HOA $2000 per homeowner EXTORTION

Forgive my verbosity in advance. I've been doing some investigating into our HOA situation, and its really got my blood boiling. My newly wed wife (sorry no pics guys) and I recently bought a bank owned condo in a 30+ unit complex in Los Angeles, CA. When we purchased the HOA dues were listed as $275, when we moved in, we found out it was $325. Just recently, it was raised to $350/mo. This occurred in span of about 1 yr.

This is a lower income part of LA in San Fernando Valley where average HOA's in the same neighborhood for similar complex range in the $100's. HOA dues pay for water and trash and basic maintenance, there is no pool or other extravagant amenities. In addition to HOA due increases, two to three "special assessments" of $500 have already been charged in the last year, with a new $2000 assessment just voted for approval.

The HOA claims the increases/charges are due to budget/reserves shortfall due to deliquencies and foreclosure related charges. I don't buy it because I calculate the base management fees to account for over 40% of the $325/mo dues, accounting for over $100,000k in management fees alone annually. Their management fees are 5 times compared to other estimated quotes! When I brought that up to their attention, the management company just dismissed me with evasive smoke and mirrors saying I can't compare apples to oranges.

The homeowners that have dissented have been forced out/foreclosed upon/gave up. Police were even called once due to arguing. The supervisor from the property management company is a haughty condescending b**ch that blows smoke and spins deceptive lies, which irks me even more. When I asked for the accounting statements, the supervisor is very evasive and cryptic. I and other owners have a laundry list of complaints which I will spare FWers from.

Our HOA meetings are controlled by the property management company acting as "proxy" for the homeowners that were either too lazy or stupid to attend meetings. They made it very difficult for new homeowners to be voted onto the board because the old existing board members are automatically place on the ballot, while new candidates have to be "write on" candidates. Write-ons never win, the election is basically rigged. Just today I found out that a several homeowners in our complex, who are the existing board of directors of the HOA, are ALSO owners/employees in the same property management company that manages our complex. Can you say conflict of interest!!?!

They control a good portion of the voting rights, so its now wonder they just voted to approve a $2000 special assessment". They are paying money from their left hand and putting it back into their right hand, while most homeowners aren't aware of this. Its no wonder these particular "homeowners" voted yes as it PAYS THEIR OWN SALARIES/COMPANY!

Bottom line honest struggling homeowners are getting doubly screwed. This management company is lining their pockets and laughing all the way to the bank, while condos in our complex are foreclosed left and right, depressing home values leading to a death spiral. Meanwhile, hard working honest folks are trying to feed families and keep a roofs over our heads are extorted.

I called the California State Fair Housing Comission, and they are spinning wheels in circles giving me different phone numbers. I'm not sure what else we can do as the few homeowners are aware of the situation, and compose the minority voting block regardless. Hire legal counsel??

Help. PLEASE. Any legitimate suggestions truly appreciated. Thanks for reading, my fellow FWers.

Mods, please move this thread to Finance for red.

Deja Vu....would have sworn I read this before

You need to get with the current board members OR get yourself elected to the board.
One way to do that in an apathetic community is to find out if your community is allowed "proxy" votes. You simply go door to door, telling people that you're fed up with fees and want on the board and need them to assign their proxy vote to you (they have to sign something). This worked for me.

A community in foreclosure is bad news. Your assessments will go up and up due to those not making payments. Attempting to go after those already in mortgage defatult will only dig the hole deeper (trust me, I know). You need to get very strategic about who you go after and make sure your management company / attorney is not charging you the normal $100-$250 per letter for warnings on these accounts.

Get on the board and fire that management company. You probably cannot self manage, but you can get competitive bids. Once a management company is in, they ARE the HOA in some circumstances and doing things like "rigging" elections is par for the course. Review your by-laws carefully on elections. If they're doing things that are out of scope - warn them and the board with registered letters and copies of by-law language.

Good luck.

At least you can feel good knowing you're not throwing money away renting.

nycll said: Post your HOA financial statement, whatever that thing is called. If the relationship between the HOA and homeowners is highly combative, then there might have been some nasty legal fights.

It turned nasty before and unfortunately, the Joe Plumber homeowner resorted to brawn rather than brain. Police were called to "monitor" the next meeting. Joe Plumber's home is now on the block for foreclosure.

FichteScholar said: Has the HOA behavior enerally changed during the current housing downturn?

I'm not exactly sure since I bought recently, but it seems the increases seem to coincide over the past year or so. My guess is that it is in part due to housing downturn, but in part greed and revenue generation (they want to keep their own salaries flowing) so why not keep on kicking the mule?

The head cronie at the management company seemed to be nasty from the very beginning. I guess ruthlessness is a requirement to some extent when people get to positions of power...

@gatzdon

Thanks for advice. Unfortunately, we bought with the first time federal credit, so we have to stay for 2-3 years.

I know posting here on FW will get red/ridicule, but it serves as 1) a self serving place to vent 2) may help others 3) sometimes some savvy FWers provide great insights/suggestions.

I also posted on dedicated HOA forums online, but FW community is one of my favorites by far! =)

princebargain said: Forgive my verbosity in advance. I've been doing some investigating into our HOA situation, and its really got my blood boiling. My newly wed wife (sorry no pics guys) and I recently bought a bank owned condo in a 30+ unit complex in Los Angeles, CA. When we purchased the HOA dues were listed as $275, when we moved in, we found out it was $325. Just recently, it was raised to $350/mo. This occurred in span of about 1 yr.

This is a lower income part of LA in San Fernando Valley where average HOA's in the same neighborhood for similar complex range in the $100's. HOA dues pay for water and trash and basic maintenance, there is no pool or other extravagant amenities. In addition to HOA due increases, two to three "special assessments" of $500 have already been charged in the last year, with a new $2000 assessment just voted for approval.

The HOA claims the increases/charges are due to budget/reserves shortfall due to deliquencies and foreclosure related charges. I don't buy it because I calculate the base management fees to account for over 40% of the $325/mo dues, accounting for over $100,000k in management fees alone annually. Their management fees are 5 times compared to other estimated quotes! When I brought that up to their attention, the management company just dismissed me with evasive smoke and mirrors saying I can't compare apples to oranges.

The homeowners that have dissented have been forced out/foreclosed upon/gave up. Police were even called once due to arguing. The supervisor from the property management company is a haughty condescending b**ch that blows smoke and spins deceptive lies, which irks me even more. When I asked for the accounting statements, the supervisor is very evasive and cryptic. I and other owners have a laundry list of complaints which I will spare FWers from.

Our HOA meetings are controlled by the property management company acting as "proxy" for the homeowners that were either too lazy or stupid to attend meetings. They made it very difficult for new homeowners to be voted onto the board because the old existing board members are automatically place on the ballot, while new candidates have to be "write on" candidates. Write-ons never win, the election is basically rigged. Just today I found out that a several homeowners in our complex, who are the existing board of directors of the HOA, are ALSO owners/employees in the same property management company that manages our complex. Can you say conflict of interest!!?!

They control a good portion of the voting rights, so its now wonder they just voted to approve a $2000 special assessment". They are paying money from their left hand and putting it back into their right hand, while most homeowners aren't aware of this. Its no wonder these particular "homeowners" voted yes as it PAYS THEIR OWN SALARIES/COMPANY!

Bottom line honest struggling homeowners are getting doubly screwed. This management company is lining their pockets and laughing all the way to the bank, while condos in our complex are foreclosed left and right, depressing home values leading to a death spiral. Meanwhile, hard working honest folks are trying to feed families and keep a roofs over our heads are extorted.

I called the California State Fair Housing Comission, and they are spinning wheels in circles giving me different phone numbers. I'm not sure what else we can do as the few homeowners are aware of the situation, and compose the minority voting block regardless. Hire legal counsel??

Help. PLEASE. Any legitimate suggestions truly appreciated. Thanks for reading, my fellow FWers.

How do you know that all of the rest of your neighbors are honest? I think they're all on the take!

princebargain said: The supervisor from the property management company is a haughty condescending b**ch that blows smoke and spins deceptive lies, which irks me even more. When I asked for the accounting statements, the supervisor is very evasive and cryptic.Reminds me of a notorious HOA shill here on FWF.

Is someone trying to park a truck in the community? If so, I know why your HOA fee is so high. http://www.fatwallet.com/forums/finance/1019763

Is the property management co run by Persians?

Rather than letting the management company vote in proxy (by the way, they should need a signed and validated proxy in order to vote in proxy for homeowners, and even then the proxy is given to another homeowner, not the management company), why don't YOU collect proxies and vote on their behalf? This is how our current board did away with the old, less honest board in our HOA. Once you decide to do something about it (get elected to the board with other trustworthy neighbors), you will have the authority to kick the management company to the curb.

The way our HOA is legally set up, all homeowners have access to our books (must view at management company and request in advance). There is no way around that. A majority of the homeowners can also dissolve the board at any time. Read your docs and be prepared to walk and not just talk the talk if you want to have change in your neighborhood.

Me? Year two of walking the walk--vp of hoa board...

lonestarguy said: It is much more problematic to dissolve an HOA for a condo complex than for single family neigborhood due to common utilities and maintenance.
In case that was in reference to what I said--I suggest dissolving the current board, not the hoa. There is almost always a formal process prescribed in the hoa articles.

I agree with HKnight above. Also, when the next election rolls around make sure you talk to your neighbors (all 30+ of them, minus the ones who are already on the board) and tell them that you want to be elected on the board so that you can help prevent the $2000 special assessments. Once you are on the board, you can also make a crusade to switch management companies to lower the costs.

When you bought your property, you were OK with the $275/month assessment. Did you ask about how special assessments could be made, and how easy would it be for the board to raise the assessment (a fixed percentage, at whim, etc)? It should be spelled out in the CC&R's exactly what authority the board has to increase your assessments and create special ones. Unfortunately, I believe that your current board is following those rules, you just happen to have gotten into the community at a bad time, after the reserve money has been squandered but the assessments aren't coming in due to abandoned/foreclosed homes. And the few of you that are left get to make up for it.

I would hate to be in your situation.

We had a bad situation with our HOA when we moved in. They were fighting with the former board members and had tires slashed and all kinds of stuff. I have no desire to get involved with any of that crap.

jkimcpa said: Is the property management co run by Persians?

that's odd ... because I would have suspected canaanites or phonecians

At this burn rate, your first time federal credit of 8K would be gone in no time. What's stopping the HOA from imposing another 2K special assessment fee next year?

princebargain said: @gatzdon

Thanks for advice. Unfortunately, we bought with the first time federal credit, so we have to stay for 2-3 years.

I know posting here on FW will get red/ridicule, but it serves as 1) a self serving place to vent 2) may help others 3) sometimes some savvy FWers provide great insights/suggestions.

I also posted on dedicated HOA forums online, but FW community is one of my favorites by far! =)

First get the books you dont know whats going on. The HOA might be near bankruptcy because of non-payers. Not saying you shouldnt try to kick the current board out, but you need the facts first. The problem there is the more corrupt the board is the more difficult it will be to get the books from them. If they stop answering your calls, requests for the books and force you to get a lawyer it might just be easier to oust them.

Also - when buying a condo or HOA property, realize that economics of scale apply. Personally, I would only consider a LARGE complex (200+ units). Larger buildings have many advantages over small or mid sized ones. The cost-per-apartment of providing services like security, decoration, etc. is reduced. Also the effect of any individual owner defaulting and not paying fees is spread over so many more units, so one individual's default is less likely to throw the whole building into default. Lastly, larger buildings that have been in existence a few years (ie, no longer stocked with the developer's people) have a larger pool of potential board members to draw from. There is more of a chance for the "wisdom of crowds" to emerge and residents are more likely to see a stable, predictable board with steady and predictable fees.

@eaken. Didn't think of BBB, thanks for that idea. I think in typical poor management company situations, your suggestions of creating headache for would work. But in our situation, I predict they (ie. management co, board of directors, developers) will fight to the bitter end as managing the HOA is their cash cow. Their vested interest is too strong, ie. this is funding their livelihood.

@slimtim, thanks for advice. In this case, I just noticed a cross of Jesus and a painting of the 12 apostles, and I put two and two together with their ethnic background. They didn't volunteer the info. Maybe I should tell him to confess all the sins, lay guilt trip.

I did ask this "mole" for the membership list/contact info of all the owners of our complex, so we will see if he divulges info and complies. So far he hasn't responded yet, so that is suggestive of where his loyalties lie. I don't want to call him out just yet, as I am trying to figure out a way to utilize him to in our fight against the management company.