Reader Questions - Who Is Watching The HOA?

Mr. Richardson,

Is there an oversight/audit department on a state level that oversees the management of an association? I am finding contradicting and wrong information in the minutes.

Thank you, M.H, Laguna Woods

 

Kelly:

Is there a governing body that oversees all HOA groups?  Ours is not enforcing its CC&Rs. What can we do besides sue them? 

L.T., Rancho Bernardo

 

Dear MH and LT:

Some states, including Nevada, Colorado, and New Jersey, have agencies dealing with homeowner association problems, but statistically none of these three states are in the “top 10” in terms of total number of HOAs. California has about 50,000 HOAs, more than 2 ½ times the total of those three states combined, yet has no state agency enforcing any requirements for HOAs or their managers (Statistics Courtesy of Foundation for Community Association Research 2018 Factbook).

The Department of Fair Employment and Housing will handle discrimination claims, but outside of that, California HOA owners with errant HOAs or managers have only one place to turn to – the courts. The Davis-Stirling Act has many provisions providing for a private right of action and an award of attorney fees to the successful homeowner. The door swings both ways on the issue of enforcement, as HOAs generally also rely on litigation to enforce their governing documents (hopefully only as a last resort), seeking attorney fees under Civil Code 5975(c).

One may wonder why the state with the largest number of HOAs of any state other than Florida (also approximately 50,000) has no resource to correct errant HOAs other than the courts. The answer may well be in the sheer numbers involved. The task of licensing California’s thousands of part and full-time professional managers would require a large new sector in the Department of Real Estate. Harder still is the idea of funding an even larger department to regulate 50,000 associations and the 13 million residents living in them.

Litigation is a poor method to correct errant HOAs. A court can order association compliance with a specific requirement, but it cannot compel an HOA to improve its governance. Experience has shown the toll of litigation on communities is much more than just financial – the repercussions and relationship disruption can affect the community cohesiveness for many years.

The best source for correction of a poorly running association? The answer lies with the membership. When the members’ dissatisfaction level becomes sufficient to override their normal complacency, a new board can be elected.

Associations can improve their operation by electing directors who will take the time to learn what the governing documents and law require, and who will govern the community as diligent servant leaders. Electing directors devoid of personal ego and agendas and who simply want to do things correctly is far better than all the court orders in the world. Encourage increased volunteer involvement. Demand that directors take courses from the Community Associations Institute or other local education providers to learn better how to serve the community’s needs and insist the HOA hire credentialed managers.

Instead of a massive new state bureaucracy regulating HOAs and managers, or filing expensive and divisive lawsuits, the best approach is to increase participation and implement higher standards of involvement, governance, and service to improve associations.

Sincerely, Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.