What is a "Reality Check"?

There is populist sentiment and then there is reality. The series on posts with the label "reality check" will provide an answer to questions posed from time to time. The questions are basically derivatives of "How could this happen?" and can be rephrased as "What was done or not done that got us to this particular place in time?" Another series of questions deals with "Where are we now?"

I've closely monitored more than one HOA for about 10 years. I've attended many, many HOA meetings. I've attended meetings where board members asked "How could this happen" and where owners do the same. It has become clear that what is sometimes demanded is a vanilla reply. Sometimes what is expected is an answer to the unasked question "What are YOU going to do about this?" From time to time I do not play the game and I state exactly "how this happened." Now that's a great way to stir up the hornets.  It's fairly easy to see the troops rally around a position when I fail to play the game according to their expectations. The push back is usually a demand by others in the group. "Why is my lawn dead and why haven't you done anything about it" or "There are mosquitoes, you should do something about it" or Why has it taken so long to finish the landscaping off my patio?" or "Why don't you do something about the potholes in front of my address?" Never mind the reality that it isn't "their" lawn and even that patio is maintained by the HOA using HOA fees. Never mind the reality that 96 people have no choice but to drive on that road and we are all in the same dilemma.

I have discovered that disagreement is not acceptable among "nice people." However, the selected few are part of the "nice people" and the rest of us are something else. That includes pummeling the current board. That's great sport! Apparently, the primary job of the board member is to shield the owner from reality and deal with all of the cr@p that he/she doesn't want to get involved in. When we fail to do that, we are a "bad board." In other words, simply give us the sugar coated reports; don't enforce the rules, particularly if I am in arrears with my fees or prefer to park in the "no parking' areas; avoid providing delinquency or foreclosure information; simply tell us "we have enough money;" lower the fees;  and, oh, while you are walking the grounds please pick up the trash and please give me a new sidewalk. Some owners apparently don't read the newsletters, either.

Looking at what worked and did not work is one way to grow, develop and achieve positive results. All too often the questions are posed with the intention of spreading blame, or avoiding responsibility. Sometimes it is all about outrage. It doesn't take a bright person to decode the real question and the expected answer when a couple of owners produce a list of complaints and then snarl, with faces distorted by anger "What do we get for our money?"

The series of posts on "reality checks" will look more closely at this. After all, it is desirable to learn from our mistakes and our successes. It is also desirable to minimize expenditures in a HOA. As I am fond of stating to owners and board members. "We have limited resources." In other words, boards can't go about doing things that flush the money of the owners. Or perhaps I should change that to "boards should not flush the money of the owners." Contrary to some beliefs, inaction is as costly as action. Lakecliffe Blvd is providing a wonderful example of this. One owner remarked at the recent HOA meeting "Our streets are disintegrating." They were referring to problems they had noticed on Gloucester. It seems we are moving forward. Believe me, it has been a long, difficult road. No pun intended.

Lakecliffe is a metaphor for a disease which gripped this HOA for a time.  It is present in all of us and in society and communities. It may be held in check. It is not possible to eliminate it because it will always be present. The symptoms include an inability to act. The symptoms include a willingness to avoid difficult decisions.

From time to time the residents, owners and potential HOA owners exhibit concern about the health of an HOA. My "reality check" posts are universal in nature and are not about any one HOA; it is however based upon my personal experience. HOA health concerns should be something to think about from time to time. After some thought it might be necessary to take some positive action. There are a few burning questions to be asked. Sometimes, asking a question and then taking the time and effort to determine the answer is more important than demanding an answer from others. I am concerned about a society in which there is a tendency to demand that answer which satisfies and meshes with the pre-conceived notions of the questioner. However, I assert that ignoring unpleasant answers might be dangerous to one's financial health and quality of life.

Asking questions does require a certain amount of courage, and awareness. Doing the necessary research does require some effort. However, doing the work, asking the difficult questions and avoiding the simple answers does have a payoff.  There is reality and then there is one's beliefs. Some people believe they can defy gravity. Gravity wins. Nevertheless, some questions are unanswerable. Acquiring the skills to find authentic answers when they exist does prepare one for the unknowable. In other words, for those questions that are unanswerable the process to uncover the answers can provide useful insights. For an HOA, unanswerable questions can yield quality indicators or can be predictors of where an HOA will most likely be in 10 years.

What's noise? I refer to disruptive owners or ancillary issues as "noise." There is a reason for this specific term. Noise masks or obliterates valid signals and measurements. It detracts or prevents one from dealing with valid issues. And so it is with some factors and some owners in a HOA.  Here's one example. Because the builder and the city failed in the installation of the fireplaces at BLMH, this has been a component at many HOA meetings at BLMH. The fire places are owner responsibility. Yet, this has disrupted board meetings where Lakecliffe, roofing, water main failures and delinquencies should have been the hot topics for a board comprised of fiduciaries. So what's more important? Here's the answer: personal matters trump HOA business matters and if it doesn't then the board is "bad and wrong."

Sometimes, we become pre-occupied with financial matters to the exclusion of all else; that's why members of a former HOA board, after looking at the bank account, made the pronouncement that "we have enough money." Yes, $1 million in the bank is a lot of money and on a personal level, could salve the needs of an individual. However, when shared by 336 such an amount is $2,976 for each owner in my HOA. That's not enough to pay the annual assessment, much less replace the streets or the roofs and deal with operations. On an individual lever it might not even pay for the removal of 336 condemned fireplaces. In other words, when shared by 336 owners $1 million isn't that much at all. Using this arithmetic is an example of a "reality check."

However, the larger questions include: What are the characteristics of a healthy HOA i.e, is my HOA healthy, and why, or why not? So I pose the following questions.

• When is the dynamic of an HOA irreversible and the HOA in decline? Similarly, what are the indicators for a HOA in ascent?
• What percentage of owners are necessary to be involved in a healthy HOA and in what manner?
• Is owner apathy a good thing or not? If not, why not?
• Are owner fee delinquencies a good thing or not? Why not? 
• Are owner foreclosures a good thing or not? Why not?
• Is owner attendance at HOA meetings a good thing or not?
• Is owner compliance with rules and regulations a good thing or not?
• Is a full board a good thing? Is an understaffed board a good thing?
• Is your HOA board election primarily a popularity contest? Has this been so in the recent past? If so, is that a sign of a healthy HOA?
• Are rentals a good thing or not? What's a reasonable percentage of rentals in a healthy HOA?

Of course there are quality measurements. Certain factors can contribute to the ascent or demise of an association. What are those factors and what are the signs of good or poor quality? In other words, I ask these questions:

• Owner involvement can be measured. Should board staffing levels and positions/accountabilities be considered as an indicator of such involvement? Should the number of owners attending HOA meetings be considered and that includes annual meetings? What about on a building by building level? For example, are trash containers left out a positive or negative indicator; specifically, how much effort is required by a neighbor to bring in a another's empty recycling bin? If the other neighbors refuse to do this, is that a positive or negative indicator? When there are infrastructure problems such as a water main break, do owners call this in as an "emergency" or not? If not, is that a sign of a healthy HOA or not? If not, why not? If owners take the positions "I paid my fees and so I've done my duty" is that a sufficient quality indicator (similar to paying the mortgage or taxes)? Or not?
• Do owners exhibit any concern about the "health of my HOA?" If they do not, should that be a cause for concern? If owners do express HOA concerns are they usually about personal issues such as "the condition of my landscaping" or "my fees" or is it expressed as the "gross inadequacy of the board?" or other complaints? In other words, do most owners see the success or failure of the association as a board issue and as solely the responsibility of the  board?   Is such a position indicative of a healthy HOA or not? 
• Apathy can be measured. Is this important? Are voter turnout, delinquencies, lack of rules compliance  indicators? Are owners aware of what's going on in their association? Do owners know the rules and regulations? Do owners know the current level of delinquencies? Do they know the level of foreclosures? Do they know about legal issues and are they aware of any legal suits or judgement against the HOA? Do they even ask about these things at meetings? Or are owners generally unaware or express a desire for the "good news"? Is being comfortable and satisfied the primary concern of owners?  Do owners want to be aware of everything, both positive and negative? Is apathy of any consequence and is it important? Is such an attitude an indicator of the presence or absence of HOA health? 
• What about owner perception of the HOA board? Is that an indicator of HOA health? Do owners view the HOA board as partners? Or is the board primarily perceived to be servants? or is the board adversaries? Is it healthy for a HOA if owners see the board as an adversarial relationship? Is it a positive if owners perceive the primary board purpose is to do the "dirty work" and to act as shields so as to allow owners to go about their daily lives spared from the problems and the issues? Do owners view their life in their HOA as a "owner versus board" existence or as "us versus the board?" How does your HOA perceive the board? Is that a quality indicator?
• Do owners consider a good board to be one that runs the business, or is a "good board" one that tells owners what they want to hear and shields them from everything else? If the owners in a HOA press for only the good news and complain about anything that is perceived as "negative" is that a positive health indicator? Do the owners complain about any negative information in the HOA newsletter or communications? Is it healthy for owners to demand to have boards which tells the owners what they want to hear to the exclusion of all else? If it isn't healthy, then why not? 
• Are rules and regulations necessary? What's the view of owners? When the board enforces the rules are they perceived to be the "police?" Is it an indicator of a healthy HOA? Do other owners defend the rule breakers and take the position that rules enforcement is really an encroachment by the board on personal privilege and rights? Is that a positive indicator of HOA health or a negative one? 
• Is enforcement of the rules and regulations a necessity according to owners? Do owners harangue the board for better rules enforcement but expect someone else to do this? Is that  a healthy thing? When owners are advised of a rules breach do they argue and threaten the board? Is that a sign of a healthy HOA or not? When boards give up about rules enforcement in disgust or powerlessness, is that a sign of a healthy HOA or not?
• Are delinquencies inevitable? If so, what's an unhealthy delinquency level and what total amounts? What is the perception of owners when the board enforces the rule to pay fees and uses all proper means to collect from delinquent owners? Is that important? For example, do owners applaud the board for protecting their finances or do they attack the board as uncaring or being "a bad board?" When owners become delinquent and are legally requested to pay their obligations, do they do so, or do they hire an attorney to avoid their obligations to their fellow owners? Do owners in arrears acknowledge that they did, in fact, fall behind and broke their agreement and obligations? Do they then recommit and agree to do their utmost to honor that obligation? Or do they do what they can to avoid the obligation while telling friends, neighbors and relatives "what a vile, nasty board our HOA has?" When this occurs, do their friends trumpet and repeat the comments?  On becoming aware of this situation do other owners defend the board and affirm the need for vigorous fee collections, or do they "throw the board under the bus"? If these things occur are these indicators of a healthy HOA?  Or an unhealthy one? 
• What about foreclosures? Are foreclosures healthy for a HOA? What's the attitude of owners when their neighbors foreclose? Do other owners consider this to be a healthy thing for the HOA or not? Is there a discussion among owners about the responsible and necessary steps owners should take to avoid foreclosure of their units in life and after death or not? Is it a healthy thing for a HOA if there is no such discussion, and is it important in any HOA with seniors or one which some owners trumpet as "primarily a retirement community?" If it isn't important to the health of an HOA, why isn't it? 
• Is a healthy HOA one in which most of the owners are invisible, and then when things go wrong come to HOA meetings, accost the board and then say "How could this happen?" Is that an indicator of a healthy HOA or not? If not, why not?
• How is it that an association can have "good owners" but "terrible boards" according to some owners. Is this rational and is it an indicator of a healthy HOA or not? What it is indicative of?

How is it that an association can have "good" owners but "bad" boards? That's a really interesting question. Over the years, that's been an assertion of some of the owners at BLMH; "We have good owners but bad boards" they will say and so they say the fees at BLMH are "too high", the association is not properly managed or maintained, the rules are an affront to my personal liberty and are stupid,  fee collection is mean, etc.   Some HOA owners assert "I pay my fees so I do my share"; of course, the reality is that these fees are obligations just like paying the mortgage or real estate taxes. Doing so is merely paying the cost of admission. Those fees pay for all of the tasks the owners don't do. It isn't like sending money to Washington to be spent elsewhere. It is also a fact that if they didn't pay their fees they would be challenged and a demand for payment made. If they declined then eventually their unit would be possessed and they would be evicted, exactly what their bank will do if they fail to pay their mortgage. They would also lose their abode if they failed to pay their real estate taxes. Now, it is a fact that not all HOA boards pursue this.  So in some HOAs owners pay the bank and the county, but fail in their obligations to their fellow owners. Some HOAs have failed as a consequence. Others have struggled. Some have higher fees as a consequence.

I do understand that from a certain point of view, the current board which has and does vigorously pursue all delinquencies is in the eyes of some at BLMH a "terrible board." I disagree.  We're all obliged to pay our fees. Some owners pay their fees and some don't. The association is obliged to collect all fees from all owners. Period.

Certainly some HOA boards are more effective than others. But what role in this do the owners play, beyond paying fees and doing their election chore? To what extent in an association do the owners promote "bad behavior" and an unhealthy association? To what extent is a HOA an expression of the owners? Here at BLMH, the promoted position of some very verbal people is that everything is the fault of the board; it's embarrassing to live here. Yes, some people are unhappy and some will say and do most anything to avoid paying their fees. When they don't they say they have valid reasons. It seems that a few truly believe that delinquencies, foreclosures and rule breakers, these are the people who add the the quality of life in a HOA! Is such an attitude indicative of a healthy or unhealthy HOA? I suppose if there are only a few who operate from that paradigm it is simply a fringe. But what if these arguments and positions, what if these few become the motive force in a HOA? Is that healthy or not?

Asking the difficult questions and looking for the answers. Is that a necessity? Why or why not? Does it matter? Does anything matter?

I am interested in history as a predictor such as "How is it that a HOA gets to the current state, be that the fee level, reserves, overall finances, community makeup, number of delinquencies, number of foreclosures, number of rentals, physical state, rules enforcement issues, etc."?   Ignoring facts and relying upon feelings, hunches, etc. can lead to problems. Operating solely by popularity is ineffective. We have had a lot of popular politicians in Washington. Each and every president was elected by millions of votes.

Of course, popularity is fleeting and the sub-group will turn to someone else; they always do. In some HOAs there seems to be a lack of willingness to accept any responsibility on the part of owners. When all else fails, owners can always declare "I didn't know." Or, "How could this happen?"

Other owners sometimes ask the question "Why is it the way it is?" I think we are asking the same question. I also am of the opinion that owners in any HOA would like to know where their HOA will be in 5 or 10 years. For example, how many rental units, how healthy the reserves and finances, the state of the infrastructure, the fee levels, etc. Can these things be predicted and determined? To a certain degree, they can. Of course, once we do discern the future, we might not like what it is we discover. Perhaps that is a powerful avoidance motivator.

Here are some of the attributes of functional and dysfunctional HOAs. These factors are present to a certain degree in each and every HOA because no HOA is perfect. It is an imperfect world, yes? To what degree are these factors present in your HOA? Are you aware that they exist? Many owners are unaware of many of the facts. "Reality checks" may provide a measurement of the pulse of the HOA. The following list of factors are a few of those that can and will be illustrated over time in my series of posts under the label "Reality Check." Before anyone of the "I only want the good news" contingent complains, I'd like to point out the posts are an affirmation and indication of a healthy HOA to the extent that owners and board members are willing and able to ask the difficult questions and acknowledge the positives and the negatives of HOA living. Or would you rather live in a HOA where we all say, no matter the circumstance "It's all wonderful"? BTW, here at BLMH, the most negative of the "only give me the good news" group are usually the ones who are the most negative about fees and rules enforcement. Some complain about fees and do everything in their power to annex the common elements to their unit! Any board that doesn't subscribe to the wants, needs and desires of the entitlement brigade is a "vile, bad board member" and I speak from years of personal experience.

Continuing with a list of Reality Check indicators to be aware of:

apartment dweller mentality
apathetic and disinterested owners
avoiding responsibility
board-management-vendor conflicts
board turnover
collusion of owner groups and board members
constructive factors
contractor and vendor turnover
crossed-purposes
community issues
delinquencies
destructive factors
dysfunctional groups (boards, owners, etc.)
entitlement mentality
exclusive groups
excessive optimism
failure to grasp reality
financial irresponsibility
financial failures
foreclosures
generational conflicts
imbalance
inability to establish priorities
inability to make decisions
inability of a board to function as fiduciaries
infrastructure failures
intolerance
irresponsible neighbors
irresponsible or less than responsible owners and boards
lack of financial skills
legacy issues
legal conflicts
managerial failures
management turnover
oversight failures
owner-owner conflicts
owner-board conflicts
poor judgement
procrastination
rules violations
shortsightedness, or a lack of foresight
stupidity
tenant-onsite owner ratio
tenant-owner conflicts
undermining behavior
unforeseen circumstances
unprepared owners
unprepared boards
unreasonable expectations
untruthfulness

Do the above factors contribute to or determine the state of the HOA? If not, then what does?