BUYER BEWARE, PART III: THE ILLUSION OF “PROPERTY” OWNERSHIP
Donie Vanitzian, BA, JD, Arbitrator
(c)2006
What’s wrong with buying a condo? Almost everything. Most people who think they are getting a good deal, have no idea what the meaning of a “good deal” is. It is not enough to say that the building looks good, or that the lawn is cut and the flowers are in bloom. Buyers must look beyond the facade.
This type of living environment requires the
Thursday, June 29, 2006
Sunday, June 11, 2006
Welcome to Conformityville!
Welcome to Conformityville!
Constraint * Conflict * Control
Conceit * Controversy * Corruption
by Donie Vanitzian, BA, JD
(c) 2006 Vanitzian
Its been about three years since Villa Appalling! invited and welcomed millions of residents into its community and congratulated them for buying into its ass-o-see-a-tion. A big thank you was also extended for putting your money in the ass-o-see-a-tion's hands, and buyers were also reminded to be good neighbors. The criteria for being a good neighbor, is soooooooo simple, all you have to do is follow the rules: 1. Give us your money. 2. Don't ask questions. 3. Don't run for election to the board. 4. Don't come to meetings but give us your proxies and ballots. 5. Don't make waves. 6. Understand that we sue first and ask questions later. 7. Don't sue us, but we can sue you, and you will pay for it. 8. If you don't pay, we will foreclose on your home. Finally, always remember that we can make your life miserable -- other than that, Villa Appalling! Welcomes you.
If you think THAT'S bad, you haven't heard the worst of it.
CONSTRAINT!
Though there is NO per se "homeowner association" law, many attorneys profess to be expert in just that: "homeowner association law." The law should be "the law" -- period, no exceptions for individual groups or sideshows. If a person owns "real" property, then property law should be applied fairly to all, but it is not.
The proof of two legal systems is easily seen through a type of quasi-property ownership, a hybrid of sorts consisting of a contrived corporate fiction whose liabilities are shared amongst owners. It is against this backdrop, that certain property OWNERS have been lured into and made to conform to nefarious "industry standards" that are backdoored to our legislators. These so-called "standards" prevent this group of owners from effectively protecting their individual assets once they purchase "property" in a common interest development.
When making arguments against those who champion the owners' individual rights to protect their assets one of the most prevalent terms utilized by the "industry" is "homeowner advocate." Their use of this phrase is nothing more than a "label," it is an oxymoron and it is meaningless. Who would want to be a "homeowner advocate" for this bastardized hybrid type of living arrangement under the umbrella of a fictional corporate business shell. Who would advocate or promote such a disastrous concept?
As one author writes, soon, legislation will "shift the balance of power in homeowners associations away from the board of directors and in favor of the property owners." Presently, this cannot happen in California because it would entail recognition of the full bundle of sticks by way of "property rights" for those owners who by statute have inferior titles. The "industry's" relationship to a homeowners association consists only of an at-will contract to provide services and nothing more. It is the titleholder that has a VESTED INTEREST IN PROPERTY -- THE "INDUSTRY" HAS NO SUCH INTEREST WHATSOEVER!
Using the bundle-of-sticks metaphor, the bundle represents the owner's entire interest in property and each stick within the bundle represents a particular right held by the owner of that bundle. Owners, whose titles are clouded by deed-restrictions that forever change at the whim of any given board in power at the time, have experienced a taking of substantial property rights. Every time these deed-restrictions are amended, rewritten, or restated, the titleholder is usually denied rights that vested on purchase of their property. With each change or fluctuation in recorded or unrecorded restrictions and rules, the association "takes" from these owners a significant stick in the bundle of sticks that together constitute ownership of real property, thus denying them due process of law. Each stolen "stick" further denies that owner of yet another economically productive use of his property. Yet because the association it is not a governmental entity that is taking that property or property right, there is no compensation due the owner. Owners are left to their own devices to recoup or absorb their losses.
Deed-restricted ownership is a "risk" and it is "inferior" to all other types of real property ownership. One may have title to their property, pay taxes, and be with or without mortgage debt, but that does not mean you completely "own" that property in total. In such developments, the titleholder's asset basically consists of nothing more than the "inside space" of their home and in limited cases the outside structure, otherwise he or she virtually owns nothing outright because the actual ownership consists of a "fractional interest in common" with many others, and nothing more. In other words, one owns LIABILITIES-IN-COMMON with other fractional-interest owners. That's it. Whether it be a condominium, townhouse, single-family dwelling standing alone with no neighbors: If it is in a common interest development, has a homeowners association, has a board of directors, then that buyer's title is deed-restricted and inferior to all other types of REAL property ownership in the state.
Once the buyer understands that his purchase is "inferior" and his title is "restricted" maybe he will then understand that he does not own a "home" or "real property" in the traditional sense. When he fights to protect the rights he does not have, he will also uncover that he is NOT a true advocate for "home-ownership" therefore, he cannot be a "homeowner advocate" in the strict sense of the word. The best he can do, is attempt to protect his "asset" - whatever that is.
Because control is in the hands of an association's board of directors, the titleholder's control of his asset is "severely limited," and he can never own the land on which that structure (house) sits. Even if all the structures are damaged or destroyed (as in the Northridge earthquake) he still cannot escape assessment payments or his share of liability because a common interest development exists in "perpetuity" (forever) and, California courts have ruled such property cannot go bankrupt because each and every owner is mandated to pay unlimited assessments at any time. These owners are forced to pay to keep the association solvent.
CONFLICT!
Boo, hoo, hoo. While the "industry" continues to whine about their difficulty in squeezing more money from owners, but continue to deny their interloper status, they do however, manage to inject themselves into the bank accounts of millions of Villa Appalling! residents and attempt to goad them into spending even MORE money to support third-party advertisements, lobbies, and surveys.
The "industry's" insecurity can be seen through its self-obsession in defining itself through politically correct terminology connoting "fairness," "professionalism," "hard working," and "careers in serving communities." Oddly enough, none of those words are per se definable, they are instead, nebulous creations of these interlopers who have perfected if not legalized, an artful type of hard-to-detect thievery that goes unpunished year after year, decade after decade. Clinging to income projections geared for years to come, the interloper's "dedication" is that of a sociopathic parasite petrified that its host will starve it to death at any time.
Picture the industry interloper as a conglomerate enterprise dedicated to the usurping of power from the owners who rightfully own it, and placing them in a vulnerable position which prevents them from protecting their assets in a meaningful way without interference from an association, board of directors, management company, and attorneys. In espousing their self-declared dedication in putting the interests of the association-fiction in a primary position, the industry relegates titleholders who are responsible for bankrolling the operation, to a subordinate roll. The reason for this is that the association-fiction can demand "unlimited" funds at any time from all titleholders which in turn can further line "industry" pockets. Still, these interlopers serving "communities" deny their involvement in devaluing property and eroding rights.
Only when faced with the truth and starved of financial resources, and with the future of the "industry" at risk, does the interloper go on the defensive by reverting to the banal platitude that "criticism is healthy for any industry that takes itself seriously," all the while planning their next assault against the rights of titleholders.
CONTROL!
Owners must understand that they have lost control of their assets, that is, if they ever had control to begin with.
The "industry's" adeptness lies in creating confusion among buyers and owners. An example of this can be seen in California where several industry factions, in order to legitimize their standing, lobbied vigorously to pass a certified common interest managers bill. They really wanted that 'certification' and they got it. The problem? They obviously didn't think it would be so difficult to comply with, so it got watered down, and then watered down again, and now take a look at that ill-crafted bill and what one has to do to be "certifiable." Does a management company owner need to comply? Is there a requirement that such managers have a high school diploma? What about a mandatory bond and investigative background searches on managers? Go look at the statute.
Associations and industries that control them, wield unbridled power over owners and while there is an illusion of "choice" and "freedom" in residential deed-restricted environments, those basic constitutional rights are at risk of forfeiture once the purchase is made. Associations can dominate your lifestyle, control resales, interfere with your livelihood, and curtail your activities. Not only does the owner have to deal with a board of directors and association rules, but also other interlopers such as management companies and industry lawyers who further complicate the titleholder's ability to cope with complexities inherent in this scheme.
Just because you can afford to move "in" does not mean you can afford to "stay" or that you can afford to move "out." Most buyers are not advised that they must have a steadily increasing income to keep up with escalating arbitrary costs and trumped up fees when purchasing or refinancing. Owners who cannot afford to pay their association's demands for any increased fees and assessments, that can cost thousands of dollars per owner, cannot stay. Make no mistake: all the cash capital in the association's bank accounts is generated from each owner.
Certified Personal Financial Planner and Real Estate Broker, Thomas Foster, explains, "Once the deception of association-type living is uncovered, the obvious next move is to immediately cut your losses and get out of there. It is only then, that owners discover the trap they're in. Moving from a deed-restricted property to one without restrictions of similar size and location may at first appear to be a 'like-for-like exchange' however, when it comes to pricing that's where the similarity ends. The fact remains that unrestricted property is much more valuable than it's restricted counterpart."
The big question for owners who bought into this "affordable living fraud" is; can they afford the extra cost and higher property taxes to break out of the trap? Owners brag, "My home has appreciated hundreds of thousands of dollars." That elation is short-lived. Mr. Foster explains "that appreciation is somewhat irrelevant if it is not enough for you to make a like-for-like exchange in real time. Compared to other 'real' real estate, your deed-restricted title is immediately devalued because you are unable to move into a comparable 'freehold house' for the same money in the same area. When defining appreciation, the owner must subtract all assessment payments made during ownership to see the real picture."
The industry's control over owners in this environment is evidenced through the owners being burdened with a double financial risk because they essentially relinquish control of their assets to an elected board of directors. Mr. Foster cautions, "The owner's financial crisis differs substantially from the association's financial crisis. An association always has 'cash requirements,' and by law it can raise cash on demand from each owner. Even with this ability, these communities can remain in a constant flux of not being able to meet their liabilities. This means that a 'gain' for the association results in a corresponding 'loss' for each owner, subjecting seniors in particular to potential personal financial distress."
CONCEIT!
The real "community" consists of owners financing "industry employees." Bankers, attorneys, gardeners, landscape companies, management companies, lobbyists, attorneys, painters, roofers, plumbers, are ALL PAID VENDORS feeding off the carcasses of owners. Titleholders are merely the goose that lays the golden egg or the cash cow.
In order to provide the resources to pay for the excesses of those controlling the industry, such as their child's tuition to Harvard, Princeton, Yale, or other private schools, the second Mercedes, birthday parties, fur coats, jewelry, vacations in the Caribbean, ski trips, purchase of private "real" properties, or time-shares in Mammoth, Colorado, Florida, Palm Springs, yachts, five-star dining excursions, mountaineering tutors, personal trainers, fine clothing, funding personal pension plans and health insurance, owners merely have to work harder, take second jobs or simply deplete their equity to bankroll the industry's insatiable appetite.
Frequently, mutual ties between the management company and boards of directors can be cemented by the exchange of cheap trinkets such as glass vases filled with mints, bouquets of flowers with thank-you notes containing pre-paid dinners at a local restaurant or theatre tickets and occasional boxes of chocolates. As the stakes get raised, more substantial gifts come into play such as vacations, airplane tickets, trips, cruises, garage doors, and SO much more. The author of this article was offered a three-week first-class luxury cruise in exchange for hiring a particular management company. Needless to say, the offer was rejected.
CONTROVERSY!
The "industry" blames its continued demise on "hate." Not their "incompetence" or their "greed," or their "dishonesty," but, "hate." Refusing to take responsibility for its actions, this is an industry that has all but demolished the concept of "affordable housing" as it was once known and caused countless sections of law to be repealed or written to better favor vendor-interlopers; prevented owners from suing their associations to vindicate their rights; forced arbitration down our throats; caused monthly fees to go up by mandating association registration with the Secretary of State and other agencies; created monopolies where none existed before; eliminated a variety of choices for owners; file amicus briefs against owners who are struggling to hold their own in a court of law; and silencing voices of opposition.
In an excellent retort by Mr. George Staropoli, titled, “Community Associations Institute Reinvents Democracy, a Response to CAI/CEO criticism of Homeowner Advocates" he succinctly posits these queries: "Is it reasonable to oppose restoration of the homestead exemption? Or reasonable to oppose due process protections by independent tribunals? Or reasonable to seek draconian foreclosure measures against homeowners that amount to excessive punishments and a constitutional violation of the 8th Amendment. No, it's only reasonable if your objective is the perpetuating a defective, authoritarian, un-American form of governance throughout the land."
When the "industry" wants to continue its stranglehold over owners, it is considered to be "for the good of the association." When an owner attempts to protect his assets, he is considered to be "hateful," "petty," and "vindictive."
Make no mistake, the concept of a homeowners association is a sociological and economical disaster. It is a failure perpetuated by myths created and sustained by an industry that is fearful it's free ride on the backs of our personal income, will cease.
CORRUPTION!
Corruption in homeowner associations is expensive, unchecked, and rampant. In theory vendors pretend they are there to alleviate time constraints and take the burden off a volunteer board. But, because it has become so lucrative, they instead create moneymaking opportunities for themselves.
The "industry" interlopers who have supposedly made careers of "serving" so-called "communities" add to the various types of interference associations face today. These unmitigated influences, which trickle down upon owners across the country are costing countless millions of dollars in poor decisions made by boards under the spell of outside vendor perks.
Sabotaging homeowners -- Keep this story depicting an anatomy of corruption in mind the next time your home is headed for a holiday season foreclosure. It is December and association management companies are ratcheting up their holiday spirit by screwing over a few extra homeowners. In the following instance, the owner first learns purely by chance that he has a lien on his property and is in danger of foreclosure. He immediately contacts the board only to be referred to the management company who in turn informs him that a "notice," "copy of a bill of what he owed," and "several letters informing him of the situation had been sent to him." None of which had been actually received by the owner. Despite his protests, he was told it was "out of the association's hands" and "it's with a foreclosure company" and now he "has to deal with the attorneys." When attempting to contact the attorneys all he was given was a post office box and an answering service telephone number with a recording saying that the office was closed for the December holidays and would reopen sometime in January next year. As it was too late to get the payment to a post office box in order to save his property he tracked down the foreclosure company. Just imagine how difficult that is to accomplish particularly during this time of year! He showed up just in the nick of time only to be told by a receptionist, "how the hell did you find us?" Then the owner was told, that the receptionist was instructed NOT to accept any payments from owners and that the boss was on a ski trip out of the country and that the office was "technically closed." The owner said, "Too damn bad!" and with that, threw his payment on the desk and left. Fortunately the owner had the foresight to be accompanied by a credible witness and because of this the company could not deny receiving payment. He avoided foreclosure. Happy Holidays.
Though some may believe that California's legislature is headed in a direction away from its past bad decisions and leaning toward the views of property owners, we are reminded that the Devil's Dictionary defines the word "lawyer" as "One skilled in circumvention of the law."
~*~
Constraint * Conflict * Control
Conceit * Controversy * Corruption
by Donie Vanitzian, BA, JD
(c) 2006 Vanitzian
Its been about three years since Villa Appalling! invited and welcomed millions of residents into its community and congratulated them for buying into its ass-o-see-a-tion. A big thank you was also extended for putting your money in the ass-o-see-a-tion's hands, and buyers were also reminded to be good neighbors. The criteria for being a good neighbor, is soooooooo simple, all you have to do is follow the rules: 1. Give us your money. 2. Don't ask questions. 3. Don't run for election to the board. 4. Don't come to meetings but give us your proxies and ballots. 5. Don't make waves. 6. Understand that we sue first and ask questions later. 7. Don't sue us, but we can sue you, and you will pay for it. 8. If you don't pay, we will foreclose on your home. Finally, always remember that we can make your life miserable -- other than that, Villa Appalling! Welcomes you.
If you think THAT'S bad, you haven't heard the worst of it.
CONSTRAINT!
Though there is NO per se "homeowner association" law, many attorneys profess to be expert in just that: "homeowner association law." The law should be "the law" -- period, no exceptions for individual groups or sideshows. If a person owns "real" property, then property law should be applied fairly to all, but it is not.
The proof of two legal systems is easily seen through a type of quasi-property ownership, a hybrid of sorts consisting of a contrived corporate fiction whose liabilities are shared amongst owners. It is against this backdrop, that certain property OWNERS have been lured into and made to conform to nefarious "industry standards" that are backdoored to our legislators. These so-called "standards" prevent this group of owners from effectively protecting their individual assets once they purchase "property" in a common interest development.
When making arguments against those who champion the owners' individual rights to protect their assets one of the most prevalent terms utilized by the "industry" is "homeowner advocate." Their use of this phrase is nothing more than a "label," it is an oxymoron and it is meaningless. Who would want to be a "homeowner advocate" for this bastardized hybrid type of living arrangement under the umbrella of a fictional corporate business shell. Who would advocate or promote such a disastrous concept?
As one author writes, soon, legislation will "shift the balance of power in homeowners associations away from the board of directors and in favor of the property owners." Presently, this cannot happen in California because it would entail recognition of the full bundle of sticks by way of "property rights" for those owners who by statute have inferior titles. The "industry's" relationship to a homeowners association consists only of an at-will contract to provide services and nothing more. It is the titleholder that has a VESTED INTEREST IN PROPERTY -- THE "INDUSTRY" HAS NO SUCH INTEREST WHATSOEVER!
Using the bundle-of-sticks metaphor, the bundle represents the owner's entire interest in property and each stick within the bundle represents a particular right held by the owner of that bundle. Owners, whose titles are clouded by deed-restrictions that forever change at the whim of any given board in power at the time, have experienced a taking of substantial property rights. Every time these deed-restrictions are amended, rewritten, or restated, the titleholder is usually denied rights that vested on purchase of their property. With each change or fluctuation in recorded or unrecorded restrictions and rules, the association "takes" from these owners a significant stick in the bundle of sticks that together constitute ownership of real property, thus denying them due process of law. Each stolen "stick" further denies that owner of yet another economically productive use of his property. Yet because the association it is not a governmental entity that is taking that property or property right, there is no compensation due the owner. Owners are left to their own devices to recoup or absorb their losses.
Deed-restricted ownership is a "risk" and it is "inferior" to all other types of real property ownership. One may have title to their property, pay taxes, and be with or without mortgage debt, but that does not mean you completely "own" that property in total. In such developments, the titleholder's asset basically consists of nothing more than the "inside space" of their home and in limited cases the outside structure, otherwise he or she virtually owns nothing outright because the actual ownership consists of a "fractional interest in common" with many others, and nothing more. In other words, one owns LIABILITIES-IN-COMMON with other fractional-interest owners. That's it. Whether it be a condominium, townhouse, single-family dwelling standing alone with no neighbors: If it is in a common interest development, has a homeowners association, has a board of directors, then that buyer's title is deed-restricted and inferior to all other types of REAL property ownership in the state.
Once the buyer understands that his purchase is "inferior" and his title is "restricted" maybe he will then understand that he does not own a "home" or "real property" in the traditional sense. When he fights to protect the rights he does not have, he will also uncover that he is NOT a true advocate for "home-ownership" therefore, he cannot be a "homeowner advocate" in the strict sense of the word. The best he can do, is attempt to protect his "asset" - whatever that is.
Because control is in the hands of an association's board of directors, the titleholder's control of his asset is "severely limited," and he can never own the land on which that structure (house) sits. Even if all the structures are damaged or destroyed (as in the Northridge earthquake) he still cannot escape assessment payments or his share of liability because a common interest development exists in "perpetuity" (forever) and, California courts have ruled such property cannot go bankrupt because each and every owner is mandated to pay unlimited assessments at any time. These owners are forced to pay to keep the association solvent.
CONFLICT!
Boo, hoo, hoo. While the "industry" continues to whine about their difficulty in squeezing more money from owners, but continue to deny their interloper status, they do however, manage to inject themselves into the bank accounts of millions of Villa Appalling! residents and attempt to goad them into spending even MORE money to support third-party advertisements, lobbies, and surveys.
The "industry's" insecurity can be seen through its self-obsession in defining itself through politically correct terminology connoting "fairness," "professionalism," "hard working," and "careers in serving communities." Oddly enough, none of those words are per se definable, they are instead, nebulous creations of these interlopers who have perfected if not legalized, an artful type of hard-to-detect thievery that goes unpunished year after year, decade after decade. Clinging to income projections geared for years to come, the interloper's "dedication" is that of a sociopathic parasite petrified that its host will starve it to death at any time.
Picture the industry interloper as a conglomerate enterprise dedicated to the usurping of power from the owners who rightfully own it, and placing them in a vulnerable position which prevents them from protecting their assets in a meaningful way without interference from an association, board of directors, management company, and attorneys. In espousing their self-declared dedication in putting the interests of the association-fiction in a primary position, the industry relegates titleholders who are responsible for bankrolling the operation, to a subordinate roll. The reason for this is that the association-fiction can demand "unlimited" funds at any time from all titleholders which in turn can further line "industry" pockets. Still, these interlopers serving "communities" deny their involvement in devaluing property and eroding rights.
Only when faced with the truth and starved of financial resources, and with the future of the "industry" at risk, does the interloper go on the defensive by reverting to the banal platitude that "criticism is healthy for any industry that takes itself seriously," all the while planning their next assault against the rights of titleholders.
CONTROL!
Owners must understand that they have lost control of their assets, that is, if they ever had control to begin with.
The "industry's" adeptness lies in creating confusion among buyers and owners. An example of this can be seen in California where several industry factions, in order to legitimize their standing, lobbied vigorously to pass a certified common interest managers bill. They really wanted that 'certification' and they got it. The problem? They obviously didn't think it would be so difficult to comply with, so it got watered down, and then watered down again, and now take a look at that ill-crafted bill and what one has to do to be "certifiable." Does a management company owner need to comply? Is there a requirement that such managers have a high school diploma? What about a mandatory bond and investigative background searches on managers? Go look at the statute.
Associations and industries that control them, wield unbridled power over owners and while there is an illusion of "choice" and "freedom" in residential deed-restricted environments, those basic constitutional rights are at risk of forfeiture once the purchase is made. Associations can dominate your lifestyle, control resales, interfere with your livelihood, and curtail your activities. Not only does the owner have to deal with a board of directors and association rules, but also other interlopers such as management companies and industry lawyers who further complicate the titleholder's ability to cope with complexities inherent in this scheme.
Just because you can afford to move "in" does not mean you can afford to "stay" or that you can afford to move "out." Most buyers are not advised that they must have a steadily increasing income to keep up with escalating arbitrary costs and trumped up fees when purchasing or refinancing. Owners who cannot afford to pay their association's demands for any increased fees and assessments, that can cost thousands of dollars per owner, cannot stay. Make no mistake: all the cash capital in the association's bank accounts is generated from each owner.
Certified Personal Financial Planner and Real Estate Broker, Thomas Foster, explains, "Once the deception of association-type living is uncovered, the obvious next move is to immediately cut your losses and get out of there. It is only then, that owners discover the trap they're in. Moving from a deed-restricted property to one without restrictions of similar size and location may at first appear to be a 'like-for-like exchange' however, when it comes to pricing that's where the similarity ends. The fact remains that unrestricted property is much more valuable than it's restricted counterpart."
The big question for owners who bought into this "affordable living fraud" is; can they afford the extra cost and higher property taxes to break out of the trap? Owners brag, "My home has appreciated hundreds of thousands of dollars." That elation is short-lived. Mr. Foster explains "that appreciation is somewhat irrelevant if it is not enough for you to make a like-for-like exchange in real time. Compared to other 'real' real estate, your deed-restricted title is immediately devalued because you are unable to move into a comparable 'freehold house' for the same money in the same area. When defining appreciation, the owner must subtract all assessment payments made during ownership to see the real picture."
The industry's control over owners in this environment is evidenced through the owners being burdened with a double financial risk because they essentially relinquish control of their assets to an elected board of directors. Mr. Foster cautions, "The owner's financial crisis differs substantially from the association's financial crisis. An association always has 'cash requirements,' and by law it can raise cash on demand from each owner. Even with this ability, these communities can remain in a constant flux of not being able to meet their liabilities. This means that a 'gain' for the association results in a corresponding 'loss' for each owner, subjecting seniors in particular to potential personal financial distress."
CONCEIT!
The real "community" consists of owners financing "industry employees." Bankers, attorneys, gardeners, landscape companies, management companies, lobbyists, attorneys, painters, roofers, plumbers, are ALL PAID VENDORS feeding off the carcasses of owners. Titleholders are merely the goose that lays the golden egg or the cash cow.
In order to provide the resources to pay for the excesses of those controlling the industry, such as their child's tuition to Harvard, Princeton, Yale, or other private schools, the second Mercedes, birthday parties, fur coats, jewelry, vacations in the Caribbean, ski trips, purchase of private "real" properties, or time-shares in Mammoth, Colorado, Florida, Palm Springs, yachts, five-star dining excursions, mountaineering tutors, personal trainers, fine clothing, funding personal pension plans and health insurance, owners merely have to work harder, take second jobs or simply deplete their equity to bankroll the industry's insatiable appetite.
Frequently, mutual ties between the management company and boards of directors can be cemented by the exchange of cheap trinkets such as glass vases filled with mints, bouquets of flowers with thank-you notes containing pre-paid dinners at a local restaurant or theatre tickets and occasional boxes of chocolates. As the stakes get raised, more substantial gifts come into play such as vacations, airplane tickets, trips, cruises, garage doors, and SO much more. The author of this article was offered a three-week first-class luxury cruise in exchange for hiring a particular management company. Needless to say, the offer was rejected.
CONTROVERSY!
The "industry" blames its continued demise on "hate." Not their "incompetence" or their "greed," or their "dishonesty," but, "hate." Refusing to take responsibility for its actions, this is an industry that has all but demolished the concept of "affordable housing" as it was once known and caused countless sections of law to be repealed or written to better favor vendor-interlopers; prevented owners from suing their associations to vindicate their rights; forced arbitration down our throats; caused monthly fees to go up by mandating association registration with the Secretary of State and other agencies; created monopolies where none existed before; eliminated a variety of choices for owners; file amicus briefs against owners who are struggling to hold their own in a court of law; and silencing voices of opposition.
In an excellent retort by Mr. George Staropoli, titled, “Community Associations Institute Reinvents Democracy, a Response to CAI/CEO criticism of Homeowner Advocates" he succinctly posits these queries: "Is it reasonable to oppose restoration of the homestead exemption? Or reasonable to oppose due process protections by independent tribunals? Or reasonable to seek draconian foreclosure measures against homeowners that amount to excessive punishments and a constitutional violation of the 8th Amendment. No, it's only reasonable if your objective is the perpetuating a defective, authoritarian, un-American form of governance throughout the land."
When the "industry" wants to continue its stranglehold over owners, it is considered to be "for the good of the association." When an owner attempts to protect his assets, he is considered to be "hateful," "petty," and "vindictive."
Make no mistake, the concept of a homeowners association is a sociological and economical disaster. It is a failure perpetuated by myths created and sustained by an industry that is fearful it's free ride on the backs of our personal income, will cease.
CORRUPTION!
Corruption in homeowner associations is expensive, unchecked, and rampant. In theory vendors pretend they are there to alleviate time constraints and take the burden off a volunteer board. But, because it has become so lucrative, they instead create moneymaking opportunities for themselves.
The "industry" interlopers who have supposedly made careers of "serving" so-called "communities" add to the various types of interference associations face today. These unmitigated influences, which trickle down upon owners across the country are costing countless millions of dollars in poor decisions made by boards under the spell of outside vendor perks.
Sabotaging homeowners -- Keep this story depicting an anatomy of corruption in mind the next time your home is headed for a holiday season foreclosure. It is December and association management companies are ratcheting up their holiday spirit by screwing over a few extra homeowners. In the following instance, the owner first learns purely by chance that he has a lien on his property and is in danger of foreclosure. He immediately contacts the board only to be referred to the management company who in turn informs him that a "notice," "copy of a bill of what he owed," and "several letters informing him of the situation had been sent to him." None of which had been actually received by the owner. Despite his protests, he was told it was "out of the association's hands" and "it's with a foreclosure company" and now he "has to deal with the attorneys." When attempting to contact the attorneys all he was given was a post office box and an answering service telephone number with a recording saying that the office was closed for the December holidays and would reopen sometime in January next year. As it was too late to get the payment to a post office box in order to save his property he tracked down the foreclosure company. Just imagine how difficult that is to accomplish particularly during this time of year! He showed up just in the nick of time only to be told by a receptionist, "how the hell did you find us?" Then the owner was told, that the receptionist was instructed NOT to accept any payments from owners and that the boss was on a ski trip out of the country and that the office was "technically closed." The owner said, "Too damn bad!" and with that, threw his payment on the desk and left. Fortunately the owner had the foresight to be accompanied by a credible witness and because of this the company could not deny receiving payment. He avoided foreclosure. Happy Holidays.
Though some may believe that California's legislature is headed in a direction away from its past bad decisions and leaning toward the views of property owners, we are reminded that the Devil's Dictionary defines the word "lawyer" as "One skilled in circumvention of the law."
~*~
Sunday, June 4, 2006
BUYER BEWARE, PART II: THE ILLUSION OF “PROPERTY” OWNERSHIP
BUYER BEWARE, PART II: THE ILLUSION OF “PROPERTY” OWNERSHIP
Donie Vanitzian, BA, JD, Arbitrator
(c)2006
Why would anyone buy a home with all the trappings of property ownership, mortgage, taxes, upkeep, and not have full control over it, and then risk losing it through non-judicial foreclosure? If you own a condominium, townhouse, or single-family dwelling located in a common interest development, your ownership is a risk because it is “inferior” to all other types of real property ownership. Even with taxes paid and no mortgage, it does not mean you completely “own” that property. In such developments, the owner’s asset basically consists of nothing more than the “space inside” his home and a “fractional interest in common” with all other owners.
Even if your home is damaged or destroyed (as with the Northridge earthquake) you still cannot escape liability and payments because a common interest development exists in “perpetuity” (forever) and, California courts have ruled such property cannot go bankrupt because every owner must keep paying.
An association can dominate your lifestyle, control resales, interfere with your livelihood, and curtail your activities. Just because you can afford to move “in” does not mean you can afford to “stay” or that you can afford to move “out.” Most buyers are not advised that they must have a steadily increasing income to keep up with escalating costs and trumped up fees when purchasing or refinancing. Owners who cannot afford to pay their association’s demands for any increased fees and assessments that can cost thousands of dollars per owner cannot stay. Make no mistake: all the cash capital in the association’s bank accounts is generated from each owner.
Certified Personal Financial Planner and Real Estate Broker, Thomas Foster of Marina del Rey, explains, “Once the deception of association-type living is uncovered, the obvious next move is to immediately cut your losses and get out of there. It is only then, that owners discover the trap they’re in. Moving from a deed-restricted property to one without restrictions of similar size and location may at first appear to be a ‘like-for-like exchange’ however, when it comes to pricing that’s where the similarity ends. The fact remains that unrestricted property is much more valuable than it’s restricted counterpart.”
The big question for owners who bought into this “affordable living fraud” is; can they afford the extra cost and higher property taxes to break out of the trap? Owners brag, “My home has appreciated hundreds of thousands of dollars.” That elation is short-lived. Mr. Foster explains “that appreciation is somewhat irrelevant if it is not enough for you to make a like-for-like exchange in real time. Compared to other ‘real’ real estate, your deed-restricted title is immediately devalued because you are unable to move into a comparable ‘freehold house’ for the same money in the same area. When defining appreciation, the owner must subtract all assessment payments made during ownership to see the real picture.”
Owners in this environment are burdened with a double financial risk because they essentially relinquish control of their assets to an elected board of directors. Mr. Foster cautions, “The owner’s financial crisis differs substantially from the association’s financial crisis. An association always has ‘cash requirements,’ and by law it can raise cash on demand from each owner. Even with this ability, these communities can remain in a constant flux of not being able to meet its liabilities. This means that a ‘gain’ for the association results in a corresponding ‘loss’ for each owner, subjecting seniors in particular to potential personal financial distress.”
Raising owner fees to replenish the association’s operating accounts in order to stay solvent can go on indefinitely. Environments like these are time-consuming and expensive, with little or no tangible return for the owner. Trying to protect yourself takes extensive planning and the financial means to sustain oneself during this time, with no guaranteed success. Every problem the owner encounters steals income, days, weeks, months, and years away from their life -- none can be recovered.
------------------------------------------------------------
--Ms. Vanitzian, BA, JD, is an Arbitrator, commercial property manager and certified mediator with the L.A. City Attorney's Dispute Resolution Program. She authors the Los Angeles Times Associations column and is a UCLA Extension Professor for the course, Protecting Yourself in Common Interest Living. Her book, Villa Appalling! Destroying the Myth of Affordable Community Living, is touted as the "Ultimate Buyer Beware" guide. Contact: VillaAppalling@earthlink.net or write P.O. Box 11843, Marina del Rey, CA 90295.
Donie Vanitzian, BA, JD, Arbitrator
(c)2006
Why would anyone buy a home with all the trappings of property ownership, mortgage, taxes, upkeep, and not have full control over it, and then risk losing it through non-judicial foreclosure? If you own a condominium, townhouse, or single-family dwelling located in a common interest development, your ownership is a risk because it is “inferior” to all other types of real property ownership. Even with taxes paid and no mortgage, it does not mean you completely “own” that property. In such developments, the owner’s asset basically consists of nothing more than the “space inside” his home and a “fractional interest in common” with all other owners.
Even if your home is damaged or destroyed (as with the Northridge earthquake) you still cannot escape liability and payments because a common interest development exists in “perpetuity” (forever) and, California courts have ruled such property cannot go bankrupt because every owner must keep paying.
An association can dominate your lifestyle, control resales, interfere with your livelihood, and curtail your activities. Just because you can afford to move “in” does not mean you can afford to “stay” or that you can afford to move “out.” Most buyers are not advised that they must have a steadily increasing income to keep up with escalating costs and trumped up fees when purchasing or refinancing. Owners who cannot afford to pay their association’s demands for any increased fees and assessments that can cost thousands of dollars per owner cannot stay. Make no mistake: all the cash capital in the association’s bank accounts is generated from each owner.
Certified Personal Financial Planner and Real Estate Broker, Thomas Foster of Marina del Rey, explains, “Once the deception of association-type living is uncovered, the obvious next move is to immediately cut your losses and get out of there. It is only then, that owners discover the trap they’re in. Moving from a deed-restricted property to one without restrictions of similar size and location may at first appear to be a ‘like-for-like exchange’ however, when it comes to pricing that’s where the similarity ends. The fact remains that unrestricted property is much more valuable than it’s restricted counterpart.”
The big question for owners who bought into this “affordable living fraud” is; can they afford the extra cost and higher property taxes to break out of the trap? Owners brag, “My home has appreciated hundreds of thousands of dollars.” That elation is short-lived. Mr. Foster explains “that appreciation is somewhat irrelevant if it is not enough for you to make a like-for-like exchange in real time. Compared to other ‘real’ real estate, your deed-restricted title is immediately devalued because you are unable to move into a comparable ‘freehold house’ for the same money in the same area. When defining appreciation, the owner must subtract all assessment payments made during ownership to see the real picture.”
Owners in this environment are burdened with a double financial risk because they essentially relinquish control of their assets to an elected board of directors. Mr. Foster cautions, “The owner’s financial crisis differs substantially from the association’s financial crisis. An association always has ‘cash requirements,’ and by law it can raise cash on demand from each owner. Even with this ability, these communities can remain in a constant flux of not being able to meet its liabilities. This means that a ‘gain’ for the association results in a corresponding ‘loss’ for each owner, subjecting seniors in particular to potential personal financial distress.”
Raising owner fees to replenish the association’s operating accounts in order to stay solvent can go on indefinitely. Environments like these are time-consuming and expensive, with little or no tangible return for the owner. Trying to protect yourself takes extensive planning and the financial means to sustain oneself during this time, with no guaranteed success. Every problem the owner encounters steals income, days, weeks, months, and years away from their life -- none can be recovered.
------------------------------------------------------------
--Ms. Vanitzian, BA, JD, is an Arbitrator, commercial property manager and certified mediator with the L.A. City Attorney's Dispute Resolution Program. She authors the Los Angeles Times Associations column and is a UCLA Extension Professor for the course, Protecting Yourself in Common Interest Living. Her book, Villa Appalling! Destroying the Myth of Affordable Community Living, is touted as the "Ultimate Buyer Beware" guide. Contact: VillaAppalling@earthlink.net or write P.O. Box 11843, Marina del Rey, CA 90295.
Tuesday, May 30, 2006
BUYER BEWARE, PART I: THE ILLUSION OF "PROPERTY" OWNERSHIP
BUYER BEWARE, PART I: THE ILLUSION OF "PROPERTY" OWNERSHIP
Donie Vanitzian, BA, JD, Arbitrator
(c)2006
If your idea of home ownership involves freedom of choice, control over your assets, the ability to alter or upgrade your property using contractors you choose without first having to ask permission; then do not buy property in a common interest development with a deed-restricted title. Even relatively simple decisions such as putting up a for-sale sign in your front yard or having a garage sale can require written permission resulting in delay after delay.
In California, ownership of a townhome, condominium, co-operative, including high-rise luxury condominiums, means you own an "undivided interest in-common in a portion of real property coupled with a separate interest in space called a unit;" the "space" within your walls can "be filled with air, earth, or water." Owners of deed-restricted free-standing homes do not fare much better because they don't really "own" the land their home sits on and they too, are subject to the same rules and regulations that condominium owners are burdened with. Before purchase, always ask if it is located in a "common interest development" and if it has a "homeowners association." If an association exists, there will also be a "board of directors," and "covenants, conditions, and restrictions," otherwise known as "CC&Rs."
An "association" is a fictional entity. Whether incorporated or unincorporated, that entity is not a democracy and it is certainly not a "home" in the traditional sense. Compared to freehold ownership, this type of property ownership places titleholders in an inferior position. Though it may seem unclear and confusing figuring this out, owners must understand the relevance of their inferior status. Treat the association as a corporate fiction created to operate a business, the business being the "association." Know too, that it is impossible to reason with a "fiction."
Mr. Karen Sarkisyan, a Realtor-Associate with Century 21 P & S Realty, Los Angeles, is a seventeen-year veteran selling real estate. Explaining to buyers eager to purchase deed-restricted property "this means you have also simultaneously purchased a 'business' run by people [association board of directors] you have never met, didn't vote for and may have nothing in common with."
In addition to the upkeep of your own property, you are responsible for funding the association's bank accounts and paying for repairs and maintenance of common property. Instead of paying for only one roof (your roof), you may have to share the cost of paying for 100 or 1,000 roofs. If the board and management keep the association mired in unnecessary or costly perpetual maintenance schemes, all owners must pay for those oft-times poor decisions, even if they disagree with them.
The industry has made it so complicated to own in a deed-restricted project, that the owner’s near-perfect purchase of a home would require being an attorney, psychiatrist, police officer, accountant, professional engineer, plumber, electrician, roofer, construction expert and knowledgeable of all state and local building codes and laws, because this is what you need in order to protect yourself.
No one forces buyers to "Sign here and buy this property!" It is assumed that the purchaser understands what he is buying and does so voluntarily. Even if the owner claims he did not know of those documents, the law presumes the owner knows of the existence and content of these documents because they are "recorded" on the title. Mr. Sarkisyan warns, "Once the buyer signs that they accept these terms, they cannot come back and say they did not know what they were getting into."
In addition to "recorded" documents there are "other" documents you may know nothing about. Such rules may stop you from renting out your home, having guests stay overnight, leaving your trashcan out, leaving your lights on past a particular hour, doing laundry after a certain time, color of your plant pots, swimming in the pool, and so much more. Breaking rules will cost you money through fines and missing an assessment payment can cost you your home. Through non-judicial foreclosure, a homeowners association can foreclose on your property without ever stepping foot in court. In California, owners have been known to lose their homes for owing the association as little as $142.00.
An association board allowed a 120-member swim team to dominate the swimming pool every summer and spring and exclude owners from use. "I cringe every time I hear a buyer say, 'it's such a nice, clean, safe, neighborhood and the neighbors seem nice too.' They have no idea about the liabilities lurking beneath that facade," says Alisa Ross of Irvine who was forced to expend tens of thousands of dollars of her own money to sue her association in order for her children to be able to use the swimming pool; the maintenance of which was included in her homeowner dues.
“We pay our money and keep our mouths shut. Never in a million years did we think we would be spending our golden years mired in paperwork and excessive fees, and under constant threat of being sued,” Corkey Eley, Leisure World, Laguna Woods. During a dispute that began over the association's accusation that his window was "leaking," Gerry Brace of Play del Rey, says, "every single nightmare that I can remember that I had for over a year was about my homeowner association. Sometimes, I would wake and find reality was worse than the nightmare had been!" In another case, a $10 bamboo shade nearly cost one owner her home, her life savings, and drove her to the brink of suicide.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
--Ms. Vanitzian, BA, JD, is an Arbitrator, commercial property manager and certified mediator with the L.A. City Attorney's Dispute Resolution Program. She authors the Los Angeles Times Associations column and is a UCLA Extension Professor for the course, Protecting Yourself in Common Interest Living. Her book, Villa Appalling! Destroying the Myth of Affordable Community Living, is touted as the "Ultimate Buyer Beware" guide. Contact Ms. Vanitzian at: VillaAppalling@earthlink.net or write P.O. Box 11843, Marina del Rey, CA 90295.
Donie Vanitzian, BA, JD, Arbitrator
(c)2006
If your idea of home ownership involves freedom of choice, control over your assets, the ability to alter or upgrade your property using contractors you choose without first having to ask permission; then do not buy property in a common interest development with a deed-restricted title. Even relatively simple decisions such as putting up a for-sale sign in your front yard or having a garage sale can require written permission resulting in delay after delay.
In California, ownership of a townhome, condominium, co-operative, including high-rise luxury condominiums, means you own an "undivided interest in-common in a portion of real property coupled with a separate interest in space called a unit;" the "space" within your walls can "be filled with air, earth, or water." Owners of deed-restricted free-standing homes do not fare much better because they don't really "own" the land their home sits on and they too, are subject to the same rules and regulations that condominium owners are burdened with. Before purchase, always ask if it is located in a "common interest development" and if it has a "homeowners association." If an association exists, there will also be a "board of directors," and "covenants, conditions, and restrictions," otherwise known as "CC&Rs."
An "association" is a fictional entity. Whether incorporated or unincorporated, that entity is not a democracy and it is certainly not a "home" in the traditional sense. Compared to freehold ownership, this type of property ownership places titleholders in an inferior position. Though it may seem unclear and confusing figuring this out, owners must understand the relevance of their inferior status. Treat the association as a corporate fiction created to operate a business, the business being the "association." Know too, that it is impossible to reason with a "fiction."
Mr. Karen Sarkisyan, a Realtor-Associate with Century 21 P & S Realty, Los Angeles, is a seventeen-year veteran selling real estate. Explaining to buyers eager to purchase deed-restricted property "this means you have also simultaneously purchased a 'business' run by people [association board of directors] you have never met, didn't vote for and may have nothing in common with."
In addition to the upkeep of your own property, you are responsible for funding the association's bank accounts and paying for repairs and maintenance of common property. Instead of paying for only one roof (your roof), you may have to share the cost of paying for 100 or 1,000 roofs. If the board and management keep the association mired in unnecessary or costly perpetual maintenance schemes, all owners must pay for those oft-times poor decisions, even if they disagree with them.
The industry has made it so complicated to own in a deed-restricted project, that the owner’s near-perfect purchase of a home would require being an attorney, psychiatrist, police officer, accountant, professional engineer, plumber, electrician, roofer, construction expert and knowledgeable of all state and local building codes and laws, because this is what you need in order to protect yourself.
No one forces buyers to "Sign here and buy this property!" It is assumed that the purchaser understands what he is buying and does so voluntarily. Even if the owner claims he did not know of those documents, the law presumes the owner knows of the existence and content of these documents because they are "recorded" on the title. Mr. Sarkisyan warns, "Once the buyer signs that they accept these terms, they cannot come back and say they did not know what they were getting into."
In addition to "recorded" documents there are "other" documents you may know nothing about. Such rules may stop you from renting out your home, having guests stay overnight, leaving your trashcan out, leaving your lights on past a particular hour, doing laundry after a certain time, color of your plant pots, swimming in the pool, and so much more. Breaking rules will cost you money through fines and missing an assessment payment can cost you your home. Through non-judicial foreclosure, a homeowners association can foreclose on your property without ever stepping foot in court. In California, owners have been known to lose their homes for owing the association as little as $142.00.
An association board allowed a 120-member swim team to dominate the swimming pool every summer and spring and exclude owners from use. "I cringe every time I hear a buyer say, 'it's such a nice, clean, safe, neighborhood and the neighbors seem nice too.' They have no idea about the liabilities lurking beneath that facade," says Alisa Ross of Irvine who was forced to expend tens of thousands of dollars of her own money to sue her association in order for her children to be able to use the swimming pool; the maintenance of which was included in her homeowner dues.
“We pay our money and keep our mouths shut. Never in a million years did we think we would be spending our golden years mired in paperwork and excessive fees, and under constant threat of being sued,” Corkey Eley, Leisure World, Laguna Woods. During a dispute that began over the association's accusation that his window was "leaking," Gerry Brace of Play del Rey, says, "every single nightmare that I can remember that I had for over a year was about my homeowner association. Sometimes, I would wake and find reality was worse than the nightmare had been!" In another case, a $10 bamboo shade nearly cost one owner her home, her life savings, and drove her to the brink of suicide.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
--Ms. Vanitzian, BA, JD, is an Arbitrator, commercial property manager and certified mediator with the L.A. City Attorney's Dispute Resolution Program. She authors the Los Angeles Times Associations column and is a UCLA Extension Professor for the course, Protecting Yourself in Common Interest Living. Her book, Villa Appalling! Destroying the Myth of Affordable Community Living, is touted as the "Ultimate Buyer Beware" guide. Contact Ms. Vanitzian at: VillaAppalling@earthlink.net or write P.O. Box 11843, Marina del Rey, CA 90295.
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