Saturday, December 5, 2015

HOA nightmare

My lovely home is in a cute (or it was) neighborhood filled with first-time homeowners like myself. Until this past year, the HOA had been under control of the builder who created the neighborhood. It has since been ran by residents. After a peaceful 10 months or so all hell broke loose in November. If you follow me on social media you have seen many posts regarding how flabbergasted I am of all which is going on. A recent discussion lead to the decision a drinking game needs to be created to get me through all of this. And this nightmare is too good not to share because to outsiders it is quite hilarious. Heck, I'm at the point where I'm just laughing. So here is the story of the nightmare. Most has been copied and pasted from the Nextdoor app where the chaos began. I'm also feeling nice and have removed names and locations. Grab a snack, a beverage and settle in to enjoy this. 

It all started with this post: 

I believe everyone needs to be aware that the HOA Board has voted to construct an open pavilion-type building on the greenbelt by the back pond. The cost estimates of this building vary between $50,000 – $80,000. The building will include a fireplace or grill. This was voted on by the HOA Board in a meeting with NO notice to the homeowners in violation of the Bylaws 3.15 Notice and Open Meeting requirement. In addition, I believe that a decision to build a capital improvement should have been made by a vote of the homeowners instead of by the HOA Board alone. The Board will need a vote of the homeowners to pay for this building. The Board wants to stop paying for professional lawn care services and use this money plus the reserves to pay for the building. The Board wants to have volunteers take care of all the common areas in the neighborhood. However, this is prohibited by the Declarations Article 3, section 1(iiiii), which expressly requires the use of professional third parties for lawn care. Without this money, the HOA Board will either have to substantially raise our dues (homeowner vote required by Declaration Article VI, Section 3 for more than 20% increase), do a special assessment (homeowner vote required by Declaration Article VI, Section 4), or borrow money (homeowner vote required by Bylaw 3.22 if money borrowed is more than 10% of budget). All of these items require homeowner approval – which they do not have. Despite this fact, they have already put down a $5,000 deposit on a building that no one knows anything about. If this concerns you, please contact the HOA Board and request an immediate meeting for all homeowners and ask them to not spend any more money on this project before this meeting. The website for our community is XXXXX. It has the contact information for the Board members and all the Bylaws, Declarations and the Covenants. Please note though that XXXXX resigned as a Board member at the last Board meeting on Thursday, and XXXXX and XXXXX are no longer Committee Members. The website also contains the minutes of some of the Board meetings and HOA meetings, including the October meeting where they voted on this building.
Several homeowners, myself included, met and decided the best course of action was to walk around the neighborhood and get a petition to sign. To the point, very few neighbors had been on the Nextdoor app. This is what we included in the petition: 


1.  The Building – The HOA Board has voted to construct an open pavilion-type building with a fireplace on the greenbelt by the back pond. The cost is expected to be between $50,000 and $80,000. This was voted on by the HOA Board in a meeting with NO notice to the homeowners in violation of the Bylaws 3.15 Notice and Open Meeting requirement. This decision to build a capital improvement should have been made by a vote of the homeowners instead of by the HOA Board. The Board will need a vote of the homeowners to pay for this building. The Board wants to stop paying for professional lawn care services and use this money plus the reserves to pay for the building. The Board wants to have volunteers take care of all the common areas in the neighborhood. However, this is prohibited by the Declarations Article 3, section 1(iiiii), which expressly requires the use of professional third parties for lawn care. Without this money, the HOA Board will either have to substantially raise homeowner dues (homeowner vote required by Declaration Article VI, Section 3 for more than 20 percent increase), do a special assessment (homeowner vote required by Declaration Article VI, Section 4), or borrow money (homeowner vote required by Bylaw 3.22 if money borrowed is more than 10 percent of budget). All of these items require homeowner approval – which they do not have. Despite this fact, they have already put down a $5,000 deposit on a building that no one knows anything about. It needs to be discussed whether we want the building, the issue of stopping/not stopping lawn care, funding the building if we do want it, and the $5,000 deposit that was paid without any authority.

2.  The Fines – The Board has passed a set of fines for covenant violations and have begun to mail out violation letters based on these fines. This was done in complete secrecy with no input or notice to the homeowners. It is unclear how much the fines have been set at.  However, it was confirmed at the last HOA Board meeting that the violation for a first-time offence for not mowing their lawn was $150.

3.  The Cameras – According to the October 7 Minutes, the HOA has voted to install four security cameras at a cost of $500 each on the properties of four different homeowners.  However it seems this “installation” consisted of handing the box of cameras to the homeowners. Apparently no contracts were given to the homeowners to make sure the cameras were returned if they moved or that the cameras would remain with the properties. At least one set of homeowners has given the cameras back to the Board. This issue needs to be addressed with the Board.


4.  Potential Removal of HOA Board President XXXXX – The HOA President XXXXX seems to believe that he can vote on anything without the consent, notice or approval of the homeowners. This is incorrect. The rights and responsibilities of the homeowners are set out in the Bylaws, Declarations and Covenants.

It seems reasonable to me. Eventually the petition was posted on Nextdoor in order to reach more neighbors who we weren't catching as well as to passively notify the president we were on to him. He responded with this gem (once we get past this, the juicy stuff starts): 

Regarding the HOA Pavilion Project: To help build the community’s relations with our neighbors and increase property values we are in the initial stages of constructing a new community center pavilion. This project will beautify our park area adding a place where we can get together with our neighbors for outdoor barbeques, graduation celebrations, family reunions and other special events to include the hosting of HOA Meetings for the community. We will be showing off the 3D Architectural Designs at our Annual Meeting which is scheduled for 6:30pm on the 12th of January.   
One of the plans with this construction project allows the community to store HOA Lawn and Maintenance equipment which, with the help of a vote by our home owners and volunteers from our community, will form a lawn service committee. This plan will illuminate the tremendous cost of a lawn care contract which last year was $25,000. By voting to allow the board to move forward with the lawn committee plan, we believe HOA Dues can be reduced next year.  
Out of all the possible projects shown to the community at last year's annual HOA Meeting, it was the Community Center/Pavilion Project that was most desired by the all in attendance. Many of our neighbors also asked this last year if we could do more neighborhood events so we our hoping the pavilion project may be just the ticket to get a lot of us out of our homes to work together in building this community project. Not only will we be beautifying our park and working with our neighbors to construct this project but we will also save on construction & contracting costs. Using XXXXX as our builder, we can put in as much or little sweat equity as we want into this project. The budgeted cost is how much the project would cost if we used all subcontractors and put zero sweat equity into the project. We hope that all of you that are able will join us in this project. 
As with most of our annual meetings and apparently according to the posts I have seen on this site, the big questions for the HOA board all comes down to costs. Here is the breakdown:
  • Pavilion Project Budget cap is $50,000 (Could be reduced to $40,000 or less depending on the sweat equity put in by the community) 
  • Current HOA Account is $15,000
  • Next year’s Dues (358 homes x $150 (assuming a one time $25 project cost addition)) will bring in approx. $53,700
  • Miscellaneous annual expenses are $1,200
  • Pond Maintenance and repairs $3500
  • Lawn Maintenance $25,000
  • Professional Fees $2700
  • Utilities and Taxes $2000
Total Income from 2016 dues and current assets amount to $58,700. Total Expenses are $34,400. We can reduce expenses with the passing of a lawn care committee removing the $25,000 lawn service contract leaving around $9,400 in annual expenses. This will put us in an excellent position for dramatically reducing HOA dues in 2017 but the only way this can happen is if we can do something about the high lawn service contracts. The Pavilion Project allows the HOA to store the equipment and create a lawn service committee illuminating that cost. Professional spray service however will still be retained to control weeds as they can acquire much better chemicals than what we would be able to obtain. 
We look forward to meeting all of our neighbors in January and even with the comments posted on this site are still excited about this project. We as an HOA board may not be perfect but we are always striving toward the beautification of our neighborhood, building better neighborly relations and increasing value to all our homes. From every architect we have talked to, this project will have a positive increase in value to all of our homes and this community.
Discussion took place and a comment by the treasurer led someone to ask if it was true the only votes which matter are that of the board to which he responded: 
It is true that the only votes that are counted when it comes to the spending of funds for projects, maintenance, repairs are the ones of the HOA Board members themselves.  
Um, say what? Looking at the bylaws and declarations, this is not true. Silly president. He also claimed the board had voted for the pavilion yet per the minutes on the website, they have never had quorum in the last half of the year.

Adding to the nightmare are these tidbits:
  • In the board meeting called upon because of the petition (complete CYA move), many residents ambushed the meeting to which the president informed them the project was going to happen no matter what;
  • There has been crime in the area where this is supposed to go yet he wants to put in huge flat screen tvs;
  • It is against the bylaws/declarations to do away with the professional lawn service without residents voting;
  • The builder being used is a "you build it" type of thing...as in, we pay for the materials and plan but we also have to build it;
  • Despite policy of two board members having to sign a check, the president went ahead and signed the check to pay the $6,500 to the builder for the plan;
  • The dues were raised in January so the HOA could afford legal actions against those who have not been paying their dues. This has not occurred. It was also agreed upon to put all beautification ideas/projects on hold until the finances were sorted out (far too many people are not paying their dues);
  • They sent out a proxy ballot for those who can't attend the meeting in January. They did not follow the bylaws by having a place for residents to write their address so they can make sure residents only vote once;
  • Ballots are being sent to the president who has proven to not be completely transparent which leads the question of how many ballots could end up "lost";
  • A resident who works for the city mentioned the plot of land for the pavilion is on a 100-year floodplain. Basically, there is no way the city will approve building there;
Lately, people have been irate about the security cameras. The board refuses to share exactly where they are or if they are actually in use. Their responses to the questions have been very snippy.

Then there is a resident who I refer to as the neighborhood nuisance. Basically, he thinks he is the savior of the neighborhood, the only one who cares about it (he is NOT the one who notified anyone of this project) and we should all bow down to him and be thankful he lives here. He has a tendency to go from 0 to 100. The other day he posted:
Get ready to pay your $6500 due is all I have say. Better start saving some money "my friend"
I responded and asked who it was directed at because to me it seems quite threatening. Then he lost his mind and accused me of being the most horrible, evil person possible (to summarize). In the past few days, he has amped it up and is now threatening to contact the state Attorney General. He is also blasting people for not listening to him -- every other post is him writing "I already said that." Dude. Seriously. Get over yourself. In response to bringing a lawsuit, the president notified everyone the HOA funds would pay for their lawyer no matter what, even if they were found guilty. 

I know I'm forgetting a lot of what is going on but I think it summarizes it quite well without providing all of the testy messages back and forth. But seriously, if you want those, I can post a part two. Are you all as exhausted as I am? 

Oh wait! I forgot today's update. A resident emailed (and bcc'd me) the board this: 
I would like to request a copy of the following documents from the Board pursuant to Bylaw 6.4: 
1. Declaration pages for any and all current insurance policies, as well as quotes for any insurance policies for 2016.  
2. Last quarterly report prepared pursuant to Bylaw 3.21 (6) i-v. This includes the income statement, the statement of all cash statements, the variance report, the balance sheet, and a delinquency report.  If any of these reports have not been prepared, please explain why.  
3. 2014 annual report prepared pursuant to Bylaw 3.21 (7) that includes at least the balance sheet, income statement and changes in financial statement.  Please state whether this was prepared by an independent public accountant.  If any of these reports have not been prepared, please explain why. 
4. Contract and checks to UBuildIt, any permits, designs or drafts of the building and parking lot.  Please also disclose any communication with UBuildIt, the subcontractors, and communications with the city regarding permitting issues.  If you do not have the permits yet, please disclose the status of the permitting process. 
5. Contract for lawncare for 2014, 2015, and any quotes for 2016 lawncare. 
6. Quotes for any lawn equipment you have received. 
In addition, I have a few specific questions for the Board: 
1. Have you received a quote for liability insurance coverage that would cover volunteers working on the building?  If so, how much coverage? 
2. Have you received a quote for liability insurance coverage that would cover volunteers on the proposed lawn care committee.  If so, how much coverage? 
3. Is the building ADA complaint? 
4. Will there be any Board meetings before the annual meeting?  If so, when and where? 
5. Will the homeowners be able to vote on whether we want the building at the meeting? 
6. You said at the meeting that $6500 had been spent on the project.  Has anymore money been spent on the project since that time? 
Thank you for your immediate attention to these issues.  If I need to come and make copies of any of these documents, please let me know.  I would be happy to pay reasonable copying cost for these documents.  If you object to providing any of this information, please identify the specific documents that you will not disclose and the reason.  However, all of the financial information is clearly covered by the bylaws and I would like to receive it at your earliest convenience.
And the board beautifully responded with (bullet points indicate a separate response): 
  • We can have this stuff available at the annual meeting when we drop everything off and hand off to the new treasurer. No, no more money has been spent on the pavilion. 
  • It's time consuming as 80% of your demanding questions are from the treasurer and I will use any free time I have to get that stuff but I can't guarantee I will have it all. I volunteer on the board so I'm only required to put whatever efforts into the position and if it's not what our residents like they can elect to have a new treasurer. You also can't just ask for 20 different things and expect to get them in 24 hours. I think that is absurd! By laws say you can request them but not a time frame.  
  • XXXXX didn't have any records like the stuff you requested before. They told us to make sure things get paid and that the common areas are well kept I'm not aware of any of these kind of records. So to answer your question no we don't have any fancy filing nor annual statement records. I have a p&l and the HOA dues spreadsheet for record keeping. Which that can be easily emailed to you on Tuesday. I send that out the board every month. I said I don't have questions  2 & 3 nor did any other board before me. We can hire an accountant to do all this which would probably cost the HOA a lot of money. If you absolutely want this I can ask the board and then the residents if they think this is a good idea to spend our money. 
The board really doesn't like people questioning them do they? If anyone is a lawyer or super smart regarding HOAs and you are willing to provide some input, leave it in the comments. All input is greatly appreciated. And now, it is time for wine!