In this June 15, 2011 photo, an empty park bench and rusting pipe sit near the swimming pool at the Inlet House, in Fort Pierce, Fla. The complex was an affordable place that the 55-and-older set aspired to. But now the Homeowner's association has levied a $6,000 assessment on every homeowner and then foreclosed on seniors who did not owe the bank a dime but could not afford the association bill. (AP Photo/J Pat Carter)
Michelle Conlin and Tamara Lush, AP Business Writers, On Sunday July 10, 2011, 3:46 pm EDT
The Inlet House condo complex in Fort Pierce, Fla., was once the kind of place the 55-and-older set aspired to. It was affordable. The pool and clubhouse were tidy, the lawns freshly snipped. Residents, push-carts in tow, walked to the beach, the bank, the beauty parlor, the cinema and the supermarket. In post-crash America, this was a dreamy little spot. Especially on a fixed income.
But that was Inlet House before the rats started chewing through the toilet seats in vacant units and sewage started seeping from the ceiling. Before condos that were worth $79,000 four years ago sold for as little as $3,000. And before the homeowners' association levied $6,000 assessments on everyone -- and then foreclosed on seniors who couldn't pay the association bill, even if they didn't owe the bank a dime.
Normally, it's the bankers who go after delinquent homeowners. But in communities governed by the mighty homeowners' association, as the sour economy leaves more people unable to pay their fees, it's neighbor versus neighbor.
"What the board is doing is trying to foreclose on people to force people out the door," says Mike Silvestri, 75, who stopped paying his dues at Inlet House in protest over what he considers unnecessary and unaffordable assessments.
He and others say there were cheaper ways to deal with the rat infestation and leaky sewage that led the board to order up a costly plumbing overhaul. "They are bamboozling old people. I'm old, but I'm not senile," he says.
In the past, housing associations have gained infamy for dictating everything from the weight of your dog (one mandated a diet for a hound) to whether you can kiss in your driveway (not if you don't want a fine). Homeowners' associations have served as the behavior police, banning lemonade stands, solar panels and hanging out in the garage. One ordered a war hero to take down his flag because of a "nonconforming" pole. Another demanded that residents with brown spots on their lawns dye their grass green.
Now, past the faux regal gates, beyond the clubhouses, many property owners in associations owe more than their homes are worth. Some are struggling to pay their bills after they lose a job. Others have had their pay cut. So they've stopped paying their association dues.
To combat the rise in delinquencies, boards are switching off utilities, garnishing income and axing cable. They are yanking pool passes and banning the billiard room. And, in the most extreme cases, they are foreclosing.
"The treacherous part is that homeowners' associations are acting like a local government without restraints, and they have this extraordinary power," says Marjorie Murray, a lawyer and founder of the Center for California Homeowner Association Law.
Today, one in five U.S. homeowners is subject to the will of the homeowners' association, whose boards oversee 24.4 million homes. More than 80 percent of newly constructed homes in the U.S are in association communities.
And of the nation's 300,000 homeowners' associations, more than 50 percent now face "serious financial problems," according to a September survey by the Community Association Institute. An October survey found that 65 percent of homeowners' associations have delinquency rates higher than 5 percent, up from 19 percent of associations in 2005.
Associations set rules for their communities. They levy monthly dues, typically between $200 and $500, and cover the costs of services that a municipal government usually takes care of: road repair, streetlights, sewage systems. If an association's budget is strained or major repairs need to be done, the board can levy a "special assessment" on top of those dues. And when one homeowner doesn't pay those fees, all the other homeowners have to pick up the cost.
The rise in delinquencies comes as banks are taking over foreclosed homes and then leaving them vacant more often than ever. Taken together, these shortfalls are resulting in higher fees for all of the other homeowners -- and massive financial angst for association boards.
Before now, associations rarely, if ever, foreclosed on homeowners. But today, encouraged by a new industry of lawyers and consultants, boards are increasingly foreclosing on people 60 days past due on association fees, says Evan McKenzie, a former homeowner association attorney who is now a University of Illinois political science professor and the author of the book "Beyond Privatopia: Rethinking Residential Private Government."
The government does not keep statistics on how often homeowners' associations initiate foreclosures. But a nonprofit research group found that association-initiated foreclosures in the Houston area jumped from 500 in 1995 to 2,200 in 2007. Most association-related foreclosures in Texas do not go through the judicial process, so the group's analysis represented only a fraction of the foreclosures that housing associations have initiated.
In exchange for adhering to the rules, homeowners got safe communities with clubhouses, pools and tennis courts. But what many didn't realize when they bought their homes was that the fine print gave the association the right to foreclose -- even over a few hundred dollars in unpaid dues.
All the association board has to do is alert its attorney to place a lien on the property to start the process. The home can then be auctioned by the board until the bank eventually takes ownership. Homeowners typically have no right to a hearing.
"These are banana republics," McKenzie says.
The problems in some communities are resulting in more scrutiny. In Nevada, the FBI is investigating corruption in elections of association boards. In Utah and Arizona, legislators are trying to pass bills that would root out the use of debt-collectors who are alleged to have used thug-like tactics to strong-arm residents into paying fees.
State legislatures in California, Arizona, North Carolina, Texas and Florida have taken up legislation that would clamp down on foreclosures.
Not everyone thinks the tactics are out of line, though.
"When people are not paying their assessments, they're not shortchanging some giant multinational corporation. They are taking money directly out of the pockets of their neighbors," says Andrew Fortin, head of government affairs for the trade group the Community Associations Institute.
So the neighborhood feuds are escalating. At Inlet House, one resident claims her fellow senior citizens have turned into vigilantes, vandalizing her car in retaliation for not paying her dues.
In all, 17 of the 60 units are in various stages of delinquency. Paul Gray, a fastidious budgeter, paid off his mortgage long ago and paid all but $2,500 of the Inlet House assessment. The association initiated foreclosure proceedings. A few days after he received the foreclosure notice, Gray suffered another stroke, three friends say. Now he is in a nursing home. He has since paid off the $2,500. His home, worth $89,000 in 2006, is for sale for $18,500.
In the meantime, the board, facing $172,000 in costs from nonpayers, has had no choice but to raise dues by an extra $50 a month to an average of $375. Between the assessment and increased dues, some residents complain that they pay more than they would to rent a plush oceanfront spread down the street at the posh Fontainebleau condo complex. Association manager Janice Stinnett, who is also an Inlet House resident, says she isn't to blame, the nonpayers are.
"It's unfair that everyone is paying extra to cover these deadbeats," she says.
The board is continuing to make the plumbing repairs that made the assessments necessary to begin with. It will soon issue another special assessment to cover the costs.
To homeowners who opposed the repairs on the grounds that they were too expensive, the entire picture adds up to a crime. Says Silvestri, "What these associations are doing is illegal. It's a fraud."
Follow Yahoo! Finance on Twitter; become a fan on Facebook.
3,305 comments
Show:
Post a comment
Comments 1 - 10 of 3305First PrevNextLast
00Robert 2 minutes ago Report Abuse
This is just another HOA's should be banned nation wide, unless, of course, you prefer to live in a non-democratic society where someone else can tell you what to do, when to do it and how to do it. Sure HOA's have some benefits such as someone else doing the yard work (their way), more secure living (once in a while), etc. The greed and insanity of the selfish control freaks has to stop, HOA's should just be completely outlawed and those neighborhoods returned to the Land of the FREE.
Reply
00Scott 2 minutes ago Report Abuse
Your vice president said to count yourself lucky when you can pay your fare share. Hey we live in Obamanation, get used to the tax if no one cares about spending.
Reply
00Crafashion.Com 3 minutes ago Report Abuse
polo tshirt ，gucci prada lv chanel ，handbag， shoes ，online 33 usd look my name 67
Reply
10Anonymous 3 minutes ago Report Abuse
That is why, I would NEVER live in a community with an HOA. I've done that, and all they do is take your money and do nothing for it, except tell me how I should live in my own house. I understand that some people like the idea of uniformaty, but, alot of these HOA a**hole see it as a way to impose their way of thinking on everyone else, and get money to do it. If it ever come to the point of renting or living in a HOA community, I'll take renting, they tell you want you can and can't do, cause they own the building yoy are living in. These are hard times for everyone, people are out of work and are barely scraping by. Those people are being a little rediculous, emphasis on the 'DIC'.
Reply
10Roger 4 minutes ago Report Abuse
ive been thinking about buying a house , but buying one with H O A is know way out , of what i want , after reading this , i had no ideal about the H O A having this kind of bull , i have a feeling that some people that run the H O A are going to get hurt !!! a realator was trying to get me to buy a house that the h o a said needed a roof, i said if i buy it , ill wait and theres soo many that cant aford it , whats the H O A going to do , the realator , said yea what can they do , goes to show she knew that thye could o this and just wanted to sell the house , realators are vampires , her names talia from brandon florida , ill look for no H O A and hope they get what coming to them , what ever that may be , hope the people can chase them out !!!
Reply
00Alien Jesus 4 minutes ago Report Abuse
USA, where people will actually pay to be told what to do as long as it makes them feel like they're getting to tell someone else what to do... it's a greedy hell bent power mad society and most of the people who bought into this crap in the first place deserve whatever they have coming.
Reply
00Jerry 5 minutes ago Report Abuse
When the hell did it become other peoples business what you do on your own property? Everything stays within the parameters of the law how the freaking hell can they do this? I've never heard of anything so outrageous here in central/northern New York.
Reply
10Fat 6 minutes ago Report Abuse
blame the citys that allow hoa. they don't write rules to govern them and they just suck up the taxes . city arent any different that hoa.I wish that if you live in a hoa you didn't have to pay property taxes. you get nothing from the city when you pay property tax.JMHO
Reply
20H.Busch 9 minutes ago Report Abuse
I think our country is being run by an H O A.
Reply
00Jerry 10 minutes ago Report Abuse
Just how do they get away with making such ridiculous rules? This can't be fully legal. I've heard of some far-fetched things but some of that is incredible. The weight of your dog, kiss in your driveway...seriously? No way can they have full legal authority to enforce this and fine 'offenders'.
Reply
No comments:
Post a Comment