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.

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--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.