business practices not supported in other industries
*Municipalities don't allow unlicensed contractors to manage their money
There is no licensing requirement for management companies to manage an HOA. This means there are no standards of conduct, either. Municipalities would not allow this because this practice does not allow for control of the conduct and the risk management is too great. It's not a sound business practice for them, but they don't require the HOAs they authorize to follow their own business practices.
*Municipalities don't allow unsupervised volunteers to have free reign of their offices
Municipalities would not allow a volunteer to show up and do whatever they wanted, without regard for the impact it has on the others in the office or in the community. Yet, by using their dump and run business model they sell the homeowners short by not requiring any kind of standard of condcut for how the association is to be run. They have standards of conduct for any other type of business, but choose to look the other way when it comes to how HOAs are run.
*Municipalities say they don't have any say in how HOAs are run
Developers can't build without them and municipalities financially benefit from them, so they are not being truthful when they make this soundbite. In any other industry it would be wrong to financially benefit from manipulative and deceptive business practices especially when they are intentional.
*Municipalities authorize "architectural committees" to decide structural changes to a building
The CCRs or other governing documents often state that if a homeowner wants to make changes to their property, it has to be approved by an "architectural committee," but rarely provides any qualifications, conditions or process for what this means, let alone any supervision to ensure whatever happens is compliant with any necessary local ordinances or state or local laws.
This is something they dump on the vulunteers who aren't qualified to make those decisions, but gives them the authority to fine the homeowner if they don't go along with it.
The other option that often happens is the unlicensed management company steps up with one of their other companies and takes over the work. It's a conflict of interest, but it happens anyway and it offers the homeowner no way to defend against it or address it if the work is not done properly.
One member of a board of directors once told me that they didn't get quotes from three businesses because the law doesn't require it. The work they had done to the homeowners that was eventually shown to not been necessary was done by a company owned by the management company the use for the association. In any other world, sound business practices would have required them to get quotes from three different companies, but they were used by their management company who took advantage of them.
The purpose of the board is to enforce the CCRs - a contract between the municipality and the developer, but niether one provides any mechasims for the benefit of the homeowners.
*Developers don't hire unlicensed contractors and also pay for their liability insurance
Centex built our property. They are on the articles of incorporation. They were bought by Pulte and don't build in Minnesota any more. In any other world the name on the articles of incorporation matters, but in the dump and run world, they get to walk away and pretend we don't exist. However, our master plan insurance policy has a rider that has homeowners paying for employee misconduct. Our association doesn't have employees. We are paying for the liability of the unlicensed management company, despite the fact that the CCRs say they are supposed to have their own insurance. I've seen other instances where the same management company has the HOA paying for worker's comp and the association doesn't have employees.
When I asked Pulte about this, all I got was the sound of them lacing up their running shoes and running away. When I asked the insurance company about this, they first told me it was "industry standard" and then they called the police to try to get a restraining order on me to get me to stop asking questions.
*Legislature won't make things that are wrong for other people be wrong for HOAs
The legislature has heard many stories of homeowners being harmed, but it is still way more of a challenge to get more of them to choose to call it wrong. In other industries, things like embellzement and fraud would be wrong and those impacted by it would have a legal recourse. It's not against the law when it involves a HOA. Renters have protections from retaliation from landlords. All HOA homeowners get is others looking the other way when they are feed and fined by people on the boards who aren't required to even make sense or provide a rational justification for their conduct.
In the last legislative session, they had a chance to require truthfulness and transparency in how HOAs are run, but the phrase that kept coming up is that "it's not convenient" for those who somehow are not able to do business that way, so homeowners lost out.
There are many who are fully aware that homeowners don't have the ability to defend against toxic business practices, but are ok with not changing that. These are the same people who will meet in person with a lobbyist and won't require the lobbyist to provide evidence of how they are benefitting homeowners, while at the same time hide behind their assistants and refuse to hold or participate in town hall meetings with the people they, at least in theory, were elected to serve.
*Realtors consider withholding information from homeowners to be ethical
This is an area that seems to go around in circles and when I have tried to have a conversation around it, all it seems to do is inspire the running shoes thimg. However, they can't claim victimhood when they are being used to perpetuate the dysfunction for a paycheck.
First, it starts with the listing. The listing will typically say "sidewalks shoveled, lawns mowed and professionally managed," but there is rarely an explanation that tells the potential buyer that "professionally managed" could mean just about anything.
Then they help the potential buyer to "read the documents," but won't help them or help them find a way to understand what the CCRs say or that bylaws don't meet the statutory definition of a contract.
It's not about telling them where to live, but rather helping them make an informed choice.
However, one of the requirements for their license is that they know the law, so they are fully aware HOA homeowners have no civil rights when it comes to this kind of homeownership, but don't want to explain why that doesn't matter when they are participating in making this sale.
FHA, USDA and VA-backed loans all look for sound busness practices before they will approve a purchase in a HOA, so it is not as though real estate companies are prohibitied from putting processes in place to mitigate the risk to the buyer they are representing.
They raise the justification for this as an ethics issue for the agent, but that doesn't make sense if their loyalty is supposed to be with the buyer who is paying their commission.