“Novice buyers often fall in love with the decorative staging or the lakefront view of a for-sale unit,” said Sara E. Benson, a Chicago real estate broker and appraiser with more than 30 years of experience.

“However, you need more high-tech inside information than typically available on a Multiple Listing Service printout,” advised Benson, CEO of Association Evaluation LLC, a Chicago-based real estate data-analysis firm. (www.AssociationEvaluation.com)

Working as an exclusive buyer’s broker for decades, Benson always did the behind-the-scenes condo-investigation homework for clients. On every deal, Benson dug into the condo documents—budgets, board minutes, history on special assessments, status of reserve funds, and common-area conditions before she let a buyer blindly sign a sales contract.

Why? Because more than half of the 337,000 community associations in the U.S. are facing “serious financial problems,” reported the Community Associations Institute. And, 72 percent of association-governed communities were underfunded in 2013, according to Association Reserves, a California-based company that helps associations with budget and operational issues.

In 2012, Benson utilized her real estate appraisal background to develop a unique algorithm analyzing more than 140 data-points regarding the internal workings of community associations. Using the data, she commissioned a team of computer scientists and programmers to create a new, patent-pending scoring system—the “Private Association Rating”—or PARScore®, a revolutionary new high-tech, data-driven analytics process.

So, how does a condo shopper obtain the often hard to get financial information? The simplest way is just ask for it, and make the deal contingent on getting the information.

“You should insist that your Realtor or real estate attorney attach a special “Condominium Association Inspection Contingency Rider” to the contract to make completion of the deal contingent on receiving important documents and often hidden financial information.

The rider requests the following information: Declaration or Covenants, Conditions and Restrictions (CC&Rs), association rules and fine schedules, current and prior year’s operating budgets, most recent 12 months of board minutes and audits.

The rider also requests most recent reserve study and reserve study review, current reserve and operating account balances statement, lawsuit disclosure statement, owner-occupancy disclosure statement, life safety completion statement, and most recent 24 months of special assessment history disclosure.

The Contingency Rider also requires the seller to pay any expenses related to gathering the documents and providing them to the buyer.

The Contingency Rider also includes a new benefit—a Buyer’s Inspection Notice—which calls for visual examination of the property’s commonly owned elements, such as recreation facilities, swimming pool, fitness center, parking, elevators and common roof deck. The prospective buyer pays for the visual inspection as part of the PARScore® fee.

While surfing the web, a Chicago-area condo shopper found Association Evaluation through a Google search.

The buyer, who plans to move from north suburban Gurnee and hopes to buy a condo in southwest suburban Oak Lawn, downloaded the free “Buyer Kit,” the Condominium Association Contingency Rider, and the HOA Contingency Rider using the following links:

• Buyer Kit: https://associationevaluation.com/buyerkit/

• Condo Rider: https://associationevaluation.com/wp-content/uploads/2014/06/AE-Condo-Inspection-Rider.pdf

• HOA Rider: https://associationevaluation.com/wp-content/uploads/2014/06/AE-HOA-Inspection-Rider.pdf

The buyer also asked Association Evaluation to complete a PARScore® evaluation on the Oak Lawn condominium he plans to buy. He already has received the association’s declaration, bylaws and insurance certificate. “Financial information and other documents listed on the Association Evaluation website have been requested,” he said.

“Today, potential buyers of condos or homes in HOAs have access to digital tools that de-clutter murky data in favor of transparent information that actually empowers the consumer in advance of their purchase,” said Benson.

The Association Evaluation team already has captured more than 50,000 Chicago-area and Illinois condo associations and HOAs in their database, and has completed hundreds of PARScore® reports from Bethesda, MD to Palm Springs, CA.

Through the proprietary algorithm, PARScore® provides a standardized rating between 400 and 900. Every association is assigned a unique Permanent Identification Code (PIC). More than 140 data sets are analyzed and scored against the coded individual associations by using the patent-pending PARScore® point system.

Depending on the number of units in the condo building, the cost of a PARScore® typically ranges from $300 to $850.

Collected data includes direct investigations with association directors and property managers, as well as on-site inspections of the communities. Additional data sources include monitoring corporate filings such as lawsuits, judgments and bankruptcies.

Financial reporting includes verification of operating and reserve-account monies. Board minutes are examined for adherence to standard accepted business protocol procedures and to ensure against unexpected and costly special assessments that have been discussed by the association’s directors, but not yet levied at the time of sale.

A check for date of last reserve study and date of last financial audit also serves to greatly reduce risk. News, Internet and media sources are consistently monitored for each association.

For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.

The post Condo Buyers Should Never Buy Blind Without Insider Info appeared first on Association Evaluation LLC..

A new national survey by the Coalition for Community Housing Policy in the Public Interest (CHPPI), has found that 81% of community association residents surveyed feel that “lack of transparency” and “poor communication” are major problems of HOA and condo life.

• Some 65.9% are “very dissatisfied” with and 15.1% are “dissatisfied” because of transparency and communication issues.

• A whopping 72.6% of the condo and HOA owners surveyed said they were generally “very dissatisfied” (51.2%) or “dissatisfied (21.4%) with the whole concept of community association living. And, 60.8% of survey respondents urged that community associations should have more government oversight and regulation.

Chicago currently has about 12,235 condo and homeowner associations containing approximately 305,000 residential units, according to a comprehensive directory—the “2016 Association Evaluation Report on Illinois Condominiums and Homeowner Associations.” Association Evaluation, LLC, is a Chicago-based real estate technology firm that rates the livability and stability of condo and homeowner associations. Visit: www.AssociationEvaluation.com.

“Our 2017 CHPPI survey, which rates the level of concern on more than 50 commonly reported topics and issues, found that a broad spectrum—from voting and election procedures to power of the board to fine owners—were viewed as major problems within condo associations and HOAs by respondents,” said Sara E. Benson, a CHPPI advisory member and president of Association Evaluation.

“Regarding transparency, a shocking 67.4% of community association residents say that prior to closing on their home they were not told that an HOA or condo association has a legal right to foreclose on the property if the owner becomes delinquent on assessments, fees, dues and fines,” noted Shu Bartholomew, a CHPPI advisory member and host and producer of “On The Commons,” a weekly radio show broadcast from Fairfax, VA. Visit: www.onthecommons.com.

“I am not aware of any state that requires associations to disclose to a buyer that an HOA or condo association has the power to foreclose on a homeowner to collect alleged money due,” Bartholomew said. “These amounts may be legitimate dues, but also fines, attorney’s fees or other junk fees. Housing consumers should be told before they complete the sale.”  

“Some 59.1% of survey respondents reported that they did not even know prior to closing that their condo or HOA board had the power to issue fines,” Bartholomew said.

The on-line, opt-in survey’s preliminary results were gathered from more than 500 owners residing in condominium and HOA communities in Illinois, Texas, California, Florida, Arizona, Nevada, Missouri and Kansas, and a host of other states coast-to-coast.

The survey will conclude on January 31, 2017. Visit: www.CHPPI.org, the organization’s home page, take the survey and see details of the initial 2015 CHPPI survey report.

According to the Community Associations Institute (CAI) there currently are more than 337,000 homeowners associations where more than 68 million people reside across the United States. CAI is a trade association and special interest group that primarily represents attorneys and property management companies servicing homeowner associations.

In a survey on community association success published by CAI in 2016 it was reported that only 12% of respondents are dissatisfied with their HOA. However, that suspiciously low percentage still translates into 8.2 million very unhappy residents.

One of the biggest attractions of shared-community ownership is the so-called “carefree living” aspect. There are no yards to maintain, grass to cut, snow to shovel, windows to wash, decks to stain or roofs to repair. All an owner has to do is sit back, pay his or her monthly assessment, and enjoy the recreational amenities.

And, condo ownership also can be a good lifestyle choice for singles—especially single women seeking security—retirees and smaller families not in need of larger spaces.

Another attraction of condo and HOA living is the hefty tax breaks—federal and state tax deductions for mortgage interest and property taxes that are handed to owners.

However, critics of community associations say owners really are “subject to double taxation” because they not only pay real estate taxes to local municipalities, but also are required to pay monthly assessments for common areas.

For example, owners in a private community association must pay for snow plowing and upkeep of private roads, maintenance of private streets and lighting, upkeep of storm-water retention basins, and other common-area amenities within the HOA or condo association’s jurisdiction.

A rare chance to rate your condo association or HOA

If you love your condo association or Homeowner Association or hate it, now’s your chance to rate it as part of a new 2017 National HOA Survey conducted by the Coalition for Community Housing Policy in the Public Interest (CHPPI). To take the survey, visit www.CHPPI.org, the organization’s home page. Your input will remain anonymous. Final results will be published in Inside Publications after the January 31, 2017 deadline.

For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.

The post Many Condo & HOA Owners Are ‘Dissatisfied’ With ‘Carefree’ Life appeared first on Association Evaluation LLC..

Every day I hear or read about outrageous events in Association Governed Housing Communities. And I see the same issues over and over again.

These are not “isolated incidents” as the HOA industry would have the public believe.

Two very common issues I encounter:

• disputes over who should pay for substantial repairs to exterior elements in condominiums and
• failure to disclose important information to homeowners and homebuyers.

A few months ago, I wrote about Mallard Lakes Condominium Association in Selbyville, Delaware, where several condos were damaged by Superstorm Sandy 4 years ago. A group of condo owners are currently locked in a battle with their Association over who will pay to elevate their condo units as required by FEMA and Sussex County, Delaware.

To refresh your memory, or if you’ve missed it, here’s the link to the Previous blog:

4 years after Sandy, it’s a no-win situation at Mallard Lakes

Over the past few months, there have been some new developments.

Another lawsuit at Mallard Lakes

John and Jennifer Mingora, condo owners who purchased their unit in 2013, have filed a lawsuit against the seller, their real estate agent, and Mallard Lakes Condo Association.

Mingoras allege that important (material) facts about their recently remodeled condo unit were not disclosed to them.

According to public court documents, here’s a summary:

Mallard Lakes has 477 townhouse condo units. 30 of those condo units are located in five buildings on a barrier island.

Superstorm Sandy slammed the island condos at Mallard Lakes on October 29, 2012, causing coastal flooding, and damage to the first floor of several units.

On April 24, 2013, Mallard Lakes Association opened a claim with FEMA. On May 14, 2013, Sussex County designated Mallard Lakes units as “substantially damaged.” To meet the definition of “substantially damaged,” the cost to repair must exceed 50% of current estimated value of the property.

Both FEMA and Sussex County Flood Control Ordinances require “substantially damaged” structures to be raised to prevent damage from a future flood. Until a “substantially damaged” structure is raised to the required elevation, no certificate of occupancy can be issued.

The formal complaint also states that Mallard Lakes Association failed to timely follow FEMA procedures when applying for funding, therefore, the Association received very little money to use toward extensive repairs.

The Association is required by law to raise 24 condo units to a higher elevation, but there’s not enough money to do the job.

After the owners of those 24 units were told they could return – despite the lack of a certificate of occupancy – they were then told they must contribute $60,000 each to cover the cost of  construction to elevate their condo buildings. (4 buildings with 6 units each)

One of those units was owned by Charlotte Hurley of NC. Hurley sold her unit to John and Jennifer Mingora on October 13, 2013.

(In a separate lawsuit, attorneys for Mallard Lakes owners argue that all 477 members of the Association must share in the cost of elevating affected units, see previous blog.)

The Realtor representing both buyer and seller, Cynthia Spieczny of Resort Quest Real Estate in West Fenwick (DE), has sold many properties in Mallard Lakes and owns a unit in the condo association.

However, Hurley, Spieczny, and Mallard Lakes all failed to disclose to the Mingoras that the condo they purchased did not have a valid certificate of occupancy. The buyers were also not told that, as new owners, they might have to pay a $60K special assessment to cover their share of the cost of elevating the building.

Non-disclosure of material facts involving a real estate sale is against state law.

In late September of this year, Mingoras filed the following legal complaint. In the exhibits, see if you can spot misrepresentations in the seller disclosure. The complaint lists seven counts against the defendants, including breach of contract, fraudulent misrepresentation, and civil conspiracy between Spieczny and Mallard Lakes Association.

Mingoras paid $114,900 for the Mallard Lakes property. They seek reimbursement of their purchase price and related costs.

Legal complaint – non-disclosure of material facts

https://cldup.com/cc8OwXJRzB.pdf

Association tries to silence condo owners

Melissa Golden and other condo owners are stuck with condos they cannot legally occupy. They want to set the record straight with their neighbors, because Mallard Lakes Association has misrepresented or omitted key facts in official correspondence with their members. This has led to resentment toward victims of Super Storm Sandy.

But when damaged condo owners tried to communicate with their neighbors, or call attention to the issue at board meetings, Mallard Lakes Association filed a court order to prevent condo owners from speaking out in public.

The gag order was a blatant attempt at stifling free speech, one that was thankfully denied by a Judge this summer.

Judge won’t put gag order on Sandy-damaged condo owners

James Fisher , The News Journal 12:12 p.m. EDT July 22, 2016

A bitter disagreement over Superstorm Sandy damage to a set of Selbyville-area condo buildings won’t be tamped down by a court-imposed gag order, a Court of Chancery judge has ruled.

Vice Chancellor Sam Glasscock III ruled against the condominium association at Mallard Lakes, which had asked the court to stop some unit owners from speaking publicly about a dispute – and lawsuit – over whether Sandy-damaged structures have to be elevated and who will pay if they must be.

Read more:

http://www.delawareonline.com/story/news/local/2016/07/22/judge-wont-put-gag-order-sandy-damaged-condo-owners/87379894/

**Reposted with permission from Independent American Communities blog http://independentamericancommunities.com/

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. This week, we begin an examination of HOA Horrors stories about roaches, bedbugs, and rats across the nation.

A “Biblical” Explosion of Roaches

Cleanliness may be next to godliness, but when your community is invaded by roaches, bedbugs, rats, maggots, and other vermin, it’s time for quick action.

New York City’s famed Ansonia has had an illustrious and remarkable past. The 18-story Beaux-Arts style structure was originally built as a hotel around 1900. Ninety-two years later, it was converted to a 430-unit condominium building.

Over the years, the Ansonia has been home to Babe Ruth, Igor Stravinsky, and Angelina Jolie and has been featured in several movies. During the 1960s and 1970s, it house an infamous gay bathhouse in its basement. Later, the club became, Plato’s Retreat, a renowned heterosexual swing club.

One couple at the Ansonia, Alan Arkin (not the famous actor) and his wife, Suzanne Bagert, said they were hardly able to sleep at night and stopped using their kitchen for fear of crawling critters. They started seeing roaches scurry about in 2006 and had an exterminator spray their unit, but it helped only temporarily. They started sleeping with the lights on.

Ms. Bagert, who worked from home, imagined roaches crawling on her neck. “My brushes my neck and I scream,” she said in an interview with the New York Times. Her husband found a roach in his sock.

After what Mr. Arkin called “a biblical-type explosion of roaches,” the couple filed a lawsuit in New York State Supreme Court against the Ansonia’s management. “This infestation,” Mr. Arkin wrote in his court papers, “has rendered their apartment completely unfit to live in.” According to the filing, the situation was so bad that the roaches were on the floor, the walls, the ceiling, the curtains, and even the couple’s bed.

The suit further alleged that his and his wife’s complaints were met by “doublespeak and half-truths.” Management reportedly responded by sending a maintenance worker to knock cockroaches off of the hallways walls, vacuum them up, and then wash the walls with soap and water, a treatment Mr. Arkin called “grossly and negligently” insufficient.

Mr. Arkin further states that management said the infestation was caused by an elderly tenant on the same floor who would not allow exterminators into her apartment.

Even if you’re the most spic and span housekeeper in the world, if you’re sharing walls, ceilings, or floors with a hoarder, or someone who simply keeps wet cat food out all day, getting rid of roaches – and even ants- can be next to impossible. It’s the actual physical nature of community living that is the most challenging.

If infestation exists, communities would be well served to have a regular maintenance schedule for extermination with mandatory cooperation from all unit owners. If the root source of the problem is overlooked, all the spray in the world will be only temporarily effective.

The post HOA Horror: Roaches, Bedbugs, And Rats Pt. 1 appeared first on Association Evaluation LLC..

Last week, we talked about the ways that your HOA can unwittingly be stripped of their monies. This week, we talk about the signs that your HOA might be the victim of embezzlement. There are many clues to embezzlement, but the primary clue that theft or misappropriation of funds is occurring is

Although fraud activity may continue for years – even decades – the typical fraud lasts for approximately two years. By the time others become suspicious of fraudulent activity, it has most likely been going on for quite some time -and by then, the missing money is frequently unrecoverable.

Arlen Lasinsky, director of litigation and forensics for a Deerfield, Illinois, accounting firm, describes the “fraud triangle” of white-collar crime. According to Lasinsky, the fraud triangle’s three angles represent 1) opportunity, 2) motivation, and 3) rationalization.

Opportunity presents itself when a person sits in a position of trust and control- and has access to funds. The opportunistic mechanism is engaged due to lack of oversight and proper in-place financial controls. In short, opportunity arises when one person can compromise the transaction because he or she can a) consummate, b) record, c) reconcile the transaction.

Motivation may include job loss, drug or alcohol problems, divorce, gambling problems, death of a family member, illness, or any other change in life circumstances. These all can trigger fraud.

Rationalization frequently includes an inability for thieves to see themselves as criminals. Yes, they are stealing money, but their inner voice convincingly whispers, “I deserve this.” Other rationalizing voices include, “I’ve earned this, and no one will miss it anyway,” “I’m just borrowing a little bit,” and “I’ve made so much money for this place, they owe me.”

Most cases of theft and embezzlement start out small and snowball. Flashing warning signs include the following:

• Not taking vacations;
• Being the first and last to leave the office;
• Creating a fire drill to get reports or copies of bank statements;
• Unreconciled bank statements;
• Living an unusually lavish lifestyle

Just as some volunteer presidents know nothing about how to govern, many volunteer treasurers do not know how to conduct basic accounting – and virtually nothing about budgeting. Or, conversely, they know too much about accounting and how to create false invoices, Photoshopped bank statements, and false bottoms. It’s scary, but true.

One 19-unit condominium association provided a makeshift budget to unit owners. The budget- on just one single sheet of 81/2-by-11-inch paper – simply stated, “Electricity, $250 per month, same each month – same as last year,” and so on for each subsequent category.

At that point, a few residents who actually took the time to read the numbers, doubted the treasurer could perform simple math. They started asking questions, but their questions were aggressively rebuffed: “Why are you asking me questions about the budget? Don’t you trust me? Everything is on the record. How dare you not trust me?” Later, when further pressured by one unit owner, the treasurer responded with a string of expletives and indignantly walked out of the room.

This type of highly defensive behavior combined with refusal to produce documents should be a screaming red flag – with neon-flashing chase lights – to fellow board members and owners dept in the dark. By law, owners are entitled to see all bank transactions concerning their association. Sadly, too many owners only glance at their association’s minutes and budgets and never request copies of actual bank statements. As a result, gross negligence, misappropriation of funds ,and theft may go unnoticed for years – even decades.

In the above case, and unbeknown to the other owners or board members, the treasurer was pilfering thousands of dollars from the association funds.

In addition to secrecy and concealment, other clues include boards that “punish” owners who inquire about financial matters by levying bogus fines and legal fees, and aggressive board attorneys who defend board secrecy. Trumped-up “embezzlement assessments” for the whistleblowers has even resulted in illegal foreclosure on some owners’ homes.

Non-board-member owners should ask tough questions. They are entitled to request records and to lobby for a financial audit. Transparency should always be of utmost priority for board members, especially in areas related to finance. Any form of concealment begs suspicion.

According to certified public accountant Kimberly Waite of Frost Ruttenberg & Rothblatt PC: “It’s not enough to elect a treasurer- every board member is responsible for every action of the board.” Board members have a duty and an obligation to watch the finances and set up controls to reduce opportunities for fraud and negligence.

Ultimately, your HOA is your responsibility. Be vigilant about your HOA’s accounting practices.  Be informed and demand transparency. 

The post Clues That Your HOA Might Be The Victim Of Embezzlement appeared first on Association Evaluation LLC..

Last week we covered: the kickback, overbilling, expense padding, volunteer compensation and underreporting income. In the final installment of this two-part series, we continue highlighting common examples of how HOA’s can unwittingly be stripped of their monies:

• Overreporting expenses. Owners should beware when financial statements show an exaggerated amount for recurring regular monthly expenses. For example, the reported electricity budget is 40 percent higher than the actual electric usage, or the maintenance is reported as double the actual cost. One-time expenses may also be overreported. The goal of overreporting expenses is to create a “slush fund” that can then be siphoned off by whoever is in charge of the bank account.
• False bottoms. This financial chasm is created when income is underreported or expenses have been overreported. False bottoms are created by making false entries in books. By creating a “false bottom,” would-be thieves can extract monies without being easily spotted.
• Photoshopping bank statements. In the age of computers, this illegal act is not at all uncommon. If you go online and Google “How to Photoshop a bank statement,” you’ll get an amazing 508,000 results. The first query: “How do I edit a bank statement after scanning?” Prior to taking off with more than $2 million in assets, one management company sent fake bank statements to more than 40 condo associations it managed.
• Creative accounting. This is any accounting that fails to follow generally accepted accounting principles (GAAP.) For example, GAAP would include preparing a statement of assets and liabilities, a profit and loss statement, and an income and expense report. By failing to follow basic accounting principles and setting arbitrary and misleading matrixes, owners are overwhelmed and often do not admit when they cannot understand the “creative accounting procedures.”
• Insider trading. Invested on Wall Street, this highly illegal act occurs when board members use their power, position, and inside knowledge to acquire property for personal wealth and gain. In associations whose bylaws or covenants, conditions, and restrictions (CC&Rs) contain a right of first refusal, board members have been known to avoid presenting the sale to the board in an open meeting and signing their own waiver in order to purchase a pristine unit at below-market value. High-end cooperative associations are equally vulnerable to this type of abuse, wherein board directors deny purchase applications and subsequently purchase the unit for their own personal pleasure and financial profit. Under the “buddy rule,” fellow board members simply look the other way. Note that association insider trading is not regulated in any way. “Insider trading” is typically the illegal act of trading stocks to one’s own advantage through the use of confidential information. If only Martha Stewart could have been so lucky!
• Debit cards. They simply are an embezzler’s dream come true. Association debit cards have been routinely used for traveling, gambling, medical bills, gas, groceries, cell phone bills and even lingerie purchases at Victoria’s Secret. Some associations are lulled into a false sense of security when two signatures are required on checks. Debit cards require only one signature.
• Forgery. Perhaps one of the oldest scams around, forgery is still running rampant in homeowner associations across the nation. In several cases, signatures of deceased or mentally impaired owners were used to cash checks. Additional means of embezzlement include double billing, false billing, data falsification, inflated management fees, phantom labor, bundling, and unapproved billing.

Best practice would mandate association finances to be transparent to the owners at all times. The monies belong to the owners as a whole – not the board officers or members. Next week, we’ll discuss some clues to help you discover if your HOA is the victim of embezzlement.

The post The Many Names For Theft Inside Your HOA: Part TWO appeared first on Association Evaluation LLC..

In this two-part series, we will highlight common examples of how associations can unwittingly be stripped of their monies:

• The kickback. This widespread act of dishonesty is one of the most prevalent forms of embezzlement because it is extremely difficult to spot. Kickbasks can occur in any association – large or small, self-managed or professionally managed. Kickbacks can range from a few hundred to millions of dollars. Many kickbacks are made in cash, and the agreements are never in writing. All kickbacks have the ultimate effect of raising the unit owner’s costs. One association president directed all cleaning and maintenance contracts to his own company – a clear conflict of interest that owners were too busy to catch despite his fees being three times higher than competing companies.
• Overbilling. This blatant act of theft is the practice of a vendor or contractor billing more for services than was actually rendered. For example, a 20-minute chore is billed as a two-hour job. This can be done in error, but more often, is motivated by fraud. It ca nalso be described as “super-charging” or “gouging.” In the movie The Firm, Tom Cruise wins an impossible case against a dirty law firm by catching an intenional overbilling errors that were sent out via the US Postal Service – making the mail fraud a federal offense.
• Expense padding. This financial sleight of hand includes any type of purchase made allegedly for the benefit of the association owners, but personally benefiting a board member or property manager. It may start off small, such as a tank of gasoline once a month, but escalates to a gas fill-up every week. One association’s president completely furnished his home office on the association’s dollar. He bought an expensive new computer, wireless router, wireless mouse, printer, ink cartridges, paper and $2,000 of “forever” postage stamps and billed it all ot the association – with receipts – and no one even blinked.
• Volunteer compensation. This abuse is a true oxymoron that has been surfacing more and more since the Great Recession. For nonprofit associations whose bylaws clearly stipulate board members may not be compensated, some rogue boards are rewriting the “rules” to allow payment for their services. Other “volunteer” board members are charging associations for services such as conducting “meet and greet” sessions with new owners, supervising workers,” and “watering the grass” – despite having a full-time landscaping service One “volunteer” treasurer- an accountant – has been paying herself $250 an hour from the association’s checkbook for simply writing ordinary checks. These fees can quickly add up to thousands of dollars in unnecessary and frivolous “tasks.” Beware of any board director or member taking or accepting fees from the association. Be especially wary of board directors who have the capacity to issue themselves checks. These situations beg for abuse.

• Underreporting income. This trick is most often seen when financial statements are altered to decrease the actual income received by the association. The difference between the stated amount and the actual amount can then be pocketed by whoever is in charge of the checkbook. Aside from regular assessments, there may be unexpected income from insurance companies, banks, earned interest, fines, penalties, charged interest, and even attorney settlements.

In our next installment, we will cover more ways that your association can be swindled, as well as some clues that your HOA may be the victim of embezzlement.

The post The Many Names For Theft Inside Your HOA: Part ONE appeared first on Association Evaluation LLC..

The post HOA Makes $109K Fair Housing Settlement Contingent On Owners Moving Out appeared first on Association Evaluation LLC..

, Coalition for Community Housing Policy in the Public Interest (Chppi.org)

As the 2016 Presidential election campaign heats up, so do political sign controversies in homeowners associations. Here’s a perfect example from Florida, a dispute over a Hillary Clinton sign in a resident’s window.

Help Me Howard, Channel 7 WSVN, on political signs in your HOA(1)

Howard Finkelstein is Public Defender for Broward County in Florida, but he moonlights as a legal analyst for the local Fox News affiliate. According to Finkelstein’s analysis, an HOA can deny a resident’s right to display a political sign as long as their documents are “written correctly,” and if the homeowner took this to court, she would “probably lose.” However, an HOA cannot allow some types of political signs (such as the one we see in the video about gun ownership rights) and not others  a sign supporting Hillary Clinton).

That would be Selective Enforcement: that’s the kind of inconsistency that gets HOA Boards in trouble, the kind of stuff that leads to billable hours to the Association attorney to defend the indefensible. Guess who pays for this expemse? Why, that would be the members of the Association, the homeowners.

Of course, Howard brings up the standard argument that because it is not the government, a private HOA can make up rules prohibiting signs. Or, as I like to say, the standard industry claim is that the Bill of Rights Need Not Apply, including your guarantee to Free Speech under the First Amendment.

But, is that absolutely true or is it subject to interpretation?

Recent Case Law opens the door for future challenges

In 2012, the NJ Supreme Court, in Mazdabrook vs. Khan(2) ruled that an Association’s restriction against placing a political sign inside a condo unit’s window was unconstitutional under state law. Of course, the facts in Mazdabrook bear a striking resemblance to the action taken by Valencia Morris at The Enclave at Cutler Bay. Ms. Morris was threatened with a fine if she did not remove the small political sign she had placed on the inside of her unit’s window.

More recently, in 2014, in Dublirer vs 2000 Linwood Avenue Owners (3), the NJ Supreme Court upheld that the Association violated the state’s Constitution when it denied the owner of a Fort Lee Co-op the right to distribute campaign leaflets as he contemplated running for a seat on the Board.

In both cases, the NJ Supreme Court ruled that even a private organization such as an Association-Governed Residential Association, cannot restrict “too much speech” and rejected legal arguments for the Associations that a homeowner “gives up” Constitutional rights by taking title to an HOA property.

Now, some FL attorneys will argue that the NJ Constitution offers greater protection of rights involving private organizations. So let’s compare the two state Constitutions on the issue of free speech.

New Jersey Constitution, article I (4)

6. Every person may freely speak, write and publish his sentiments on all subjects, being responsible for the abuse of that right. No law shall be passed to restrain or abridge the liberty of speech or of the press. In all prosecutions or indictments for libel, the truth may be given in evidence to the jury; and if it shall appear to the jury that the matter charged as libelous is true, and was published with good motives and for justifiable ends, the party shall be acquitted; and the jury shall have the right to determine the law and the fact.

Florida Constitution, Article I (5)

SECTION 4. Freedom of speech and press.—Every person may speak, write and publish sentiments on all subjects but shall be responsible for the abuse of that right. No law shall be passed to restrain or abridge the liberty of speech or of the press. In all criminal prosecutions and civil actions for defamation the truth may be given in evidence. If the matter charged as defamatory is true and was published with good motives, the party shall be acquitted or exonerated.

Now, I’m not an attorney, but these two provisions seem to say essentially the same thing.

Are the winds of change blowing?

Allow me to leave the reader with one final thought, courtesy of the First Amendment Center at the Newseum Institute (NI). In their recent survey (6), NI asked: Does the First Amendment go too far in the rights it guarantees? Below you can see the results. (click here and scroll to page 4 for a full-screen view)

Looking at perceptions of First Amendment rights for different age groups, it’s quite clear that younger generations are not going to put up with private corporate HOAs restricting speech! Time is on our side.

References:

1) Help Me Howard, Channel 7 WSVN, on political signs in your HOA

2) Link to Federalist Society Article on Mazdabrook vs. Khan

3) Link to NorthJersey.com article on Dublirer vs. Linwood Ave.

4) Link to NJ Constitution Article I

5) Link to FL Constitution Article I

6) Link to Newseum Institute survey on First Amendment

The post Are You Entitled to Free Speech in your HOA? appeared first on Association Evaluation LLC..

N4T Investigators: Tenant upset over HOA decision over “dog” fence 
Written By Bret Buganski

TUCSON- Is it a reasonable enforcement of the rules, or did one man’s homeowner’s association go too far? Dan D’Agostino has buyer’s remorse after renting a new home in Continental Ranch. It all centers around an incident where his dog jumped over the fence, and D’Agostino tried correcting the problem.

His dog “Penny” is a 2 year old pit bull mix, that has a lot of energy and sometimes likes to jump. This became a problem over the summer as the dog jumped over the fence and into his next door neighbor’s yard.

“Hey my grandmother just got scratched by your dog pretty bad,” said D’Agostino, who told us about what his neighbor said to him when his dog escaped. “My heart sank and I just felt horrible about the situation.”

To make sure “Penny” never tries this again, he put up a chain link fence around the existing brick fence in his backyard.

“It solved the problem,” said D’Agostino. But he said after about two months, his HOA contacted his landlord, who told him the chain link fence violated the rules, and he was required to take it down.

“Absolutely not, I will not endanger the safety of my neighbor,” D’Agostino said. “I’m open to suggestions, I’m open with coming up with an equivalent solution I said.”

One of the suggestions posed by the HOA was a “dog run,” which D’Agostino felt was not equivalent. The other suggestion was extending the brick wall in his backyard, but it was something his landlord did not want to do. He said both sides were deadlocked, until he said he threatened the HOA with a lawsuit if this couldn’t be resolved. But he said his HOA also threatened his landlord with a lawsuit, and gave them an ultimatum.

“It was out of a fear that he could be bullied into submission and that’s kind of what happened,” said D’Agostino.

The News 4 Tucson Investigators obtained an email between D’Agostino and his HOA saying, “his problem is what is creating the potential risk, and the renter cannot claim the HOA must allow the chain link fence as a “reasonable accommodation.” The Board upholds its responsibility to protect its members from known hazards…the appropriate course of action for the Association would be to report the dog to Pima County Animal Control, being that you have sent documented information regarding the harm it caused to your neighbor after your failure to contain the animal on your property. The Association hopes that you can find acceptable means to address the issue, while following the CC&Rs. There are numerous other “reasonable” ways he can control his dog without any significant expense and certainly without a chain link fence. A leash. Many outdoor dogs are kept on a rather lengthy leash. it will allow the dog to roam the entire backyard without the risk of jumping over the fence.”

However the N4T Investigators found that suggestion from the HOA violates Pima County Law. Under Chapter 6, in the animal control regulations, it says “*with the exception of temporary tethering of horses— the use of tie-outs such as chains, leashes, wires, cables or similar restraining devices for the purpose of animal confinement is hereby prohibited.” Read more: http://www.kvoa.com/story/29994011/n4t-investigators-tenant-upset-over-hoa-decision-over-dog-fence

How would you have handled this situation? Do you have a similar story to share? Let us know! Email us at info@associationevaluation.com

The post DISPATCHES FROM THE FRONT: TENANT IN THE “DOG HOUSE” OVER HOA “DOG” FENCE DECISION appeared first on Association Evaluation LLC..