What You Can Do about a Mismanaged HOA

Posted by Tamara Berryman on Wednesday, October 8th, 2014 at 9:00am.

When you purchase a house, a townhome, or a condominium in an HOA community, you do so because the association actively works to keep the community clean, well-maintained, safe, and prevent other owners from going rouge. The benefits of living in a homeowner’s association are numerous. You can live in a place that’s partly or completely free of yard work and where all the owners have a common interest.

You pay an HOA fee for the sole purpose of having the luxury of living in a community that’s got plenty of amenities to enjoy and is kept in good condition without having to lift a finger. However, when the association begins to slip in its management, it has a very big impact on the owners in the community. It can lead to a lot of trouble and make otherwise friendly neighbors adversaries.

Associations run into trouble when personalities on the board clash, in some instances, other times it's a result of nefarious activity. Occasionally, trouble arises not from the board and from the owners in the community, but from a third party, a contractor, for instance, that's hired to perform specific work, is paid an upfront installment, and does not follow through. That leads to a sudden loss in funds and more costs to litigate the matter. However, when it is a situation where the some or all of the board members are downright incompetent, it becomes difficult to amicably resolve.

About Homeowners’ Associations

The introduction of the homeowner’s association dates back to the mid 19th-century; but, it wasn’t until the 1960’s they became more common. By the 1980’s condo communities, townhomes, and cooperatives were quite common. Today, HOAs can be found in new single family home developments being built across the country. Homeowners find living in these communities is a great way to maintain higher property values and have access to resort-styled amenities.

“According to the Community Associations Institute (CAI), 54.6 million people lived in private associations—up from just 9.6 million 25 years ago. With so many residents, lawsuits are an inevitability. A homeowners association's exposure could range from mismanagement of funds by a board of directors or a board member, to slip-and-fall lawsuits for negligent sidewalk maintenance during an ice storm, to disputes with contractors, employees and residents.” --The New Jersey Cooperator

What owners living in such communities expect is for the board to do a job which has a direct and positive impact on the people and property in the community. It’s the sole reason for having such a governing entity and goes to the quality of life. Most often, board members are owners, but sometimes, the responsibility is given to a property management firm. An outside firm is an inherent risk because there's not a vested interest, as the case when owners sit on the board. In addition, being disconnected from the day-to-day happenings is likewise a disadvantage.

Dealing with a Mismanaged HOA

If you’re experiencing a problem with your homeowner’s association and believe that its mismanaged, you don’t have to sell your property. You do have options which will right what’s gone or is going wrong and here’s what you can do:

  • Speak with your fellow owners. Start by talking the situation over with other owners in the community. If you feel there’s a problem, it’s essential to learn how the other owners perceive the circumstances and what their take on the best course of action might be collectively. This will provide much-needed feedback and let you know where you stand.
  • Ask to see the minutes of the latest meetings. Request the minutes from the last few meetings, particularly the ones you believe where the problem began. While many association email these to residents or post them in a specific place, some do not. Get copies and take time to go over each page.
  • Request another contractor be hired. If the problem is with the contractor hired to do a job, then do not approach the contractor. Instead, go to the board, along with some of the other owners and ask about finding someone else to do the job.
  • Opt for a change in board members. Should the problem lie with one or more of the board members, elect to fill the seat yourself or get a drive together to choose another owner to sit on the association’s board.
  • Consult a real estate attorney. If you believe funds are being commingled, mismanaged, or diverted, it’s time to speak with a lawyer. Should any of these be the case, it might become both a criminal and civil matter. The key is to act right away and document whatever you can.

While these remedies are available, one thing you and the other owners should not do is withhold your fees. That violates a legal contract and can lead to trouble later on; so, it’s best to try and resolve the manner quickly.

Tamara Berryman
Google

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