Man, you have to give this woman and her kids (and grandson at Harvard) credit for working their asses off on this one. A growing housing trend Foreclosure suits filed by homeowners groups add up By MIKE SNYDER Copyright 2002 Houston Chronicle The number of foreclosure lawsuits filed annually by Houston-area homeowners associations tripled between 1985 and 2001, according to a database compiled from court records by local activists. This trend is attributed variously to lawyers' seizing on a lucrative speciality or to the growing prevalence of mandatory homeowners groups. It occurred amid growing controversy over tactics the groups use to collect past-due fees and enforce rules, notably in the case of an 83-year-old widow, Wenonah Blevins, who lost her $150,000 home for a time last year over an $814.50 delinquency. Partly in response, a state Senate subcommittee in January began public hearings on homeowners associations. The database -- a record of more than 15,000 cases painstakingly assembled by a 71-year-old Houston woman and her two sons -- also shows that most foreclosure lawsuits are filed in neighborhoods where the median home value is less than $100,000. And it shows that a handful of Houston attorneys who specialize in such cases generated thousands of the lawsuits. While few of the cases actually lead to people losing their homes through foreclosure, activists say the threat often creates pressure for homeowners to pay thousands of dollars in legal fees and other costs based on relatively small debts. "What they're doing is crazy, and there is no control," said Varalyn Williams, a Houston financial analyst who was sued over a $300 association fee that she said has grown to more than $2,000 through legal bills. "They can set their amount" of legal fees, said Williams, who settled the lawsuit late last week for an undisclosed amount. "They are judge, jury and executioner." Association representatives say they need the authority to file for foreclosure and recover fees in order to maintain income for community services and to enforce rules that make neighborhoods more desirable. Most associations use foreclosure actions only as a last resort, they say. "I think there is kind of an impression that associations relish the idea of people losing their homes, and I don't think that's true," said Michael T. Gainer, a Houston attorney ranked in the database as the area's second most active in filing foreclosure lawsuits. Over the past three years, Houston resident Beanie Adolph and her two sons have spent hundreds of hours assembling data on foreclosure lawsuits from public records. They have posted summaries and analyses on the Internet at http://hoadata.org. As their findings become more widely known among activists and policymakers, Adolph and her sons hope they will influence the debate over the legal tactics used by homeowners' groups. The Legislature adopted a measure last year intended to provide protections against abuses, but many activists and public officials say more reforms are needed. "What we're fighting is all the attorney fees that have forced so many into bankruptcy," Adolph said. The database shows that the annual number of foreclosure lawsuits stayed below 500 each year in the mid- to late 1980s, from a low of 302 in 1987 to a high of 496 in 1985. A steady increase began in 1991, with the number exceeding 1,000 by 1994 and peaking at 1,540 in 2001. State Sen. Jon Lindsay, R-Houston, who heads the subcommittee investigating the issue, said the increase probably reflects lawyers' growing recognition of the fees they can earn in such cases. "I think there are always a lot of lawyers out there that are looking for new venues to get into," Lindsay said. "In this situation, to some degree, they have a blank checkbook," because of laws that allow homeowners groups to recover legal fees from the people they sue. Sandy Denton, executive director of the First Colony Community Services Association, offered another possible explanation. "Certainly there's been a large growth in the number of homes within community associations," said Denton, whose organization represents some 9,000 homes in the Sugar Land-Missouri City area and is one of the largest homeowners groups in the country. "Proportionately, that's going to be a component of the increase." While most Houston neighborhoods have some type of civic association, the public policy debate focuses on associations in which membership is mandatory. These homeowners must pay annual fees and abide by rules relating to design, land use and even lifestyle standards. A legislative panel that studied the issue in 1998 reported that homeowners associations have "banned political signs, children, spouses below a certain age, pets above a certain weight, day-care centers, the use of back doors, pickup trucks and even goodnight kisses on front steps." Attorney Gainer said it is important to consider the number of foreclosure lawsuits filed in the context of the many thousands of homeowners who belong to such groups. "I can't really tell you why those increases took place," Gainer said. "But even if you have 1,500 foreclosure lawsuits, that's a small percentage of the total number of homes in restricted subdivisions." Gainer, who testified before Lindsay's subcommittee in January, is identified in the database as having filed 928 foreclosure lawsuits, the second-highest total of any local lawyer. Gainer said the figure is low; he estimated he has filed 1,400 to 1,500 suits in Harris County district courts. Adolph and her sons collected the data from a legal publication called the Daily Court Review, from Harris County databases available on the Internet and from county district court records. Adolph, who also testified at the Senate subcommittee hearing, said she became interested in the topic after she helped block an effort to organize a mandatory homeowners association in her neighborhood. As she learned more about the legal authority of homeowners groups, Adolph said, she became increasingly angry. "To me, this was so un-American it just riled me from my toes up," she said. She obtained copies of several thousand foreclosure lawsuits from Geneva Kirk Brooks, an activist who has been fighting for limits on the groups' authority for years. Adolph started going through the cases by hand, tabulating information on index cards and plotting locations on a map. "I worked day and night going through files," Adolph said. "Sometimes I would fall asleep and wake up when my pen fell out of my hand and hit the floor." The effort became more high-tech when Adolph enlisted the aid of her sons, attorney Tom Adolph, 45, and engineer Bob Adolph, 46. They began systematically searching court records for all cases filed by homeowners' groups that could lead to foreclosure. A third generation of the Adolph family got involved when Bob's son, Chris, did research on the subject for his doctoral studies in political science at Harvard University. None of the Adolphs has even been involved in a legal dispute with a homeowners association. They said they were motivated solely by their desire to correct what they see as a grave injustice. "Neighborhoods are supposed to be about people helping each other," Tom Adolph said. "Instead of helping a person in need, these groups are making their problems worse." He said the Legislature should revoke the associations' foreclosure authority or at least require a neighborhood vote before a foreclosure lawsuit can be filed. To analyze the value of homes targeted most often in foreclosure suits, the Adolphs determined the names of the subdivisions where they were filed. They obtained median home values for these subdivisions from the Web site of the Houston Association of Realtors (www.har.com). The findings showed that residents in modestly priced neighborhoods were the most common targets of lawsuits. More than 6,000 homeowners were sued in neighborhoods with median values between $60,000 and $80,000. At the other extreme, only 41 owners of homes in neighborhoods with median values between $200,000 and $220,000 were included. Lindsay said these findings suggest that owners of lower-cost homes have less money to make improvements needed to comply with deed restrictions, or to hire lawyers to represent them when they are sued. Denton, the First Colony association executive director, said she found this finding "very interesting." She said homes represented by her group range in value from less than $100,000 to more than $3 million. "When we are making a decision about whether to proceed with any type of action against a homeowner, home value doesn't drive it," Denton said. Williams said the home that triggered the lawsuit against her and her husband, a rental property in northwest Harris County, is valued at $90,000 to $100,000, placing it within the range of those targeted most often. Williams acknowledged that she and her husband, Darren, were late in paying their $300 assessment for 2000 to the Concord Bridge Homeowners Association because of "some personal problems." She said they sent a partial payment, for $150, after the Jan. 31 due date, and this check was cashed. But when they sent a second $150 payment in May, Williams said, the association's attorney said he would return it because they now owed legal fees in addition to the assessment. "At first, I thought it was not that big a deal, but when I got the bill from the attorney about two weeks later, it was $604," Williams said. "I said, `No way, this is wrong.' " As the dispute continued, she said, the attorney, William Gammon, continued to tack on additional legal fees. He filed suit in January 2001. Williams declined to disclose the amount she agreed to pay in settling the lawsuit, saying only that it was "substantially less than what they wanted, but more than what we thought was fair." Williams said she and her husband concluded that continuing to fight the suit would be too costly. "We decided the next battle is going to be with the Legislature," she said. Gammon did not return calls seeking comment. His name appears on 1,562 lawsuits in the Adolphs' database, making him the most active attorney in this field in the Houston area. Williams said she is willing to pay a fee for the late payment and a "reasonable" attorney's fee, but nothing close to what she said Gammon is demanding. "The whole idea of it is so unjust that I just can't stand back and watch this," she said. "If the court tells me I have to pay it then I will pay it, but I will tell my story from every mountaintop."
Oh man, I must be slipping. I wonder what all my conservative friends will say when they read the National Healthcare thing.....next thing you know they will discover that I am also Pro choice. Jeez, whatever happened to the good ole days where a guy could just be consistently conservative? GRRRR !! DaDakota
I guess all the Democrats will be pissed at me for wanting to reform the guys who stuff their campaign bank accounts too. What is the freakin' world coming to?
I've had the opportunity to help some people in the past who've had problems with homeowners' associations....the thing I can definitely agree with is how ridiculous attorneys' fees can be when piled up on these things. I've seen attorneys trying to collect thousands of dollars worth of attorney's fees for roughly $200 worth of damages to the association. It's absolutely amazing...got into a shouting match with an attorney about that on the phone not too long ago. Completely unreasonable...they're charging roughly $500 for review of a tiny file and drafting a letter...that kind of crap needs to stop, no doubt! Judges need to do a better job of saying, "no...those fees aren't reasonable in going after that debt." At the same time, you have to give some financial incentive to an attorney to do his job for a property association...but it's just way out of proportion right now, in my opinion.
Max: Thanks for responding. I was kinda wondering if you had any experience with this sort of thing in the past. I agree that "out of proportion" is a good way of putting it.
keep in mind, i say this as an attorney who represents a couple of banks and an acquistions company as well! sometimes you have to say, "it's not worth it here." sometimes clients complain about that, but i think they respect the attempt at integrity. as you can imagine, some of the more emotional moments in the office have come when people have had problems with homeowners' associations. we had a couple in once where the woman couldn't stop crying (understandably so) at the thought of losing her home...they had fallen a bit behind (not completely their own fault, either) and were having a hard time catching up. most banks will bend over backwards to work with you to get those situations straightened out before legal fees are necessary...but not homeowners associations', in my experience.
Here's a more broad question that should probably be addressed: Should homeowner dues even be mandatory? I understand paying for things like community areas or security, but does that really require legal ramifications like home forclosure? Technically speaking, I own my home and my land. Requiring me to sign a deed restriction with a home owners association seems really un-American.
At the very least, it seems Un-Texan. Our state in particular has had quite strong homestead protections and very few ways a person can lose their homes over debts (four ways total - taxes, the mortgage itself, homeowners association dues and more recently home improvement loans and all that that implies). Of course, I have a probelm with the controlling nature of some homeowners associations. Personally, I think there are two supreme rules to getting along in a free society. 1. Mind your own business, and 2. Keep your hands to yourself. Some of these homeowners associations violate both of those rules. And that will always bug me. That Americans are so willing to give up their own freedoms so their neighbor doesn't paint his house green or buy a third car is something I will never understand. I guess it gets back to reasonableness. I'm sure every homeowners association starts out with reasonable goals. But after a while, the things that people want to control often grows larger and larger and larger. Just like these monetary disputes growing larger and larger until it becomes bigger than it ever should have been in the first place. It seems to me, though, that there are plenty of ways to settle debts without resorting to threating to foreclose or foreclosing on someone's home. I mean, the vast majority of lenders can't take away our homes if we don't pay our bills and they seem to manage just fine. Sure, having foreclosure powers compels people to pay, but I think the power is too much - like swatting mosquitoes with a sledgehammer. But that's just what I think.
That part cracks me up. I believe the legal fees & any incidental fees should have a cap put on them, along with a maximum total that can be accrued before the foreclosure proceedings are implemented & during the foreclosure proceedings. As MadMax indicated, the fees should be high enough to make it worthwhile to the attorneys & also have some bite to the homeowner, but be reasonable at the same time. With the new legislation that was just implemented, putting maximum caps on the fees would allow the homeowners to get through the rough times & get caught up. As for established neighborhoods starting a HOA up, there should be some kind of Grandfather Clause that would allow someone to abstain from being under the control of the HOA. In other words, if the majority of the residents voted it in, the ones that didn't want it, should be exempt. I realize that this would defeat the purpose of the HOA, but why should someone be put into a position of losing their home to foreclosure, through no fault of their own. As for anyone moving into a neighborhood that already has a HOA, they are well aware of the rules that they have to live by. One problem that I've seen, is that when the HOA has their monthly meeting, many residents don't even bother to show up & vote on any new changes. That means they have to live with whatever hardships the new changes put on them. People need to take a more active role in their neighborhoods.
I agree completely. When we went looking for a new house a couple of years ago, that was one of the top criteria for a new house: that it be in an area with NO homeowner's association. If one were to start up now, I would fight tooth and nail to defeat it, and, should be started anyway, would insist on such a grandfather clause be instituted. I hate HOAs!
I could live with that. The problem is that the number of HOA's has increased dramatically over the past 10 years. There was a really interesting story on this in the New York Times last year where they discussed the fact that, in some areas, as much as 50 percent of the residential areas in a given city are deed restricted. I guess what I worry about is the ever-increasing use of HOA's in the first place. At what point does it become too much? We see that there seems to be a targeted price range for foreclosures. My guess is that the same would be true for HOA's in the first place. There are large legal organizations in the US who spend most of their time lobbying city and state governments for favorable HOA laws and calling on local home owner groups to start HOA's as a way to "protect the home values in the neighborhood" even though research shows that HOA's are no indication of even stable home value let alone increasing one's.
I'm not defending HOA's, but, you would know, when you buy the house, whether or not your moving into a subdivision with an HOA. If you think that the HOA would be bad, don't buy the house in that subdivision. You have the choice of whether or not to move into a subdivision with an HOA. When you move into a subdivision with an HOA, your not only buying your house, but you have to compare it to joining a country club. Everyone has a stake in the club, and everyone wants the club to be nice, so everyone has to play by the rules. Some clubs require you to tuck in your shirt. If you hate tucking in your shirt, don't join that club. Some subdivisions require dues for maintence and you in turn have to maintain your property. If you don't like keeping up with dues, don't move into that subdivision. Also, homeowner dues are a necessary evil, someone has to pay for the easements to be mowed, any community areas, as well as constable protection. All that being said, I think that HOA's wield too much power in many cases, and many of the enforcing members are just stay-at-home busy bodies that wield what power they can to make themselves important and would like nothing more to write you a 3 page letter on how your corrupting the subdivision's worth because you have an old basketball net on your driveway goal. Some of these people get off on that stuff and I just find that sad. As for forclosing on someone's house because of small debts, that's dumb. It would be much easier to have the HOA to have the ability to file a lien on that house against the debt owed. That means the HOA would have first dibs on the debt owed to them if the homeowner ever tried to sell the house or take a loan against the house. The homeowner would basically have to pay the debt to use their home as any kinda financial tool, without actually losing their home.
Maybe you do, maybe you don't. With more and more of them popping up every day, there will come a time when it isn't possible to move into any subdivision without joining an HOA. And there are HOAs formed after the fact. I could move into a neighborhood that doesn't have an HOA only to have one forced upon me without my consent later on. The defense of HOAs always ignores the abuses. This "necessary evil" to get trash picked up or whatever is listed as the benefits while all the silly rules about no kissing on the porch or not having more than one car or not being able to paint your eaves green are routinely ignored. In my opinion, the law should be changed to reign in the powers of HOAs. If they are necessary to pick up trash, etc. write the law to limit their powers to those necessary evils. Letting your neighbors decide whether you can have kids or who you can or cannot marry is going WAY too far and has nothing to do with maintaining an attractive neighborhood. Personally, the argument that we have a choice to move or not to move into such places always strikes me as odd. I mean, for that matter, I could say, "Why do you care that the Dallas Police Department routinely violates the civil rights of citizens, especially minorities? If you don't like it, don't live in Dallas." When things are wrong, they are wrong. I don't live in a neighborhood that has an HOA, but that doesn't make what some of these HOAs do any less wrong. The law needs to change to take away this huge power that these groups have to control the lives of other people. Forget about getting the trash picked up or even making sure people keep their own yards nice. Many of these HOAs go way beyond that. I see these sorts of things all the time. There is a large desire on the part of many, many people to want to control what their neighbors can and cannot do. Everyone should be outraged, but everybody thinks it's cool until they come after you. Of course, I'm easily excitable.
I'm not really complaining about the choice itself. I realize that moving into the place knowing the rules means you either accept them or attempt to change them or don't live there. However, what concerns me is that HOA's are becoming increasingly prevalent particularly among middle class neighborhoods. Let's say you want to live in a neighborhood with decent schools for your kids but you also operate a business out of your home. It might be tough, with HOA's, to find a home that not only satisfies your families living requirements, but also is in a decent school district and allows you to work from home. My concern isn't for the existence of them. I live in a neighborhood without them. My concern is that choice is becoming limited because neighborhoods are going increasingly to the use of HOA's. If the trend continues in its current form, we could have communities where 75 or 80 percent of the neighborhoods have deed restrictions. So much for choice then.
Too often, HOA's simply go looking for "violations". When we lived in Houston, the HOA had someone go look in everyone's backyard to see if anyting was amiss. We had a patio in our back yard that we covered with a deck. They sent us a nasty letter saying we didn't have their "permission" to build a deck and that it may encroach on the easement. I quickly called them and told them we did not need their permission to build the deck (especially considering the only way to see the deck would be to climb into our back yard). If we did encroach on an easement (kind of hard considering we built directly on top of an existing concrete structure), then it was between us and the city and we would be responsible for any fees incurred (not the HOA) should anything ever have to be done. I lastly told them they were not welcome on our property, and to ask our permission before ever entering our yard again. In addition, I painted our house gray with a rose trim. I was sent a letter indicating that the rose trim was not on the "approved" list of colors (no one I spoke with had ever seen this mysterious list). I went to the next meeting to state my case. We had about 100 homes in our neighborhood at the time. The HOA had a book of violations at least 2-3 inches thick. One house was being cited because there was not a net on their basketball goal. I introduced myself to the other homeowner that was there. I told her where I lived and she remarked how much she liked the pain job on my house. I then told her why Iw as there and she was appalled. To make a long story short, I informed the HOA that if anyone ever had trouble selling their home due to the paint job on my house OR if anyone ever complained to simply let me know. I went on to say that after I verifed the claim, that I would go out the next day and paint over the trim. I go to my old neighborhood whenever I'm back in Houston and now, 15 years later, the house is still painted the same way. Once my parents fence was crashed into by a car (this was on a Friday night around midnight. On Saturday, my dad put a tarp across the broken part (perhaps 10 feet wide) so the dogs would not escape the yard. On Monday my parents had a letter from the HOA informing them they need to get their fence fixed. It is things like that, that give HOAs a bad name.
bobrek: You keep on fighting, man. Good job. My in-laws live in one of the nicer neighborhoods in Clear Lake and they've had people climb up on the outside of their fence to peek over into the back yard. That's just horrible.
Here's a way to stop them from looking into your back yard. Unless they are taller than your fence, they would more than likely have to put their hands over the top of the fence to pull themselves up. Just run one of those electrical shock perimeter wires (that are used to keep dogs from digging under the fence) around the top of the fence, about a half inch from the top. The next time they climb the fence, ZAP! I'm truely evil.
One way to disarm a Homeowners Association is to lead it. Get involved with the neighborhood, get elected President and then use your position of power to do nothing and leave everyone alone.
