Rob Ford is about to set a terrible example for the hundreds of thousands of board members out there – and the losers will be the owners in each of those condominium corporations.

Here is what is already being positioned – that his act of using corporate resources he shouldn’t have, and more importantly, the clear act of voting in a conflict of interest, should be overlooked. To be clear, it’s not contested by any that he took improper actions – just if it’s improper to find him guilty for the actions.

The National Post, a huge supporter of his, reports that Mr. Ford indicated his actions weren’t inadvertent, were not a judgment error, and were wrapped in a sense of entitlement, dismissiveness and confrontation.

If he fights the judgment, and is successful, then we are about to see a rash of similar actions performed by condominium corporations throughout Canada.

With Mr. Ford being a city Mayor – at least some scrutiny from the media and the public exists. There is some transparency of action and record that may be examined. With condominium boards the transparency is non-existent, and the records are far from detailed. Further, most provinces have little or no teeth for owners to vet, verify, or hold accountable their board.

Every week I get more news of an abusive board, or one that functions outside their bounds or limits. While I reference here a US report, it is applicable to Canada – the Colorado 2011 Annual Report of the HOA Information and Resource Centre indicates that abuse by the board is becoming owner’s number one complaint – eclipsing even people, parking and pets.

So what’s Rob Ford example to condominium board members that already act without real or enforceable oversight – do what you want, use corporate resources as you wish, remain unapologetic, and ignore conflict of interest rules.

Oh help our owners.

But owners that decide to simply bunker down and hold on to their properties until they rise once again will face an additional burden for their trouble: higher taxes.

Toronto has a Municipal Land Transfer Tax (MLTT) – on top on the provincial land transfer tax – which accounts to about 300 million dollars a year. This tax takes place when a property changes ownership. For a cost example, on the average cost of a condo ($369,892 – Toronto Real Estate Board) the Toronto MLTT works out to $3074.52.

If property prices fall 20% the drop in city taxes isn’t the same because the rate varies based on the price of the property. This is important to realize when the cost of detached homes in Toronto averaged $650,147, and the blended value of all property types  in Toronto averaged $517,556 – a 20% reduction in property value would result in a 34% reduction in the MLTT – or about $105 million in reduced revenue for the city.

A collapsed bubble market coupled with a MLTT will result in even further loss in property values. It will be bad enough when values naturally drop in a bubble, but with Toronto scrambling to make up 100+ million in taxes, there will be dramatic raises in property tax (or other service costs) that will continue to put a downward pressure on housing values.

People who hold on to under-water equity homes will get punished for riding out the loss with new and greater taxes that were previously funded by an addiction to the MLTT.

I’m not a big fan of MLTT – I much prefer a fair market taxation rate (which is nice – more expensive properties pay more taxes) as a single, primary, tool of municipal taxation. The MLTT seems too variable, too addictive in certain markets, and especially too difficult to deal with when a municipality has to go cold turkey on a collapsed housing bubble.

Apparently, for the Jasime  Homeowners Association, California, simply knocking on the front door during daylight hours, and communicating the need for eviction isn’t their chosen approach. Instead they hired a security company to perform a 3am raid on the tenants.

After the guards entered the premises, awoke everyone, forced them into the street in underwear and then ransacked their stuff, the tenants had an opportunity to show lease and utility payments. This proved that the tenants were actually renters (with rights) vs. what the HOA claimed – squatters. With the new information, the guards allowed the tenants back into their homes.

The tenants are suing the HOA (and it seems rightly from the report) for a variety of charges. I would have to say that all this could have been avoided if the HOA had made sure that clear, and proper, notification of eviction had been given. Say, during daylight hours.

The best part, one of the security guards hired is quoted as saying:

between you, me and the lamppost, the homeowners’ association is over-zealous.

Really? Over-Zealous. Say it isn’t so!

• Canadians don’t mind paying for the perks of condo living (link)
• Maintenance-free living but can Calgarians really relax in their condos? (link)
• Torontonians worry about affording their mortgage – but many don’t mind paying for the perks of condo living (link)
• More affordable than a house: Condos seen as an attractive option in Vancouver’s expensive real estate market (link)

The interesting point for me

More than one-quarter (28%) of Vancouver condo dwellers say that their monthly strata fees make it feel like they are still paying rent, so they are saving up to buy a home without set monthly maintenance fees.

Condo, Strata, and HOA fees are not rent, but the monthly payments required to maintain the property that you have purchased. There is no concept of profit with monthly condominium fees unlike rent. The collection of monthly condominium fees is based off of a budget that is designed to be as close to actual cost as can be forecasted.

There is another focus about paying maintenance vs. paying rent. With rent – you have an owner that looks to maximize revenue and that usually includes significant controls on expenditure. Every penny provided to update or maintain the property is an out of pocket cost for a landlord.

With condominiums, you are paying (usually, unless the board is unusual) for proactive and ongoing maintenance and work designed to maintain the common property and the corporation. While owners may not like paying fees (35% of poll respondents want fees $200/month or less, 44% are ok with fees up to $400/month, and 17% with fees up to $800/month), they should realize that instead of lining the pockets of a landlord they are lining their own pockets by maintaining the condominium corporation.

I hope that helps understanding the difference between rent and condominium fees.

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I’ve read, and had some personal experience, about too many “lifer presidents” (an example here) that over time begin to treat the board as their exclusive play grounds. Where most elected bodies recognize the threat to good governance elected lifers create – even the President of the United States has term limits – no such measures exist for community associations.

The risk is, and it seems to come to fruition, that over a period of time the basic principles of the board get eroded.

Take for example the board of President Lorraine Walsh, who has held her title for over 20 years at the Deveonwood, Hercules California, condominium. According to one resident the board hasn’t held an election since 2005. Further, though there is a vacancy on the current board and an owner volunteered to fill it till next election – the current board voted down the appointment 4 to 0.

Other shenanigans appear to be happening there as well: holding in camera executive sessions in the middle of public meetings. That’s clearly a method to shut down the meetings.

Often long serving boards tend to use fining as a heavy handed method to enforce compliance, or threaten owners financially if they raise trouble. For the Deveonwood, first time violations carry $350 fines and have been handed out for improper window coverings and poor garden pot locations.

Sometimes I wonder if the property management firms hired by these long term boards are somewhat responsible for the condominium’s or HOA’s decline. If there really hasn’t been an election since 2005 the property management company should resign or make public notice that the board is failing to abide by all rule and regulations. The problem is management companies can fear failing to comply with the board will result in a non-renewed contract. It’s hard to protest the board that pays you. For the Deveonwood, one owner appears to have asked for the record of past elections to confirm when and how the last elections were held, and the management company denied to fill the request.

Condominiums are great places to live, but like any organization they benefit deeply from a regular turnover of the board, and a rotation of the roles. There is nothing scared or amazingly difficult about being on a board, and normally a management company will ensure all the i’s are dotted and the t’s crossed. I have yet to see a new board, with none of the old guard remaining, mess up a community.

What does get my hackles up is the boards of these condominiums or HOAs threatening, or taking, legal action to shut down these social media groups or sue for control of the social media.

The Maplewood Homeowner’s Association, Nashville Tennessee, has issued a letter to Susan Rowe that her failure to remove the name of the subdivision (Maplewood) from her 2 year old Facebook page would cause the association to sue her. The intent of the letter is not only to have her change the name of the site, but to turn the Facebook group over to the board.

Her Facebook group – “Residents of Maplewood” (changed from “Maplewood Subdivision”) is a private, invite only, group which posts about lost cats and neighbour requests to borrow lawn equipment. This isn’t even a case of “we hate our association postings”.

The use of Facebook for neighbors to communicate without authorization from the board is something that is legal, justified, and fully supportable. As well, identifying the group as related to a particular local or building – but indicating that it’s not the “official site” is also well and good. There can be no limitation on a group of activist residents using the name of the association within the group title. Otherwise it’s a lot like saying the Nashville Singers couldn’t use the word Nashville in their name. Just plain silly.

HOAs don’t have a right to control owner conversation – and really that’s the crux of most of these conflicts. It’s overbearing, control-freak, boards that see any ability for owners to organize as a threat to their position. To them I say good luck with that. Spend your time on building community – not destroying other people’s successful endeavours

PS. If the association wants is the word Maplewood removed – maybe the association should first go after all those other associations that show up on a Google search for Maplewood. It’s all so confusing as to which one is the real Maplewood, when they all stand up shouting “No, I’m Maplewood!“

On a square foot basis, the units go for either $2160/sq. foot (for 3” ceilings), or $3300/sq. foot for the luxury 8” ceilings.

I’m all thinking this is a phenomenal idea, until I checked out their website and see they are marketing the purchase as “the ability to own a prime piece of real estate at an affordable price.” This is not an investment opportunity, this is a different way to manage and secure valuables. That the company is even marketing 1.67 sq. foot condos as a real estate play is not only inexcusable, it makes that plan feel a little scammy to me. Now I’ve got a little of that “buyer beware feeling.”

It not only acts as an attempt to intimidate the owner, it’s a public statement that directly influences others owners to perform the same action, or become supportive of it. Seriously.

Setting aside all the work on advertising and the use of messaging, there’s a pretty famous test called the Milgram experiment which shows that people who see someone perform an action, even if they find that action harmful to another human being, would perform the same action (in Milgram’s case it was applying powerful electric shocks to another person) more often than a person who has no example of the action. In essence, people are way more willing to do things they are personally uncomfortable with (even harmful) if they have first had experience of the act.

So by publically painting the slogan on, in this case James Burns’ door, the painter not only attempts to intimidate James, but hopes to receive community support to repeat or increase the severity attack on James. Even implicit support (nobody objecting) creates the feedback needed by the painter.

Thankfully at least one other member of the condominium community objects to the vandalism. Mr. Burns received a poster that was hung on the door with statements including “We advocate zero-tolerance for hate crimes” and “heart, caring, helpful, kind.”

That’s freaking awesome. It’s the “backfire” that’s required to nip owner on owner persecution before it grows. With only 66 units in the “upscale” complex (Zillow shows unit prices at about 440k at the moment), the management and board should immediately follow up with letters to all the owners, postings in the building, and a letter to Mr. Burns that state any attack on an owner is fully condemned by the condominium corporation. The communication should not only include positive statements that people of all walks and cultures are welcome at the Copley Court condominiums, Braircliff Manor NY, but person or persons found responsible for the act will be sanctioned to the maximum allowance of the bylaws.

A home, is a home, is a home. And the corporation is always in the role to ensure that all people can enjoy and feel comfortable within their residence, and by extension the common property.

Sadly – at the time of this article neither the board nor property manager has contacted Mr. Burns about this.  Time for the board to step up to the plate ensure a positive community. The longer the board waits to respond, the more implicit support they give the evil doer.

Briefly, for those not familiar with the case – HOA Block Watch captain George Zimmerman shot to death Trayvon while the boy was returning to his residence after purchasing Skittles and an ice tea. George Zimmerman claims self defense, even though he chased the boy after the police told him not to, and the deadliest thing Trayvon had on him was 2.17oz of tasty rainbow.

Here’s why the HOA is about to pay out a whole lot of cash:

1. Mr. Zimmerman was performing an activity authorized and backed by the HOA– performing the duties of Block Watch within the neighbourhood. An HOA newsletter confirms this role in the community.
2. The HOA, in backing Mr. Zimmerman as a Captain, authenticates a person who had been charged in 2005 for battery of a police offer, and had previously a restraining order filed against him.
3. Mr. Zimmerman failed to conform to any of the neighbourhood watch mandated training. Block watch clearly indicates that watch members are there to observe only, and never confront suspicious persons. They are “eyes and ears only”.
4. Mr. Zimmerman was recorded actively chasing Trayvon while on the phone with 911 (audio of call). The 911 operator also indicated that this action was unnecessary. This was definitely an act to confront Trayvon.
5. While carrying a gun is not illegal in this situation, neighbourhood watch members are not permitted to carry firearms.
6. Mr. Zimmerman made 46 calls to 911 since the beginning of 2011 to report disturbances, break-ins, windows left open and other incidents. Not only is it reported that he was out on his rounds for the watch, it is reasonable to assume as this encounter also started with a 911 to report a suspicious person, he was operating as a neighbourhood watch member as he was the 46 other times.

It’s a pretty simple line to draw the HOA as responsible for failing to maintain the required screening and standards required of their volunteers. Unlike a criminal prosecution, a civil case needs significantly less burden of proof or certainty. It is well documented that a person found innocent of a crime may still face significant monetary loss in a civil court. In this case it won’t be a person found liable in civil court, but the HOA.

I have said before that the Block Watch program is a phenomenal program, and every condominium and HOA that faces a crime issue should operate one. The Block Watch program has operated for over 50 years with astounding success. I still stand by the success.

The issue is an HOA must take the steps required. A formal relationship must be made between the community and local law enforcement. All members of the neighborhood watch must attend training – both at the beginning and ongoing. The HOA needs to create, back, and act on the mission statement: “eyes and ears only” – and repeat that message to the volunteers and the community constantly.

Importantly, the HOA needs to have a firm, written, commitment from each volunteer that they will abide by all the recommendations and requirements of both the national neighborhood watch program and local police authority.

And seriously, if this event makes you afraid to have a neighborhood watch – don’t be. Just stick to the program and enforce a role of observation only. That approach works most awesomely. A neighborhood watch that observes only, and doesn’t carry weapons, is both safe to themselves, safe to the community, and safe to 17 year olds coming home with a bit of ice tea and candy.