HOAs in the Media: 5 Scandals Affecting Community Associations in 2012

Posted by Andrea Drennen, CMCA on December 31, 2012

Scandals affecting Community Associations in 2012

2012 was a year rocked by scandals affecting community associations. At a time when we are looking ahead, making resolutions, we thought it might be helpful to look back and see the scandals that colored the public’s knowledge of HOAs in 2012, and perhaps learn a lesson or at least take heed of a warning from that reflection.

  1. Shooting brings neighborhood watch and HOA security into question.

    Perhaps the biggest news story involving HOAs in 2012 was the fatal shooting of 17 year old Treyvon Martin by neighborhood watchman George Zimmerman. In spite of the fact that Mr. Zimmerman was not on duty for the neighborhood watch at the time, and not acting as a representative of the HOA, a lot of news stories and public attention was focused on the HOA. As a result of the events, many in the industry turned their eye to their own community policies for neighborhood watch programs.

  2. Corruption and Embezzlement is catching up to Fraudsters

    Fraud is certainly nothing new; as with any other situation in which opportunity is present, and a person feels entitled, HOAs are vulnerable to corruption, embezzlement, extortion and fraudulent behavior. What is new is the awareness of law enforcement and actions being taken on these crimes. One case that had a lot of media attention in 2011 involved an FBI task force in Las Vegas that eventually identified over 75 conspirators in a scandal that rocked the HOA world in its scope and complexity

    Following that scandal, case after case has been aired like dirty laundry in the media throughout 2012. While this may seem disturbing on the surface, the encouraging news is that the measures taken by law enforcement, communities, oversight committees and residents in general are paying off, and fraudsters are being caught. 
  3. False news story brings out the worst in HOA haters

    One of the most common complaints by those who dislike homeowners associations is the covenants, conditions and restrictions unique to every community. Specifically, any restriction on holiday decorations or American flags tends to get their blood pumping. But public outrage took a stumble in 2012 when a photograph was incorrectly reported as result of an HOA violating a homeowners rights. In fact, the home is not even in an HOA but in an Historical district, and the issue had nothing to do with a flag pole.

    Nevertheless, HOA boards continue to struggle with striking a balance between a visually appealing community with higher property values and holiday revelers just wanting to have a good time.
  4. Court rules in favor of banks; associations fear ability to collect on assessments

    Sometimes it’s a court case that changes the face of the world as you know it. In 2012, many in community management took note of the outcome of Coral Lakes Community Association, Inc. vs. Busey Bank, NA. et.al. in Florida. The crux of the decision was that the bank, which had taken over a deed on a foreclosed home in the community, was deemed not responsible for past dues accrued prior to them taking on the property. 

    This led to a lot of fear for other communities across the country that are facing the issue of foreclosed properties whose owners are rapidly changing hands, and whose dues payments are woefully in arrears. To insure this does not happen to them, many communities have had to take a good hard look at their community documents.
  5. Sex, Lies and Insurance Fraud the rule of the day in Florida

    Florida homeowners associations struggled hard in 2012 after the announcement that Citizens Property Insurance Corp., the state-backed ‘last-chance’ property insurer was going to revoke discounts for hurricane proofing measures, and force statewide inspections to comply with a series of policy changes. As a result, many policy holders experienced doubling of their premiums along with decreased coverage

    To add insult to injury, dozens of scandals have since come to light involving the insurer, including such allegations as paying hush money to former employees in the form of huge severance packages, side business using company resources, sexual harassment and fraudulent external audits of executive conduct. Even attempting to sue the company comes with a new set of problems. To put it mildly, policy holders are unhappy with the current state of affairs!

Aside from making for a salacious gossip item, a scandal can bring into light an instance of wrong-doing or injustice, but it can also damage reputations of both the guilty and the innocent. Sometimes, the best thing we can do to avoid the negative attention is to simply be polite, and fair to all. And hire a good lawyer…just in case 


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