Do Homeowners Need an Enforcement Agency — or to Scrap a Defective Idea…?

Two documents landed in the CCHAL mailbox this week.  

  • One was an opinion piece published in the San Diego Times urging that a state office be formed to reduce and resolve disputes in California’s 55,000 homeowner associations.
     
  • The second is a decision handed down by Santa Clara Superior Court in San Jose requiring homeowners to pay $1.824,000 in damages, court costs and attorneys’ fees to two of their neighbors who sued the HOA board for failing to repair an artesian well that wrecked their home.   Here’s the decision.

NOTE what the court has to say about the behavior and the testimony given by the board president, who was sued personally by Ridley and Shen.

Lobbying for a special department to “oversee” homeowner association disputes isn’t a new idea.  The California Law Revision Commission (CLRC) laid out a plan for such a “bureau” in a 33-page memo written exactly 20 years ago (and posted on the CCHAL website here https://calhomelaw.org/resolving-disputes/county-self-help-centers-and-county-public-law-libraries/clrc-memo-on-cid-bureau/

Legislation was introduced three times to implement the “bureau” idea but each time it failed.  The first bill, AB770/Mullin/2005, was vetoed by Gov. Wilson.  By the time AB567/Saldana/2007 got to the Gov. Schwarzenegger’s desk its purpose was education only – not enforcement – and homeowners were going to pay hefty fees to use it.  SB551/Lowenthal/2005 failed in the Bus. & Prof. Committee.

Several other states – Arizona, Nevada, and Florida among them – have instituted dispute resolution programs through an Ombudsman office, but all have been plagued by long wait times and hefty fees charged to homeowners.  At least one of them has been taken over by the real estate and property management companies they are supposed to regulate. 

What other choice do homeowners have?  Doug Ridley and Sherry Shen used the  obvious one – the courts. 

They put their lives – and retirements – on hold and spent hundreds of thousands of dollars to get their association to stop an artesian well from flooding their home.  Read their news story on the CCHAL website, keyword RIDLEY.

Santa Clara Superior Court decided in their favor last week  and ruled that the 100+ HOA owners in the subdivision will have to pay at least $1.824 million in damages, court costs, and plaintiffs’ attorney fees.  This figure alone works out to about $100,000 per parcel in the subdivision and THAT means a special — if not emergency — assessment.

The $1.824 million figure does not include the association’s own legal fees, court costs, and contracts with consultants.  The HOA plans to appeal the ruling to the Sixth District Appeals Court in San Jose, a step that means the Rancho Palma Grande membership – win or lose – will have to shell out more money to finance court costs and legal fees. 

Does anyone besides CCHAL think that it’s just possible that it’s the legal structure of the homeowner association itself that’s causing all the trouble?  

Associations – legally speaking – are formed as nonprofits with the powers of business and the authority of government. 

  • Is there something wrong with the STRUCTURE itself that is the problem?
  • Is there any other legal entity like it – one that has so much unrestrained power over peoples’ chief financial asset: their homes? 
  • A government in which there is no separation of powers?
  • The answers probably do not lie with an Ombudsman office.