Do Maryland Laws Enable HOAs to Abuse Homeowners ... then Hush It Up?

Imposing and enforcing fines and fees on individuals who cannot afford to pay them has been shown to cause profound harm. Municipalities are wrongly issuing excessive fines and fees to people without assessing their abilities to pay them, relying on the money collected to fund basic functions of government. The fees often snowball ... [These] harsh financial penalties that trap people in poverty could be unconstitutional.
–Vanita Gupta, Associate Attorney , U.S. Department of Justice, as reported in The Washington Post, April 24, 2023.

"Please bear in mind that the community needs these revenues to properly conduct its affairs so that all homeowners, including you, benefit. ... This communication is an attempt to collect a debt by a debt collector ..."
–Boilerplate text in letters sent by Quail Valley HOA's debt attorney to homeowners

The minutes of our May 9, 2022 homeowners association (HOA) meeting mentions that “the Board adjourned to Executive Session at 8:46 pm.” That’s the only trace of a financial attack by an HOA against a homeowner, as enabled by state laws governing Maryland HOAs. That attack is typical of the HOA abuses as experienced by many families. On this occasion, the attack failed.

At that community meeting, an elderly couple, 26-year-long residents of this neighbor­hood, showed up in person to protest four abusive fines, totaling $900. That debt arose from alleged “property violations” cited by the HOA. (See excerpts, below.) I spoke up to support these hard-working neighbors, American citizens who emigrated from a West African nation decades ago and raised their children here. I was angry, and the volume control on my voice was probably set too high. The meeting went on. After a while the public meeting ended, and the board held an “executive session.” I learned later from a family member that the HOA annulled the fines.

Whew! That was a close call–not for that family–but for an HOA board potentially facing a racial discrimination or harassment lawsuit, or both. For the HOA, it’s also convenient that no public record was made of the episode.

Why would an HOA aim abusive property violations and fines at this, or at any family? In Maryland, and all across the United States, fines and fees are a major funding stream for HOAs and their vendors–which together comprise “the HOA industry.”

What did board members, who are volunteers, know about the actions being taken against this family? They are, by law, responsible for all HOA actions, but they stay aloof, hiring a property management company to do the work of inspecting properties, issuing fines, billing residents, and occasionally suing them in court. No board member was present, for example, on May 12, 2021, when a Maryland District Court judge threw the book at our HOA for its abusive behavior toward an Asian American homeowner and dad, for whom English is a second language (ESL). This was the second loss in court for the HOA, in its litigation against this family. In the weeks afterward, the HOA continued sending bills to the homeowner despite the court’s final judgment. The homeowner finally mailed a “cease and desist” letter to remind the HOA to stop disobeying the court’s judgment.

What can homeowners do to interrupt these predatory practices? Well, you can show up in person at an HOA community meeting and protest, or just ask for mercy. Those meetings are held once a month, beginning at 7:00pm, when many residents of this blue-collar community are at work serving in hospitals, cleaning school classrooms, driving buses and delivery trucks, fighting fires, operating military or civilian facilities (such as a water treatment plant), or caring for the elderly.

If a homeowner does attend an HOA board meeting (perhaps burning up vacation hours to do so), they’re told to wait 30 minutes or maybe an hour for their turn on the agenda. Wasting your time is one of the HOA’s tools of punishment. The property manager (who issued the alleged property violations in the first place) then takes the resident aside and quietly offers a “payment plan”–reducing a $3,000 debt to some arbitrary amount, $1,500, for example. You can pay this debt in monthly payments of, for example, $100, but the HOA won’t restore your parking space or allow your kids into the community pool until the entire debt is paid.

These little conversations happen out of public view, ostensibly because of debt privacy laws. These “closed meetings” keep the resident isolated during a power play by those who profit from punishing them, and keep the wider community ignorant of how the bullying is done. Close the door, lower the blinds, then apply financial “discipline” as necessary. Needless to say, if English is your second language, or if your debate skills are less than stellar, then you’re not likely to get a fair result. Surrendering to a “payment plan” is a better outcome, however, than discovering that your file has passes from the property manager’s desk to the debt collector, at which point fines and fees accelerate.

Here’s one example of how that abuse works. In Maryland, the HOA has the right (see p.75) to “accelerate your debt” if the homeowner is late or delinquent in paying. For example, if you are late paying the monthly HOA assessment fee (having lost your job during an epidemic, or suffered a medical emergency), then the fees for the entire year suddenly become due. When you are least able to pay, the payments balloon. Another example: the HOA can apply your monthly payment to some other alleged debt that it claims you owe, which makes you tardy ... in paying your monthly dues! (Go to "accelerate your debt," above.) It's a trap. The HOA accuses and punishes the homeowner. There's no trial. This amounts to legal extortion.

The charade was interrupted at that May meeting in 2022. The homeowner spent hours preparing for that moment, and they successfully curbed the abuse. The HOA quickly, quietly cancelled the fines and suffered no consequence–admitting to no mistakes, and recording nothing in the minutes, not even that these family members were present. Dust swept under the rug. One board member joked about how these community meetings have so much "drama." Perhaps it is indeed an evening of entertainment for some people, but not for the elderly couple going home in the dark, during a pandemic, after a meeting they should not have been compelled to attend. It’s no game to be under financial attacked by your own local government. It is terrifying.

What other recourse is there for homeowners? You can fill out a complaint form with your county’s (likely soporific) "commission on common ownership communities"; with Maryland’s Office of Financial Regulation (if a debt collector is harassing you); or with Maryland’s attorney general (if the HOA board members are harassing you). These agencies wait for consumer complaints, then parse problems in an atomized fashion. There seems to be no government office, consumer organization, or journalist in Maryland who is tracking this problem or gathering key data. Apparently, nobody is observing the vast damage done to real families in real time, or studying whether laws upholding the HOA industry are serving homeowners, or somebody else. What are the total annual costs to Maryland homeowners of HOA abuse? Do specific groups (e.g., immigrants; Housing Choice Voucher Program; English as a Second Language) become “soft targets” for repetitive attacks? How many foreclosures and evictions can be traced back, at their point of origin, to HOA-generated debt?

Nationwide, there are some findings. Independent American Communities, which covers HOA “dysfunction, corruption, & abuse,” reports that the presence of an HOA decreases the value of a home on the market, according to nation-wide surveys. But we need urgent county and state intervention and legislative action.

This predatory system will continue until homeowners living in HOA communities somehow find each other, organize together, speak up to bring abuses to light, and put pressure on our elected officials to attack the source of the problem: Maryland’s corrupt laws that have created a whole industry designed to punish HOA homeowners for profit. Maybe somebody should pay attention.

Steven Sellers Lapham is a 22-year resident of his HOA community and author of the “Living on Cuckoo Court” blogs on PATCH.com, as well opinion pieces in Maryland Matters.

Notes
1. "Several examples of past attempts at investigative reporting on HOAs: The HOAs from Hell series in Kansas City Star (2016); 60 Minutes segment on the Surfside, FL condo collapse (2022); ProPublica’s Homeowner Hell series on HOAs (2022-2023); AARP on harsh treatment of homeowners who fall behind on HOA fees (2019); HomeAdvisor’s survey that found homeowners don’t think HOAs are worth the added stress (2022)." (Thanks to IAC for this info.)

2. Apparently, a homeowner can waive their right to privacy and allow a friend or ally to join them in these "little meetings" during which an agent for the HOA will offer a "payment plan" to keep the homeowner out of the debt trap. Or will it? It's wise to have a witness with you to see and hear what goes on in these unrecorded meetings.

3. The excerpts below are from a letter sent by the homeowner to the HOA on April 8, 2022, protesting the HOA’s abusive and possibly discriminatory violations. The four abusive violations and fines were annulled by the HOA in May, 2022.

Dear [Property Manager],

Thank you for the email of April 6, 2022, in which you express concern for my elderly father's health issues. My parents own the house at [address], and I’m helping them with correspondence. English is neither parent’s first language. I’m working with my mother to bring this conversation–which has gone on for more than a year–to a fair conclusion. …

Fine, Clean the siding on the home - $225.00. In response to the violation notice, we cleaned the side of the house in 2021, and will do so again as needed, but not more than once a year. My father’s employment and family matters have often taken him out of country. He was not always able to rapidly respond to HOA communications. We are not paying this fine, as it seems unfair and possibly discriminatory.

Fine, Exposed cable - $225.00. Several houses within view of ours have exactly the same arrangement of cable entering the home, yet the HOA has not denied those families their parking spaces. Why are we treated differently? Nevertheless, we have removed the cable from our house. We are not paying this fine, as it seems unfair and possibly discriminatory.

Fine, Unapproved deck - $225.00. The deck was present when my parents bought the house 26 years ago and must be “grandfathered in.” … We are not paying this fine, as it seems unfair and possibly discriminatory.

Fine, Children’s playset - $225.00. The HOA granted my father permission to build this sturdy play structure 15 years ago. I have recently submitted an Architectural Change request, with measurements and photos, in order to provide you with a description of the structure for your records. (The HOA has reported that many of its records were lost about seven years ago). We will not provide an official survey plat of the property, costing $500 or more, as requested by [your associate] on April 12, 2022, as we can see no real need for it. We are not paying this fine, as it seems unfair and possibly discriminatory.

[Please notify us that the] issues listed above have been closed … and restore our parking space by May 1, 2022. If that conclusion to these matters is not forthcoming, we will consider retaining an attorney.

Sincerely, [Signed by the owner of the home and his adult son.]

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