CODES

January 28, 2005

By Ann Roth (View author info)
Copyright Ann Roth

The OMBUDSMAN proposal includes ENFORCEMENT of violations of homeowner associations (HOA) governing documents against homeowner association board of directors and informal hearings to assist in homeowner disputes. The HOA industry’s reaction against this proposal is understandable.

The HOA industry of lawyers, litigators, property managers, realtors, contractors, builders, and other maintenance vendors, stand to lose collectively millions of dollars in revenue for their bottom line anytime a stranglehold is put on their ability to do as they please with regard to homeowner association corporations across the United States.

However, are homeowners and homeowner advocates sitting on the same side of the fence as the HOA industry on this issue? IF SO, IT IS FOR VERY DIFFERENT REASONS.

Homeowners worry that a HOMEOWNER ASSOCIATION OMBUDSMAN OFFICE will not be effective ENOUGH. That the concept of an HOA OMBUDSMAN in any State, may only be a bandaid fix for a bleeding carotid. Ask Nevada.

Perhaps this is a start and that it is better than nothing – we hope.

The OMBUDSMAN idea might take some wind out of the HOA litigation vortex, but homeowners should not get their hopes up. It might only delay the inevitable. While homeowners pour their hearts out to the OMBUDSMAN in an “informal” hearing, will the HOA’s lawyers be present? Will they be furiously recording every detail to find ways to use this information against the homeowner? Litigation may still happen and the HOA lawyers will have had time to stack your story against you.

With regards to ENFORCEMENT – THAT is the issue that most likely concerns the HOA industry. And it should. This is where the homeowners MIGHT have a slightly better chance at getting the upper hand on their HOA dispute. HOA disputes often arise over the fact that HOA boards and property managers ignore or violate the laws.

IF the OMBUDSMAN’S office finds a cadre of recalcitrant HOA board member’s guilty of violations and there are penalties imposed, it will help to lend credibility in the homeowner’s favor. However, if the HOA is allowed to somehow “appeal” the ruling and take it to the higher courts, which they likely will all the way to the Supreme Court, will the violation ruling of the OMBUDSMAN be allowed to be entered into evidence?

With regard to the OMBUDSMAN’s powers – homeowners have plenty of excellent questions and are looking for answers from the California Law Revision Commission:

* Will the OMBUDSMAN’s ruling of violation against an HOA board be final?
* Can the OMBUDSMAN’s ruling be appealed or end up in litigation anyway?
* Could violation’s cause the HOA’s liability insurance to increase or cancel? Like auto insurance – one too many violations and you lose your insurance?
* If the HOA board doesn’t pay their “ticket” can a bench warrant be issued for their arrest?
* Will the HOA board be required to pay the penalty out of their OWN pockets or will it come out of “Joe Homeowner’s” pockets?
* Will homeowners be able to recover damages from violator board members individually?
* Besides the public disclosure list on an OMBUDSMAN website – will the violations be required to be DISCLOSED directly to each prospective homebuyer?
* Where will any hearings be held? States have hundreds of miles between their borders.
* Will the hearing information be kept confidential?
* Who will be handling the hearings? Lawyers? or CAI laywers? * Will the parties be represented by lawyers?
* Will the “prevailing party” in a dispute settled by the OMBUDSMAN’s office be reimbursed for the costs they incurred?
* Would lawyers fees be included? (This could be dangerous for homeowners)
* If the matter can’t be settled by the OMBUDSMAN’s office, will the parties get reimbursed for costs they may have incurred?
* How is this different than the mandatory mediation requirements under the current Civil Codes?
* Will the mandatory mediation requirements under the Civil Code be void if you agree to a hearing by the OMBUDSMAN instead?

With regards to the OMBUDSMAN FEE:

* Is the OMBUDSMAN fee mandatory?
* Will failure to pay the fee result in non-judicial foreclosure of one’s home?
*Who will ENFORCE collection of the fee?
* Will homeowners who bought their homes prior to enactment of the fee, still be required to pay it?
* Will homeowner’s have an opportunity to VOTE on whether they want the HOA to be a “member” of the OMBUDSMAN’S OFFICE or to pay the fee?
* Will the fees be paid through the HOA dues?
* Will the fee be tax-deductible?
* Will each and every homeowner who is required to pay the fee, receive an accounting of how those fees are being spent?
* How will fee increases be handled and homeowners notified?
* Is their a cap on how much the fees can go up?
* Will any of the homeowner fees be used for “education” of OMBUDSMAN personnel and WHO or WHAT agency will provide the “educating”?
* Will education or training of OMBUDSMEN personnel be done by the Community Association Institute or any of its related brethren? Many homeowners view CAI and its affiliates as anti-homeowner.

It goes without saying that when it comes to anything homeowner association related – there are always more questions than answers. With every additional layer of control and bureacracy imposed upon “Joe Homeowner”, comes additional layers of liability. Only time will tell if the idea of a HOMEOWNER ASSOCIATION OMBUDSMAN can be successful.