Commentary: Some homeowners are at the mercy of unmonitored and predatory management companies

This issue needs a public venue, where residents, homeowners and managers can relay their experiences and concerns.

Rick Egan | The Salt Lake Tribune Homes for sale in a new subdivision called Rushton Meadows in South Jordan, Wednesday, April 27, 2016.

Utah’s booming population growth is demanding more and more residential housing, and according to recent reports, our builders are building more than any state in the nation. However, with this success come unintended consequences: predatory Home Owner Associations (HOAs).

As counties along the Wasatch Front and throughout Utah strive to meet these growth demands, they are turning to more efficient ways of using available land. Cities, counties and developers frequently turn to Smart Growth principles to help guide them. These principles include mixed-use and multiple product residential and commercial developments, more walkable and transit-focused urban centers, increased emphasis on public transportation and the preservation of open space. These development challenges and opportunities must be accompanied by increased stakeholder collaboration and participation.

Due to maintenance requirements for private streets, sidewalks, parks, etc., local municipalities frequently require the establishment of a Home Owners Association for each development. Homeowners’ direct participation is essential through a locally elected HOA Board of Directors that is made up of residents living in their respective condominium building, town houses or single-family homes.

Because most homeowners lack experience in running an HOA Board (or executing contracts with financial institutions, architects, engineers and contractors) they are, with increased frequency, turning to private management companies to guide them through management challenges. Unfortunately, many HOA board members are equally inexperienced in dealing with professional HOA management companies.

As a result, some HOA boards fall prey to predatory management companies. In no time, the HOA board relinquishes their authority to the management company, thereby compromising the fiduciary responsibility they have to their own residents. Some management companies are:

- Producing one-sided contracts for the HOA board to sign, which guarantees payment to the management company, but releases the management company of responsibility or liability.

- Removing critical documents and contracts once housed with the HOA board to the management company offices.

- Wholly monitoring the election ballots and results.

- Hiring attorneys who actually have a fiduciary duty to the management company, not the HOA board and residents.

As Utah’s population grows, and HOAs become more prevalent, a greater segment of our population will be at the mercy of unmonitored and predatory management companies. This is not acceptable. As local municipalities often stipulate that developers create HOAs, our elected officials must recognize their responsibility to protect citizens against predatory management companies.

The most efficient and cost-effective solution to these growing problems is to ensure transparency and fairness by appointing an HOA ombudsman, housed at the office of Consumer Protection. An HOA ombudsman can be a point of contact, a reference, and an objective intermediary. This will provide a critical checkpoint, preventing unwanted and unnecessary litigation by insuring a neutral setting and hopefully resolution. Complaints and investigations will allow HOAs the opportunity to check the work history of their current or potential management company and will serve prospective buyers as they do their due diligence on a specific condo building or community.

This issue needs a public venue, where residents, homeowners and managers can relay their experiences and concerns. I will request this item be placed on the interim calendar after this next legislative session and I encourage and welcome your participation.

Jeremy D. Egan

Jeremy D. Egan, South Salt Lake, is a Republican candidate for the Utah Senate, District 3.

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