'We felt targeted': These Oregon families are facing thousands of dollars in HOA fines — say the system is in the 'wrong hands.' Protect yourself now from these 'financial surprises'

A system in the ‘wrong hands’

Several families have moved out of the neighborhood due to fines and other board decisions, including Sheikh’s tenants.

"The harassment of the HOA has made us feel very uncomfortable and has forced us to look for a new place to live ... these claims are outrageous, and the discrimination is appalling,” the tenants wrote in a message that was later shared with the board.

Sheikh recounts when the board sent him multiple violations and fines — up to $1,350 dollars a week — claiming the tenant was operating a woodworking business and that woodworking was proof of “habitation” in the garage. Sheikh says his tenant enjoyed woodworking as a hobby and didn’t think they were in violation of HOA rules.

On another occasion, he received fines saying his tenant was "observed from the street performing work on their truck,” a violation of "dismantling or assembling motor vehicles" in an area that's not "screened from view” — and that the use of the garage to perform these repairs involved habitation by the tenant.

“It's endless trying to chase these things, exhausting," Sheikh says. "It has really affected the quality of our lives."

HOA president Martin Anderson told KGW8 the new board wanted to crack down on late dues and costs, like for landscaping, and that he felt the neighborhood had gone downhill in recent years.

In October, a group of homeowners sent the HOA board a letter requesting a special meeting. They wanted to vote to remove the president and represented more than 25% of the outstanding vote needed to do so, according to the HOA bylaws.

However, the very next day, Anderson and another board member voted to amend the bylaws, so that the percentage of owners who could call a special meeting of the owners needed to be 50%, while 90% of owners would be necessary to establish a quorum at meetings.

He then rejected the homeowners' request for a special meeting since the homeowners had not physically signed the document calling for a special meeting, Sheikh says. By that time, the new bylaws were in place.

"Boy, this just screams of abuse, right?” says Sheikh. “Or it suggests that this entire system in the wrong hands, with the wrong people serving these positions for the wrong reason, could damage a community.”

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Is there a lack of oversight?

It’s becoming increasingly common for neighborhoods to be governed by HOAs — in fact, 84% of newly built, single-family homes sold in 2022 belonged to homeowners associations, says CNBC, citing data from the U.S. Census Bureau.

Thomas M. Skiba, CEO of the Community Associations Institute — a membership organization of homeowner and condominium associations — says this is because there’s a financial benefit for local governments with constructing new homes.

“They don’t have to plow the street anymore [or] do all that maintenance and they still collect the full property tax value,” Skiba says

However, since HOAs are private organizations, any disputes are considered private matters and governments don’t have the legal authority to get involved, Kevin Harker, an attorney with Harker Lepore who specializes in HOA law, told KGW8.

“Litigation is expensive though; it’s emotional and it can hold up sales in the community,” Harker says, explaining a civil lawsuit is the last course of action.

Sheikh says the community doesn’t know what to do, aside from turning to a lawyer. "I thought we were a community, and now, it's become us versus them."

What do homebuyers and owners need to know

While Sheikh and other members in his neighborhood have been placed in an impossible situation, experts say there are ways to help you vet an HOA before buying a home.

Harker advises homeowners to read their HOA's codes and regulations carefully, volunteer on the board and track board finances, and try to resolve disputes as amicably as possible.

Jaime Moore, a premier agent for Redfin, tells CNBC it’s important to look into local and state laws to find out your rights as a homebuyer and potential homeowner, so that you can investigate the property’s HOA before signing on. Moore adds that buyers could even avoid HOAs by searching for older homes on the fringes of developments.

Skiba also recommends checking what the monthly or annual fees are and the HOA’s budget and look into the history of how assessments have gone up. He notes the community’s reserve funds, which cover repairs and renovations, should be properly funded and have enough cushioning to cover big expenses.

“No one likes surprises, and that is the kind of big financial surprise [that can] be really problematic for every homeowner,” says Skiba.