Saturday, January 09, 2016

South Carolina lawmakers prepare to tackle divisive HOA issues | The Sun News

South Carolina lawmakers prepare to tackle divisive HOA issues | The Sun News

"A committee appointed by the South Carolina legislature to study contentious issues surrounding homeowners associations (HOA) identified numerous problems that require the state assembly’s attention, but failed to agree on solutions for key issues. There was no consensus on whether HOA managers should be licensed or certified, and the panel was split on the question of how long developers should be allowed to control an association."


I think it's great that the SC legislature decided to set up this committee, and if you read the details you can see that they tried to address a number of serious issues. But when it came to solutions, they couldn't agree on some of the most basic things:

"The panel was specifically tasked with reviewing five categories: whether HOA governing documents should be disclosed to homebuyers, education for homeowners and board members, manager certification, the time period of a developer’s control of an HOA, and the need for a uniform planned community act. The panel did agree that HOA governing documents should be disclosed to prospective buyers, particularly for new home sales."

They managed to agree that prospective buyers should actually be able to see the contents of the rules they would have to live by. Wow. And what is the meaning of "particularly for new home sales"?  Why would people who buy an existing home be less entitled to know the terms and conditions?

State legislatures around the country take different views of their role with respect to CID housing. There are some states, such as California, where the legislature, guided to some extent by the California Law Revisions Commission, understands the need for regulation of HOA and condo boards. Some other states are more or less in that same camp--Maryland, Virginia, Nevada, Florida, Illinois--I'm not saying that these states have gotten everything right, but at least they have track records of dealing with significant issues and actually passing legislation. Then, on the other hand, you have these states where they don't seem to get the picture, or where the balance of political forces is such that they can't act.  For example, in Arizona it seems that the pattern is always a bunch of separate, piecemeal bills rather than a coherent package.

There are millions of people living in associations run by their untrained neighbors and often unlicensed and untrained property managers. Developers frequently leave associations in a bad financial position. Many if not most associations have inadequate reserves. There has to be a coherent public policy framework with adequate institutional support and oversight, or the owners can be placed in serious jeopardy.  The fact that the South Carolina legislature, at the dawn of the year 2016, can't  get itself together to resolve some pretty basic issues, such as the obvious need for property managers to be licensed, is frightening.


Tom Skiba said...

Imagine the response by authorities and public opinion if they weren't white.

robert @ colorado hoa . com said...

"pretty basic issues, such as the obvious need for property managers to be licensed,"

I disagree that the licensing of property managers is something that there is an "obvious need" for. It's one of those things that sounds like a good idea. But in addition to thee issue of regulatory capture, it doesn't really change anything, nor address the fundamental problems with H.O.A. corporations. I speak from experience.

On December 02 2015, Madison Hill H.O.A. Inc. — Colorado corporate I.D. # 19,871,259,221 and Colorado H.O.A. registration # 25,559 — was found in Contempt of Court for violating the judge’s Court Order (Jefferson County Colorado Court case # 2014 C 38745) and attempting to extort $6,954.00 in unlawful attorney fees from me.

Both the judge and the officers of the H.O.A. corporation conveniently agreed that the property management company, L.C.M. Property Management Inc., was at fault. The directors of the Madison Hill H.O.A. corporation even fired L.C.M., only because they had to give the appearance of doing something to correct their illegal behavior before the sentencing hearing.

L.C.M. continues to conduct business as an H.O.A. property management company, which just goes to show that requiring property managers to be licensed has no effect whatsoever.

Some background information and observations:

1) This is a dispute going back over 7 years and several lawsuits, so I’m over-simplifying and leaving out a lot of details here.

2) The behavior that resulted in the Contempt of Court ruling was not an accident nor isolated incident, but a pattern of behavior going back seven years. After a prior litigation in 2009, they repeatedly violated another Court Order by the same judge back in 2009 - 2011, when they repeatedly attempted to extort several thousand dollars in unlawful attorney fees and unlawful late fees from me.

3) An attorney I hired in 2010 never even suggested pursuing Contempt of Court back then, probably because it wouldn’t have been as profitable for him as the course he chose. This is an example of how consumers of legal services can be screwed over by their own counsel.

4) In 2011, the president of the H.O.A. corporation testified that he was extremely satisfied with the performance of the management company, when they were doing the same thing that they were doing in 2015.

5) At the Contempt hearing, Judge Greene admitted that she is “not inclined to send corporate officers to jail” for a crime committed by the corporation.

6) Judge Greene also said that she was reluctant to impose a “heavy fine” on the H.O.A. corporation, since the cost would simply be passed back to the home owners.

7) At the sentencing hearing last week on January 12 2016, Judge Greene said that she did not have the authority to send the corporate officers to jail. Nor could the manager be held accountable, since he was acting as an agent of the corporation. She ended up issuing a whopping $500 fine to the Madison Hill H.O.A. corporation.

8) Regular readers of this blog are aware that law enforcement officials don't want to investigate complaints about H.O.A.s, telling home owners that "it's a civil matter". Yet judges really don't want to deal with H.O.A.-related complaints from home owners, either.

9) Obeying the law will continue to be optional for H.O.A. corporations. The courts, at least in Colorado, are unable and/or unwilling to even enforce their own Orders against H.O.A. corporations. Home owners will continue to have no effective legal protection nor recourse when they are being abused and the few paltry rights they have are being violated.

robert @ colorado hoa . com said...

According to the summary above, the five categories of H.O.A. issues that the South Carolina legislature attempted to address are

(1) “whether HOA governing documents should be disclosed to homebuyers”,
(2) “education for homeowners and board members”,
(3) “manager certification”,
(4) “the time period of a developer’s control of an HOA”, and
(5) “the need for a uniform planned community act”.

As Even McKenzie observed

“Why is it so hard to . . . reach the obvious conclusion that the money side of CIDs is not working? The media have a frame for reporting on the social control conflicts that happen in associations--flags, pets, political signs, religious symbols—but they can't seem to see the pattern when it comes to the enormous financial problems that leave millions of Americans vulnerable to major economic loss.” (September 14, 2014)

Like all other state legislatures, South Carolina fails to address two fundamental issues :

(1) how to ensure that the home owners are treated like paying customers of the H.O.A. corporation. Most Americans are paid by their employer to be managed at work for eight hours a day. It is absolute insanity that “owners” of H.O.A.-burdened property have to pay another corporation for the privilege of being managed at home. As Robert Metcalf put it, H.O.A.s represent “a systematic infusion of corporate culture and governance into the domestic lives of an ever larger share of the American population. Who wants to live at work?” (2007, emphasis in original. PDF).

(2) how to protect homeowners from the debts and liabilities of the H.O.A. corporation. As a corporation, an H.O.A. is a defective product. See my comment in response to “South Carolina: HOAs Do A Terrible Job Maintaining Dams, Causing Massive Flooding” (October 09, 2015). While South Carolina was flooding, the legislature was fiddling.

robert @ colorado hoa . com said...

“you have these states where they don't seem to get the picture, or where the balance of political forces is such that they can't act. For example, in Arizona it seems that the pattern is always a bunch of separate, piecemeal bills rather than a coherent package.”

In 1991, the Colorado General Assembly passed the so-called “Colorado Common Interest Ownership Act” (H.B. 91-1292)(C.R.S. § 38-33.3-101 et seq). One of the prime sponsors of the C.C.I.O.A. was Mike Coffman (Republican), who owned a property management company at the time. Mr. Coffman is now a U.S. Congresscritter (CO-6), and his wife is currently the state Attorney General.

Beginning about a decade ago, Colorado has introduced “a bunch of separate, piecemeal bills” that, while offering the illusion of reform, haven’t made things better for the home owners. According to Colorado Capitol Watch (CCW), 117 bills were introduced on the first day of the Colorado General Assembly’s 2016 session. After one week, there have been a total of 230 bills introduced. So far, three of them address H.O.A. issues:

Residential Precipitation Collection
CCW summary : “The bill allows the collection of precipitation from a residential rooftop under certain conditions. The bill requires the department of public health and environment to develop best practices for nonpotable usage of collected precipitation. HOA's cannot prohibit using rain barrels for collection.”

HOA Managers Profl Responsibility & Disclosure
CCW summary : not yet available

HOA Whistleblower Protection
CCW summary : “The bill prohibits a homeowners' association or other person from retaliating or discriminating against a homeowner who files a complaint.”

SB16-082 is a perfect example of how clueless (or worse) state senator Morgan Carroll (Democrat) has been regarding this issue over the past decade. Given the enormous power that H.O.A. corporations have — including a wide variety of subtle and not-so-subtle ways to retaliate or discriminate against a home owner — plus the fact that judges are demonstrably unwilling to enforce their own Court Orders against H.O.A. corporations and unable and unwilling to hold the officers of an H.O.A. corporation accountable, how does she think the HOA Whistleblower Protection Act is actually going to work? Answer: it can't and it won't. But at least she can claim that she passed another H.O.A. law.

Meanwhile, folks like Ward Lucas are declaring that "We’re Winning the HOA Wars!" (January 18, 2016).

Eight years ago, an anonymous commenter on the Colorado Libertarian Party blog wrote that “I and other HOA homeowner advocates have attended many HOA hearings for new bills introduced/sponsored by Rep Morgan Carroll and Sen Bob Hagedorn. In our opinions, they are both in collusion with lawyer/lobbyist members of the Community Associations Institute (CAI) whose offices are in the Denver area (a branch of the national CAI organization). Therefore, since we know that the CAI throughout this nation has done/is doing extremely damaging things to HOA homeowners -- ecologically and financially -- any bill that Carroll or Hagedorn sponsor is suspect in our eyes.” (January 22, 2008) This was before I was paying attention to this issue, but based on what I’ve seen since then, I wholeheartedly agree.

PS - Morgan Carroll will be running against Mike Coffman this year. As the tagline to that crappy Alien vs Predator movie (2004) put it, “Whoever wins, we lose”.

robert @ colorado hoa . com said...

Speaking of Colorado State Senator Morgan Carroll (Democrat), she has been quoted as saying that

“I have carried more HOA legislation (increasing nearly 30 of rights for homeowners and increasing transparency and accountability for HOAs) than any other member in the legislature. I have authored the biggest reforms in this area in 30 years, virtually all of it improving the balance of power for homeowners with respect to their HOAs.) I think the record that anyone can read speaks for itself.” (“HOAs Compared To Mafia”. April 20, 2011)

Senator Carroll has some strange ideas about “improving the balance of power for homeowners”, because things aren’t getting any better. As I noted above, it’s so bad that a judge recently told me that she will not and cannot hold officers of an H.O.A. corporation accountable for violations of her own Court Orders.

Like her legislative record, Senator Carroll’s web page on H.O.A. issues shows a remarkable ignorance of the fundamental issues that will be obvious to most readers of this blog:


I live in an HOA - what are my rights?

You have the right to:

01. Display political yard signs (with some time, size limitations)
02. Display the American flag (with some placement limitations)
03. Attend HOA Board meetings
04. Speak at a designated public forum time during those meetings
05. Request copies of Board minutes, covenants, bylaws, declarations, finances
06. Due Process before a fee or fine is assessed against you
07. Reasonable accommodations for disabilities
08. Expect the Board / HOA will follow its written policies
09. Not be subjected to arbitrary, unwritten requirements
10. Vote in the selection of your HOA Board
11. Request mediation if there is a dispute, but it is not mandatory
12. Run as a Board member or campaign for your preferred candidate
13. Xeriscape your lawn (with some limitations)
14. Make energy efficiency or renewable upgrades (with some limitations)

Some general suggestions:

01. READ your covenants, declarations, bylaws and policies.
02. ATTEND your HOA Board meetings & participate.
03. VOTE in your HOA elections.
04. DOCUMENT your correspondence, communications with your HOA.
05. BE professional, even if your HOA isn't.

Some warnings to consider:

01. MOST items written in your HOA documents will be enforced.
02. You do NOT have the legal right to withhold dues, even if your HOA is out of compliance in other areas or not living up to their end.
03. Non-payment of dues, fines can lead to a lien against your property.
04. HOAs have the right to FORECLOSE your property for unpaid dues, fines or fees, even if you are 100% current with your mortgage!

How do I enforce my rights?

01. By pointing out the law to your HOA Board & seeking corrective action.
02. By using a Mediator.
03. By filing with a Court: small claims, county, district court
* Breach of Contract
* Tort - Breach of Fiduciary Duty
* Injunction, Declaratory Action, or Damages