October 7, 2007

My Take: Homeowners’ Associations Operate As Governments. Why Shouldn’t They Be So Treated?

Here’s a SmartMoney.com article on something I’ve been meaning to bring up for quite a while (bold is mine):

Buying a home is already a complex endeavor. Add in the sometimes unfathomable machinations of a homeowners association (HOA) and you enter a realm filled with the potential for misunderstandings that may have legal and financial consequences.

Often, home buyers don’t fully realize the tradeoff they’re making when they move into communities that involve becoming association members, experts say. More than 57 million people live in associations governing everything from large and small condominium developments to subdivisions of single-family homes, according to the Community Associations Institute, a trade group in Alexandria, Va.

“Many people have trouble accepting the fact that decisions will be made by others,” said Mark Pearlstein, a partner with Levenfeld Pearlstein LLC, a Chicago-based law firm that represents associations.

….. Associations provide a number of important benefits including, for instance, landscape maintenance and access to fitness facilities, and their rules often help protect property values. But it’s the horror stories that make the news: Full-blown fights over a homeowner flying a flag, stringing a clothesline or owning a large dog. And in some states associations are within their rights to foreclose on homeowners who respond to disagreements by refusing to pay their dues.

Two common homeowner complaints: Unexpected increases in dues and unwelcome rule changes.

Homeowners are often “surprised about the ability of an association to change the rules,” Pearlstein said.

For instance, recently, to forestall declines in property values, more associations are prohibiting homeowners from renting out their units. “Courts in most states have held that an association can change the rules by a vote of the ownership to restrict or eliminate leasing,” Pearlstein said.

Now, there’s the rub.

I’ll admit to not having sorted all of this out, but some freedom-advocating reactions to the arbitrary nature of HOAs, especially severe after-the-fact restrictions, would include these:

  • HOAs are functioning as governments, and quite unaccountable ones at that.
  • If they’re going to do that, HOA board members have to run for election — and not the internally-administered kind. I mean the normal government-administered election process at the polls.
  • Major changes to HOA rules should also be subject to a formal electoral approval process.
  • HOA members not on the HOA boards should have the right to bring forth ballot initiatives.
  • Residents not satisfied with the resolution of a dispute need a legally-recognized right to appeal those rulings through the court system instead of being subject to binding arbitration.

I’m sure there’s a lot I’ve missed. I’m not impressed with the argument that “You agreed to it when you bought your house, now you have to live with it.” My view: You agreed to be “governed” by reasonable people, not the petty tyrants and busybodies who have all too often gravitated towards HOA positions.

Since the large majority of new homes and condos are governed (there’s that word again) by the rules (which are for all practical purposes, laws) of HOAs, their actions and somewhat extra-legal nature deserve more scrutiny than they are receiving.

I believe HOAs function as unnacountable de facto governments that need to be reined in. Though I haven’t researched it, I would be not surprised to learn that their “trade group” is into big-league lobbying at the state and federal levels to protect their arbitrary interests. I would also suspect that their power to influence any potential legislation is growing. HOAs not happy with assuming the responsibilities commensurate with their power do have a choice: They can vote to disband. Many of them wouldn’t be missed.

I don’t necessarily see this as a left-right issue, but perhaps others see it differently.

Cross-posted at Wide Open.

Positivity: The Secret Billionaire Giveaway

Filed under: Positivity — Tom @ 6:56 am

The not-secret-any-more philanthropist is Chuck Feeney:

Fri Sep 21, 2007 11:27am EDT

LONDON (Reuters) – He wears a $15 watch, flies economy class and does not own a house or car. For years few guessed that Chuck Feeney was one of the world’s biggest philanthropists, secretly giving away his billionaire fortune.

Born in New Jersey during the Depression to a blue-collar Irish-American family, Feeney co-founded Duty Free Shoppers (DFS), the world’s largest duty-free retail chain. He liked making money but not having it, and gave it away for years in strict secrecy.

Journalist Conor O’Clery’s new book “The Billionaire Who Wasn’t: How Chuck Feeney Secretly Made and Gave Away a Fortune” (Public Affairs $26.95), reveals that Feeney may be destined to go down in history as one of the greatest American philanthropists.

Witty, self-deprecating, frugal and astute, Feeney was listed by Forbes Magazine in 1988 as the 23rd richest American alive and worth $1.3 billion, richer than Rupert Murdoch and Donald Trump. He wasn’t.

Four years earlier, Feeney had placed most of his money in charitable foundations.

Inspired by the great 19th century philanthropist Andrew Carnegie, Feeney helped fund schools, hospitals, universities, medical research and human rights from the United States and Ireland to South Africa and Vietnam.

“I had one idea that never changed in my mind — that you should use your wealth to help people. I try to live a normal life, the way I grew up,” Feeney said. “I set out to work hard, not to get rich.”

Feeney made money in his youth selling Christmas cards door-to-door, clearing snow from driveways and caddying at golf courses. He loved the challenge of making money but had little use for it.

After serving as a U.S. Air Force radio operator in Japan during the Korean war, he graduated from Cornell University and launched his career selling duty-free liquor to American sailors at Mediterranean ports in the 1950s.

The business expanded rapidly to embrace airport duty free concessions. By the late 1960s business was booming thanks to sales of duty free from Anchorage to Hong Kong. Over the decades his fortune mushroomed and so did his determination to give it away. …..

Go here for the rest of the story.