Approximately 60 million Americans live in communities governed by a homeowners’ association (HOA). HOA board mismanagement is rampant across the country, with financial wrongdoing the most common form of misconduct. Why does this happen?
HOAs are mostly unregulated. Consumer protection laws do not apply. The majority of homeowners are disinterested until large association dues increases occur. The “Homeowner Association Act” of New Mexico, passed in 2013, requires re-registration by June 30, 2014 for our states’ approximately 50 HOAs. The law does not provide a state agency to monitor compliance with SB497, nor any mechanism to investigate alleged malfeasance. In other states, the Attorney General’s office handles complaints but that is not the case in New Mexico. When I called the Attorney General’s office they said to hire a private attorney.
NM residents who confront their HOA boards for infractions must pay their own attorney fees, while boards get to use HOA funds for defense. Those funds come from association dues, so if a resident sues an HOA, a portion of their dues is used against them. Most HOA bylaws state that HOA funds can be used for legal purposes only if the board members are in compliance with bylaws of the HOA; if they are not, board members are personally liable. But that cannot be proved until a matter goes to court. No wonder boards feel emboldened to act however they please.
My own HOA Board treats residents with disrespect, bullying, and intimidation. The President had a sheriff’s deputy come to our annual meeting and some monthly meetings. Resident comments were moved from the beginning of the meeting to the end. When asked why, the President said, “Because we can.” She also spent our money to get a legal opinion on it. Two months later, resident comments were limited to two minutes per issue, despite the fact that there are seldom more than eight residents attending. Meeting minutes have become increasingly abbreviated and no longer accurately reflect what happens at meetings. Why? The Association’s attorney recommended it to protect the Association and Board members from legal liability. More and more Board business is conducted in executive session, in total secrecy. Legal expenditures in the first four months are close to the whole year’s budget. Anyone who asks about the expenditures is told that details are confidential.
We have a newsletter that is funded by resident dues, but the Board will not publish residents’ letters to the editor.
Four members of the board held a meeting without three other members and called the sheriff on a resident because they said they felt threatened. This resident had the audacity to question their actions on a regular basis and they deemed this harassment. The HOA manager also called the sheriff to say that a Board member had threatened him. The Board member had been asking for months to see HOA records he is entitled to see and was refused. Exasperated, he used “foul language” according to the manager, triggering a visit from a deputy sheriff. In each case, sheriff’s deputies found no wrongdoing, but the residents had no recourse against these Board members.
A new records policy adopted by our Board forbids Board members from having a briefcase, purse, backpack, coat, cellphone, or camera when inspecting Association records. Board members, who are entitled through bylaws to examine and copy records, are being treated like criminals. The rules for ordinary residents are even more onerous. If they object to anything the Board does, they stand a good chance of suffering retaliation.
There should be a state agency that investigates complaints from HOA residents. Without any enforcement power, New Mexico’s HOA law is useless.