You Can’t Win Against Your HOA

The president of Denver City Council, Stacie Gilmore, recently called for a moratorium on foreclosures in the Master Homeowners Association of Green Valley Ranch in Northeast Denver. In the last year, the HOA has foreclosed on more than 50 homes.

Last weekend, Gilmore hosted a town hall meeting to help homeowners manage the foreclosure process and provide resources to homeowners facing financial distress.Stan Hrincevich, the president and founder of Colorado HOA Forum, a nonprofit that has been sounding the alarm on Colorado HOA fees and practices for years, attended the meeting and is here to fill us in.

Interview Transcript:

Alexis Kenyon: So to start, tell me about what’s been happening at Green Valley Ranch. How is it possible that the HOA foreclosed on so many homes? What were you hearing at the town hall?

Stan Hrincevich: Right, so listening to these folks, one of their problems was the lack of notifications. Communication throughout the foreclosure process was very poor. It sounded like some of them were getting little to no notifications. According to the homeowners, someone could get a knock on the door, a homeowner or renter, and be told, “We’re taking over the house today.”So that was a big problem.

Secondly, many of the homeowners were getting simple fines of $50, $100, $200 and they compounded into thousands of dollars because there is no limit in this state on the activities of HOAs or property management companies. And the homeowner all along the way is saying, “Whoa, I want to contest this or that or let’s bring closure to it. What is the fee? What is it about? What are all these legal fees and assessments?”

When these folks wanted to challenge anything with their board or even the management company, the only venue available is our court system. And it’s not a level playing field.

I mean, for the past 25 years, we’ve been passing HOA legislation. And as related to this story, not one of those bills, not one, provides for an affordable, accessible dispute resolution process for homeowners.

Alexis Kenyon: What do the bills do?

Stan Hrincevich: Well, the bills lay out the overall governance policies of an HOA. And it’s supposed to make sure everybody complies with their governing documents. An HOA needs tools to collect money. That’s fine, but they don’t need a way to bury a homeowner with the process. And that’s what’s happening right now.

So it was meant to protect both sides. But it’s totally skewed towards the HOA and management companies. Almost all HOAs are managed by property management companies. They can do what they want, when they want, and there’s no oversight. None.

Alexis Kenyon: Yeah. So you have actually submitted several proposals to the state to reform some of these policies to protect homeowners involved with an HOA. I read through some of them and one is called the Sunrise Review.  Honestly, looking at that proposal and some of your other proposals, you’re proposing really basic things like making sure foreclosure notices are in Spanish and English. Another is something about how there needs to be some sort of limit to how much a fee can be compounded. I mean, I guess what struck me about what you have submitted is that these don’t already exist, and they seem so reasonable.

Stan Hrincevich: They are. And all of our proposals are fought by the HOA property management companies and the legal industry, who make who knows how many millions on this.

They oppose any reform, and you’ll see them fight like heck because when you implement them, people stay out of court. The homeowner can challenge things, get proper notification, have some control over the sale of your home.

Think about a person in financial distress on a foreclosure. I’m already into this thing because of fees, maybe $7000, $8000, $10,000 dollars. I go to court to challenge it. I get my lawyer for another $1500 dollars and I lose. Now I have to pick up their several thousand dollars in legal fees. Now, now I’m really getting buried, right? And then when they pursue their foreclosure action, all these fees continue to compound.

Something needs to be done. HOA foreclosure reform. Provide out-of-court dispute resolution in the HOA office and license these property management companies, which are just out of control. So it is an important issue that needs reform to level the playing field between the HOA and the homeowner.

We are calling on the governor this week to ask for a committee on HOA reform. So again, we’ll see where it goes. We always have low expectations with HOA laws in the state of Colorado, 25 years of passing the same old thing. So we’ll see how that all turns out.

Alexis Kenyon: So just to summarize, you’re saying the problem is when you sign a legal contract with the HOA, you’re giving them the power to take you to court if you have any dispute with them. But because they are big companies and you’re up against a contract that you signed, the state needs to help the homeowner have a level playing field against the property management companies because these companies have legal and financial advantages that allow them to get away with pretty much whatever they want.

Stan Hrincevich: And they do in a lot of cases.

Now, not all HOA management companies or HOA boards are corrupt. I’m not saying that, but licensing property management companies and holding them accountable to abide by state HOA law and HOA governing documents is critical.

And as far as the homeowner, when the homeowner observes problems or wants to challenge something, we have on one side, the licensing the property management companies, and then we have to have something holding the HOA accountable to abide by state law and governing documents. And that’s where the dispute resolution process comes in.

Alexis Kenyon: So before I let you go, can you tell me, how you became interested in HOAs? I know you have a background actually in computer systems engineering and accounting.

Stan Hrincevich: Yeah, I’ve lived in, I’m going to say seven or eight different HOAs. Our organization is pro-HOA, and I am. I would not live in a community without an HOA. I got involved in this and got one nasty education years ago when I found misappropriated funds in our HOA, and it was well over 30,000, and I started an audit of the books. They were real friendly at the beginning because I just wanted to look at this, you know, and when I needed some more information, like actual check registers, all of a sudden, the HOA Lawyer Management Company and Board put out a memo, “Don’t talk to this guy, he’s a troublemaker.” All I wanted was access to documents, which is the most basic right of a homeowner.

And I went to court because this was a slam dunk, right? I lost. I’d say the case lasted maybe five minutes. And then the worst part of this was, they assessed me their legal fees. And I said, “What?” Unless I paid those legal fees, they were going to be in court, and they were going to fight me. And I said, “Something’s got to be done about this.” And now we have the Colorado HOA Forum.

Alexis Kenyon: Well, Stan, thank you so much for talking with me today.

Stan Hrincevich: Thank you.