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HOA tricks, lies, and deceives ... and residents still don't care

Maybe paying the board is a good idea

In early June, homeowners at Greystone at Eastlake Vistas, a 269-unit condominium complex, found themselves caught up in a circus of tricks, lies, accusations, and betrayals that seemed more fitting to an episode of The Bachelor than the inner workings of a homeowners’ association.

Richard Monson serves as president of the California Association of Homeowners Associations. He estimates there are 55,000 such associations in the state, and says dysfunction too often plagues them. “There’s one primary reason,” he explains, “which is far and above the other reasons, and that is the complacency of the homeowners, the unwillingness of homeowners to be involved in the administration of the association. Consequently, when an election is held, there is very meager participation. There are even fewer people interested in serving on the board of directors. And so the pool from which the board of directors is taken is very, very small.”

He adds, “Most people running for office have an agenda.”

I can’t expect them to know much.

Depending on who you ask, the dysfunction at Greystone will have a different beginning, but we’ll begin on March 31, 2015, when, during the monthly HOA meeting, a boardmember submitted a petition “apparently signed by 18 owners demanding that the board be recalled and Summit Property Management, Inc. fired,” as stated in the meeting minutes.

The boardmember who submitted the petition agreed to be interviewed so long as her name not be used. So we’ll call her Caroline Jarvis.

“I was getting the attention of the boardmembers, like, ‘Hey, you have to take back your control, because right now you don’t have control,’” Jarvis says.

Playground at Greystone at Eastlake Vistas

Playground at Greystone at Eastlake Vistas

The real problem, she claims, was that the management company wasn’t doing its job correctly, and she was the only boardmember who understood how the relationship between the association and the management company was supposed to work. “What was happening was that people would buy and then sell, and no one would really stay on the board but myself,” she says. “They were brand new people. I can’t really expect them to know much.”

The president of Summit Property Management, John Kiss, was, Jarvis says, taking over meetings, and taking advantage of the inexperienced boardmembers who didn’t understand that they called the shots, not him. “He took that and ran with it for so many years that it bothered me,” she says. “So that was why I [announced] a recall election.”

But, she didn’t expect that the recall would actually happen, because in the eight years of the association’s existence, they had never had the 25 percent quorum needed to make a vote official.

We’re going to have a real election.

Some of the accusations Jarvis makes against John Kiss and Summit Property Management are less-than-specific, and maybe somewhat personal. “He always considered me as a complainer,” Jarvis says of Kiss, for instance. But the rest of her complaints about the management company are all tied in with complaints about the maintenance company, Spotless Image.

Immediately after the recall announcement, the board sent a 30-day notice to both Spotless Image and Summit Property Management that their contracts were ending. Jarvis held an executive meeting of the board at her home, where they discussed and agreed to sign a new contract with Menas Property Management as well as a new maintenance company, a new pool-service company, and a new janitorial company.

Nathaniel Guerrero, owner of Spotless Image and a homeowner within the community, believes that the boardmembers were manipulated into signing these new contracts.

“The inexperienced boardmembers got nervous, and [Jarvis] used that by saying, ‘Look, if you don’t go on my side, you guys are going to get recalled,’” Guerrero says. “This is what she told them: ‘I can stop this if you agree with me to get rid of Spotless Image and Summit Property, you can keep your position.’”

When Guerrero heard from Kiss that Summit’s contract had been canceled, he knew his was next. But he also knew that the recall was an opportunity to turn things around. “I said, ‘No, we’re going to have a real election.’ So I started knocking on people’s doors and explaining what’s going on and this and that,” he says. “And Julie [his custodial employee] was going around knocking on people’s doors. We had some people that wanted to be boardmembers, and everything was good.”

Julie caught homeowner Josh Hervas on the way back home from his mailbox. Hervas says she asked if he knew about the coming board recall and re-election, and if so, had he voted? Hervas responded that, yes, he knew, but, no, he hadn’t yet voted.

“She said, ‘Let me tell you about the people that are running,’” Hervas says. “She showed me five names and spoke about each one and explained who they were. That was the only five [out of the ten candidates] she showed me. She said, ‘You get five votes and you can vote any way you want. Here’s a paper with their names on it. Just feel free to make sure there’s five votes on there.’”

When Julie produced a stack of envelopes and offered to mail the ballot in for him, Hervas declined.

“She doesn’t even live here,” Hervas’s wife Jasmine says, expressing confusion about why the custodial worker would come seeking votes for the HOA’s board.

Like Jasmine Hervas, other homeowners expressed confusion and some suspicion of what was happening. Others listened with concern.

Homeowner John Snoddy was one of the latter. He’s lived in the community for approximately two and a half years, and he had some complaints about things that were promised but not getting done.

Residents would like new pool furniture.

Residents would like new pool furniture.

“They’ve been talking about fixing the playgrounds for two years, and nothing has happened. And they’ve been talking about replacing the pool equipment and furniture for at least a year, and nothing’s happened,” Snoddy says. “So when someone was going around door-to-door suggesting that you vote for the recall, that seemed very reasonable to me. They asked me if I’d be willing to be on the board, and I said, ‘If I can make a difference, I’d be willing to help.’”

Faded signs and worn map

Faded signs and worn map

Recall strategy backfires

While Richard Monson claims that homeowner complacency is the number-one problem that plagues HOAs, he also says there is no magic formula for inspiring homeowner involvement. “Homeowners are very complacent when things are going well,” he says. “If you want a large turnout, just increase the dues. Or have some rule change that affects people.”

It appears that the drama within the Greystone HOA drew at least some curiosity and involvement on the part of the homeowners. The association had its first-ever quorum during the June 23 association meeting. The minutes read, “There being 76 of 269 owners present in person or by mailed ballot, a quorum was established for the recall election… 55 voted in favor of the recall, and 9 voted against. Therefore the recall was successful.”

Jarvis says that although she initiated the recall, she was not happy with the results because the whole thing seemed “staged.”

“The maintenance company that we released,” Spotless Image, “as well as the management company that we released,” Summit, “we feel that they were working together to ensure that the recall was successful.... [They were] going around door-to-door with ballots. We went over and we looked at the ballots and we looked at the envelopes and we said, ‘Why are all these, this whole batch here, all postmarked the same date?’ That should be a red flag.”

Jarvis saw what she claimed were other red flags. “There was also a checklist of people who sent [the ballots] in, and I said, ‘That’s a bank. That’s a bank. Why are all these foreclosed homes submitting ballots? How are they submitting ballots, especially with names on them?”

But the association’s lawyer, she says, seemed unconcerned.

I want to know my money went to the proper people.

On Wednesday, June 24, the day after the recall passed, Menas, the new management company, received an email from Summit stating that the new board would be rescinding their contract and keeping Summit, so all transactions between Menas and the association should be canceled. Two days later, homeowners received a similar letter from Summit. “A new Board was elected. The new Board has decided not to hire Menas Realty to manage the HOA. Summit Property Management will remain the management company for Greystone. Please disregard any correspondence from Menas Realty…”

Menas forwarded the email to Jarvis. “Now I knew. That was more proof to me that what was happening was staged,” Jarvis says. “So basically [the recall] was a ploy to rehire Summit who would then rehire the maintenance company and our property would still look like crap. So that’s when I started damage control.”

The whole thing confused the homeowners, most of whom had not voted, and all of whom had received the week before a packet from Menas introducing itself as their new property manager, and an invoice for their first payment to Menas, due July 1.

By the time the “disregard any correspondence from Menas Realty” letter made it to the homeowners, many had already made their first payment.

Prior to receiving this letter, Jason Petty, a homeowner at Greystone since 2011, never concerned himself with matters regarding the HOA. He paid his property assessments and then went about his business. He had never been to an HOA meeting, and he didn’t intend to. He says he knew when he bought his home that it came with association fees. “But this has piqued my interest,” he says. “My wife said, ‘I’m confused. It says to disregard [Menas], but I already sent the check.’ Being a person who really didn’t investigate HOAs, I’m going to the [next] meeting. I want to know my money got to the proper people so I don’t get billed twice.”

I am for this recall. Wait, no. I’m against it.

Within a day or two of receiving the communication stating that Summit would continue to manage the property, homeowners got a visit from former boardmember Geronica Moffet, who handed them a manila envelope and instructed them to read it. The envelope contained a two-page letter signed by three boardmembers (including herself) explaining why Summit Property Management and Spotless Image had been let go; four pages of correspondence between the HOA Board and Summit regarding questionable check signatures; two pages detailing invoice discrepancies; photocopies of 34 checks (some with non-Board signatures); an email from Summit to Menas alerting them that the newly elected board would be rescinding their contract; and the minutes from the June 23rd recall election meeting.

Homeowner Jasmine Hervas called the packet “an adolescent spitting game.”

“It was just more misinformation,” Josh Hervas says. “And we weren’t really sure why we were getting this.”

Snoddy, who had just been elected to the board, responded to Moffett’s packet with an email of his own.

“Why are we just hearing about this now? I’ve been through three years of meeting minutes and found only one negative reference to Spotless Image (10/13/14),” he wrote. “I found no references to issues or complaints about Summit Property Management. You will have to forgive me if I’m a bit skeptical of claims that seem to be coming out of the blue, with no prior record of their existence.”

In the letter, he also referred to the sudden change from Summit to Menas that homeowners had not been informed of until they received the welcome letter from Menas.

“Frankly I am stunned that you would make such a major change without consulting the membership at large…. When I worked for the Navy, we weren’t allowed to buy as much as a desktop computer without finding three sources and writing a justification letter for the vendor we selected. I’m very curious to know how you came to this decision,” he wrote. “I hope you are wrong when you say we will be liable to a lump-sum payment in excess of $30,000 to Menas for retaining Summit as our property Management firm. If true, that means you entered into a binding non-severable agreement to commit over $30,000 of association funds without consulting the membership at large.”

Greystone at Eastlake Vistas

Greystone at Eastlake Vistas

From Snoddy’s email to Moffett, one can infer that he is among the new boardmembers that Guerrero believed would stand up for Summit and Spotless Image. But that did not happen. “A week [after the recall], the same boardmembers that said that they were going to bring us back in, I see them walking around with Geronica,” Guerrero says. “I’m, like, What the heck? They’re walking around with Geronica and she’s poisoning their minds.”

Snoddy explains that in response to the email, Moffett invited him to her home.

“She just went over everything with me. And there’s so much stuff that I had no idea what was going on,” Snoddy says.

Following his conversation with Moffett, he changed his mind about how he should have responded when Nathaniel came to his door asking him to vote for the recall and step in as a boardmember.

“If I had known the problems that the previous board had with Summit property management, and the difficulties they had caused for them, I would have been going door-to-door telling people don’t vote for the recall,” he says. “These board positions like the one I’m on now, they were just temporary, because the old board got recalled. We got elected to serve the rest of their term, which expires at the end of this month. And I was very glad to see that Geronica’s name was there.”

But later, Snoddy finds himself confused.

“Now it’s my turn to be confused,” he writes in an email after looking over the March 31 meeting minutes, “because it says the petition was to recall the board and fire Summit. But the folks who went door-to-door and managed to get enough votes to make the recall effective, wanted to keep Summit!”

If I’d known then what I know now…

Jasmine and Josh Hervas say that prior to recent events, they read the monthly HOA meeting minutes and occasionally corresponded with the management company but didn’t attend meetings. That’s about to change, they say. They intend to keep closer track of what is being done with their money.

“Oh, we’re going to the next meeting,” Josh Hervas says. “And that’s because of the mismanagement, the constant misunderstanding. They’re not passing clear information.”

Petty admits that once the association’s money issues are squared away, he’ll probably just go back to sending in his dues and carrying on with his life — and not attending meetings.

Pay for boardmembers?

This entire kerfuffle confirms Monson’s theory that homeowner complacency will not go away anytime soon, and HOA mismanagement will continue. But Monson also presents a somewhat controversial idea that he thinks could broaden the pool of those willing to serve on the board.

“My feeling is that the single most important thing homeowners’ associations could do is to compensate the board,” he says. “The compensation should not be great. Perhaps to the extent of their dues. The [candidate] pool would be enlarged if people were compensated.”

Jasmine Hervas says she wishes she had the time to serve on the board but with her schedule as a full-time nursing student and her circumstances as wife to a military man who deploys occasionally, leaving her to handle the needs and schedules of their two young children alone, she doesn’t have the time required for the commitment. The events of the past couple of months have made her intent on taking a more active role in the association, and although she cannot commit to signing on as a boardmember, she does plan to attend every meeting that she’s able to and continue to read the minutes when she is not.

But what if she were paid approximately the amount of her dues? Would she find the time?

“Probably not me,” she says, “but I might be able to convince Josh.”

As for Snoddy, “To be perfectly honest, if I had any idea what condo living was going to be like, and about HOA issues and all of this stuff…” he says, not completing the thought.

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Comments

The proposed City of San Diego change to the Municipal Code for Maintenance Assessment Districts (MADs) makes provisions for the Owner's Association (or HOA) to directly receive the funds the city collects. This is in addition to already assessed HOA fees.

I think a diagram would be beneficial.

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