It’s your castle — your house, your yard, your garden. But if you choose to live in a subdivision governed by a homeowners association, you’re not always the king.
In fact, you might be too much a king’s subject for your liking.
Typically created by developers, HOAs act as private residential governments with leaders elected by other homeowners. They set and enforce rules aimed at protecting property values and collect dues to maintain common areas and costs typically absorbed by local governments.
But HOA rules can turn ordinarily wholesome staples of suburban life — basketball hoops in the driveway, sheds, aboveground pools — into violations. Whether they know it or not, homeowners agree to the regulations when purchasing the property. But in this form of ground-level residential government, the rulers often matter more than the rules.
Most of the debate or disagreement within a homeowners association plays out in the small and intimately personal confinement of each neighborhood. Board meetings are private among property owners, and disputes usually are resolved between neighbors in a front yard. An exception was the rash of unpaid dues in 2012 in the Stonecreek Arbors Homeowners Association.
Stonecreek Subdivision’s HOA filed 49 liens against lot owners for nonpayment of annual assessments. The legal action, per the association’s bylaws, represented more than half of the 94 liens filed in Vanderburgh County last year. In many cases the amount due was just over $200.
The volume of liens represents nearly one in six lot owners in what Stonecreek HOA President Stephen Hess described as a 320-home, middle class subdivision.
The culture can be disagreeable at Stonecreek, located northwest of Kansas Road and State Road 57.
“He just wants to tell you what to do all the time,” resident Lois Payton said of Hess.
Payton said she pays her dues on time, but Hess recently directed her to have a microchip implanted in her small dog, a procedure she doubts would affect property values in her neighborhood. The edict does not appear in the recorded covenants governing Payton’s neighborhood.
Payton said Hess also threatened to have cars towed away if they appear in a driveway next to her house — a driveway she said she and next-door neighbor Roch Dupre were told years ago was theirs to use. Family members have parked there for seven or eight years, she said. Dupre said it is particularly galling to be told he can no longer use the driveway because he spent $300 having its crumbling brick wall taken down after Hess told him the HOA would not pay for the work.
The driveway didn’t become an issue until an HOA board member who lives a few doors away began driving over it to a nearby lake to launch a fishing boat, according to Payton and Dupre.
Dupre said Hess’s demanding, inartfully worded email messages on the driveway issue poisoned their relationship.
“He don’t have any professional skills talking to people, and if he had been in my yard talking to me the way he wrote me an email, the law would have been out there because I would have knocked him out,” Dupre said.
Payton agreed, saying Hess “talked awful to me on the phone” about the matter.
After a brief telephone interview about the liens, Hess sent the Courier Press an email canceling a face-to-face interview and ordering the newspaper not to publish anything about Stonecreek.
“Furthermore, this notice also requires you not to at any measure mention anything regarding my name, any resident of Stonecreek, NOR will we ALLOW any of your printing in any article regarding Stonecreek at any time in any publication,” the message stated. “You will be held liable for any violations of this letter and notice/request in this email. If we find/discover you have mentioned Stonecreek in any legal matter their (sic) will be action toward yourself as well as any print paper you represent in the media article.
“You may contact any HOA in the County of Vanderburgh, the State of Indiana, but Stonecreek will not PERMIT OR ALLOW YOU our legal name in any future article.”
Hess later called the newspaper to threaten legal action, alleging harassment of Stonecreek residents.
“You stop this article immediately, because I will sue you just like I sue the people who don’t pay their dues,” he said.
‘A powerful tool’
Before sending his email to the Courier Press, Hess said Stonecreek was only doing what it had to do to collect money from lot owners who failed to pay even with a 90-day grace period and plenty of warning.
“We even give them an additional 30 days’ grace,” he said.
Stonecreek’s HOA isn’t the only one that used liens as a tool to collect past due assessments last year. Several other HOAs or condominium associations combined to file about a dozen liens. HOAs also can seek past due payments by filing Small Claims Court actions if the amount due is less than $6,000.
But there is no evidence that HOAs are foreclosing on homes in Vanderburgh County over relatively small amounts of money. Vanderburgh County Sheriff’s Office data dating to mid-2008 indicates no liens filed by HOAs have resulted in actual foreclosures in that time.
Seeking foreclosure is more expensive than filing in Small Claims Court, said local real estate attorney Michael DiRienzo, but that’s not the point.
“It can be a powerful tool to get paid. The threat of foreclosure, even over $200, is scary to most people, and so they’re going to be more willing to pay that,” DiRienzo said. “The primary reason to file a lien is that when someone goes to sell their house, all the liens that are on it have to be paid before the new owner is going to get clean title.”
Frank Rathbun, a spokesman for Washington, D.C.-area advocacy group the Community Associations Institute, said HOAs that take legal action over past due payments are justified in doing so.
“The bottom line is, associations budget to pay for all their expenses — maintaining the property, for capital repairs and expenses, whether it’s on the pool or tennis courts. They’ve got to pay utilities. They have to pay insurance, and so on,” Rathbun said.
“If enough people in some small community — it doesn’t take many — don’t pay their fair share, then the greater burden falls to the others.”
Hess, who identifies himself as president, treasurer and legal agent of the Stonecreek HOA, said one resident facing a lien has “quite a bit of luxury toy items,” while he lives a middle-lower class life and still manages to pay his own assessment.
“It is quite upsetting, and it does bother me each year that there’s a large number that do have liens,” he said.
Bill collection in some HOA-governed housing developments comes with little angst and precious little legal action.
Keystone Subdivision, one of Vanderburgh County’s largest subdivisions, reported in a recent newsletter that 516 of 518 lot owners paid their annual assessments in 2012 with just two liens filed. The subdivision is located in northern Vanderburgh County, west of North Green River Road and south of Goebel Soccer Complex.
Residents there say HOA leaders take a laissez-faire approach to enforcing rules.
“If our street lamp is out for more than a couple of days, they’ll let you know,” said Jesse Gehlhausen. “We’re not supposed to park on the street, but I park on the street all the time because I have three vehicles.
“They don’t enforce anything, really besides your ($120 or $170 annual dues assessment). I wouldn’t say they’re too strict.”
The disparity in making dues payments at Stonecreek and Keystone likely is attributable to more than the way residents perceive they are treated by their HOAs. The economy and the financial circumstances of residents in the two subdivisions also may be contributing factors. Homes are selling in Stonecreek for generally no more than $155,000, while it is not uncommon for homes at Keystone to sell for $200,000 or more.
The typical homeowner has no idea what he is getting into — or what kind of HOA leadership he will be dealing with — when he signs a binding contract to move into an HOA-governed subdivision, said Evan McKenzie.
McKenzie, a former HOA attorney and now a political science professor at the University of Illinois at Chicago, has written Privatopia: Homeowner Associations and the Rise of Residential Private Government. He says new homeowners are up against Realtors, who have no incentive to fully educate them about HOAs for fear of killing the deal, and local governments, who like getting property taxes from developments that sometimes provide private infrastructure.
“If you’re going to buy a house, you ought to know well in advance of even making an offer on the house not only that there is an association, but what the rules are and what the finances of the association are,” he said.
The standard purchase agreement for home sales through Realtors in Indiana has a “homeowners association/condominium association” provision which states: “Documents for a mandatory membership association shall be delivered by the seller to buyer within (blank) days after acceptance of this agreement. If the buyer does not make a written response to the documents within (blank) days after receipt, the documents shall be deemed acceptable.
“In the event the buyer does not accept the provisions in the documents and such provisions cannot be waived, this agreement may be terminated by the buyer and the earnest money deposit shall be refunded to buyer promptly.”
To veteran local realtor Marsha Abell, there can be no doubt what this provision means. The “documents” are an HOA’s bylaws and covenants and restrictions, and sellers are required to give them to buyers. Abell said she is always sure to call that provision to the attention of homebuyers within a seven-page document that they must not only sign, but initial on each page.
“If you the buyer says, ‘Oh, wait a minute. I don’t want this,’ as the Realtor for the buyer I go back to the Realtor representing the seller and say, ‘We don’t agree with all the terms and provisions, deal’s off,’ and you get your money back,” said Abell, who also serves as a county commissioner.
But McKenzie calls the provision “hopelessly inadequate,” noting that it provides for disclosure of HOA documents after a buyer has committed himself to purchase a house. The issue is clouded further, McKenzie said, by the staggering mass of paperwork necessary to buy a house. Most homebuyers don’t read it all.
“Yeah, you can back out technically, legally. But from an emotional standpoint, it’s like you’ve already bought the house,” McKenzie said. “They’ve done their shopping, they’ve bought a house. You’ve put down a huge amount of money in a down payment. You’ve told your kids, ‘We’re moving here in 30 days.’”
The homes sales purchase agreement states that it is “prepared and provided as a member service” by the Indiana Association of Realtors and is restricted to use of its members. A Realtors association spokeswoman did not return telephone messages about the purchase agreement.
The obligation of Realtors to provide HOA documents to homebuyer is a matter of who you ask.
Abell said some local Realtors put the documents online when they list a house, “if it’s not 100 pages, if it’s just three or four pages.”
McKenzie argues that meaningful consent demands such proactive changes.
“If (realtors) cared about this, which they don’t, they would be establishing policies. They’d say, ‘In order to list a house — before anyone even looks at it — in order to do a listing, you have to make available a copy of the covenants and restrictions to everybody who looks at the house if they want to look at it,’” he said.
The idea likely would encounter resistance.
“The problem is, I think probably a lot of the homeowners themselves don’t pursue the information,” said Bill Pedtke, executive director of the Southwestern Indiana Builders Association. “And so how do you involve someone who’s not pursuing the information to participate?”
Shannon Frank, a local attorney who helps builders and developers get HOAs established and draft restrictive covenants, says no homebuyer should be surprised to find out about an HOA.
“When you take title to the property, you take title subject to everything of record regarding that property, and those covenants and restrictions would be an item of record,” Frank said. “Bylaws are voted on by lot owners, so if they already are implemented at the time you buy your lot, then you know there’s an association and you can get a copy of those before you purchase it. It’s just due diligence.”
The information is available in the Recorder’s Office in Room 231 of the Civic Center in Downtown Evansville.
In the end, attorney DiRienzo said, the best thing a prospective homebuyer can do to ensure he knows about an HOA before buying property in a subdivision is to engage a title company or an attorney to prepare a title commitment.
The report will contain an HOA’s covenants and restrictions.
“It will also show all the liens and documents of record, everything that’s recorded at the Recorder’s Office on that property. It will show all judgments against the seller, all mortgages, homeowners’ liens, what the taxes are due on it, if there are utility easements on the property — everything,” DiRienzo said.
Analyst says it helps value
A sound philosophical underpinning supports HOA rules governing such things as the color of your home, says local real estate analyst David Matthews.
“We’re taught in appraisal courses that maximum value is achieved through homogeneity of some sort,” Matthews said. “You don’t want every property to look the same, but a new subdivision works better if you tend to have some consistency in price range and design.”
The point is illustrated, Matthews said, by the likelihood that putting an 800 square-foot low-quality home next to a 4,000 square-foot high-quality home would depress the value of the higher-priced home while upping the lower-priced home’s value.
Likewise, Matthews said HOA rules against otherwise legal activity such as on-street parking do protect property values. Allowing unconstrained on-street parking could open the door for residents to begin parking cars with flat tires and putting them in their front yards for repair work.
HOAs are on shakier ground if their rules infringe on freedom of expression. In 2010, a bill was signed into law that forbade HOAs in Indiana from banning the display of political signs during election seasons.
“The idea was to bring relief to property owners so that they could exercise their First Amendment right without any kind of interference from the homeowners association,” said the bill’s author, Sen. Mike Delph, R-Carmel.
‘Control thy neighbor’
Homeowners might spare themselves the grief of being under the thumb of domineering, combative HOA officials, McKenzie said, by meeting them before buying. But he conceded they would have no real incentive to agree to such a meeting.
“You’d want to find out what the climate is around here, what the attitude is toward owners, really to find out how strictly rules are enforced and how assessments are collected,” he said. “You might ask some questions about how strict people are. Is it neighborly, is it friendly?”
The crucial question, McKenzie said, is what type of individuals head up the HOA. Many association leaders genuinely, selflessly want to serve their communities, he said, but some simply want to control their neighbors.
“Maybe they’ve never had power in their lives or maybe they just have a grudge against certain types of people,” McKenzie said.
“Often this ‘control thy neighbor’ mentality — that is the payoff for some of these folks. In other words, it’s a structural problem that this position, this board president, board member position, is attractive to people who have really a motivation of wanting to control and dominate people and wield power.”
At Keystone Subdivision, the tone adopted toward rules by HOA leadership could fairly be called polite.
“Just a reminder to be courteous of others in the Keystone Community and please avoid habitual parking in the street,” stated a recent HOA newsletter.
Keystone HOA President Brad Mills, a former director of the Evansville-Vanderburgh County Area Plan Commission, said a laid back approach to enforcing rules and collecting dues makes all the difference.
“I’m a resident here, obviously, and we’re neighbors,” Mills said.
“We as board members try to work with people and get them to understand that the covenants and restrictions are here because it’s a benefit that will help to keep the values of our property up and make it a desirable place to live.
“We did move here knowing that we had these things.”