceptional reporting for the Review-Journal. 
When the scandal first became public, a number of story lines popped up briefly in the press and then were submerged as the prosecution went forward and the focus shifted to the way the case was unfolding, day to day.  I think these unresolved story lines are why the Review-Journal is after the records, and that may be why the DOJ is fighting to keep them secret.  For example:
1.  Did anybody in the justice system--prosecutors or judges, perhaps--tip off the fraudsters about what was happening inside the investigation?  There were stories suggesting that this may have happened.
2. Why did the DC office of the DOJ take the case away from the local US Attorney's office?  Why did the private attorney who blew the whistle on all this have to do his own investigation and present it to the government gift-wrapped in order for anything to happen?
3. Was this ring--with 42 convictions--not the whole operation? Were there other people involved who didn't get prosecuted?  
4.  Was this ring linked to organized crime at a higher level, as in what we call here in Chicago "The Outfit"?  There were suggestions of that in the press early on, but that angle was not pursued in the DOJ's case.
5. Are there other HOAs and other HOA vendors in Las Vegas or nearby where the same sorts of things are going on, but without prosecution or even investigation?  What turned up in the investigation regarding how prevalent HOA takeover by contractors, and sweetheart deals, really are, in Vegas and elsewhere?
So I hope and trust that the court will open up this investigation so we can have answers to these and maybe other questions.

Wednesday, June 24, 2015

Man Who Created The Pink Plastic Lawn Flamingo Dies : The Two-Way : NPR

Man Who Created The Pink Plastic Lawn Flamingo Dies : The Two-Way : NPR

"If you've got a plastic pink flamingo on your lawn, give it a pat on the back. The man who designed the lawn art, Donald Featherstone, has died. He was 79."


That's quite a legacy. The symbol of the homeowners' rights movements, too.

Tuesday, June 23, 2015

Dying woman who turned her yard into a giant SANDBOX so she didn't have to mow the lawn threatened with jail if she does not clean it up

"A Missouri woman who says she has about six months to live has been threatened with jail time and fines if she does not remove the sand in the front yard of her home.
Georgianna Reid has lived in her home in Brookside, Kansas City, for more than 33 years, but covered the front of the house with 80 tonnes of sand three years ago, in an operation that cost her $4,000.

'I would say I'm putting in the largest litter box in the world,' said Reid of her unusual approach to landscaping last year.

But the local council and her neighbors don't see it as the beach-like oasis Reid does/Reid received a letter from the city that said she has 10 days to remove the sand from her yard or she will face up to 180 days in jail and a $1,000 fine, KSHB reported.'I called the city, I asked permission, not once but twice,' Reid told the network.She said she gave the yard a facelift because she had grown tired of mowing and watering it."

Read more:
Follow us: @MailOnline on Twitter | DailyMail on Facebook

Read more: 
Follow us: @MailOnline on Twitter | DailyMail on Facebook"
She says she'll take the sand out of the yard as ordered, but she's going to replace it with asphalt. Prepare for Round Two...

Wednesday, June 17, 2015

Israel conference on residential private governmnet

I just got back from the Interdisciplinary Center at Herzliya, Israel, (known as IDC Herzliya) where I attended a conference on private communities and presented a paper. It was a wonderful experience in many ways, because I made new friends, learned a great deal about  what is happening with common interest housing in other nations, and visited Israel for the first time. You can read about it by following the link below. We are producing a book from all the papers we wrote, and there will be more research to come after that.  These were mostly lawyers and law professors, which is a different network than the urban planners, geographers, and social scientists who populate the other international network of private government scholars I'm associated with.

Here are a few notes:  Insolvency of condominium associations is a significant  problem in other nations--it isn't just a US problem.  And owners are ultimately liable for the debts of their associations in other nations, not just the US.  Most US condo and HOA owners don't know they are potentially on the hook for their associations debts, by the way.  In Spain, everybody has to rotate as a BOD member, like it or not.

Monday, June 08, 2015

How the rise of gated spaces like swimming pools can quietly perpetuate racial tension - The Washington Post

How the rise of gated spaces like swimming pools can quietly perpetuate racial tension - The Washington Post

This horrible McKinney, Texas, incident, with a cop brutalizing and menacing black kids while white people saunter around and manhandle the teenagers themselves, is instructive.  It is no accident that it happened in an HOA, nor was it an accident that Trayvon Martin was shot to death by "neighborhood watch volunteer" George Zimmerman in an HOA. These associations first became popular in the US as a way to enforce contractual bans on selling homes to African-Americans. And after Brown v. Board of Education in 1954 banned separate but equal public accommodations, private swimming pools became available (for only the white residents) in your local HOA. The boom in HOAs began in the years immediately following the Brown decision, and one factor was that the real estate industry decided this was a way they could continue making money peddling racial segregation. There were other factors, but segregation was, and still is, one of the reasons so many white people want to live in private and especially gated communities.

"As Yoni Appelbaum points out over at The Atlantic, this context is particularly freighted: For decades, swimming pools in America have been sites of racial exclusion. Many of the fights to desegregate communities and public resources in the 1950s were waged over access to swimming pools. And the way they're used to this day still reflects a sweeping trend — more subtle in its exclusion but no less pervasive — that arose from that era. As public resources were desegregated in American cities, communities increasingly found ways to privatize them. In McKinney on Saturday, the black teens were not using a public pool. They were swimming, rather, in the communal pool of a private community in the predominantly white part of town where civic resources like parks and pools are funded directly by homeowners."

Thursday, June 04, 2015

VT woman builds 60-foot by 24-foot 'screen' to block view of neighbor's home | Local News - WPTZ Home

VT woman builds 60-foot by 24-foot 'screen' to block view of neighbor's home | Local News - WPTZ Home

This is a new one: fabric privacy screens for homes. It's only a matter of time before they come to Privatopia and join flagpoles, flags, swingsets, clothelines and treehouses as the latest battlefront between the HOA commissars and inmates.

'Naughty Neighbors' face HOA lawsuit in Parker County

So it turns out that a swingers club operating out of a 4000 square foot home in a gated community is a business, according to this HOA.
The suit argues that the late-night parties are business operations because charges of up $75 per couple are listed on advertisements for the events.
HOA policy doesn't allow for businesses within the neighborhood. Specifically, the petition states that Carter is "...operating a business in violation of the Covenants which has become obnoxious, offensive, an annoyance, and a nuisance to the neighborhood, which is also a violation of the Covenants."
Other neighbors who spoke with News 8 but asked not be identified also expressed concern about the nature of the parties, and about the noise and clientele driving through the neighborhood late at night.
It wasn't immediately clear if the operation violates any county ordinance.
The lawsuit asks for an injunction, as well as attorney's fees and unspecified damages.

Wednesday, June 03, 2015

Vendors Flood Market with HOA Super-Lien Services | News

Vendors Flood Market with HOA Super-Lien Services | News

"Laws that give homeowners association debts "super lien" priority over all other claims have been a long-standing threat to servicers. But it wasn't until a pair of recent court rulings came out in favor of HOAs that industry vendors started to look at their existing data and technology to develop products for servicers to manage these risks. There are super lien laws on the books in 21 states, plus Washington, D.C. Historically, they've rarely been invoked, but when they are, the results can be devastating for mortgage debt holders. In a Nevada case ruled on last year, the first-lien mortgage holder lost its claim to an $885,000 debt because of $6,000 in delinquent HOA dues. "That gave everybody the awareness that this is not something that they should take lightly," said Ann Song, vice president of REO management for LRES, an industry vendor that recently launched HOA lien services for originators, servicers and investors...Vendors that have flooded the market with super lien-related products include Black Knight Financial Services, CoreLogic and LRES, as well as a partnership that incorporates services from MMREM and Equifax. The vendors all say their services can identify properties subject to super-lien laws and check for active HOA liens. LRES and MMREM will also help servicers negotiate HOA lien disputes. (The two vendors are both REO management companies, while LRES also has an appraisal services unit.)"


Superlien statutes give HOA/condo association liens for unpaid assessments priority over the first mortgage, at least in some amount. They vary from state to state.  The idea is to protect the association from having its entire lien wiped out when the bank forecloses on the first mortgage and there is nothing left over to pay the association for unpaid assessments prior to the foreclosure.  The solvency of community associations hit the radar screen of policy makers since the crash of 2008. Foreclosures wrecked a lot of homeowners' lives and also left an enormous number of associations in terrible financial shape.

Tuesday, June 02, 2015

Many earthen dams on private property are behind on repairs | The Columbus Dispatch

Many earthen dams on private property are behind on repairs | The Columbus Dispatch

"Almost 43 percent of the high-hazard earthen dams in Ohio are on private land — about 200 in all. They’ve been designated as such because if the dams fail, people who live in the water’s path likely will die. Like those owned by the state, private dams pose a serious threat in part because the Ohio Department of Natural Resources, the state agency that inspects dams, goes easy on dam owners. It lets some dams remain dangerous for decades as it tries to negotiate repairs. Owners also are to blame: They often are ignorant about dam safety and lack money for repairs. “I think people are not aware of the liability that comes with the dam. ... There’s potential for great disaster, and people don’t realize that,” said Hans Gottgens, a professor of environmental sciences at the University of Toledo who has studied dam failure."


The condition of public infrastructure in this country is deplorable, and private infrastructure may be even worse.  But we are doing a great job of blowing up infrastructure in other countries and then paying private contractors to rebuild it. So there's that.  Thanks to Deborah for this link.  By the way, take a look at this list of high speed rail miles of track by country and see where USA ranks. This is what happens when a country is run by people who think the only proper roles of government are to make war and to serve as a source of plunder for the rich.

Monday, June 01, 2015

How California Homeowners Are Dealing with Drought | Digital Trends

How California Homeowners Are Dealing with Drought | Digital Trends

"Per the new regulations, watering lawns within 48 hours of “measurable” rainfall is a finable offense. Some people are forgoing their lawns all together, either following the State Water Resources Control Board’s urgings to let the die or finding creative solutions. Some are painting their lawns green. Others are ripping them up and putting in artificial turf (to the dismay of homeowners associations) or shrubs and plants that thrive in drought conditions (known as xeriscaping), thanks to rebates available in some areas."


Maybe the political system's reflexive deference to HOA regulations has finally run out, along with the state California's water supply. After all these decades of state legislatures and courts acting like the whims of some long-gone developer and his lawyer are holy writ, it would be nice to see some recognition that private law-making is subordinate to public policy.

Sunday, May 31, 2015

Franklin HOA settles suit after denying room for disabled kids

Franklin HOA settles suit after denying room for disabled kids

File this one in the "some people never learn" category:

"A Franklin homeowners association has agreed to pay $156,000 to parents who said they were unfairly barred from building a therapeutic space for their two children with Down syndrome. The specially designed sun room would have been a place for Charles and Melanie Hollis' young kids to play and receive physical therapy, but the Chestnut Bend Homeowners Association denied their request to construct it based on concerns about the way the addition would look, a 2012 federal lawsuit alleged. That, the lawsuit said, constituted discrimination and a violation of the Fair Housing Act, which makes it illegal for agencies to turn down what are called "reasonable modifications" that make it possible for residents with disabilities to more fully enjoy their homes."

Homeowners sue Barrington Hills after tree dispute bars them from moving in - Barrington Courier-Review

Homeowners sue Barrington Hills after tree dispute bars them from moving in - Barrington Courier-Review

"Homeowners have sued the village of Barrington Hills after being denied permission to move into their newly built mansion because of a dispute over the number of trees on the property. Najamul and Nausheen Hasan built a 9,200-square-foot estate on a five-acre lot they purchased in 2007, but they sued last week after they were recently denied an occupancy permit by the village. The Hasans claim in the suit that the village's tree ordinance — spelling out how builders must replace the trees that they remove during construction — is unconstitutional. They also say their civil rights are being violated, and that the matter is "of an emergency nature" because they have leased their residence in Hoffman Estates after being told by the village's building officer that they would be granted a temporary occupancy permit. The temporary permit for occupancy was later denied."


This complicated dispute about the number and species of trees that the Hasans are supposed to plant, to replace the ones they cut down during construction, all started when the president of the HOA contacted the village of Barrington Hills.  She says she "speaks for the trees."  Remember the Lorax, from Dr. Seuss? That's what he said. One of my favorite stories, by the way--not to take sides in this Barrington Hills tree saga.

Saturday, May 30, 2015

Foreclosure scam ordered to repay $11M to distressed homeowners | TheHill

Foreclosure scam ordered to repay $11M to distressed homeowners | TheHill

"The lawyers behind a foreclosure scam were ordered Friday in federal court to repay more than $11 million that it took for vulnerable homeowners. The Consumer Financial Protection Bureau and the state of Florida accused the scammers, led by the Hoffman Law Group, of tricking distressed homeowners into joining frivolous lawsuits that would supposedly provide foreclosure relief."


After the housing market crashed in 2007-08, a whole lot of "foreclosure rescue" businesses were set up. Many of them were nothing more than fraud rings and they operated for years--with many still in business.  It's a great example of how little our policy makers care about homeowners and how much they care about banks.

New law aims to lift artificial turf ban on HOA property | FOX5 San Diego – San Diego news, weather, traffic, sports from KSWB

New law aims to lift artificial turf ban on HOA property | FOX5 San Diego – San Diego news, weather, traffic, sports from KSWB

"CHULA VISTA, Calif.  — On the heels of new water regulations that start Monday across San Diego, one answer to California’s massive drought may come in the form of something fake. There’s a turf war brewing over a bill making its way to the State Senate. The bill would make it illegal for homeowners associations (HOAs) to prohibit fake turf."


This has passed the Assembly. If it passes the Senate, I hope the Governor signs it this time.

HOA tows heart attack victim's car from neighborhood - News3LV

HOA tows heart attack victim's car from neighborhood - News3LV

"Virginia says she also heard her car was towed because it was in the same spot for more than 72 hours. "Just because my mom doesn't drive her vehicle very often, doesn't give them the right to tow it," says Jason Lenderman, Virginia's son."


Of course this story doesn't have all the facts, but this sounds like one of those all-too-common situations where the owner is outraged and the media coverage implies that the association is being unreasonable, but when all is said and done the association has the law on its side and they can do this is if they want to.  So it's just a question of whether they want to put up with the bad press.  

The Supreme Court Could Transfer A Lot Of Political Power Away From Cities | FiveThirtyEight

The Supreme Court Could Transfer A Lot Of Political Power Away From Cities | FiveThirtyEight

The conservative majority on the Supreme Court seems to have decided that they need to get their thumb on the scale of partisan politics. They have destroyed campaign finance regulation, they gutted the Voting Rights Act, and now they have two redistricting cases that could give the Republicans a huge advantage--which they just happen to need, because their voters are dying off. Coincidence? Sure.

Thursday, May 21, 2015

Las Vegas HOA takeover fraud ring sentencings

There are many sentencings going on this week in the multi-million dollar Las Vegas HOA takeover fraud prosecution.  I believe the number of people convicted stands at 38, and they include attorneys and former police officers.  I will post a summary of these sentences when the dust settles.

Man charged in $4.1 million condo fraud

Man charged in $4.1 million condo fraud

Oh, Canada:

"A St. Catharines man has been charged with defrauding 13 Hamilton and Burlington condominium corporations of $4.1 million. Police say Brett Mackenzie Leahey, 45, acted as the owner/operator of Integrated Condominium Management, a property management firm responsible for servicing and managing the finances of 10 condominium corporations in Burlington and three in Hamilton."

Using Drones To Enforce HOA Violations

Using Drones To Enforce HOA Violations

See the article below, in which I guess nobody knows whose drone is involved. But be aware that the CID industry, which is basically a whole lot of businesses who want to sell their services and products to HOAs and condo associations, is thinking about droning it up.  Ward Lucas thinks so. See this article from HOA Institute, which I think is by attorney Clint Goodman:

"Since the spike in private ownership of remote-controlled drones, more of us are asking whether homeowners associations can (or should) be using drones to enforce HOA violations.  There are mixed feelings about HOA drones.  Some are worried about privacy.  Others think their use will lead to abuse and “unreasonable enforcement” because it has too much of a “big brother” feel.  Others believe that technology is supposed to make life easier and having drones for their HOA’s code enforcement will significantly reduce the time and expense traditional enforcement brings.  Whatever your opinion is, when (not if) drone enforcement becomes a reality, associations need to be careful that the association uses them with prudence. Right now HOAs cannot use drones “commercially” without FAA approval.  Whether enforcement drones in HOAs are considered “commercial use” depends on who is using them and how.  For example, use of a drone is likely not “commercial” if it is privately owned by the President and used by the President or another director without pay.  Conversely, hiring a company to use drones for code enforcement may cross the line, at least right now.  If Amazon can get permission to do it, I have a feeling we will see the use of drones in the commercial context across the board very soon."

Homeowner’s association puts end to family’s ministry - The Newnan Times-Herald

Homeowner’s association puts end to family’s ministry - The Newnan Times-Herald

This nice Christian family started a volunteer project to collect and distribute household items to needy families, and eventually they incorporated it as a not-for-profit. That's when the HOA struck:

“We started, literally, out of our garage, collecting items. We got a P.O. box, we rented a storage unit which filled up rather quickly,” he said. They have storage space at their church, Vineyard, for linens, a food pantry at Turin United Methodist, and mattresses and beds in the storage unit.

Everything else went into their garage. But not anymore. The Novaks were recently cited by their homeowner’s association for conducting a business out of their home.

The citation, issued April 9, said, “Please do not conduct a business out of your home.”

Exclusive: Brickell Key Woman Says Drone Spied On Her As She Breastfed « CBS Miami

Exclusive: Brickell Key Woman Says Drone Spied On Her As She Breastfed « CBS Miami

"MIAMI (CBSMiami) — Imagine you’re in the privacy of your own home — possibly in a compromising position — and you turn around and  see a drone just a few feet from you. A Brickell Key woman says that’s what happened to her while she was breastfeeding her child earlier this week inside the family’s 12th floor condo."


I guess with this technology available now we are going to need new laws to protect us, and that's what is happening in Florida:

"Alessi’s privacy concerns are real, says Michelle Richardson with the American Civil Liberties Union. Richardson pointed to a new Florida law that will go into effect this summer — called the “Freedom from Unwarranted Surveillance Act” as a good first step towards regulating drones. Richardson said the law will impose civil penalties on drone users that capture images of unknowing people on private property where a person has a reasonable expectation of privacy. “When you’re talking about looking into people’s homes and violating individual privacy, it’s an unchartered area,” Richardson said. “And we’re really doing this for the first time in Florida.”

Tuesday, May 19, 2015

Las Vegas HOA takeover fraudster sentenced

This week a bunch of the 38 convicted criminals involved with the Las Vegas HOA takeover scheme are being sentenced.  This one escaped prison.  I'm going to do a summary of  all this soon.

The message of this is obvious--HOAs and condo associations are fragile institutions that are totally dependent  on the resources of their owners.  By resources I mean money, time,  loyalty, and expertise.  With virtually no governmental oversight and most residents not paying attention, it is  easy for associations  to be taken over by groups of people who don't have the  community's best interest in mind. Some are just petty neighborhood dictators, some are looking to engage in self-dealing to help  themselves and their friends, and some are fraudsters.

HOA insurer not obligated to defend suit against HOA board absent underlying liabiltiy claim, court rules

In the past, insurers were readily inclined to defend most any legal action brought against an HOA board of directors even if there was no underlying claim of liability or damages such a lawsuit seeking equitable relief ordering the board to comply with the governing documents or state or federal law.

That may be changing if a recent Kentucky case is any indication. A Kentucky federal district court ruled an insurer had no duty to defend a claim under an HOA policy's directors and officers coverage, reasoning that D&O coverage is intended to shield corporate directors and officers for personal liability and not to protect the corporate entity itself.

Click here for a summary of the ruling in State Auto Prop. & Cas. Ins. Co. v. Highland Terrace Counsel of Co-Owners, Inc., 2015 U.S. Dist. LEXIS 59663 (W.D. Ky. May 7, 2015) by Traub Lieberman Straus & Shrewsberry LLP.

American condo buyer losing condo in Mexico due to liens

It appears that this unfortunate woman bought a Mexican condo as a retirement home, only to discover later that several Mexican workers had liens on the condo because of a pay dispute with the developer. A judge ruled in the workers' favor, and now they own what used to be her condo.

Wednesday, April 22, 2015

Two conversations about constitutional rights

We have two different conversations about constitutional law. One is this hyper-technical purely legal analysis you see from lawyers and judges. The other is what really happens. So in this case, hooray, there are limits on the length of traffic stops, according to the USSC. But the other conversation says that if you get assertive about your constitutional rights in a real traffic stop, they won't let you go. Instead, you might get beaten, tazed, or shot.  The cop will likely face no consequences, just by claiming you resisted, or posed a "threat," or "he reached for his waistband." None of it needs to be true because a "reasonable mistake" is good enough. So, what good are rights if cops don't respect them and get away with violating them, day in and day out? The technological fix being proposed is video--dash cams and body cameras--and that may help, but the overriding problem is that police are drunk with power in this country. They can get away with almost anything and they know it. The can manipulate the on-the-scene situation, they investigate themselves, they have the union and prosecutors and most judges on  their side, and they are professional witnesses. Until that power situation changes, I think these USSC pronouncements are only meaningful in a small number of cases that get fully litigated. For thousands of day to day interactions between citizens and police, these "big decisions" are largely irrelevant.

Tuesday, April 14, 2015

House Republicans want to do away with consumer protections for mobile home buyers

I just listened to (Vice) Presidential candidate Marco Rubio make the argument that Big Government regulation is the reason ordinary people are getting screwed by banks. If you can believe that, you can believe the Republicans have your best interests in mind, mobile home owners:

"The House will vote Tuesday to repeal consumer protections for low-income borrowers in rural America who have seen the promise of affordable housing turned into a financial sinkhole by a mobile home industry that makes pre-manufactured houses far more expensive to buy than they need to be.
The bill is part of the GOP majority’s campaign to chisel away at specific pieces of the Dodd-Frank financial regulatory overhaul that became law in 2010 but which left many details to be filled in later by regulators. In this case, it was the Consumer Financial Protection Bureau (CFPB) that did that filling. After long study of both publicly-available data and proprietary information from the industry itself, the CFPB began enforcing new consumer protections for people who borrow money for a manufactured home. When Rep. Stephen Fincher’s bill to roll back those regulations passes on Tuesday, the rules will have been in force for barely 15 months. The mobile home financing market is an esoteric landscape for a battle between consumer advocates, regulators, and politicians. Compared to the American Dream trappings that come with traditional homeownership, families in mobile homes don’t have much cultural cache."

Monday, April 13, 2015

HOA oversight bills die in Florida

"Homeowners hoping for more state oversight of the association boards that rule their communities are out of luck this year as legislation to increase scrutiny of HOAs died for lack of support in Tallahassee.  It’s the second year in a row that proposals to give the Department of Business and Professional Regulation power to investigate complaints against homeowners associations and create educational programs for HOA board members failed to even make it to a single committee hearing."

Saturday, April 11, 2015

WTVC NewsChannel 9 :: News - Top Stories - Utah Homeowner Asked To Remove US Navy Flag From Home

WTVC NewsChannel 9 :: News - Top Stories - Utah Homeowner Asked To Remove US Navy Flag From Home: (KUTV) A homeowners' association in Lehi is facing backlash online after sending a letter to a resident and telling her to remove a U.S. Navy flag displayed in her front yard.

Lucia Sandoval says she put the flag up to remember her husband, who is currently deployed with the U.S Navy. But shortly after the flag went up, she received a notice stating it was out of conformity with neighborhood standards.

"In a recent review of the community, it was brought to our attention that you may not be aware of one or more of the rules for the community," the letter from the HOA reads. "Your front yard had a flag displayed not in accordance with the accepted standards. Please remove the flag ASAP."

In the letter, the HOA cites community guidelines, which read, "Flags and flagpoles shall be uniformly placed and consistent in size and shape and shall not interfere with on site utilities."

Sandoval says she didn't understand how her flag violated any of those policies and is refusing to take it down.


Another flag flap, this one in the Utah sector of Privatopia. Film at 10 on WTVC Channel 9.

Friday, April 10, 2015

The town fascism built

"Nestled in eastern Long Island is a sleepy little town called Yaphank where the streets have cozy names like Oak and Park, names that hide a dark past: they once bore signs like Hitler and Goebbels Streets.Yaphank, in the 1930s, appeared as a haven for Americans--most of them of German heritage--who sympathized with the causes of the Third Reich.

In fact, it was largely founded as a Nazi camp, one of several scattered across the U.S., where the children in the German American Bund (AKA American Nazis) could fish, swim, hunt and learn about things like eugenics."

Read more: 
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Thursday, April 09, 2015

Robert Meisner Says Condo/Homeowners Associations Beware: The Michigan Legislature Has Dealt You a Severe Blow

I don't usually reproduce press releases, but I think in this case it bears repeating. I will be looking into the legislation in question, but for now, here is the word from attorney Robert Meisner:
BINGHAM FARMS, Mich.March 25, 2015 /PRNewswire/ -- Robert Meisner, founder of The Meisner Law Group, PC, and nationally recognized as one of the premier community association lawyers in the country, is issuing an alert to anyone living in or thinking about buying a home in a condominium, homeowners association, or a cooperative. In a lame duck session this past December, the Michigan Legislature quietly made sweeping changes to the Michigan Nonprofit Act.
"Here's the hitch," says Meisner. "Every condo, homeowners/cooperative association is a nonprofit corporation, so the new laws apply to them. Among the things these homeowners need to know is that their boards of directors, officers, and others may already be virtually immune from liability and accountability to the association, even for gross negligence and certain intentional acts."
Meisner says that he is also concerned that the changes in the law take away much of the traditional democratic participation of the members of non-profits and make it easier for entrenched directors to remain in office. He says this allows directors to be elected without a meeting, eliminating open debate, passing matters at membership meetings without prior notice and even holding membership meetings without notice to the members. The law even allows the board to turn over complete control of the association to non-members who have no stake in the community.
"It is not just community associations that are affected," Meisner says. "The amendments have the potential to make non-profits of all kinds the tools of fraud and profit for the unscrupulous. I understand that the Michigan Legislature was trying to make the operations of non-profits more streamlined and efficient, but it seems that this legislation was rushed through without careful thought and analysis and without any input from those most affected."
Meisner is advocating that the legislature either modify or revoke the new legislation.
A nationally respected community association law specialist for over 40 years, and adjunct professor of community association law, Meisner has authored numerous legal articles, pamphlets and two books: Condo Living 1 and 2: Authoritative Guides to Buying, Selling, and Operating a Condominium.
For more information on the potential pitfalls of this new legislation, contact Robert Meisner at 248.644.4433 or

update:  and here is another attorney's summary of the changes.