HOAs from hell: More horror stories, more fraud — and prospect of legislative action

In Georgia, a decorated Army veteran who lost a leg in Afghanistan is now ensnared in a battle on the home front — with his homeowners association.

The HOA filed a lien on his house related to the placement of his trash cans.

From Maryland to California, prosecutors have charged HOA officers and property management officials in fraud and embezzlement cases with losses that total in the millions.

And in Missouri, lawmakers are working on a proposal to make homes associations more accountable, with one saying homeowners in his district have become so incensed with their HOAs that “we are one step away from pitchforks and torches.”

In the few months since The Star’s report on HOAs from hell, horror stories continue to pile up and homeowners keep falling victim to thieves from within their ranks.

Lawmakers in some states are saying enough is enough. It’s time, they insist, to take on a more aggressive role in regulating the $85 billion industry.

“It’s the number one constituent issue in my district,” said Missouri state Rep. Bryan Spencer, a Republican from Wentzville, near St. Louis. “This is basic property owner rights. It’s a fundamental right that we should have as Americans.”

Spencer said he has sponsored two focus groups on HOAs and both sessions were packed. At the first one, he said, “everyone was standing around the room, the patio was full and people were standing out the door trying to listen in.”

The second was even bigger, he said.

“I brought in an HOA lobbyist and an HOA attorney,” Spencer said. “And I thought I was going to have to call the police. I thought we were going to have an incident, because people were that angry.”

The Star’s series, published in August, examined the homes association explosion and the problems it has generated. Today, one in five people in the U.S. lives in a homeowner or condo association, and 80 percent of new housing starts are in HOAs. 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.

While many agree that something needs to be done, the industry continues to contend that the HOA concept is working well.

In November, the Community Associations Institute, a trade organization that represents HOAs in the legal and legislative arenas, promoted the results of a national survey it commissioned that indicated those living in HOAs overwhelmingly are satisfied.

The survey of Americans living in homeowners associations and condominiums found that 87 percent of residents rate their overall community association experience as positive or neutral, and 84 percent say members of their elected governing board “absolutely” or “for the most part” serve their communities’ best interests.

But a survey now underway by the Coalition for Community Housing Policy in the Public Interest, a consumer advocate group formed last year to prevent HOA abuse, is finding just the opposite.

“The vast majority are not satisfied with their HOA, and the number one issue is a lack of transparency,” said Sara Benson, a Chicago-based real estate broker and coalition board member.

Benson said the online survey, which can be found at www.chppi.org and wraps up Jan. 15, indicates that nearly 80 percent of those responding were dissatisfied with their HOA.

She said preliminary results of the survey also show that 67 percent of those living in homeowners associations said they were not aware before closing on their home that the association had the legal right to foreclose on their home if they became delinquent on assessments, fees or dues. And 58 percent, she said, were not aware when they bought in an HOA that it had the ability to fine them.

The survey also indicates a growing tension between homeowners and their HOAs, said Benson, co-author of “Escaping Condo Jail.”

When asked if law enforcement had ever been summoned to their association board meetings due to unrest, 25 percent said yes, Benson said. And 20 percent said that security officers had been hired to attend their association board meetings.

Meanwhile, stories of HOA abuse keep mounting.

Veteran’s home on the line

Retired U.S. Army Staff Sgt. Daniel Lister, who served four tours of duty in Afghanistan and Iraq, nearly died when he stepped on an improvised explosive device in 2010. Since then, he’s endured dozens of surgeries, including a leg amputation. He suffers post-traumatic stress disorder and uses a wheelchair.

Now, the Purple Heart recipient and single father of two is in a different war zone — in his own neighborhood as he battles the Chandler Grove Home Owners Association.

The HOA in suburban Buford, just northeast of Atlanta, has written him up for the edging in his yard, his fence and the placement of his trash cans, which Lister says are in a location that’s easy for him to access with his wheelchair. Recently the HOA filed a lien on Lister’s home for failing to pay thousands of dollars in fines he’s accumulated for those violations.

A gofundme site for Lister says his injuries forced him to retire and that his family lives out of state, making it difficult for them to help care for his home. His problems are intensified by chronic debilitating pain, the website says, as he fights to avoid losing his other leg.

“This is an opportunity for us to help a man, a servant, a hero, who put his life on the line for all Americans alongside many of his friends who gave the ultimate sacrifice,” the site says. “It is, simply put, unacceptable for our veterans to endure the deplorable conditions of a combat zone only to return home to the hostility of a Home Owners Association.”

Deborah Goonan, a homeowner advocate and adviser to the Coalition for Community Housing Policy in the Public Interest, called the case an outrageous example of an HOA overstepping its authority.

“A Purple Heart Veteran, amputee, dealing with PTSD and raising two children should not have to worry about losing his home because he moved his trash can to where he could access it in his wheelchair,” Goonan said.

The home, given to Lister in 2012 as a gift from the Military Warriors Support Foundation and the Bank of America, has no mortgage and the property taxes are current, Goonan noted.

But she said Georgia law treats unpaid and disputed fines as past due assessments and permits HOAs to add “reasonable” attorney fees and collection costs.

“A home should be a place to live, not a speculative real estate commodity,” she said. “A community should be a place for people to nurture, grow, and thrive, not primarily a profit center for real estate industry stakeholders.”

The HOA did not respond to a request for comment.

Children’s lives at risk

In Nashville, Monica Meeker’s heart sank when she heard the tragic story just before Thanksgiving.

The 3-year-old daughter of a former NFL running back had died after getting tangled in the cords on a window blind in the family’s Utah home.

Though it happened more than 1,600 miles away, the death hit close to home for the Tennessee mother. Last year, Meeker’s then 3-year-old daughter nearly suffered the same fate, choking on the cords of the style of blinds required by their homeowners association.

The Meekers spent thousands on a losing battle with the HOA — even after the near tragedy, it wouldn’t back down on the requirement. The Meekers eventually moved to a neighborhood that wasn’t governed by a homeowners association.

The Utah accident took the life of Elsie Mahe, daughter of Reno Mahe, who played for the Philadelphia Eagles from 2003 to 2007 and now is running backs coach at Brigham Young University. According to news reports, a 4-year-old friend found Elsie with the mini-blind cords wrapped around her neck and quickly summoned Elsie’s mother, Sunny Mahe, a former BYU volleyball star, who began administering CPR.

Elsie, one of the couple’s eight children, suffered extensive brain damage and died a week later.

“I feel devastated,” Meeker said. “My heart aches for them.”

The Consumer Product Safety Commission says that on average, one child dies each month of strangulation from blind cords. Meeker said while such accidents can happen in any home, the unreasonable requirements by HOAs like theirs put children’s lives at risk. Property records indicate that the Mahes live in a community governed by a homeowners association, but it’s not known whether such window blinds were required. The family did not respond to a question about the HOA.

In the Meekers’ case, the family unsuccessfully tried to fight the window blind requirement, spending $7,000 on legal fees, but last summer moved to a home that is not in an HOA.

“Every once in a while you find somebody who has the time and the money and energy to fight it,” Monica Meeker said. “But we couldn’t do that. I still have PTSD (from her child’s near-death), but I can rest at night because we don’t have a single window blind in this house.”

Fraud and theft

Along with stories of overzealous HOAs come more tales of fraud and embezzlement.

▪ In Florida, a man and his wife who had been longtime officers of their homeowners association face charges of using more than $339,000 of HOA funds for personal expenses. The couple was charged in Palm Beach County in November after the new president of the Lantana Homes Homeowners Association launched an investigation, saying there were discrepancies in the association’s financial documents.

▪ In Kansas City, the former treasurer of the Charleston Harbor Homes Association received two years’ probation after pleading guilty to embezzling more than $100,000. The judge in October ordered her to pay $109,000 in restitution to the HOA, complete counseling and treatment for a gambling addiction and perform 100 hours of community service.

The sentence angered many residents who sought a more severe punishment.

▪ In Alabama, a woman who managed nearly a dozen condominium associations in the Birmingham area pleaded guilty in October to wire fraud after being charged with stealing more than $350,000 from the associations. Authorities said the woman had created phony invoices for expenses in the name of a separate interior design company that she owned and submitted them to the condo associations that she managed. Her company was then paid out of the HOA funds.

▪ A Maryland man was sentenced to 42 months in federal prison in October for wire fraud after stealing from more than 50 homeowners and condominium associations whose properties he managed. Authorities said the 39-year-old man took $2.5 million in funds intended for the HOAs, gaining the trust of volunteer board members who had little experience in property management.

Among his personal expenses: $7,000 on a dog grooming service; $2,000 each on limousines and a nail salon; and close to $4,000 at adult entertainment clubs.

▪ In California, the former manager of a condominium association pleaded no contest in September to felony embezzlement and forgery charges after she was accused of stealing $2.8 million from the Woodlake condo complex in San Mateo. The woman, who had managed the 990-unit complex for a decade, was fired after a board member noticed suspicious charges on a debit card the association had issued her.

Legislative action

As lawmakers across the country prepare for their 2017 legislative sessions, those in some states will be considering measures designed to protect homeowners who live in HOAs.

In Missouri, Spencer said he and other legislators are working on a “homeowners’ bill of rights.”

The concept, he said, will be similar to the “right to work” legislation involving labor unions.

“With all the labor stuff that is going forward, they are comparing HOAs to ‘right to work,’ ” Spencer said. “They are saying that if ‘right to work’ deals with people being forced to join a union in order to have a place to work, HOAs are like being forced to join an association in order to have a place to live. It makes sense to me.”

Spencer, who lives in an HOA, said 27 new subdivisions are being developed in Wentzville. All, he said, are in HOAs: “You can’t buy a house nowadays without being in one.”

Many homeowners don’t realize the risks involved when they buy in an HOA, he said.

“They can file liens on your house and they charge administrative costs and charge interest on those liens, and then they charge more administrative costs to take a lien off once you catch up,” he said. “But if you don’t pay them, they can evict you from your own house and sell your house with the mortgage still attached to you.

“It’s like you don’t own private property; you just own a time share.”

Another proposal in Missouri would prevent HOAs from prohibiting solar panels on homes. Sen. Jason Holsman, a Kansas City Democrat, has introduced such legislation for several years and prefiled the latest version of the bill this month.

Another measure would restrict HOAs from banning ham radio antennas. Spencer prefiled that bill this month. A similar measure during the 2016 session passed the House and had a hearing in the Senate but did not reach the Senate floor for debate.

In Kansas, a proposal to strengthen an HOA law that was adopted in 2010 died in a House committee after a hearing earlier this year. Proponents said the bill would have added more teeth to the Kansas Uniform Common Interest Owners Bill of Rights Act.

That law says HOAs can’t ban homeowners from voting in board elections just because they haven’t paid their dues. It also says homeowners have the right to see an HOA’s financial documents and to ask for reimbursement of legal fees if they win a lawsuit against their homes association.

Nila Ridings, an anti-HOA activist who played a key role in the passage of the 2010 law, said she and others are working to get another measure introduced in the upcoming legislative session.

Activists and lawmakers in other states, including Arizona, Pennsylvania and Texas, are working on proposals as well. But there’s been no meaningful legislation considered at the federal level, homeowner advocates say.

Benson and others are pushing for a federal law that requires mandatory disclosure on home purchases. The law would educate homeowners on what it means to live in an HOA, they say, including the fact that an HOA has the power to issue fines and even foreclose on homes. Benson said the disclosure should include the amount of the HOA’s dues and special assessments, a copy of the restrictions, covenants, bylaws, budgets, board meeting minutes and information on any pending lawsuits.

“It’s just amazing what people are buying into with absolutely no disclosure,” Benson said.

After the stock market crash in 1929, which led to the creation of the Securities and Exchange Commission, “they came up with all of these disclosures, warning people that you may risk losing a part or all of your investment,” she said.

“They need that same type of disclosure when it comes to HOAs. The bottom line is, if developers and sellers had to truly disclose the power of these boards, buyers would think twice.”

Judy L. Thomas: 816-234-4334, @judylthomas