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.


Deborah Goonan said...

//"Last year, Delaware and Illinois passed laws creating ombudsman offices.Four other states — Colorado, Florida, Nevada and Virginia — already have an ombudsman or a homeowner information center"//

Hmmm. More states spinning their wheels on solutions that don't work. I live in Florida. The Sunshine State has some of the most egregious and outrageous HOA disputes and corruption. And we have an Ombudsman.

//But CAI questions whether ombudsman offices are necessary.
Dawn Bauman, a senior vice president at CAI, said ombudsman programs often don’t provide relief for homeowners. She said many complaints are dismissed or resolved in the association’s favor because residents don’t understand the rules and responsibilities of living in a community association. //

Well...that's because the truth is not fully and concisely disclosed prior to purchase or otherwise taking title to a home or condo with a mandatory owners' association.

And the governing documents -- and the HOA board's interpretation of them -- has a tendency of changing after you move in.

// Delaware legislators created the office because they were seeing more homeowner complaints and the courts were becoming clogged with them, said Rep. Melanie George Smith, who sponsored the measure.//

Kind of dispels CAIs claim that residents in community associations are overwhelmingly happy, doesn't it? Or that these are "isolated incidents."

But there's not much incentive from the industry to stop the disputes before they get to court. How would all those HOA attorneys make money, if not for all those civil court disputes, many of which owners are sure to lose?

IC_deLight said...

...and the new model is designed for regulatory capture and to price homeowners out of the process. Arizona had a great program but the industry repeatedly challenged it because homeowners were prevailing and the documents were readily available for the public to see. Now the AZ program is in place but homeowners are priced out of program at $750 for an single issue filing or $2000 regarding multiple issues. The bottom line is that there is no cure for HOAs. Condos are a creature of statute - leave them out and buyer beware. But HOAs are different and there is no reason to have "rule by corporation" as a substitute for legitimate government.

Deborah Goonan said...
This comment has been removed by the author.
Deborah Goonan said...

Since IC_deLIght brings up condos, I say that condos are inappropriate for residential housing. Wasn't the corporate governance model originally created for resort and vacation properties, as a way to spread out financial risk and share investment? It might make sense in that context, where no one acutally lives in the units, but merely uses them a few weeks per year. Just as with time shares, buyer beware. You are still co-investing your money with other shareholders.

It was the cooperative that was originally created for full-time occupancy and shared maintenance responsibilities. Original cooperatives had a different governance structure that did not allow for any one individual to acquire a disproportionate share of voting power. It was a model that screened new buyers in advance, and with full disclsoure, to be sure there was a good fit.

The problem, of course, is that the screening procedure sometimes crossed the line into fair housing violatioins and possible discrimination.

The co-op was later replaced by the condominium model, a corporate model that encourages speculation and price bubbles. It's a model that encourages agressive acquisition of undervalued properties for the express purpose of redevelopment -- displacing owner-occupants, reluctant landlord-owners, and tenants with nowhere else to go.

Very few condo associations are made up of primarily owner-occupants. So many of these morph into shared investment rental communities, and quite a few of those are poorly funded and poorly managed.

There is a very good reason the market is building apartment communities again instead of condos (except for luxury condos). But very few new apartments are affordable -- so low income tenants are now ending up in the worst of the worst, crumbling, failed condo projects. It's the new privatized public housing.

No one wins in this game.

robert @ colorado hoa . com said...

"no regulation of the relationship between BODs and members except civil litigation"

Libertarian utopia!