An HOA Tricked A Homeowner Into Joining, So He Read The Full Contract And Found A Loophole That Would Put Him Back In Control Of His Property

Michael Levanduski

3 months ago

Shutterstock, Reddit

While some homeowner’s associations can be a good thing, many of them are dishonest and just looking to control the neighborhood.

What would you do if an HOA lied to you to get you to join, and then made dramatic changes that you hated?

That is what happened to the homeowner in this story, so he read the agreement and found some loopholes that cost the HOA lots of time and money.

HOA wants me to join, so I do. Just not how they expected.

So this story is about a property I own, but rent out.

This may sound strange, but I don’t think I could afford to live there these days – it’s become somewhat exclusive.

BACKGROUND

Farmland often gets converted into residential.

A million years ago my property was part of a large farm.

I bought it about 30 years ago, long after the farm was broken up, but before there was any development near it.

The piece of land I got was near the back entrance that joined into a dirt road that ran past. The more expensive plots were near the tarred road in the front.

Even the best plans don’t always work out.

I originally bought a large chunk of the land intending to do some farming, but that never happened. About 20 years ago some of the owners got organized (We’ll call them the Organized Owners – OO) and had the area designated as a municipal suburb.

The municipality agreed to put in tarred roads, water and electricity if a certain percentage of the properties were developed.

All this seems very normal so far.

A construction company (linked to the OO) went around contacting the owners who had land but no buildings offering to build houses for us at a very (very) reasonable price – contingent on them getting a certain minimum amount of people signing up.

While this was happening, one of the OO approached me and offered to buy half of my property.

Wow, he really made some great money here.

I agreed, and the money I got for the sale (which was about 4 x what I’d paid for the entire chunk of land 10 years prior) combined with a small loan from the bank gave me what I needed to pay for a house to be built, and it was a fairly large and nice house too.

I stayed in the house for a few years, and my mom moved in with me. I had decided to subdivide the property again and build her a house next to mine, but unfortunately an undiagnosed tumor took her before the house could even be started (well, it was diagnosed, but too late to do anything).

Renting out a home can be a great way to make money.

Soon after she died, we moved out of the house and started renting it out. About a few weeks before we moved out the OO I’d sold the land to started talking about starting an HOA. I wasn’t interested, and left soon after.

About two years later, the neighbor OO contacted me.

There were two roads entering the area these days – the original tarred road that was near where the farmhouse had been and was entered from a fairly busy main road, and my “dirt road back entrance” which was now a tarred entrance from a wide but not very busy municipal road.

Keeping traffic down can be nice for the residents.

The HOA was trying to get the old farm road blocked off to improve security and decrease through-traffic, and wanted the road next to my property to be the main (and only) entrance to the HOA community. And they were pressuring me to join.

I said no, and I was adamant, and eventually they accepted that, but told me they wanted to have a sign near the road welcoming people to the neighborhood, and the only practical place to put it was on the edge of my property.

This sounds like a great deal for everyone involved.

They also wanted to build a little guard hut and have a security guard permanently monitoring who went in and came out, and they wanted to build his shed on my property.

We came to an agreement whereby they would mow the lawn and pay the equivalent of about $35 per month in exchange for the land they needed.

I was very happy with this arrangement, since the property was fairly large, and it didn’t really cost them anything since they already had a full time gardening service servicing the HOA.

Everything seems to be working out perfectly.

This all happened a over a decade ago.

They eventually got the other main road blocked off, and the HOA is paying for rent-a-cop to be permanently stationed close to my property, as well as mowing my lawn and paying me enough money for takeaways for the family each month.

I’m occasionally contacted by members of the HOA to get me to sign up, but I’m really not interested.

My property has been rented to the same tenant for all these years and everything there is going well for me.

This would be terrifying! Where is the security guard?

Until about 3 years ago, when someone scared the crap out of my tenants young daughter by making strange noises and shooting a gun close to her bedroom window three or four times over about a month.

This scared my tenant and I guessed it scared the HOA because they AND my tenant contacted me with a proposal – I join the HOA and they give me exclusions from the HOA rules, including exclusions from paying the monthly fees, and in addition they will build a wall around the ENTIRE HOA neighborhood, including electric fencing and security cameras.

I don’t think I would ever join an HOA, they will weasel their way in with their rules.

They told me they had wanted to do this for a while but were unwilling to build the wall on property that was not in the HOA.

I couldn’t see the downside, and so agreed.

THE DISHONEST DEALINGS

It begins.

It took a little over a year to build the wall and get everything completed, which is quite fast. And then a month to the day after everything was done, my tenant got an HOA warning about his dogs barking. He told the HOA that while the property was in the HOA, it was exempt from the rules.

The HOA told him that they had cancelled the exemptions, and that he had 30 days to comply. He contacted me, and I opened some mail I’d gotten from the HOA (I’d ignored it since I was supposed to be exempt from the rules and fees).

What a shock, the HOA lied.

Man, did I get a surprise. They had retroactively cancelled the exemptions, and were claiming:

That I pay late fees going back over a year

That the easement agreement had been cancelled, and that they were retroactively canceling it a year back because the HOA contract allowed them to use “small unused portions” of HOA members land for the common good for free

That I refund them the money they had paid for the easement over that period,

That I owed them money for the garden service mowing the large lawn, and

That I would be fined for each infraction my tenant failed to remedy.

And this is why you should never willingly join an HOA.

This started an expensive process involving lawyers and the court system, that ended with a judge telling me that what the HOA had done was mostly legal – they had the right to revoke the exemptions, but that they had to give me 30 days notice.

As I was walking to my car the neighbor OO (the one who bought half my land so many years ago) told me that I was stupid to have refused to join when the HOA started, as I could have been a founder member (whatever that means), and that next time I should be sure to understand the documents I sign before signing them.

THE MALICIOUS COMPLIANCE

Reading a contract is always important.

Neighbor OO was right, I should have read the contract (better). Also, I was interested in what it meant to be a “Founding Member” (spoiler: Nothing), and so when I got home I grabbed the HOA contract I’d signed, as well as all the other documentation they had provided me with, and started reading. I was determined to break every rule I could find a loophole to break.

I didn’t get past the first page.

When it comes to the law, details matter.

While the street address of the property is used to identify it for all practical purposes, in the city records it has a unique property number that has to be used on legal records. When my mom moved in, I’d subdivided the remaining property but hadn’t yet started building on it.

And when I gave the HOA the easement all those years ago it had been on the property I’d sliced off for my mom. And when the HOA set up the contract, they had simply used the property number from the easement.

If the HOA wants a war, they will get one.

The next afternoon the neighbor OO delivered (and had me sign for) two documents – one telling me that my exemptions would expire in a 30 days, and one letting me know that the easement would no longer be required after 30 days.

I think he was being a bit malicious here, because I lived about an hour away from the property, and he drove out himself.

THE REVENGE

Two can play at this game.

EXACTLY 30 days TO THE HOUR after the HOA had given me the 30 days notice, I knocked on the neighbor OO’s door (did I mention he was the president of the HOA?) and had him sign for two documents.

The first was that I planned to build a house on my HOA property (which confused him) and the second was notice that they had 30 days to remove from the property the guard shed, the parts of the electric boom that were on my property, as well as the sign. He tried to engage me but I ignored him, climbed into my car and drove off.

No surprise here.

Early the next morning I got a call from the HOA lawyer who explained to me that their junk would be staying on my property since it was in an “unused” part of my land. I explained that I was building a house there, and that the land would not be unused anymore.

I could hear the smirk as he told me that building a second house to be spiteful would not be accepted by the courts.

They did not expect this.

I sure hope he could hear the smirk in my voice when I told him that the property in question did not have a house, and was, in fact, barely large enough for a house to be built and would not be large enough for any extraneous buildings.

I then told him to go look up the property in question and call me back. (I had sliced off just enough to be legal, which was just enough to build a small house). It took them just under 5 days to get back to me.

Fortunately, they had already canceled the easement.

Their lawyer told me that the terms of the easement meant that I could not cancel without their permission, so I emailed him a photo of the document they sent to me cancelling the easement.

That afternoon Neighbor OO invited me to lunch (his treat) to discuss the problem.

They won’t take no for an answer.

I said “No thanks”. He extended the offer again two days later, and again I said “No thanks”. Others of the original OO contacted me to try to talk. Some sounded aggressive, some sounded sympathetic. I said “No thanks” to each of them.

Eventually the lawyer phoned and asked if we could come to some sort of arrangement. I asked what he had in mind, and he told me that he was prepared to discuss exclusions in exchange for access to my property. So I said “No thanks, and please don’t call me again”.

Now he is getting somewhere.

About 9 days before their 30 days was up I got a call from a different lawyer. He said he wanted to “negotiate a surrender” (his words, not mine). I agreed to meet him at his office the next day. I’d already had documents drawn up, and the meeting was as simple as me giving him the documents and him reading them over. My new easement offer:

He is really asking for a lot!

Included everything offered by the old easement offer,

I changed the line “mow the lawn” to “get the property to HOA standards and keep it there” since it was now in the HOA.

Would cost them about $500 per month instead of ~$35,

This amount would increased with inflation (the previous contract didn’t include that bit).

When cancelled, for whatever reason, the HOA would have to pay me a cancellation fee of around $7500.

The contract automatically terminated 30 days after

any disciplinary action was taken against the me, my tenant, or the property (“the property”),

any complaints were levied by the HOA against the property,

any legal action was taken against the property by anyone in the HOA,

That [lawyer who had offerred to negotiate surrender] would be allowed to mediate any disputes between us, at HOAs expense, and that

The HOA would pay all my legal fees if any legal action was taken against me.

This is a smart move.

I’d deliberately left some insane things in there so that I could appear to “concede” some points or be negotiated down when the HOA got indignant about the points I actually cared about.

The lawyer didn’t look happy.

It was designed to be unfair.

He said that my proposal sounded unfair, but that he’d have the HOA president look at them. I reminded him that in 8 days I’d be setting a group of men armed with sledgehammers and anger management issues lose on whatever of theirs was still on my property.

That evening I got an irate call from the HOA president. He told me he was never going to sign the new contract.

No problem, sir.

I said “OK”. He then told me I was charging too much per month, and that it should be at the same rate as the previous contract. I pointed out that when I signed the previous contract the area was under development, and there was at least one other road leading in and out, but that now there was only mine.

And besides, mine was now developed with everything they needed. He told me that I was forcing them to sign a document they didn’t want to sign. I told him that he was free to not sign it. He whined about everything he could think of. And then eventually told me I’d be hearing from his lawyer.

At least this lawyer seems reasonable.

The next morning Surrender Lawyer called to ask if I’d be willing to come to their offices to sign the contract. I agreed. When I got there that afternoon I learned that Surrender Lawyer was not a lawyer, but a Paralegal.

He handed me the contract and asked me to sign it. He laughed when I told him I’d have to read through it first to make sure nothing was changed, and mumbled something that sounded like “I’m sure you would”.

Wow, he is getting everything he wanted!

I read the contract. Nothing had been changed. NOT A SINGLE THING. And the HOA president had signed it, with the Surrender Paralegal signing as witness. I looked at him and said “Why did he sign this? It was stupid to sign it!”

And the paralegal looked at me and said “I started telling him that signing it would be a bad decision, but he told me I wasn’t being paid to think or give legal advice, and to shut up. So I shut up.”

Hey, if the guy doesn’t want legal advice, no reason to give it to him.

I said “Do you understand what he’s signed here?”

He looks at me and nods. He said “I asked him if I should have one of the lawyers look at it before giving it to you, and he told me that we had already billed enough for this, and that he’d sign it and sue me after their easement was safe.

This is what they get for not reading it closely.

This happened about a year and a half ago. It took 6 months for the HOA to find out how screwed they were.

They wanted to sue me, but their lawyers explained to them that there was no way to win.

Even if the court sided with them, all they would get is the easement contract voided, and they did not think that the court would side with them.

Did he even intentionally word it this way?

The lawyers were adamant about one thing – the HOA could not live with the “HOA pays my legal fees if legal action was taken against me” since it didn’t limit the people taking legal action against me to the HOA – as worded, the HOA would be forced to pay for my legal fees if ANYONE took legal action against me.

They argued that the courts would probably not enforce that, since the context of the agreement was to do with the HOA, and I told them I was prepared to find out since the HOA would definitely be the ones taking action against me if they challenged it.

Why would the HOA president agree to this?

I eventually signed an addendum to the contract that said that the neighbor OO (HOA President) would personally pay all my legal fees unless he held no position at all in the HOA, and that the HOA would pay all legal fees if the HOA took legal action against me. He resigned from the HOA at the end of that meeting.

I politely told him in front of everyone that he should not sign documents unless he understands what he’s signing. He didn’t look pleased.

Wait…what!?

It came out during the mediation (you cannot imagine how happy the lawyers were that their paralegal was mediating) that without the ability to control access to the HOA neighborhood through the security boom (partially) on my property (the HOA had become a “gated community” a number of years back) the HOA would be in breach of their own articles and would be dissolved.

I also learned (should have been obvious to me) that all the security cameras were wired, and all terminate in the guardhouse / guard shed. So basically, it was my way or the end of the HOA.

He really thought of everything.

That first mediation was really quite funny. My paralegal looked more than a little glum as we assembled and he called everyone to order. I suspected that he had been told to work against me, so I took the initiative. I reminded everyone there that I had agreed to let Paralegal mediate, but that I had agreed to no arbitration at all.

If I didn’t feel like the proceedings were fair I’d leave and they could go ahead and sue. Paralegal brightened up and things actually went quite well.

Now he is just getting petty.

I’m writing this after getting home from the latest mediation. I built a “paddling pool” for the neighborhood dogs. As in I made it myself. I dug a hole, packed it with stone, and added a concrete finish. It was my first attempt, and if I say so myself, it looked … well, terrible.

The HOA called for a mediation meeting (what they do now instead of taking official action. I’ve declined their mediation requests in the past) in which they told me, as nicely as they could, that the paddling pool was an eyesore right at he entrance of the HOA.

What is he doing now?

I asked them to create a list of what needed to be fixed and how it needed to be fixed to give to me at the next meeting. The list was extensive. It basically required the pool to be rebuilt from scratch, I asked them if there was any way to reduce costs on the work they needed to get it up to HOA standards, and they assured me there was not.

I thanked them, pulled out a copy of the agreement where they had agreed to “get the property to HOA standards” (which I’d highlighted) and handed it to them with the list.

Wow, he is really sticking it to them!

I told them the HOA usually preferred if these things were dealt with within 30 days. They started arguing until the mediator reminded them that they could not force me to comply without causing the easement to end. I should mention that their lawyers usually no longer attend these things. They said they would get it done.

I also learned a lot about neighbor OO today:

He wants nothing to do with this.

I found out that Neighbor OO sold his property about 3 months back, and is apparently leaving the country for Australia.

I found out that the HOA had successfully sued him for a crapload of money they had lost to his mismanagement as part of his vendetta against me.

I also learned that he had a vendetta against me. I have no idea what I did to upset him.

He has a pretty good thing going now, I would just leave it alone.

I’m not sure if I will screw with the HOA any more. I already think I’m so close to breaking them. The only thing stopping them from canceling the contract is the massive financial loss if they do. I guess a lot depends on how they treat me and my tenants going forward.

Also, I do like the monthly payments, though, so I’m motivated to play nice.

This is always good advice.