California Housing Laws - Homeowner Associations

This is a synopsis of the more detailed opposition presented by the American Homeowners Resource Center (AHRC) to AB 555. AHRC, a nationwide grassroots organization of homeowners on housing issues, opposes AB 555 for the following reasons.

1. AHRC and the CACM lobbyists for AB 555 agree on one thing – the urgent need to reform and provide oversight over those who manage homeowner associations. They differ completely on the road to accomplish that goal. The lobbyists for AB 555 propose that they will police themselves. AHRC argues that the purpose of AB 555 is NOT to provide any genuine oversight, but to secure a monopoly for a small segment of vendors, to wrest control of homeowner associations from homeowners, and vest it the hands of CACM/CAI dominated vendor/lobbyists. Many of the abuses committed by managers listed in the letter of Heim, Noack, Kelly and Spahnn – lobbyists for AB 555 – were committed by CACM and PCAM managers – and by the very founders of these organizations.(See Item 2 a and Item 6 of attached Detailed Opposition) Yet AB 555 would place CACM and PCAM founders and managers in control of the very panel that is to oversee managers. The effect on the consumer is obvious – the same shoddy, oppressive and corrupt tactics for which they pay heavily. AHRC has received many complaints about CACM and its founders, Melinda Masson, Diane Fullerton and Jan Higginbotham

Any oversight committee has to be under the control of those who will be most affected by the behavior of managers – namely, homeowners. Police do not serve on Police Commissions. CACM managers should not serve on any management council. Hence a Council composed solely of managers and an industry lawyer – as AB 555 proposes - is totally unacceptable.

2. AB 555 in effect grants a monopoly to CACM and PCAM managers. (See 2 a. of the Detailed Opposition regarding the restraint of trade consent decree issued by the FTC against CAI in 1993.) Indeed, that may be part of the hidden agenda of the supporters of AB 555. The supporters of AB 555 are big management companies such as Merit Property Management. Monopolies mean higher prices for managerial services. Higher prices mean higher homeowner association assessments. Higher assessments mean greater hardship for all 9 million Californians in homeowner associations – especially senior citizens on fixed incomes.

3. The "educational" provisions of AB 555 are a sham. As one manager said, "I pay my $200, sign in for a short period, then I split". There is no testing procedure of any kind. The training will be conducted by existing CACM and PCAM entities – and they clearly have not done anything to provide homeowners with quality management. On the contrary, some of the biggest offenders are managers with CACM and PCAM "certification". Their "certification" process has clearly done nothing to curb abuses against homeowners.

4. The provision to allow real estate brokers to become certified managers by taking a 3 unit course is simply a political ploy to blunt opposition from the California Association of Realtors. In addition, it is very hard to see how a 3 unit course equips a real estate broker to manage homeowner associations. Brokers are geared to sell real estate, not manage it.

Genuine state supervision of association managers can only be achieved by creating an oversight council incorporating the following provisions.

1. A majority of the council members should be homeowners unaffiliated with any industry group.

2. The education of managers should be conducted by public institutions - such as community colleges - with rigorous testing procedures.

3. The council should have the right to remove the certification of managers who act improperly.

Therefore AHRC asks this committee to vote nay on AB 555.

Thank you for your attention.

Proposed Housing Laws for California