HOA Nut House

By MIKE LEE
Star-Telegram staff writer
Asa Henry's backyard playground is a kid's delight -- it's at least 10 feet high, with two slides, a fort, swings, ladders. A sign declares it "the private castle" of his two children.

It also got him sued.

The company that manages the homeowner association in Henry's Brandonwood subdivision in North Richland Hills said the playground was so tall it violated restrictions. Henry says the association rules don't cover playgrounds."The way they do things is they try to bully people into doing what they want," Henry said.

It is among dozens of lawsuits and other actions in Tarrant County filed against property owners in recent years by homeowner associations.

Associations have tried to stop residents from flying the American flag, tried to foreclose on a homeowner who wanted to hide his trash cans and slapped a lien for unpaid dues on a property owner who believed she didn't belong to the homeowner association.

John Ross, founder of Ross Property Management, which now manages 40 homeowner associations with about 6,000 residents, says the associations represent the quiet majority of residents who want their neighbors to follow the rules.

"The [homeowner association] gets tired of enforcing the rules against their neighbors or collecting money from their neighbors," Ross said. "We come in and we're the bad guys."

But several homeowners say the aggressive tactics used by Ross and others point to what's wrong with homeowner associations: their power to foreclose or place liens on property for seemingly minor violations and the virtually unlimited control they give developers.

Growing in number

Homeowner associations have been around in some form for centuries, but they have exploded in the U.S. in the last few decades.

They are designed to protect the appearance of subdivisions, to provide upkeep for shared amenities such as swimming pools, parks and landscaping, and to preserve property values for owners.

Nationwide, about 57 million people live in communities with mandatory homeowner associations, up from 45 million in 2000, said Frank Rathbun, a spokesman for the Community Associations Institute, a trade group for homeowner associations.

Among residents, 71 percent rated their experience as positive and 78 percent said they believe that their local rules protect their property values, according to a poll commissioned by the institute.

Some cities, such as Grand Prairie, require homeowner associations in new subdivisions. Mansfield has rules that encourage them; the city requires masonry walls along major streets, for example, and builders typically start associations to maintain the walls.

And as the number and size of controlled communities has grown, professional management companies have popped up.

"They bring knowledge to the table that most volunteers don't have," Rathbun said.

Homeowners agree to the terms when they buy their property. Typically an association can file a lien against a homeowner for an unpaid fine or dues and, in extreme cases, can foreclose on the home of an errant owner. Some covenants allow the developer to continue changing and controlling the terms as long as the developer owns property in the neighborhood.

"Associations have to have some sort of enforcement mechanism. ... Fines are one way of enforcing important rules in the community," Rathbun said. "Foreclosure should always be used as a last resort, and in most cases it is."

But some homeowners say the associations use harsh tactics to try to browbeat them into compliance. One memo from Ross Management obtained by a resident of Henry's neighborhood said the only solution to collecting unpaid dues was to "harass the owner" by filing notice with a credit bureau.

Playing the heavy

Ross Management is used to controversy, often playing the heavy in a clash between owners over private-property rights.

"You haven't heard of the thousands of people that love us and love the way we do things," said Sandy Ross, John Ross' wife, who handles administrative work for the company.

John Ross said he got into the property management business as an apartment manager in the 1970s and branched into managing homeowner associations in the late 1990s.

The company now includes Terry Jones, John Ross' daughter, as president, and about a dozen other employees.

Despite efforts in the state Legislature to limit the power of homeowner associations, Jones has one word for the future of the business: "growing."

She said the company is popular with developers, who invest millions in new subdivisions and want to have strict rules to protect their investment. And she said the company is doing what neighborhood boards of directors want them to do: to make all homeowners comply with the rules they agreed to follow when they bought their property.

Lawsuits are sometimes the only option because of the way the rules are written, she said.

"It's not fair for one homeowner to pay dues and pay regularly, and for others not to pay dues," Jones said.

Jones said the next step is offering educational seminars for property owners.

"We're going to concentrate on educating owners as to what an association does," she said.

Aggressive tactics

Henry said he got an informal visit from a neighborhood association member saying that a neighbor had complained about the size of his swing set, then got a letter asking him to get the set approved by the subdivision's architectural control committee.

Henry said he offered to build a taller fence and sent a letter asking to be present if the homeowner association board discussed the matter. The next notice he got was being served with a lawsuit, he said.

Henry says the subdivision is selectively enforcing the rules. The board of directors agreed to grandfather in another homeowner's playground, and it allowed a third owner to keep his playground after neighbors approved it.

Henry is negotiating with the board and said he should be able to settle the suit, but he said he still believes that Ross' tactics were unnecessarily aggressive.

"I never spoke to a single board member before the lawsuit," he said. "They launched a lawsuit thinking I'd immediately fold."

Opting to move

Shari DeGroat said her trouble started in 1998 over $730 in dues and fees she doesn't think she owed.

A businesswoman who has lived in North Texas since 1980, DeGroat moved into a town house in Arlington's Oak Lake neighborhood in 1993. It was a mixed neighborhood -- one builder had put up a half-dozen town houses and abandoned the project. Another builder took over and sold zero-lot-line houses.

DeGroat said the title insurance company told her when she bought the house that she wasn't required to join the homeowner association. She paid the association dues for a while and then decided against it.

Then Ross Property Management, an Arlington company that was managing the homeowner association, stepped in. The management company re-platted the subdivision so that the homeowner provisions applied to DeGroat's town house and then filed a $708 lien against DeGroat's house, according to court documents. DeGroat sued, claiming the lien was clouding the title to her town house.

"There was no reason to come after me other than just being ugly," she said.

The company eventually worked out a deal with DeGroat under which she became responsible for her own maintenance.

But when a judge issued an ambiguous ruling in the lawsuit, DeGroat decided to sell the town house. The new owner is now part of the homeowner association, according to Ross, and DeGroat now lives in another home in Arlington.

"You couldn't pay me enough to live in a subdivision with a homeowners association again, " she said.

A fight over a fence

Nemuel Pettie wanted to hide his trash cans.

He didn't like having them in the garage, and it's against Fort Worth ordinance to leave them in plain view. So he built a section of fence about 3 feet long in the side yard of his home in southwest Fort Worth.

His homeowner association, however, says the fence violates terms of his subdivision -- and the association took steps to foreclose on his property after he refused to budge.

In May, Pettie sued to stop the Hulen Heights Homeowners Association from foreclosing on his house.

The association agreed to delay the foreclosure on Pettie's property a few days after Pettie sued. Both sides said they are working to settle the suit.

Shutting the door on violations

A military mom's attempt to fly the American flag in Euless set off a string of efforts in the Legislature to restrict the authority of homeowner associations.

The flap started when the Euless woman put up a flag to show support for her son in the Navy.

She got a letter that month from her homeowner association, saying the flag violated the association's rules, and it asked her to take it down. The woman, who could not be reached recently for comment, started a petition drive and got the rules changed about three months later.

Then Sen. Jane Nelson, R-Lewisville, took up the banner and filed a bill during the 2005 legislative session that would have required associations to allow American and Texas flags. That bill died in the House, but other efforts have followed:

Sen. Jeff Wentworth, R-San Antonio, introduced a bill in 2005 that included a provision prohibiting homeowner associations from foreclosing on homes in cases where the owner owed only fines and attorney fees. The bill passed the Senate but died in the House.

This year, Sen. Royce West, D-Dallas, sponsored a bill that would have clarified homeowners' rights, including the right to be notified about rules before buying a home, to change a subdivision's rules through a vote, and to see the association's financial records. The bill passed the Senate but died in the House.

Beanie Adolph, an activist with Texans for HOA Reform, has been pushing for a law that would protect owners from foreclosure by their associations, which had been prohibited in Texas until a 1987 court decision.

AARP issued a paper in 2006 recommending a bill of rights for owners, including the right to be secure against foreclosure, for full disclosure of rules and the right to vote on changes to the rules.

Adolph said it's difficult for average homeowners to fight against the power of developers and well-organized associations.

"These people roam the halls constantly, giving out money," she said.

Protect yourself

Most homeowner associations require a buyer to sign a contract that spells out the association requirements. Here are some suggestions for what buyers should look for:

Read the fine print. Is there a mandatory homeowner association affiliated with the property you are purchasing? What are the rules about pets, remodeling, satellite dishes, and car and boat storage?

Do your homework. Know when the board of directors is meeting, who the board members are, and what issues they want to address.

Keep records. Take notes of any phone conversations and keep copies of letters to and from association officials.

Get organized. It's easier for a group to be persuasive than an individual.

Take action. Many homeowner associations have regular elections, and some of them allow residents to petition for changes in the rules.

Get help. The Community Associations Institute publishes a pamphlet called Be Reasonable, with ideas about how to run a homeowner association. In some cities, elected officials have gotten involved to resolve problems in subdivisions.

If all else fails, get a lawyer. A good real estate lawyer will know whether the association's rules or actions are legal, and what remedies there are.

Online resources:

Community Associations Institute: www.caionline.org

Texans for HOA Reform: www.texashoareform.org

AARP Bill of Rights for Homeowners in Associations: www.aarp.org/research/legal

Sources: Community Associations Institute, New York State attorney general's office, Star-Telegram archives

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