CONDOGATE: DYING TO GET OUT!

CONDOGATE: DYING TO GET OUT!

By Donie Vanitzian, BA, JD, Arbitrator
(c)2006Vanitzian


Your Enemies Are Your Neighbors

An old Chinese proverb says, "If you sit by a stream long enough, eventually you will see the bodies of your enemies float by."

For those who own in a common interest development, today's adaptation has become, "If you own your unit long enough, your enemies will see to it that you leave in a body bag."

Figuratively speaking, if you don't leave, your home may become that body bag. If a homeowner's residence is subject to an association, a board of directors, covenants, conditions, and restrictions, then that homeowner has a deed‑restricted property and immediately that owner's asset is at risk. Whether incorporated or unincorporated, a homeowners association is not a democracy nor was it intended to be one and, it is certainly not a "home" in the traditional sense.

Your deed‑restricted home is in fact part of a business operated under the umbrella of a corporation which you and the other owners bankroll and in which you have little or no say unless and perhaps, you are a member of the board. Because it is a voluntary purchase and no one puts a gun to the buyer's head saying, "Sign here and buy this condo," the rationalization behind the concept is that the purchaser understands what he is buying into and does so voluntarily.

Hysterical predictions aside, the industry's intended consequence for those who own this type of housing is surprisingly simple. Once you make an offer and sign on the dotted line, pay your deposit, and close escrow, membership into the association is capable of effectively paralyzing you in unimaginable ways.

Strangulation by Deed‑Restriction

It takes very little to make living in this environment, unbearable. Some owners have likened their living in an association with a board of directors to a type of slow torture. E. M. Cioran describes such actions in this way: "Torment, for some men, is a need, an appetite, and an accomplishment."

After experiencing this type of living, many owners comment, "that nothing, absolutely nothing will ever be the same again." Titleholders are forced to live by rules some of which they didn't know existed and had no part in making. As one owner puts it, "When someone told me that neighbors I thought I could trust would lie to me, and that I would fall prey to sabotage and victimization, I didn't believe it. But it was true."
In this type of community many owners will be forced into situations that normal people with "real" lives on the outside, wouldn't give a second thought to. While you're fighting your board about books, records, accountings, insurance policies, meetings, assessments, fines, penalties, liens, cracked concrete, roof leaks, mold, plumbing pipes, and incompetent, malicious management personnel and association attorneys, your friends on the outside, will be indulging in other light‑hearted enjoyments ranging from dining at the theater to eating a Dodger Dog at the game.

While you're driving to and from Kinkos day and night, photocopying and filing association documents in order to defend yourself, your friends will be playing golf or tennis, driving through the countryside smelling wildflowers or getting their nails done. Be prepared to start buying file cabinets to park your growing stacks of paper.

As one owner put it, "My most productive years were wasted chasing down board meetings. I didn't realize just how much that was costing me, until I lost my job."

Bertrand Russell once said, "Most people would rather die than think: many do." As you watch the minute‑by‑minute depletion of your life savings, and worry what the hell you will do to support yourself once your money runs out, your friends will be sunning by the pool, gardening nasturtiums, playing with their nieces, nephews, and grandkids, getting dressed up for a Halloween party, or throwing confetti in the air on New Years Eve. You're just too damn tired and probably depressed to have a good time because your house is killing you. In fact, you've likely never looked nor felt worse in your life.

But I Can't Afford to Move: You're Right!

A deed‑restricted property is the kiss of death. Once the folly of association living is discovered then the obvious next move is to immediately cut your losses and get the "hell out of there." It is then that you discover the sting in the tail. 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 is that unrestricted property is much more valuable than it's restricted counterpart. And the big question for owners who bought into the "affordable living fraud" is; can they afford the extra cost and higher property taxes to break out of the condo trap?

The test: Even though the majority of owners are prevented from moving into a "comparable" property because of their restricted titles, one can still hear owners bragging, "My condo has appreciated hundreds of thousands of dollars throughout the years." That appreciation however, 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.

Don't Expect an Intervention

There is no realistic "Condo 101" course for buyers. If such a course existed, there would be no buyers. The real‑life course begins when the buyer signs the sales agreement or makes an offer without reading it or understanding what it is that they are buying. "The sales person told us that this is a good deal, its affordable, and all the neighbors are volunteers pitching in," says one owner, "but no one told us, neighbors would pitch in to destroy us."

One senior explains, "I was told, the only thing I had to do was pay this really small monthly fee that takes care of everything. I was led to believe this was the type of freedom I was looking for. They told me I would be left alone to do whatever I wanted and that the place basically ran itself. Looking back, boy was I stupid, just plain stupid. If I had been a drug addict at least someone would have given me an intervention, but here, I've got nothing."

It's Not the Condo That's Deteriorating ‑ It's You!

It is no wonder that owners say they're "worn out and broke." As the association's special brand of protracted venom painfully and hopelessly numbs your senses and dulls your mental capacities as to what you are missing in life "outside" those gates, you become acutely more aware that on the "inside" if YOU don't fight for yourself, no one else will.

It is really hard work protecting yourself and your personal assets in a corporate environment like this. Successful survival consists of conforming, keeping one's mouth shut, and being submissive to over exuberant or obnoxious boards, and even if you do that, it will not protect you from rising assessments and threats from association boards and their attorneys or from foreclosure. It also will not protect you from having to fund irresponsible beautification projects dreamed up usually by stupid boards who are pressured by financially motivated management companies and their vendors. As one ex‑management company owner laughingly said, "don't mind us, we're just here to drain your bank account."

Death Is Not the End ‑ There Remains the Litigation

Those words from Ambrose Bierce say it all. Should an owner's problem escalate into a lawsuit against the association or its representatives: be prepared to fight that war to the end, even if it's the end of YOU. With regard to associations, more often than not, lawyers and lawsuits create a bigger drain on the titleholder's personal resources than the original problem probably did.

In the words of Jean Giraudouz, "You're an attorney. It's your duty to lie, conceal and distort everything, and slander everybody."

Too many owners make the fatal error in believing they can "get even" or "get justice" by suing the management company or the board of directors. However, that's a really hard thing to do when all the cards AND the laws are stacked against you. The board or its management company has custody and possession of all the evidence. If you have not made a demand prior to litigation to copy those documents, your chances of ever seeing them once you sue, is substantially diminished. Even if you make a demand for those documents after litigation commences, what will you compare them to? The danger of entering into a lawsuit is that it has the potential of taking on a life of its own and once the titleholder enters litigation it may be extremely difficult to get out of it.

The majority of volunteer association directors have Officers and Directors insurance that is paid for by the association. Typically, this means that if the board is sued, the insurance company provides attorneys to defend them. Therefore, owners who sue their board or association are really suing the association's insurance company. Some of the toughest, meanest, most vicious attorneys on the planet work for insurance companies and they are trained to tear the jugular right out of your bank account.

Even if the board has insurance the owner is lumbered with paying their own attorney's fees and a percentage of costs for the board's representation. This money is usually obtained through the imposition of increased dues and assessments, special assessments, and emergency assessments. In some states the board can deplete the reserve accounts to fund litigation.

Be careful of prejudicing your case because you think you know it all, but in reality, you don't have a clue, and worse yet, you haven't figured out how badly you may have already prejudiced your case or how lethal representing yourself will be in a situation like this. That's just too scary to think about right now so you keep trying to forget about it. Worse: you don't yet realize how bad it will be when you hire your family friend or long‑time lawyer to help you. What that lawyer likely does not know, is that compared to what he will be up against, he is a sand flee in an elephant's ass. But at least you've got him until your money dries up. By the time he figures out that he hasn't helped your case, you'll be broke, he'll still be billing you, and you will feel as if you are one step closer to a pauper's grave.

The Corporate‑Living Body Bag

With nothing said of the disproportion or absurdity of foreclosing on a person's home for a pittance of its worth merely because the owner allegedly missed a lousy assessment payment, the headlines continue to read: "Condo Sales Up! Up! Up!" Meanwhile the board's emotional tripe continues to be documented in the minutes ‑‑ the same minutes they will use to destroy you. During this time, boards try to sound professional on paper by presenting industry hopefuls to speak on their expertise on what went wrong, where, and how the board will substantiate spending more money ‑ your money ‑ on bad ideas.

It is not difficult to get people to serve on a homeowner association board of directors. Finding individuals flattered by the attention and euphoric in their unbridled power has become commonplace. To get elected, most promise great things but nearly all end up expanding their role beyond what is required by law. In this arena, the integrity of governance and management is bastardized.
There is also nothing intellectually stimulating about a position on a homeowner association board. Apart from its capacity to operate in an autocratically cutthroat manner, it is nevertheless a no‑brainer and a "jump‑on‑the‑bandwagon" type of position. The association directors' elevated status compared to that of the other titleholders is at the peril of those owners who are not in a position to authenticate the board's actions or to oversee the collective finances in any meaningful manner. Dangers of abuse are both immediate and costly for owners. Consequences of this anomaly in the law results in a devastating outcome to those members and property owners who are unable to adequately protect their interests and assets.

Too many owners of deed‑restricted property located in California are our new urban poor and unlike Oliver Twist, there are no wonderful Dickens characters waiting in the wings to save them. Instead, these owners are stuck clinging to the false hope that maybe, just maybe "one" law will be passed to benefit them and not the industry. As California courts continue to grant deference to decisions made by these association boards, the sociological failure in housing is allowed to proliferate and diminish the titleholder's roll in the oversight of their own property.

Hypocrisy of Majority Rule

The smart owner is the one whose intuition is on high‑speed working to alert him to cut his losses right now. Not tomorrow. Not next week. But right now. He trusts his intuition and fully understands that his fiscal and emotional survival depends on it.

As the board's piffle dribbles on, how many times has your board said, "The majority has spoken?" Board members that are outnumbered by the seated majority are worthless. Their hands are tied and their contributions are discounted. Once the power has been usurped, the mechanism already in place for governance feeds only those who are in power while disenfranchising all others. Association‑related wrongdoing is predictably unchecked and when caught, excused away. It is virtually the new "Wild West." Though in the old Wild West, "due process" was a bullet. Here, it is fines, lawsuits, foreclosure, and in some cases, that body bag.