February 17, 2005
By Margaret Bar-Akiva; Op-ed published in The Asbury Park Press
Bill seeks to bring democracy to homeowner associations
Article Courtesy of The Asbury Park Press
By MARGARET BAR-AKIVA
Published February 17, 2005
In November, Sen. Shirley K. Turner, D-Mercer, introduced
S-2016 on behalf of our organization, the Common-Interest Homeowners Coalition.
The bill is a clear and comprehensive response to the serious governance
problems plaguing homeowner associations today.
More than 1 million residents, many of them senior
citizens, live in condominiums, planned unit developments, town homes and
cooperatives across New Jersey. But unlike other New Jersey homeowners, they
often discover that living in such communities means relinquishing some of their
basic constitutional and property rights.
On a daily basis, homeowner association residents are
subjected to boards that hold closed-door meetings, conduct improper elections,
deny access to financial records, impose unreasonable fines, refuse to answer
questions and initiate frivolous and self-serving lawsuits, all at the
homeowners' expense. Some associations have been forced into bankruptcy as a
result of mismanagement or corrupt business practices. Homeowners have been
forced to pay thousands of dollars in special assessments in order to salvage
When homeowners exercise their fundamental right to ask
probing questions, they are often stonewalled, vilified or harassed by their
boards. All of these undemocratic practices have been documented on numerous
occasions by the Department of Community Affairs, and described in the report
submitted by the Assembly Task Force to Study Homeowner Associations a few years
Many people are at a loss to explain how homeowner boards,
which have been granted government-like powers to impose fines, levy assessments
and place liens on homes, have been allowed to do so without any of the
governmental oversight requirements that such powers demand. And people are
equally bewildered that a country bold enough to export democracy abroad can
tolerate this form of anarchy at home.
There is no doubt that today's widespread dissatisfaction
with homeowner associations stems from laws of the 1960s that failed to
establish them as quasi-governmental entities but classified them as private
business corporations instead. While the dire outcome of this form of housing
might not have been anticipated 40 years ago, we have now acquired sufficient
experience by which to make at least the following observations:
Applying the corporate business model and the business
judgment rule to homeowner associations has proven to be deeply flawed because
it has unwisely exempted them from state scrutiny.
The lack of governmental oversight has allowed homeowner
associations to turn into breeding grounds for special-interest groups and has
permitted unscrupulous board members to act with impunity.
The wide latitude given to homeowner boards mandates that
they no longer be allowed to masquerade as private corporations but be treated
just like any other government-regulated business.
Turner's bill seeks to remedy these deficiencies by
recognizing the quasi-governmental nature of homeowner associations, providing
them with clear and uniform guidelines to follow, and requiring their boards to
operate in an open and democratic manner.
These problems are not unique to New Jersey. The history of homeowner
associations across this nation paints a disturbing picture of government
officials who have essentially abdicated their responsibility in protecting
association residents from a housing experiment gone awry. The difference is
that New Jersey now has an opportunity to transform and improve this landscape
by passing S-2016.