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Mad Money: Residents Protest Excessive Fines from Homeowner Associations

 

A Nevada senator received a fine from her homeowners association (HOA) for a hot chocolate stain on her driveway. 

Another Nevada homeowner received a fine for patches of dead grass on her front lawn. And then there’s Matt Rudich, who received a warning from his HOA for removing a sharp plant from his front yard for the safety of his children. "It's way too much oversight by the HOA board," said Rucich. 

"This is America, we have rights." 

While Rudich only received a warning for this incident, his current dispute with his HOA is not as understanding. 

Since 2009, Rudich has paid his association $100 a week in fines for not landscaping his backyard. Thousands of dollars later, he’s had enough. 

"It's taking food out of my children's mouths and the college funds are less $400 a month," said Rudich. 

Like Rudich, a growing group of homeowners around the country are fed up with what they consider an abuse of power by their HOAs. In Texas, homeowners are planning rallies in Houston and Austin to ask lawmakers to stop allowing HOAs to foreclose on homes if homeowners don't pay maintenance fees. 

And in San Juan Capistrano, Calif., an HOA told a woman who tutors children out of her garage that she could no longer do it anymore and that the kids can't even play outside. 

“It makes me extremely upset, it raises my blood pressure, it makes my blood curdle," said Nevada homeowner Jonathan Friedrich, who organized a rally on Feb 8 of angry homeowners who feel members of HOAs are abusing their power. 

Friedrich himself was successful in taking on the HOAs in 2007. He challenged his Nevada HOA's power to implement special assessments without the input from residents and won, with the arbitrator ruling HOAs need a required vote from homeowners before adding HOA fees. 

However, Friedrich understands this isn't always the case. 

"If you try to take this thing through the legal venue, you'll have to go through arbitration… which is a trap," said Friedrich. “Once you get through the arbitration maze, only then will you get the district court." 

And this is where things get sticky. The lawyers used in the arbitration by the HOAs are usually paid for with the fees homeowners are paying to be a part of the HOA. 

Since lawyers don't come for cheap, it's hard for homeowners to find a decent lawyer to challenge any dispute in court. 

"It's tilted toward attorneys and it's too legalistic," said Barbara Buckley, who has served on the Nevada state legislature for 16 years and now works as the executive director of the Legal Aid Center of Southern Nevada. "It's very hard for a homeowner to fight a homeowners association because the homeowners association gets to hire a lawyer with the homeowners money." 

But sometimes, homeowners leave HOAs with no choice but to fine them. 

“If you have a homeowner who has weeds and you do not take any action, the homeowner might think ‘the HOA isn’t going to fine me, so I’ll be okay,’" said Dustin Marshall, whose work as community manager for Rudich’s HOA involves facilitating disputes between the HOA board members and homeowners. “When homeowners don’t see standards being enforced, it could breed more violations.” 

Marshall didn’t provide specific numbers, but he said homeowner disputes with the HOAs over petty fines are typically in the minority. But at the end of the day, they were technically warned. 

"A homeowner has a chance, before officially purchasing the home, to review a (seller’s package)," said Marshall. 

The "seller's package" he’s referring to is given to homeowners from a Realtor upon purchasing a home in an HOA. One of the documents in the package is called a Covenant, Condition and Restriction, also known as a CC & R, which lists the rules and regulations homeowners must abide by when living in an HOA. 

In the case of Rudich, Marshall said that each warning was accompanied with information stating the exact regulation he violated. And if a homeowner has a problem understanding the regulations in the CC & R, which is common because the document is 90 pages of legalese, Marshall is more than happy to help out homeowners. 

"I'm all about educating homeowners," said Marshall. "Any day that I'm sitting here, they have an opportunity to call me and ask how things work and what they need to do." 

Rudich admitted that Marshall was cooperative when it came to his dispute. Marshall provided Rudich with advice when Rudich proposed an idea to the HOA board members of installing his own landscape only if the board removed all of the fines against him. 

The HOA board declined the idea, leaving him with weekly fines on top of a home that's worth $300,000 less than what it was when he bought it. 

"The fact that the underlying asset (his home) is so far under water, it just doesn't make sense to put in anymore money into something that's essentially not even mine anymore," said Rudich. "I'm $300,000 upside down. Who's gonna fix a property that's $300,000 upside down?"

Pete Griffin is part of the Junior Reporter program at Fox News. Get more information on the program here.

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