When Michael Clauer went to Iraq as a captain commanding over 100 soldiers in Iraq, he was likely contemplating many potential dire consequences, but he probably was not thinking about the threat posed by his homeowners’ association. Because Clauer’s wife did not pay the homeowners’ fees, the association foreclosed on his $300,000 house and sold it for $3,500. They owed only $800. The story reveals the gross abuse allowed under a Texas law which gives such associations the right to foreclose on homes for failure to pay ANY amount — and to foreclose without a court order. Select Management Co., which runs the development, has refused any comment.
Michael, 37, went on active duty in February 2008 and, after his deployment, his wife May went into a depression, worrying about him and a ten-year-old and a one-year-old with a serious seizure-related disorder. She stopped opening mail because she was afraid about bad news about Michael and reportedly did not see the due notices for the associational fees.
Even if this were a case of knowingly failing to pay the fees, what happened in the case is outrageous. Without any court order, the association foreclosed on the $300,000 and then sold it for $3,500. The mysterious buyer then promptly resold the house to a third person.
Michael says that the Homeowners’ Association officers live near him and received personal visits to collect on undue fees, but his wife only received letters. They also claim that the homeowners’ association’s lawyer filed an affidavit wrongly claiming that neither of the Clauers was on active duty — since laws protect servicemembers in such cases. It should be noted that not just servicemembers should be protected from such actions. This is an abusive (and highly suspicious) series of transactions.
Despite widespread stories of such foreclosure abuse without court orders, legislators in states like Texas appear unwilling to do anything to create a level of judicial review. Banks and associations are able to act unilaterally against families with little procedural protection for families (here). These banks and associations tend to carry far more weight with politicians than do average citizens.
For the full story, click here.
The people involved in foreclosing on this patriot’s home should be sent behind bars. Even in Texas, how could this be allowed? The Texas legislature should right this egregious wrong asap.
The Mother Jones article says that the homeowner had NO mortgage on the property. The homeowner’s lawyer seems pretty confident that the sale will be set aside. If the foreclosure is invalid, it doesn’t make any difference if there was a BFP. Besides, it looks to me like everyone involved here, including the ultimate owner, has dirty hands.
Interestingly, the Mother Jones article says that the homeowner contacted the TX governor who claimed he could do nothing. What crap.
Mespo: I didn’t mean to imply that violating the SSCRA was the ONLY recourse the homeowners had, just that they could at least get their house back. Like you, I can imagine all kinds of torts claims against the HOA.
To Depressed One:
I am sorry to hear about your illness. People who aren’t depressed (or don’t know depressed people) have no idea, literally, what it’s like. They can’t imagine that it would be a struggle to get the mail, do the wash, pay the bills, etc. When these people look a someone who is clinically depressed, they can’t “see” any signs of illness. So even though depression can be lethal and is certainly as painful as any “real” illness, they just think it’s weakness or lack of backbone. Also, depressives generally are not psychotic, so they are not perceived as “crazy”. In some ways I think major depression, bipolar disorder, and other mood disorders are the cruelest illnesses of all.
As for the comment that the children should have been taken away, I can just say that TX is no better than other states when it comes to child protection, i.e., abysmal.
Isabel:
“As other people have correctly noted, this foreclosure will be set aside under the Soldiers and Sailors Civil Relief Act.”
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While I hope you are correct I wonder what the cost will be to this family to get there. A bona fide purchaser may already exist and the soldier still must prove the underlying prerequisites under the Act not the least of which is the “material effect” component. “Material Effect” is present when the service member does not earn sufficient income to permit him/her to pay the rent, mortgage, or, as in this case, the HOA fees.
Personally, I like fraud,negligence, and/or negligent infliction of emotional distress causes of action better along with a trip down memory lane with a jury. Maybe we could have the trial on Veterans Day or Memorial Day.
As other people have correctly noted, this foreclosure will be set aside under the Soldiers and Sailors Civil Relief Act.
What this story misses is that most lenders [Freddie and Fannie] will not lend on a condo unless the condo documents expressly subordinate liens for unpaid HOA assessments to the lien of the mortgage. So, in this case I suspect that the purchaser of the house bought it at the foreclosure sale subject to the lien of any mortgage.
Thirty-five years ago our first home was a condo which entailed a HOA. It was a small complex, only 88 individual units housed in 22 buildings, garages, pool, clubhouse, etc. After 1 year of using a management company we decided to do it all ourselves. We hired a lawyer and an accountant on retainer and then interviewed and hired all the contractors needed to maintain the properties. It worked out quite well. I talked with some friends who still live there and everything is as it was when we moved … they still do all the hiring and firing and use the lawyer and accountant appropriately. The maintenance monthly fees remain ridiculously low and the property is well maintained with units selling for 5 times their original price. Officers are elected yearly at the annual meeting and anyone who falls behind in their monthly fee (3 months is the cut off point)has a lien slapped on their home and their name published in the monthly newsletter. They haven’t had to slap a lien in over ten years .. in fact, since the fee is so reasonable, many residents pay 6 months in advance … like car insurance. For large expenditures like new roofs, etc … bids are taken, the entire membership meets and votes on which bid to accept and an assessment and schedule is set. When a unit does go up for sale the average time it spends on the realtor’s list is 23 days … even in this market.
HOA’s can be done right and when they are, one’s investment is secure.
Good comments Big Feller.
I have a second, vacation home in a HOA and I am not too thrilled about the strict rules because only some of us follow them–just like politics–do as I say, Not as I do.
the devils in the details. i’d check who bought the house first and then who they sold it to and for how much on the resale.
welcome to texas. home of free markets and tea parties.
What is not clear from the article, is how many months Clauer’s home owners association fees were in arrears, and how the association, through their management company, responded to the situation in the interval between the date of the first past due monthly fee and the date of the foreclosure action.
Having been a part of, and serving on the board of home owners associatIons for more than twenty years I can unequivocally state, that it is likely the board of directors of Clauer’s association are ignorant of how to effectively manage a HOA, and perhaps more importantly, negligent in their choice of and the performance of their management company.
A well run association will have board members that understand their fiduciary responsibilities, and actively oversee the operation of the association. A well run association will select a management company that provides the association board with continuing education about association operation and management and the specific regulatory requirements governing the operation of HOA’S. The board and the management company staff and principals will have an open and continuous collaboration.
The management company performs as an agent of the HOA, and while the purpose of the management company is to free the association board members and members-at-large from having to perform day to day operations and management of the association, ultimately the management company should be kept on a “short chain” and all executive decisions made by the board of directors. I have been impacted by association boards who have taken their responsibilities seriously, and engaged with high quality management companies that do not over step their bounds, and I have been impacted by association boards who engage some of the large corporate management companies that assume the mantel of corporate over lord, leaving their boards out of the loop on day to day operations and imposing draconian policies, resulting in poorly maintained common areas, and unhappy association members.
The key to success is when a board can educate itself, remain active, and engage an honestly managed, collaborative management company, that understands that it is not just all about reaping in fees for their bottom line. A good management company will insure that the board is engaged in developing and managing the budget and always has ample reserves in the bank to cover any reasonable contingency. Even an association that is managed appropriately will always have some home owners in arrears in terms of their association fees, that is just a fact of life. But a well run association will have a board that is actively engaged in managing the operating budget and taken appropriate actions, through their management agents and legal counsel, but before allowing a given situation to come any where close to a foreclosure action.
The bottom line is that the members of an association and their elected board have a responsibility to maintain the safety and value of their properties (both individually and collectively owned), and to maintain the quality of life for those living in the association. That includes knowing your neighbors, looking out for them, and not allowing some anonymous corporate entity that will stop at nothing to add to its bottom line, no matter how many homeowner’ heads it needs to knock together.
Mespo,
Thank you for the possible legal remedies in this disturbing situation. The public often displays scorn and contempt for lawyers*—especially personal injury attorneys—however, in this instance, if the facts remain as presented, I think most of us would be very pleased to this HOA sued out of existence.
*Of course, we only criticize those attorneys until *we* personally need one—similar to complaining about the ACLU until our “Ox is Gored”.
After reading all the posts I suspect that the HOA board members are going to be facing some very rough and expensive years.
A very good friend of mine suffered a serious bout of depression several years ago following the sudden deaths of her father and brother. She told me that everything she saw with her eyes and all thoughts in her head were tinged with a black edge … as if they were framed. All she wanted to do was sleep. She went for counseling and took some medication and within 6 months she was able to function normally. But … for the next 3 years she constantly feared slipping back into the depression state. To this day, 30 years later, she can recall the memories of that time vividly.
Depressed One:
Thank you for those insights. I have experience with the disease in our family and everything you say rings true. Many famous and accomplished persons have fought depression. Mike Wallace may have been the most recent to acknowledge his ongoing struggles. Perhaps the most unlikely historical figure was Winston Churchill, the robust voice of defiance for the British during WW2. Churchill called it his “black dog,” with all the metaphor implies about it being personal and only partially controllable. He was in good company. Goethe, Schumann, Luther, and Tolstoy all suffered from recurrent depression and made monumental contributions to society.
Nal,
Is that not something that is just all to wonderful about depression. Most people just assume that you can snap out of it. Well guess what, sometimes, it takes treatment and medication. I bet you a dollar to a dime that out of 100 people you know at least 25 percent suffer from some sort of depression and at least 57 percent have thought of suicide and acted on minimal preparation. I will also state that at least 2 of those people have acted on the desire to die.
You state why is she allowed to care for her children. The answer is the Mental health field suck rocks. Psychiatrist are nothing more than managed health care providers. What I mean by this is that they dispense medications without any real knowledge of what the persons disorder is or what really needs to be done.
Think Andrea Yeats, she was a suburban house wife in Houston. Everyone know she was unstable. Was she left with her children? Does it have to get to that level before anyone says, “Oh my if only I had known.” Depressed people do not jump up and down scream “I am depressed” they are silent isolationist.
If she is clinically depressed, she should not have been allowed to be responsible for two children, one with special needs. Since she was able to care for the children, I suspect her depression was not severe.
HOA = Home Owner’s Association.
Even we in the UK aren’t as bad as that and one would have thought the mortgage company would have taken an interest
Just out of interest how is HOA pronounced? is it as an acronym H.O.A. or as a word HOE?
potentially we have just another HOE robbing a servicemamn on active duty of his hard earned cash?
nothing new here…..move along please
Copy that, FFLEO.
Chris,
I have rarely heard a Marine brag about his service and that is one reason Mr. Blumenthal’s embellishment of his Reserve service bothered me.
Whether or not we are former military, you and other military service members/families deserve a salute and appreciation from all Americans—even those of us who strongly oppose the two ongoing Trillion Dollar wars.
FFLeo,
Anyone who has ever read any sort of medal citation can not disagree with your comments.
I spent a total of 23 months in Iraq over the course of a five year enlistment and to this day I believe it was the hardest thing my father has ever had to deal with. He is a very proud man, who was a Marine himself, and would never admit it though.
Chris wrote:
“Most people are aware of the hardships our men and women endure while serving their country abroad.”
_________________
That is why I never begrudged the 20-year retirement for servicemen and servicewomen. Most men moan and groan when they miss their girls for a week or so while on first class, all expenses paid business trips to Hawaii or other desired destinations. I cannot imagine being away from your loved ones for 12 to 15 month tours of duty—especially in combat zones where you are unsure if you will make in home in a body bag, all in one-piece, or psychologically scarred for the rest of your life.