Before, During and After the Sale
urban myths, misconceptions, manipulation, deception
With few exceptions, HOAs are a result of a contract between a developer and a municipality that strips the buyer of the ability to defend against toxic business practices after the purchase. The dump and run business model they choose to use is full of disjointed systems that offer no protection to the homeowners.
myths and misconceptions
"Read the Documents"
"Professionally Managed"
"We're Just Volunteers"
Homeowners are often tole to "read the documents" before they buy, but what they aren't told is about the nature of the documents. For example, CCRs are about the property - how high your grass can be or what color your front door can be, but they never say the board should go to jail for embezzlement or require the board to run the assoc
Homeowners are often tole to "read the documents" before they buy, but what they aren't told is about the nature of the documents. For example, CCRs are about the property - how high your grass can be or what color your front door can be, but they never say the board should go to jail for embezzlement or require the board to run the association with sane, sound business practices. They also rarely, if ever have any means of accountability for a board that doesn't follow them, either
"We're Just Volunteers"
"Professionally Managed"
"We're Just Volunteers"
What other industry do you know of that would put volunteers in charge of their business and hope for the best? It's not about their pay status, but a very misguided business practice that puts them in authority without any kind of oversight or even any kind of requirement for them to make sense? The dump and run business model used by m
What other industry do you know of that would put volunteers in charge of their business and hope for the best? It's not about their pay status, but a very misguided business practice that puts them in authority without any kind of oversight or even any kind of requirement for them to make sense? The dump and run business model used by municipallities also gives them more
authority than the municipality to decide what happens with the property.
"We're not like that" is heard in this realm quite often. It's good that there are occasions where boards are honest and run the association with business practices that make sense, but the part this mantra misses is that they are not required to be that way. Just as they can choose to be that way, the next board can choose to not "be that way."
"Professionally Managed"
"Professionally Managed"
"Professionally Managed"
This is a soundbite realtors will use in their advertising, but they won't explain what it means. The reality is that that there is no licensing requirement for management companies for HOAs, as there is for management companies when it comes to rental properties. This means there is no required rules of conduct pr reqiored means of accou
This is a soundbite realtors will use in their advertising, but they won't explain what it means. The reality is that that there is no licensing requirement for management companies for HOAs, as there is for management companies when it comes to rental properties. This means there is no required rules of conduct pr reqiored means of accountability for them when, as they often do, go well beyond "mowing the lawn and shoveling the sidewalk." Neither the developer or the municipality would hire an unlicensed contractor of any kind - let alone manage their money - without any kind of oversight or accountability, yet they support it for how a HOA is run.
More myths and misconceptions
"Vote Them Out"
The Purpose of the Board
The Purpose of the Board
"If you don't like the board, vote them out." This isn't always as simplistic as it sounds. In many well-documented instances, the board was never voted into office. They were appointed by the management company, so it just isn't possible to vote anyone out who wasn't vote into office in the first place.
In many cases, management companies also control the voting process, so they ultimately decide the board members who they are likely able to control - or the ones who are likely willing to give them control because "it's easier that way."
In some instances the CCRs might say something about the terms of service, but given how neither the builder or the municipality have much of an interest in ensuring the CCRs are followed, there is no real means of accountability for when or if integrity happens in the voting process.
Our board chair has never been on the ballot.
The Purpose of the Board
The Purpose of the Board
The Purpose of the Board
It's a myth that the board is there for the benefit of the homeowners. The purpose of the board is to enforce the CCRs - the contract created between the municipality and the developer that creates the HOA. In these instances, it is the developer who files the articles of incorporation.
Logic would follow that the board and the management company work for the developer and/or the municipality because the developer is on the articles of incorporation and the municipality still financially benefits from the arrangement. However, there is no logic to this dump and run business model they use.
Another piece of this business model that doesn't make sense is if you were to look on the business registrations for many of the associations at the secretary of state's office, you will find the management company listed as the president of the association.
It's a business practice that neither the municipality or the developer would tolerate in the course of their own transactions outside of the creation of a HOA because of the financial risks involved, yet they knowingly set up HOAs without regard to the harm to the homeowners.
Required Conduct
The Purpose of the Board
Required Conduct
It's a myth that sane, sound business practices are required, because they aren't.
They are in any other industry, but not when it comes to the dump and run business model municipalities use for implementing HOAs.
For example, current Minnesota law says embezzlement is wrong for other businesses, but it's not wrong for a board to do it in a HOA.
Minnesota has a Nonprofit Corporation statute, but when you look at the substance of it, the law is designed for nonprofits that function as a public charity or have a public purpose. HOAs are not that kind of nonprofit, so that statute doesn't apply to HOAs.
This website uses cookies.
We use cookies to analyze website traffic and optimize your website experience. By accepting our use of cookies, your data will be aggregated with all other user data.