The surprising powers
HOAs HAVE TO
wreak havoc in people’s lives
Brought to you by Drew McManus, your neighbor in 7908.
Introduction…
The April 10, 2023 episode of Last Week Tonight with John Oliver featured a segment where the host discusses homeowners associations (HOAs) and the surprising amount of power they wield.
In a striking coincidence, exactly one week later during the April 17 Board meeting our Board President, Scott Timmerman, surprised owners with an automatic late fee policy that ticks all of the red flag boxes from Oliver’s segment.
Authority Gone Awry…
Oliver highlights one of the problems with HOAs is even though they are set up as not-for-profit, private corporations that can often function like a local government.
This means they can set the rules and the punishment without owner review or input, a point Oliver expands on at the 9:24 mark.
“And that gets to an important point here because HOAs can have the authority of a government and collect fees and fines like one, but when it comes to accountability, they can actively resist it in ways that government officials could only dream about.”
– John Oliver
This sort of largely unregulated authority means government regulators see any disputes between an HOA’s Board, its management company*, and its members as private matters. That’s another red flag Oliver points out toward the end of the segment at the 19:05 mark
Speaking of management companies, at the 12:27 mark, Oliver says:
“If you’re thinking ‘Well, this all seems [bleep]ed up, but thank God there aren’t private companies making this worse,’ hold on, I’ve got some bad news. Because at this point, we should probably discuss management companies.”
He singles out Associa as an example of a management company making bad things worse. Our management company, Sudler, is a an Associa company. 🤦♂️
PROCESS MATTERS
Bad Process = Bad Policy
The latest bad decision happened during the April 17 Board meeting where the current Board President, Scott Timmerman, implemented an automatic late fee policy. He held no vote and he did not include the item in the Board agenda distributed to owners in advance of the meeting.
Along with Timmerman, House Rules Committee Chair Melinda McMullen are the primary Board members responsible for proposing fee policies. By implementing a process that blindsides owners, It’s understandable if you feel frustrated.
It is critical for owners to feel informed and included in decision-making processes, especially on financial matters that directly impact members. Board leadership that fails to follow a reasonable process risks begin seen as lacking accountability and violating the trust of those they represent.
Let’s walk though the process that led to this policy being forced on owners:
One week after Oliver’s segment aired, Timmerman implemented a new late fee policy that automatically assigns a $250 fee for anyone with an outstanding statement balance of only $250, regardless of your full assessment amount.
He held no vote on the matter and left it out of the meeting agenda distributed to owners.
The way the process should work is fines and fees must be made available to owners for review and feedback during an open meeting, then voted on by the full board.
Timmerman, along with Rules Comm. Chair Melinda McMullen are the primary members responsible for fee policies. That leadership team prevented a healthy process from unfolding.
Owners weren’t notified until 3 DAYS before the policy went into effect.
That notification was buried in the HOA newsletter sandwiched between “Sky Sale” and “Cat Lovers Social Event” announcements. The Association didn’t even include information in each owner’s monthly statement until a month after it went into force. The office sends dedicated email messages, like this, all the time but for some reason, the Board President did think a 150% fee hike was important enough. By implementing a process that blindsides owners, It’s understandable if you feel frustrated.
Speaking of that 150% fee hike, since 2020 the late fee payment increased three times from $100 to $250! It also penalizes owners with smaller units.
If you pay $900/mo for a studio this is a 27% fee. But it’s only 10% for an owner with a larger unit paying $2,500/mo. Fair and equitable policies use percentage based fees.
Timmerman and McMullen have created a fee policy even Ticketmaster would be jealous of.
BAD POLICY IN ACTION
Immediate Harm
Imagine your shock if you saw a $250 late fee in your monthly statement when you’ve always paid your assessments on time.
That’s exactly what happened to me in June and I remember thinking to myself “this must just be a mistake, I’ll contact the office and they’ll get this cleared up.”
Spoiler: that didn’t happen. 🤨
Timmerman’s automatic late fee policy didn’t consider any existing conditions nor did it review accounts before being adopted. Based on my experience, owners can expect an environment where even those with perfect payment historiesare treated like deadbeats. And if you’re unfortunate enough to experience one of life’s pitfalls, you can expect the same treatment.
Your spouse died at the end of the month and they handled paying assessments?
Too bad, here’s your late fee!
The Post Office delivered your check late?
Too bad, here’s your late fee!
Your bank got hit with a ransomware attack?
Too bad, here’s your late fee!
The office made a mistake with your statement?
Too bad, here’s your late fee!
We opted into the E-Check method that uses Zego™ Pay for paying our assessments. This required setting up the account through the Sudler website but it wasn’t working. I met the Assistant Property Manager in person in the office where he confirmed the trouble but assured me they would be able to set up the account for me directly. That’s what happened and it worked fine…until it didn’t.
In December that same year, I reached out to the office to change the amount for next year’s assessment increase and was told I had to do that myself. That would have been fine, but the problem is I never received any account login information and had no way to change the amount.
Zego Pay had no record on file with any of my email addresses, name, address, nor my Sudler account number. Sudler claims they can’t set up these accounts so this was my problem (more on that below).
Being stuck between providers was frustrating, but I proposed simply paying any difference by check at the end of the year until Sudler was able to help rectify the account access issue. The office did not object and each year, the Association accepted payment and cashed the check, all of which constitutes an agreement. Over all of that time, I’ve never received a warning nor has the Association issued any late fees.
After Sudler set up my Zego Pay account incorrectly, I was told it was my problem to fix.
REASON IS FOR SUCKERS
Caught In The Middle
The primary reason our Board President refuses to authorize the unjustified fee waiver is Sudler’s assertion they had nothing to do with setting up my Zego account. Sudler insisted only owners can do that and it must be done through Zego directly.
But Sudler’s own payment documentation states otherwise. The first step in the process of using Zego is “Login to your My Sudler account at SudlerChicago.com.”
After finally connecting with someone at Zego, they provided documentation confirming that payment accounts are set up through an owner’s property management company. I went so far as to run Sudler’s scenario past Zego and they confirmed that Sudler’s accounts were inaccurate.
Drew – 6/15/2023
I’m looking to confirm what your customer service rep told me when I reached out on June 1. Specifically, that my account was not set up correctly by my property management company and was missing an email address and the account number from my association’s management provider.
ZEGO – 6/16/2023
According to the notes provided by your [Property Manager], we are unable to register residents directly. Meaning that your PM would have to manually add your account through their system and set it up for you. Additionally, per the last rep that you spoke with after going through their case notes it seems like they were able to confirm your email address and set up on Auto Pay.
Drew – 6/15/2023
That helps, thank you. But I believe the customer service rep at Zego I spoke with confirmed my email address was missing from my account at the time I called but they managed to add it there during that call. I think that’s what you’re describing but it will be helpful to get verification on that. Would you mind confirming that?
ZEGO – 6/16/2023
Yes that is correct.
After spending years trying to fix Sudler’s error, paying every assessment on-time, never missing a payment, and proposing a solution the Association accepted, Timmerman’s response was to gaslight the only person working to resolve the problem.
He wrote I was “blame[ing] others for the failure to timely pay the correct amount, rather than looking at [my] monthly statement as everyone else does.”
All this from someone who couldn’t even be bothered to look at all the information before passing judgement. Imagine how he would respond to an owner with a perfect payment history that pays late due to a death in the family or other life emergency.
FROM BAD TO WORSE
Don’t Like it? Sue Us…
Timmerman goes so far to assert that neither he nor the Board are obliged to even accept documentation owners provide to confirm why they shouldn’t be charged a late fee.
All of this puts the Association at risk for increased lawsuits, which is exactly the decision I have to make.
I contacted an attorney and believe there is an excellent chance to prevail in court on multiple grounds.
The reality is those costs would outweigh the amount of the fine, but that’s exactly what Timmerman’s policy is designed to do: discourage owners from holding him accountable.
THE PLAN
A Path Forward…
While legal action would benefit me, finding an opportunity for positive change is just as important. Even with a high degree of likelihood for winning, on its own, a lawsuit may only treat the symptom, rather than the cause.
It also allows the current Board leadership to deflect attention away from their policies and processes by making the conversation about the lawsuit instead of their judgement.
While those decisions are made, I can certainly invest my time and effort into communicating with my neighbors and offer as much support and any tools they need to help express their concerns to the Board.
Most importantly, it is essential for owners to take action and replace Board members who repeatedly demonstrate poor judgement.
Removing Board President Scott Timmerman and Rules Comm. Chair Melinda McMullen ensures our community is led by individuals with sound judgement and high ethical standards. All of this helps create a culture of good decision-making, accountability, and progress that leads to higher property values and an even higher quality of life.
THE GOOD NEWS
Here’s How You Can Make A Difference…
Get Empowered.
Contact the Board President and Rules Committee chair articulating the negative impact it has had on you and your fellow homeowners. Insist they rescind the automatic late fee policy in the August, 2023 meeting. An example letter is available for you to personalize here.
VOTE!
There are two goals:
- Vote out Board President Scott Timmerman and Rules Comm. Chair Melinda McMullen.
- Elect members that respect the rights of owners and support transparency.
Run for the Board.
Running for the HOA Board with the aim of replacing underperforming or ineffective members is a vital step towards fostering positive change and enhancing the community’s well-being.
If this is new to you, reach out, I’m happy to assist with any part of the process.
Talk to your neighbors.
Encourage them to participate in the HOA election process.
By casting their votes, they have a direct say in the decision-making processes of our community and can hold the current leadership accountable. Kick off that conversation and send them a link to this site.