An Open Letter to Elrich: Please Curb These Predatory HOA Debt Traps

An Open Letter to Montgomery County Executive Marc Elrich,

This letter is to help advance point 5 of your Vision Statement, to make Montgomery County, Maryland a “More Affordable and Welcoming County for a Lifetime.” Please issue an executive order to stop these two predatory practices of HOAs and their hired debt-collection partners.

1) ACCELERATING MY DEBT -–The HOA can charge the homeowner an entire year's worth of monthly assessments–a huge payment that’s due immediately. This happens if the homeowner falls behind on a single monthly assessment ($99 in my HOA community). When a person is perhaps least able to pay a debt (having lost their job during an epidemic, for example), then the debt balloons.

2) REASSIGNING MY PAYMENT – The HOA takes a homeowner's payment for a specific purpose (for example, for the monthly assessment) and reassigns it to any other alleged debt that is supposedly owed (e.g., $250 for rusty brads on your mailbox). The homeowner is left chasing shadows, not knowing where their money is going, and discovering too late that they’ve “fallen behind” on their “unpaid” monthly HOA assess­ment, which can then be accelerated! (See #1, above).

What is the purpose of these policies if not to drive people out of their homes as quickly as possible? These debt traps are upheld by Montgomery County. For example, see the “Common Ownership Community Manual & Resource Guide,” p. 74, which states: “The community association also usually has the right to ‘accelerate’ the annual assessment for the remainder of the fiscal year if the member is delinquent.” These extortionist practices–which intensified during the onset of the COVID epidemic–are causing housing insecurity and financial insecurity in Montgomery County today. If anybody bothered to study these matters, I believe the data would show that ethnic and linguistic minorities, first-time home buyers, and the elderly are disproportionately harmed by these (and other) methods of debt-manufacturing.

But we don't need to form a study committee or convene a commission. Stop the bleeding. The U.S. Department of Justice recently advised courts that “imposing and enforcing fines and fees on individuals who cannot afford to pay them has been shown to cause profound harm. Munici­palities [including HOAs] 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.”

Our homes are the largest investment we will make in our lifetimes. "Our homes should be places of rest and recreation, not platforms upon which we are tortured," as one neighbor told me. HOAs practice "equity theft" by transforming a family’s main asset–their home–into a cash cow that's milked by the players in the HOA industry. These financial attacks (e.g., $20,000 in fines and fees) are terrifying for the families who suffer them.

Mr. Elrich, you have the power to face down these interests and halt these two destructive practices immediately. Please do so with an executive order.

Sincerely,

Steven Sellers Lapham, is a 22-year resident of the Quail Valley HOA community and author of the “Cuckoo Court” blogs on PATCH.COM, at tinyurl.com/CuckooCourt.