Missouri homeowners longing for more accountability in their homeowners associations and protection from overzealous HOA boards may not find the answers they want in legislation recently proposed in the state House and Senate.
While proponents say the measures will safeguard homeowners and ensure that they know what they’re getting into when buying a home in an HOA, some homeowner advocates say the proposals — one is called the Missouri Homeowners’ Bill of Rights — are so watered down that they instead protect the $85 billion HOA industry.
“It’s more like the homeowners’ bill of goods,” said Dave Russell, community manager of the Circle Tree Owners Association in Mesa, Ariz., who has worked on HOA legislation in multiple states. “I don’t see anything in there that protects the homeowner. There’s nothing helpful about these bills to anybody except the industry itself.”
Russell and other homeowner advocates said the measures are likely influenced by the Community Associations Institute, a trade organization that represents HOAs in the legal and legislative arenas. The organization says it works to promote harmony in homeowners associations, but critics say it actually sides almost exclusively with HOA boards and property managers.
The Community Associations Institute told The Star that it supports the Senate’s Homeowners’ Bill of Rights proposal but said the House bill would “unintentionally create more disputes than it would resolve.”
“The (Senate) bill is a practical bill that will have a positive impact on all residents living in community associations,” said Cathy Roth-Johnson, executive director of the institute’s Heartland Chapter, in an email to The Star. “Homeowners would, for the first time, have statutory protections to access and inspect records, attend and participate in meetings, have their voice heard directly instead of relying on proxies … and homeowners would have the certainty that these statutory protections will apply whether the homeowner lives in an HOA in Rolla, Kansas City, Lee’s Summit or St. Louis.”
On the surface, both proposals appear to address some of the concerns raised in a series of articles published last year in The Kansas City Star that examined the homes association explosion and the problems it has generated. The newspaper found that homes associations wield far more power than homeowners realize and that some actually torment the residents they’re designed to support.
But a closer examination of the Missouri bills reveals language that critics say enhances the rights and powers of developers and the corporate HOA entity while severely limiting the private property rights of homeowners.
“My first thought was, ‘Why is this bill called the Homeowners’ Bill of Rights?’ ” said Deborah Goonan, a housing consumer advocate and administrator of the Independent American Communities blog. “This might as well be called the HOA Bill of Rights.”
Goonan said the Senate bill grants HOA boards the right to levy fines against homeowners, withdraw their privileges to use common amenities and even collect rent from a tenant if the homeowner falls behind on dues — all without court action or intervention. And HOAs can file a lien on a homeowner, then foreclose on the lien by a nonjudicial process — without going through the court system — and pass all costs and attorney fees on to the homeowner.
“That lien can arise from a fine over something as petty as nonapproved paint colors or landscape materials, misplacement of trash cans, or the mere presence of your children’s play equipment,” Goonan said.
But if an HOA fails to follow the rules, such as refusing to comply with a homeowner’s right to speak at an open meeting or examine records upon request, Goonan said, “Your only recourse is to hire an attorney and file a costly lawsuit against the HOA.”
Roth-Johnson said Missouri law already allows for both judicial and nonjudicial foreclosure on a lien.
“The component of the ‘Homeowners Bill of Rights’ is to be consistent with other laws in the state and general practices,” she said.
She said homeowners have options other than filing a lawsuit if an HOA fails to comply with the law.
“A board member can be removed through the democratic process even if the board fails to act,” she said. “The best prevention against abuse is active homeowners and action by residents.”
The Senate proposal also would require HOAs to undergo an independent audit every three years. But it says the HOA can vote to forego the audit for one year and can do so each year for up to 10 years.
The bill requires HOA boards to meet at least once a year and says all meetings of the board and HOA committees must be open to homeowners except for executive sessions. But the bill also says that a homeowner must have prior written consent from the board in order to record a meeting.
The proposal is sponsored by Sen. Gary Romine, a Republican from Farmington. Romine referred questions to Rep. Bryan Spencer, a Wentzville Republican who co-sponsored a similar measure last year in the House. That proposal never got a hearing.
Spencer, a vocal HOA critic, told The Star that this year’s House proposal is more tightly focused.
“Since there’s such opposition with the bankers and the developers and the homeowners association lobbyists,” Spencer said, “we are trying to go for just basic, common-sense things that every HOA should have and we won’t get much pushback. Then hopefully, if we can get that through, we can start to do more.”
The House measure requires HOAs to make records available to homeowners within five days of a request and says HOAs that receive $50,000 or more a year in dues and assessments must undergo an independent audit at least once every five years.
Those provisions are “somewhat useful,” Goonan said, but she and Russell said other parts of the bill are more likely to harm homeowners than help them.
The biggest concern, they said, is the appeals process for an owner who faces a fine or other penalty imposed by an HOA.
In most states, they said, a homeowner can appeal directly to the board, and, if that is ineffective, the owner can file a lawsuit against the association. But under the House proposal, an owner would have to circulate a petition challenging the decision and obtain the signatures of one-third of the homeowners. The board would then be required to put the issue to a vote, asking all homeowners whether the penalty should be rescinded. It would take the votes of 50 percent plus one homeowner to reverse the board’s decision.
Russell called the process “the most ridiculous thing I’ve ever seen,” placing a nearly impossible burden on the homeowner.
The process would be tantamount to a popularity contest, with a homeowner at the mercy of neighbors, Goonan said.
“An unpopular owner would not stand a chance, even if the board’s decision would otherwise be considered discriminatory or unreasonable,” she said.
Critics also noted that the bill was sponsored by Rep. Derek Grier, a Republican from Chesterfield who has a background in real estate, including property management for developers.
Grier did not respond to a request for comment on the bill. Spencer said he was aware of Grier’s ties to the HOA industry but saw it as a plus.
“If I can get him to put the camel’s nose under the tent,” he said, “it makes it easier for me to make changes down the road.”
Meanwhile, lawmakers in other states also are stepping up, introducing HOA bills in dozens of states that deal with everything from restricting solar panels and political signs to creating a state ombudsman’s office to oversee homeowners associations.
A proposal has surfaced in Kansas as well, in a bill that would require the attorney general’s office to investigate complaints of homeowners who think their rights have been violated.
But the measure has not received a hearing and is not expected to advance. A similar proposal last year died in committee.