09.17.14 - What a tremendous gift, Part 2 - "The HOA: Dynasties Of Dysfunction: THE GREAT WALL OF INEQUITY," by Donie Vanitzian, JD -...

guest blog by Donie Vanitzian, JD

“THE GREAT WALL OF INEQUITY”

“Beige paint and potholes aside, artificially created communities undermine the social system as non-board member owners are relegated to positions of second-class citizenry, or in this context, second-class homeownership. Built into this artificial aura of community is an unspoken association ranking order that is arbitrarily decided by a few persons perceived to be oh-so-important. This ranking order frequently reflects the wishes of influential members rather than the merits of those elected to the board or the “real” majority. Such living environments promote exploitation of those under it. Here, an owner’s life can become subject to power-mad rulers with the means and ability to ruin and financially devastate them.

Only the owner has a vested interest in property, yet, outside vendors are often allowed to wield their influence on directors who hold the power over each person’s individual asset: their home. This leaves owners who are lowest in the social order with minimal bargaining power over their living environment and assets. Because owners essentially relinquish control of their assets to those who have been elected to the board, the owner is burdened with a double financial risk.

The owner’s financial crisis differs substantially from the association’s financial crisis. An association always has “cash requirements” and by law and simply imposing additional assessments, it can raise cash on demand from each owner. Even with this ability, these communities can remain in a constant flux of not being able to meet its liabilities. This means that a “gain” for the association results in a corresponding “loss” for each owner, subjecting those on low or fixed incomes and seniors in particular to potential personal financial distress.

As almost nothing in a community setting is designed to be resolved to the satisfaction of all owners, nearly every financial crisis a board faces can keep recurring. In this oppressive regime, owners become dispensable pawns.

MULTI-HEADED DRAGONS

Just when owners think its safe, a dragon rears its ugly head. Problems surface everywhere and they don’t stop. Problems with operations, problems with building structures, problems with maintenance, problems with funding association bank accounts, problems with foreclosures, problems with liens, problems with fines, problems with declining sales, problems, problems, and more problems. The dragons never cease.

For all the pomp and circumstance extolling spectacular benefits of community living, it is for the most part, excruciatingly invasive, boring, repetitive, time-consuming, and expensive — all with little or no tangible and/or quantifiable return for owners.

Owners at odds with their association are similar to a minority shareholder taking on a corporate monster whose personality is both dysfunctional and manic. Picture a five-member board of directors, each with a different personality. As the board changes, so do the personalities of its directors. The multiple personalities of each successive board serve to hinder owner autonomy and deplete the individual’s personal resources.

The stakes are high for homeowners and an unintentional mistake or error in judgment can have devastating results. The owner’s position is instantly prejudiced not only by statute and case law, but also by the inferior status this environment inherently accords. Predictably, this buyer like many others, will not understand that he has a deed-restricted title and as such, his homeownership is an inferior purchase compared to those properties with no restrictions on title. His membership, let alone ownership, is contingent on restrictions and rules he may not have seen, agreed to, or know to exist. Yet he is bound by it all. Depending on the rules of any given association, fines, liens, and nonjudicial foreclosures can all occur. However, by law the owner must subscribe in order to belong to this fictional entity. In order to subscribe, he must pay by way of property purchase and by compliance of the association’s covenants, conditions, and restrictions — no matter the cost.

Every problem the owner encounters steals days, weeks, months, and years away from their life — none can be recovered.

TOO LATE TO READ THE TEA LEAVES

At first it may be unclear and frustrating figuring this out, but homeowners must understand the relevance of their inferior status in relation to the association and its board of directors. Treat the corporate association-entity for what it legally is — a corporate fiction created to operate a business. That business is the “association.” View the board of emperors, uh, directors, like any other corporate board, except here, each emperor is “expected” to be in a “conflicted” position because they are both homeowner and director. When approached by the multiple personalities responsible for the owner’s demise one must remember it is impossible to reason with a “fiction.” It is impossible to fight a dragon without a sword. You have no viable weapon. You have nowhere to hide. It knows where you live. Its been watching you since you moved in. Its been training for this moment since it got elected. It is unconcerned about your welfare. It knows only one cause, it’s own. You think you know them. You don’t. You think you can tame it. You won’t. You think you can slay it. You can’t.

Given the large turnover in such developments, accomplishing anything becomes a feat in itself. Don’t expect answers. In this atmosphere it is a challenge for the owner to merely stay alive and on track sticking to a plausible game plan for emotional, financial, and physical survival.

The corporate entity’s adeptness lies in creating confusion and frustrating the opposition. Owners are the opposition.”