I really do thank my lucky stars that I don’t own a home were there is a home owners association (HOA) to deal with. In my last post on the Costa del Mar HOA I mentioned a new urban disease called HOA syndrome. I highly recommend checking out the well written description of HOA syndrome at the above link. It is entertaining and informative. If there is one complaint that has been constant in the several people I have interviewed who have issues with their HOA it would be the subject of bullying. Board members do get a great chance to bully residents. But the other thing that is far worse than bullying is the mis information and lies that can be dispatched to the residents by the board of directors.
I was invited to attend the annual CDM HOA home owners meeting last Saturday. It was a painful experience indeed and I have to admit, to the great delight I am sure of the board of directors, that I don’t think I will ever go to another. When I walked in I was immediately greeted by last years president, Rod Sainsbury. I think Rod is V.P. this year, forgive me if I have it wrong. Rod immediately told me that the meeting was for members only but he would allow me to stay if I sat in the back kept my mouth shut and did not video tape anything! I hadn’t planed actually on video taping anything but I had to wonder why they would not want video of the meeting. I mean they are perfectly transparent out there at the CDM right? Going to these meeting is almost as fun as a poke in the eye with a hot stick. After about 10 minutes there I was looking for a stick and a match.
I was out there to see how they were going to handle informing people of the law suit that they recently lost and are currently appealing. I have to think the real reason they did not want any video of the meeting has to do with that law suit they lost. I like to keep mentioning the fact that they lost a law suit because many of the residents out there don’t really understand that they actually did in fact loose a law suit. For the sake of clarity the CDM HOA was sued by a resident who believed there was mismanagement of HOA funds. The plaintiff convinced a judge that CDM needed to come up with all of its accounting records for the years between 2004 to 2010. You can click here for the link to that post.
The CDM was found by a judge to be in non compliance of its order to hand over HOA accounting. What they handed over to the accounts was essentially a joke. They could not account for the amount of money taken in from HOA monthy dues during the years between 2004 and 2010. CDM lost the law suit because of this reason and this reason alone and they are appealing the loss, which will cost them more money in attorney’s fees of course. If they should loose the appeal, which is highly likely they will then owe even more money to the plaintiffs attorney. This appeal is about saving face really since current HOA board of directors will never admit that the board every did anything wrong past or present. Yet as many who have followed this blog know, there is no doubt the board of directors have improperly spent HOA funds.
Now when I spoke with one resident out there about the law suit I was pretty surprised to see that they were completely misinformed about what had happened. This resident told me that he understood that CDM had taken care of everything and that they were in compliance with judges order and that the accounting records that were missing had been miraculously found and were to be delivered to the Judge. That is not the case. That ship has sailed a long time ago and CDM had months to come up with the requested paper work. When asked by a Mexican resident at this HOA meeting why CDM was appealing, David Peralta, the CDM lawyers present at the meeting stated they were appealing the decision of the judge because they did not want to have to pay lawyers fees for the plaintiff. It was immediately brought up by Juan Carlos Gonzales, a lot owner at the CDM that this was a blatantly false statement. Juan Carlos was pretty much immediately silenced by the treasurer Ken Unrein. Clearly the board of directors so not want CDM residents to understand the nature of this law suit. I have read the appeal and there is no mention of paying plaintiff lawyers fees as the reason for the appeal. Basically CDM is appealing because they are terrified that if they truly loose this case, which they already have since it is highly unlikely they will win their appeal, then it can open a pandoras box of problems for them. This case sets a precedent by proving that there was mismanagement of the books and almost certainly mismanagement of HOA funds. This means that the plaintiff after winning this case can then file another law suit against the HOA and possibly demand all the money he paid in to the HOA be refunded. This is a civil suit at the moment but that could change to. Several members of the board actually could theoretically face penal charges some where down the road.
At the end of the meeting Scott Elliot, a past HOA president, made some comments that were pretty typical of HOA Syndrome bullys. He stated that the reality is that those who have not paid their HOA dues are just a bunch of dead beats. Scott was allowed to speak for as long as he wanted on the subject. When Juan Carlos Gonzales tried to re-butt that statement by saying that there was a clear difference between those who, like himself suspended their payment due to a lack of transparency by the HOA board compared to those who simply don’t want to pay, he was promptly cut off by the Ken Unrein the treasurer.
In the end all that will most likely happen is that CDM will continue to loose law suits because of their past inability to properly account for millions of pesos they have taken in from HOA monthly dues. These lost law suits will cost the HOA money, and plenty of it. But money is not really an issue since from what I understand that HOA has well over 3 million pesos in reserves out there. Why a supposed non profit like an HOA would want to have so much money in reserve is beyond me actually. It would seem the more money they have in the bank the more chance it could be misused, misappropriated or embezzled. It has definitely happened in the past and history has a tendency to repeat itself here.
Anyway I do thank the CDM residents, those who pay their monthly dues and those who don’t because they think they have been screwed, as well as the board of directors for allowing me access. It was truly interesting to really see what goes on between dissident residents and an ever changing board of directors. What I have taken away from this experience is valuable.
I will update on the current law suit going on out there and if history be our judge there may be more to come.
Here is an interesting link to the HOA “Hall of Horror Stories”. For you see HOA syndrome is everywhere.