The Trouble With Homeowners Associations
Over the course of my career as a real estate attorney, I have formed several homeowners associations. Most of the associations I have formed were for condominium and townhome developments, but I have had my hands in a few single family associations.
Up until May 2007, my experience with associations was largely theoretical; I drafted the governing documents, formed the nonprofit corporation which ultimately became the association, and handed the whole ball of wax over to the developer and its handpicked management company.
In May 2007, however, I began a journey that would allow me to see the practical side of operating an association, the problems inherent in associations, and the delicate balance that needs to be struck, especially in single family associations, between proper rules enforcement and private property rights.
In my association, the big battles have been fought over what is called an “Architectural Review Committee”, otherwise known as ARC. This type of committee is present at the outset of many residential developments. ARC has a say in what type of fences are allowed, what kind of houses can be built on a lot, and what type of deck someone can build. When the developer controls the association, the developer also controls ARC. Hence, ARC is a vehicle for the developer to maintain the aesthetics of the neighborhood until such time as the developer sells out its lots and completes the neighborhood.
In my neighborhood, however, a series of events has led to an ARC that is the single most controversial aspect of the association. Our developer went out of business, surrendering its remaining lots to investors and banks, and transitioning control of the master association responsible for maintaining common areas and operating ARC to the residents. Hence, we have a unique situation: an ARC that is run by residents, not by a developer.
The first resident-controlled ARC launched in April 2008. It was, to put it mildly, an unmitigated disaster. The ARC Chair, a homebuilder who happened to live in the neighborhood who was also on the association board of directors, did not know how to run a committee, delegated control of almost every aspect of ARC to a handful of committee members with little to no experience in real estate, and was later found to be engaged in a massive conflict of interest: he was using ARC’s enforcement power to take action at the request of residents who were negotiating with him to build things. In October 2008, in protest to this behavior, I quit the association Board.
In the wake of my resignation, the remaining Board members dissolved ARC and reformed it with new members. The change in members didn’t fix the fundamental problem with the committee: that residents were being allowed to approve or reject other residents’ landscaping, fences and decks. In other words, ARC in the hands of the residents had devolved into the “Nosy Neighbor Committee.”
ARC is just one example of where an association needs to recognize the need to respect individual owners’ property rights even though all owners are part of an association. I’ve written articles about dealing with pets in associations, dealing with renters and creating enforceable rules. For these and other issues – including the proper role of an ARC – there is no black and white, and the gray area has to fall in a middle ground. When, however, the association sees only black and white, problems arise. Case in point: the aforementioned ARC is the single most divisive aspect of our neighborhood, pitting neighbors against neighbors and creating situations which are ripe for litigation.
Don’t get me wrong; there is a proper role for a homeowners association. My wife and I, like many of our neighbors, moved to our neighborhood because we had covenants, covenants that said you can’t leave your garbage cans in your driveway all week, no boats or RVs stored on driveways day after day and no sofas swinging from trees. When, however, the restrictions cross into whether you can plant perennials vs. shrubs in your front yard and how many you must have, you’ve now entered Big Brotherville.