Remarks to the Texas State Hearing Committee on Homeowner Associations

January 16, 2002

By Elizabeth McMahon (View author info)
Copyright ahrc.com

The following is a report by Elizabeth McMahon was given to the Texas Senate Committee on Intergovernmental Relations Committee - University of Houston, Houston, Texas

My name is Elizabeth McMahon.

I have been working on homeowners association issues for 13 years both locally in California and also nationally. I served as the consumer representative on Subcommittee of the California State Senate Housing Committee set up to revise the California homeowner association laws.

I set up the first national data gathering site for homeowner associations, and subsequently, the first homeowner association news service. I am currently the Executive Director of the American Homeowners Resource Center, and Editor in Chief of AHRC News Services. My remarks here, which are necessarily brief , are based on that 13 year experience.

Homeowner associations are seriously flawed both in their fundamental concept and practice. Executives (board members) are generally completely untrained for the operation of what are often multi-million dollar enterprises. Lacking the external discipline of stockholders that the normal business enterprises have, or the regulatory oversight that municipalities have, boards operate in a legal no man's land.

The law should clearly recognize that homeowner associations are another layer of government, and make them comply with state law regarding elections, disclosure and non-discrimination. Lawyers and management companies should be banned from keeping them in power. The lack of professionalism and expertise often allows petty animosities to rule the day. This creates ill will, which causes more ill will, and before long, an association is a seething cauldron, close to the boiling point. In one association in Arizona, the cauldron boiled over, and a homeowner shot 3 board members to death because he believed that they were unnecessarily harassing him.

In the midst of all these complexities and confusions, one simple fact should act as a guiding beacon. People need safe, comfortable and adequate homes. People in prior generations were able to do that without the entangling mess of laws and regulations that homeowner associations represent today. Is it a too impossible a task for this generation to achieve that? I do not think so. However, it will take courage, a clear mind, and a willingness to place the welfare of the citizen's home before that of such powerful economic interests as lawyers and other association vendors.

I know that the collapse of Enron has caused much pain and suffering in Houston. Hence, I do not lightly make the following comparison. Unless the issue of homeowner associations is comprehensively tackled, there will be many future Enrons within them also.

Thank you for your attention, and if I can be of any assistance, please do not hesitate to contact me.


American Homeowners Resource Center
Telephone (949)366-2125
Website: http://www.ahrc.com

Attachments
Media stories on homeowner associations foreclosures
CHUBB Insurance - Abusive Use of Directors & Officers Liability Policy

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