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HOA Reform or a Lucrative Funded Mandate
In response to a multitude of major news reports depicting abusive actions by Home Owners Associations (HOA), boards and vendors, Texas lawmakers have seen some sixty (60)) plus reform bills filed. Although the intent may be good, some of these bills may well enable an unrestrained funded mandate to siphon more money from homeowner for the benefit of builders, developers and management companies.
Home Owners for
Better
Building
— PRESS RELEASE —
FOR IMMEDIATE RELEASE Contact: Janet Ahmad
May 2, 2011 210-494-6404
HOA Reform or a Lucrative Funded Mandate
Austin – In response to a multitude of major news reports depicting abusive actions by Home Owners Associations (HOA), boards and vendors, Texas lawmakers have seen some sixty (60)) plus reform bills filed. Although the intent may be good, some of these bills may well enable an unrestrained funded mandate to siphon more money from homeowner for the benefit of builders, developers and management companies.
Senator Royce West’s SB 142 omnibus bill analysis sounds straight forward in its intent: “Existing statutory provisions regarding these associations do not provide adequate protections for homeowners…” “CSSB 142 seeks to ensure the basic private property rights of individuals residing within community associations by changing statutory provisions. “ However, good intentions aside, CSSB 142 contains some language that may not be what it seems to be.
1. Currently if a homeowner is late or fails to pay their dues, the HOA vendors add late fees, fines, interest and legal fees. Utilizing creative accounting practices, any payment made is applied to junk fees and attorney fees instead of assessments - which in turn generate more junk fees and attorney fees for the HOA vendors to the detriment of both the HOA and the homeowner.
CSSB 142, SECTION 15 attempts to address this issue by incorporating a “Priority of Payments” which stipulates a payment must: first be applied to the delinquent dues; then any current assessment; any attorney's fees; any other amounts owed. However, there is a cleverly worded loophole that would allow business as usual.
2. Currently industry and its attorneys impose lucrative pyramid payment schemes on owners, which are erroneously promoted as a moment of compassionate opportunity or face immediate foreclosure. On April 18, 2011 Home Owners for
Better
Building
called for (http://www.hobb.org/content/view/3611/1/ ) an AG investigation of the “Property Management Industry and Attorney Misconduct” for their highly profitable and questionable activity that results in 1,425% markup of HOA fees, fines and legal fees.
CSSB 142, SECTION 15 subjects vulnerable homeowners to misleading payment plan
schemes by legitimizing the practice in law, without strict rules or oversight. 3. Resale Certificates are highly profitable products that are sold for $300 to $500, which consist of documents normally expected to be given to buyers at closing. Often homebuyers are not informed they are buying into an HOA community nor are they given the governing Covenants, Conditions and Restrictions (CC&Rs) documents at closing. Instead the HOA management industry has captured the market to sell vital information as a commodity, packaged as Resale Certificates and Welcome Packages.
SCCB 142, SECTION 2 (f) expands this resale certificate practice and places the responsibility on the purchaser to ask for a Resale Certificate from the HOA. Further, (g) requires the purchaser to pay a fee to the property owners' association. Unfortunately this section enables more gratuitous fees for essential documents that can be prepared in as little as15 minutes that should be provided as an HOA service without charge.
The ever resourceful and aggressive industry has imposed onerous fines, legal fees, and entry fees, collection fees, handling fees, resale certificate fees, transfer fees, special assessments, community enhancement fee, covenant compliance inspection fee, expedite fees, delivery fees, and convenience fees that have and will continue to drive homeowners out of community associations they can no longer afford.
If passed as currently written the HOA industry and its building industry partners would be further empowered by
Texas
law. Do lawmakers really want to endorse HOAs as privatized governments that impose financial burdens that price folks out of the homeownership market?
Like the Texas Residential Construction Commission Act, the last self-serving building industry scheme; do lawmakers really want to endorse HOAs as privatized governments that impose financial burdens that price folks out of the homeownership market?
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Home Owners for
Better
Building
is a member of the
Texas
HOA Reform Coalition |
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