As Number of Homeowners Associations Grows, So Does Number of Complaints

By KENNETH R. FLETCHER, Capital News Service

ANNAPOLIS (Dec. 3, 2007) - Complaints against condo and homeowner's associations across the state are becoming increasingly frequent as more and more of these common-ownership communities are built, state officials said.

As of Friday, the attorney general's office had received 166 complaints against common-ownership communities this year, compared to 103 complaints filed in all of 2004.

Often, when "people buy into these common ownership communities they have no idea what they are getting into," said Richard Lloyd, vice president of the Maryland Homeowner's Association, a nonprofit advocacy group.

"You do surrender some of your democratic rights," Lloyd said.
Homeowners who do not understand the rules are a big cause of disputes, said Tom Schild, an attorney who represents common-ownership communities. Many new buyers do not read the "40 or 50 pages of single-space type" in the legal documents that come with their new homes, he said.

And some association board members do not know the rules themselves, said Rebecca Bowman, who runs the mediation unit in the attorney general's office that handles homeowner complaints. Associations are run by elected boards that are supposed to abide by open meetings and open records laws similar to a government, she said.

"When directors take office we would hope they would be educated, but that isn't always the case," Bowman said.

The state does not keep records on the number of common-ownership communities, but officials say they are booming as new developments are built on large tracts of land.

Instead of local governments taking on the burden of maintaining infrastructure like roads and sewers, developers of common-ownership communities pay a management company to do the work and set up associations to take care of future maintenance. Regular assessments are collected from residents to fund the services, the equivalent of local taxes.

Bowman said complaints against common-ownership communities are a small but growing percentage of the consumer complaints handled by her mediation unit.

The unit goes back and forth between the parties to resolve disputes. It does not take enforcement actions against associations, instead focusing on setting the board on "the right path for the future," Bowman said.

Bowman said most complaints involve "democratic process," such as access to association records or the board failing to follow proper rules and procedures. Another frequent source of complaints to the unit involves assessment fees and billing disputes.

Communities should keep enough money in a reserve fund to cover unexpected costs like repaving streets or replacing roofs, said Roger Winston, an attorney with the Maryland Builder's Association. But if there is not enough in reserve when such an expense comes up, homeowners must pay for it with a special assessment.

Assessments can also go up as maintenance costs rise.

"Nobody likes to pay higher taxes," Schild said. But residents should realize that "this is a tax that you know where the money is going and it's going right back to your community."

But Lloyd said that if homeowners have a problem with the board's process, they often do not know who to turn to. He believes mediation does no go far enough, saying the process is "not very effective" because a party can walk away without taking the recommendations of the mediation unit.

The only option after mediation is to go to court, but lawyers are often too expensive for homeowners to press their cases.

Because of the ambiguous nature of some of the rules, both the homeowner and the association could have a valid argument and not all parties end up satisfied, Bowman said.

"There is always a question of nuance" she said. "There could be very valid interpretations and the board could dig in its heels and say this is the way that we are going to do it."

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