THE HOA SAGA                                                            Back
A fictional story by MIKA SADAI

PART I: IN THE BEGINNING

In the beginning there was a developer. He was thinking to himself: how can I keep control over my project while still developing and selling properties? The new buyers will destroy my beautiful creation! They will have flowers in their front yards! They will have garbage cans! Their children will play basketball and ride bikes! They will have dogs and cats! They will fly flags on the Fourth of July! He really didn't know what to do, so he went to consult with his lawyer. 

The lawyer said: why don't you create a homeowners association and force all your buyers to be members and abide by your rules and restrictions? You can also pass on your development and maintenance expenses to naïve buyers and keep everybody under your thumb!

But how can I, asked the developer? There are no homes or homeowners yet, only vacant lots. It will be a fraud!

Don't worry, said the lawyer; we'll make it legal. You will be the homeowners. It will be a nonprofit corporation, and you and I will share the profit, while the homeowners pay their dues. We'll create CC&Rs that will be recorded on their deeds. We'll create rules and liens, and if they violate any of your rules, you will be able to foreclose. This will teach them a lesson!

So the lawyer drafted a long, detailed document, and called it the CC&Rs. The developer elected himself and his wife and son to the board of directors, which, in turn, appointed him, his cousin and brother-in-law to the Architectural Control Committee. The CC&Rs stated clearly that all the affairs of the Association shall be determined by the board of directors, which will also have the sole authority to set the rules at its discretion. The board voted to double the members' dues (the board was exempt because they were "class A" members. In addition to the regular assessment dues, violators were fined, which helped to enhance the financial position of the developer's association and his personal bank account.

We did it said the developer! But what will happen after I complete the selling of all the lots? There is nothing in these CC&Rs for the homeowners; they were designed strictly for my benefit and interest. In fact, as I read them, I think that a more appropriate name would be, "Anti-homeowners Association". But being recorded and running with the land, how will they ever be able to get rid of them? Who cares? said the lawyer.

PART II: HOW THE HOA SCAM WAS SOLD

Amazingly, it worked. The lawyer and the developer created a highly profitable private nonprofit corporation, which was designed to subjugate its residents to the interests and whims of the developer. The idea was to force all potential homeowners into a concentration camp and then fine them for violations, non-compliance and disobedience. The developer became the absolute ruler, with unlimited powers, and it was all done legally! In the United States of America, the land of the free! 

But, said the developer to the lawyer, who will come to live in my development under such conditions, and even pay good money and take a mortgage?

Don't you worry, said the lawyer; we'll sell the idea. We just need PR.

And they held a press conference and proudly announced that their carefully planned community, with its manicured yards, clean streets and well-behaved kids (who will be out of sight) would preserve market values. Now, who wouldn't want this? So, everybody liked the idea, and the buyers came with their money and exchanged their dignity and liberty for cleanliness and preservation of market value.  But then, the busybodies took over!

PART III: THE BUSYBODIES ARE COMING! THE BUSYBODIES ARE COMING!

Most homeowners did not realize that they had just traded their liberty and dignity in exchange for anticipated preservation of market value, because nowhere in the CC&Rs, which they had agreed to be recorded with their deeds, did it say so specifically. Beside, they were preoccupied with choosing the color for their carpeting and filling out the mortgage forms, and the CC&Rs that were handed to them seemed like one of those formal documents that you never have time to read, let alone analyze and understand. 

But some did read the CC&Rs, and to them it seemed like a reasonable document, setting up democratic procedures for electing a board of directors who will take care of the community needs. Even the assessment fees were reasonable. Sure, there were some restrictions, such as no-weed or mess (who could be against it?) and a requirement of architectural approval for any addition/alteration, so what? Don’t you need permits for such things anyhow? And, if you fail to pay, the association could place a lien and even foreclose, but who was planning on not paying?

Above all, it seemed sensible and fair. You could even appeal, if you didn't like something. It was democratic. There were annual meetings and elections. Homeowners were managing their business for their common good¾it was Utopia.

But, between selecting the kitchen counter tops and checking the school district, there were other provisions that passed unnoticed. Like the provision that said,  "the board shall have the exclusive right to determine and manage the affairs of the association," so what? The board will be democratically elected by the members, right? And if a board member misbehaves, out they go! You could have petitions and recalls and special meetings and what not, all provided in formal Bylaws. Besides, there were associations like this all over the place, so it must be OK, right? It was clear that the CC&Rs, or any of its provisions could be amended by 2/3 of the members, so, obviously, the sensible homeowners will move to amend whatever was unacceptable; there was nothing to worry about. Also hidden was the provision that the board had the exclusive power to create, add, modify amend etc. the rules of the association, and these Rules "shall have the same force and effect as if they were set forth in and were part of the Declaration," (another name for the CC&Rs). But since nobody paid attention to such insignificant details, everything moved along smoothly, until the big day came.

The Big Day was the day the governance of the association was to be transferred to the homeowners. From now on they will make their own decisions and independently determine their destiny. It was really exciting, and everybody was looking forward to the General Membership Meeting and elections.

"Everybody," included the busybodies, who, since they had nothing better to do with their lives, prepared themselves for the big takeover. It is a established fact that busybodies like to pick into their neighbors backyard and tell them how to live their lives. Now, when the big day comes, they will be able to do it legally, and this was really inspiring.

PART IV: THE BIG DAY

Some fifty or sixty people gathered in the library meeting room and waited for somebody to take care of things. Who is in charge? Then the man from the management company introduced himself and announced the official opening of the meeting. We have business to take care of, he said. We need to elect a board of directors that will take care of the "common area," and establish an SS unit that will enforce the CC&Rs, and we need to increase the assessments, because there is not enough money to pay for all our needs.

What are our needs? Somebody asked. Well, landscape and water and management fees, said the manager. What does the management do? Collects the assessment monies, keeps the books and makes payments to the landscaper and to itself. 

Fortunately, the developer was an environmentalist and did not provide too much landscape, because he wanted to preserve the environment after he had bulldozed it. In short, the "common area" was a few mesquite trees and a retention basin, which also served as a park. But all this needed maintenance, right? And maintenance cost money, right? And somebody needs to manage the money, right?

A financial statement was distributed to all the attending homeowners, and the manager briefly explained everything. Then a free-for-all began, and people started to complain: dogs barking, weeds in neighbors’ yard, parking, and garbage collection. Finally, the manager said, we need to elect three directors to the board.

Eleven people offered their candidacy and introduced themselves. Barbie was first. She meant business. She knew her way around city hall. She was experienced. Her main concerns were to make sure that the CC&Rs were fully enforced "without exception," and to preserve market values. She would not be elected; too aggressive.

Then came Jenny, who said that even if she were not to get elected, she would do anything to help the association, because she loved the association and also cared about market values. Proudly, she told everybody that she patrolled the neighborhood every day, and sometimes even twice a day to make sure that everything was in order.  People didn’t like her; too pushy.

Then came the others: A very young man with good will (too young), an older man who sounded mellow and said nothing memorable, (but he was pleasant and made a good father figure). A tall guy who was a resort manager (nice and gentle), and a school teacher who said that she knew how to deal with people. There were others too, but they were not tall and did not leave any lasting impression, so nobody could even remember their names. Common to all was the deep concern about preservation of market values.

People filled their ballots and the manager stepped out of the room for the purpose of counting them without interruption. Then he came back and announced the winners: The mellow guy, the tall guy, and the teacher. The busybodies were not elected.

So, the first meeting ended with optimism and good will. The scam worked, since everybody believed that it was their association and their CC&Rs, and market values will now go sky-high, and everybody on the board was really nice, and the busybodies were not on board, and this association will not be like others.

Amazingly, the busybodies did not seem to be disappointed, because they knew that this was only the beginning, and that there were back doors and side doors, and that eventually they would prevail, and this was really what mattered. So everybody went home happy, while the busybodies were planning their takeover.

PART V: THE BOARD IN ACTION

Nobody on the board knew what the board was supposed to do, so the manager advised them that the president should call a board meeting, in which they would discuss the business of the association and make decisions. Just make sure, said the manager, that you pass a motion to increase assessments.

The board meeting was held at the management office, with the manager, the board members and Barbie attending. The manager was very low key. He said that it was their board and they should run it independently, and he would not interfere. This was a disaster, because the board did not know the business of the association and had no idea of where to start, but there was hope because Barbie was there!

Barbie knew everything about how to conduct a meeting, and she instructed the nice directors on how to operate. She knew all about calling the meeting to order and making motions and seconding them and tabling them and saying, "pass" and all the stuff that one needs in order to have an official meeting. She also knew about statutes and corporate act and many other things, so fortunately there was somebody there to guide them, and they could relax and go on about their business of being nice.

Barbie said that they needed to appoint an architectural control committee, because this was the most important thing for controlling the homeowners and preservation of market values. So she made a motion to that effect, and instructed the board to second it and then vote to pass it. Then the tall guy asked: who will be on this committee? Fortunately, Barbie volunteered immediately. She also promised to recruit other people who had the ability to form an effective Gestapo. 

Everything went well. The school teacher took notes, because Barbie said that they would need to issue "minutes" and everything must be documented. She even volunteered to help in editing the minutes, because she had a computer. They also passed a motion to install one light at the entrance to the neighborhood, so that people would be able to find their way on dark nights. How much would it cost? The mellow guy was appointed (by Barbie) to find out and report back to the board.

Then the manager, who had been quiet and pre-occupied with balancing the books all this time, raised his eyes from his papers and said: Now you need to increase assessments!  Five percent asked the tall guy? Five percent is not be enough said the manager, you need twenty! 

The school teacher said that she remembered a "cap" on increase in the CC&Rs, but the manager said that there was now a new statute that allowed twenty percent, and the money was needed because he was going to charge them extra for participating in future board meetings, which was not included in the management contract. So the board voted as instructed, and the meeting was adjourned successfully.

On the following day Barbie recruited two of her friends to form the official Architectural Control Committee force. In the afternoon they were already patrolling the neighborhood and taking notes. By the end of the week some sixty percent of the homeowners received violation notices for a variety of items and were threatened with fines, liens, and eventual foreclosures, if not promptly corrected. The notices were on the Association’s letterhead, signed by "Architectural Control Committee".

Barbie submitted to the Board a formal request for purchasing a magnifying glass for the purpose of better detection of violations, which the Board approved after the motion was seconded. She also requested a telescope, but this request was rejected due to the high cost. The Board complied though with Barbie’s demand to table that request. And the nightmare continues.

Back