HOAs by the numbers
Scott Wircenske’s eight-year battle with his HOA started with a simple request.
The Parkhill Manor Homes Association had just awarded a property management contract to one of its own board members, and the Olathe homeowner wanted to know whether the job had been put out for a bid.
“This man had been on the board in 2008 and then all of a sudden in 2009 he becomes the property manager, and he’s also a homeowner,” Wircenske said. “It smelled really bad. I wanted to know, ‘How did we arrive at this? How did we pick him?’ And basically, the response has been, ‘Go away and mind your own business.’ ”
Wircenske pressed on and last year sued his HOA, alleging that board members refused to show him the meeting minutes, financial statements and other documents that Kansas law requires homeowners associations to provide members upon request. The case was settled last fall and the HOA turned over a batch of records that Wircenske says indicate mismanagement by the property manager. Now, he’s turned the documents over to authorities to investigate.
Wircenske shared his story with Kansas lawmakers last month in testimony he submitted for a hearing on a bill that supporters say would curtail abuses taking place in some homes associations. The bill, proposed by House Speaker Pro Tem Scott Schwab, would make HOAs subject to the Kansas Consumer Protection Act.
“This bill is the result of many mishaps and abuses by various homeowners associations across our state,” Schwab, an Olathe Republican, told members of the House Local Government Committee. “While many of us have heard the stories of abuses, a constituent of mine has lived it.”
Under the proposal, the Kansas Attorney General would be required to investigate residents’ complaints about their overzealous HOAs. The bill also would require all homes associations in the state to register annually with the attorney general at a cost of up to $500, depending on the number of units involved. That registration would include the names of the HOAs’ board members and property managers.
Proponents say it would make HOAs more accountable and could give homeowners relief without having to resort to costly lawsuits. A recently resolved lawsuit involving the Avignon Villa Homes Community Association in Olathe racked up hundreds of thousands of dollars in attorneys’ fees for both sides.
But opponents of House Bill 2629 say many HOAs can’t afford to fork over that much money each year in registration fees and that it would discourage homeowners from volunteering to serve on their boards.
The measure is facing strong pushback from the HOA industry, which takes in nearly $90 billion a year in dues collected from homeowners.
Rod Hoffman, an attorney who represents more than 100 homes associations in the Kansas City area, told legislators that the bill raised more questions than it addressed.
“Are homeowner associations perfect? Of course not,” said Hoffman, who also serves on the board of the Heartland Chapter of the Community Associations Institute, a national HOA trade organization. “People make mistakes despite their best intentions. But 99.99 percent of homeowners associations don’t deserve headlines.”
Those associations have one goal, Hoffman said — improving and maintaining home values.
“If a resident isn’t happy, he can become involved in his community, talk with his neighbors and cooperate to make his neighborhood better,” he said.
That’s not always the case. The Star published a series on homeowners associations in 2016, finding that HOAs wield far more power than homeowners realize and that some actually torment the residents they’re supposed to support.
More than a dozen HOAs provided written testimony to the legislative committee in opposition to the bill. Most of that testimony — including from nine Johnson County HOAs who all had the same property manager — consisted of identical form letters.
All proposed that the committee either reject the bill or table it for further study. Committee members are expected to discuss this week whether to advance the measure.
“The day-to-day management of the association is challenging as many homeowners do not follow their deed restrictions and then (get) upset because of the enforcement policies,” said Jim Tiehen, whose Leawood company manages more than 30 homes associations. “ If volunteer board members are going to be subject to investigation by the Attorney General’s Office for every decision they make, I am concerned no one will volunteer for these important jobs.”
In 2010, Kansas became the first state to adopt the Kansas Uniform Common Interest Owners Bill of Rights Act, which requires HOAs to hold open meetings, keep minutes of those meetings and allow members of the HOA to inspect the associations’ books and records upon request.
House Bill 2629 would authorize the attorney general to investigate consumer complaints about violations of the homeowners bill of rights by an HOA’s board of directors or property manager. If the attorney general’s Consumer Protection Division determines the complaint is valid, it would be treated as a violation of the Kansas Consumer Protection Act.
Schwab told the Local Government Committee that the homeowners’ bill of rights, which went into effect in 2011, wasn’t strong enough.
“There are no teeth to protect homeowners from the HOAs that have become mini governments with more power than the cities they reside in,” he said.
In testimony submitted in support of the bill, Overland Park resident Nila Ridings told lawmakers that it’s extremely difficult for homeowners to absorb the cost of legal battles against their HOAs.
Ridings, who was involved in the creation of the homeowners bill of rights, said few homeowners realize the risks involved when buying in an HOA.
“Our legislators will benefit all Kansans when they remove these massive powers from the corrupt and abusive fiefdoms known as homeowners associations,” she said.
Attorney General Derek Schmidt said his office currently has no jurisdiction over the actions of homeowners associations. In testimony provided to the committee, he said that if the bill became law, his office would need to hire one assistant attorney general, one investigator and a part-time administrative assistant. The cost for those positions — $218,135 in fiscal year 2019 — would be offset by the expected $240,750 in revenue collected from the nearly 1,000 HOAs in the state, Schmidt’s office said.
Ronald Nelson, a Johnson County attorney and president of the Prairie Village Homes Association, said the bill would hurt older HOAs whose deed restrictions make it next to impossible to change their dues structure.
The total dues paid by the 1,700 homes in the HOA amounts to about $35,000 a year, said Nelson, who also is a Prairie Village City Council member. Having to pay a $500 annual registration fee on a limited budget, he said, “would severely strain the already tenuous balance for older homes associations that must preserve their reserves forever into the future — all without hope to bring in more funds.”
“The unintended consequences for a large number of older homes associations would be devastating to them,” he said, “and far outweigh the benefits that would be gained by passing this bill.”
Wircenske begs to differ. His case, he said, is a perfect example of why the bill is needed.
When he first raised questions about his HOA hiring a homeowner and board member as its property manager, he said, the board ignored him.
“They told me, he’s a neighbor, we know him, he’s a nice guy, let it go,” Wircenske told The Star. “And then the next thing I find out was that they turned over the checkbook to him. And that’s against the bylaws. It very clearly states that the president must sign the checks, in addition to the treasurer.”
For eight years, he said, he continued to ask to see the HOA’s meeting minutes, financial reports and bank statements.
“They just simply would not supply the records,” he said.
So last May, Wircenske sued the Parkhill Manor Homes Association, alleging that the HOA was violating numerous provisions of the Kansas Uniform Common Interest Owners Bill of Rights Act. The HOA denied it had refused to let Wircenske see any documents and asked the court to dismiss the case.
In August, having still not received all the records, Wircenske asked the court to order the HOA to produce them. In September, the court ordered the HOA to turn over the remainder of the records. The case eventually went to mediation and was settled and dismissed on Feb. 13.
Wircenske said he still didn’t get all the records he requested, but the ones he did receive raised serious concerns about how Haven Property Management was handling the HOA’s finances. Wircenske said he reported the concerns to authorities and has met with investigators from the Johnson County Sheriff’s Office.
Deputy Claire Canaan, spokeswoman for the Sheriff’s Office, said she could not comment on whether authorities were looking into the handling of the HOA’s finances.
Jonathan Young, the head of Haven Property Management, did not respond to calls and emails requesting comment.
Haven Property Management is the subject of several lawsuits and has an F rating from the Better Business Bureau. The company has failed to respond to four customer complaints, according to the BBB.
Tom Volz, president of Parkhill Manor HOA, told The Star that the current board wasn’t to blame for the problems.
“It got dropped on us,” he said. “There’s a lot of stuff that did not dribble down to us, and yet we’re supposed to answer to that. I can’t speak to what a previous board did.”
Volz said the HOA terminated Haven Property Management’s contract in January and now has a new property manager. And in February, the HOA filed a lawsuit asking the court to compel Haven to immediately turn over all of the HOA’s documents. A hearing on the motion is scheduled for April 2.
Dave Russell, an Arizona property manager who has worked to get HOA regulations passed in his state, said homeowners associations should be embracing the Kansas bill.
"I can see why they don't want the attorney general nosing into stuff and covering this under the Consumer Protection Act,” he said. “But if everything was running aboveboard like they claim, why would they care?”