Idaho and HOAs fit - sometimes

North Idaho is not what anyone would describe as fertile ground for creating a homeowners association.

“What you have is the truly independent nature of people in this area running straight into a binding contract,” said Brindee Collins of the law firm Vial Fotheringham. “Putting a group of neighbors together in what essentially is a business — an actual corporation — can be a little more challenging here than in most other places.”

Collins works in VF-Law’s Boise office. She joined Chris Tingey from the firm’s Portland, Ore., headquarters to present a “Governing Documents Workshop” for any HOA board members who wished to attend a recent meeting on the subject.

It was a chance for local HOA officers to soak up some free legal advice.

VF-Law is a niche company that specializes in handling every facet of HOA business, from original declarations through incorporation to lawsuits that occasionally crop up when things go wrong.

“Idaho in general is difficult for HOAs,” Collins said. “Besides that independent streak you find in so many residents here, the state itself has an amazing lack of statutes and case law to cover these associations.

“When we advise HOA boards, we frequently find ourselves looking at laws in other states for some guidance, or just trying to use common sense.”

“Idaho in general is difficult for HOAs,” Collins said. “Besides that independent streak you find in so many residents here, the state itself has an amazing lack of statutes and case law to cover these associations.

“When we advise HOA boards, we frequently find ourselves looking at laws in other states for some guidance, or just trying to use common sense.”

Despite the difficulties facing HOAs here, there are nearly 450 homeowners associations in what VF-Law considers its Coeur d’Alene region — basically Kootenai and Bonner counties.

“Taking in the whole state, there are about 2,800 HOAs,” Tingey said. “Some of them have several hundred parcels, so you’re talking about an awful lot of people. And yet HOAs have almost no organized lobby, fly mostly under the radar and really aren’t addressed very often by the legislature.

“As a result, the few laws you have to consider in Idaho were basically knee-jerk reactions to some individual complaint. Honestly, it’s not very good law.”

When problems surface

Despite the obvious difficulties in organizing fairly free-spirited residents, local attorneys and financial managers insist that HOAs are doing surprisingly well in North Idaho.

Yet, there are problems at times.

“Unfortunately, it always makes the news when things go wrong,” Collins said.

For instance, the Sunset Ridge HOA in Post Falls is taking a hit with a board member who is accused of stealing about $13,000 from the association over a period of several years.

“Once in a while, you’re going to find a predatory board member,” said Fred Ostermeyer of KMS Financial Services, Inc. in Post Falls. “And it’s not always an attempt to get money, as in the (Sunset Ridge) case. For instance, a board member might steer an association to acquire some land and wind up owning it himself.

“Board members are volunteers who are rarely experts in the laws and regulations involved, so there are times when a member can take advantage of that for personal gain.”

Ostermeyer belongs to an HOA but declined to stay on the board of directors.

“It’s fairly common for people who are knowledgeable to avoid being on boards, because if they’re ignored and the association gets in trouble, it reflects on them personally, and that can impact your business,” he said.

And there’s no question that a few associations — generally those that don’t bother with legal advice — run into difficulties.

Coeur d’Alene attorney and property developer John Magnuson helped a member of the Remington Ranch Association recoup money paid in assessments - on the basis that the organization was never legally formed due to lack of a quorum during incorporation proceedings back in 2006.

“You do have these things come up from time and time, and they have to be addressed,” Magnuson said.

“But honestly, if the developer does the right work putting together the CC&Rs (declaration of covenants, conditions and restrictions) and hands them over to a board of directors, HOAs around here have surprisingly few large-scale problems.”

Disagreeable deals

Tingey and Collins agreed with that view, noting there is a huge difference between structural issues in an association and simple arguments among members.

“You’re always going to have the human element,” Collins said. “There will be situations where neighbors disagree, maybe when one of them is a board member and votes to approve an assessment that the people next door might not be able to afford right then.

“Those personal disagreements are going to happen in any association.”

Sometimes the battles become more serious, and Tingey pointed to Idaho law as a cause in some cases.

“There was a law passed recently to cover the issue of enforcing fines levied against members by an association,” Tingey said. “How it read, basically, was that to collect a fine, an HOA had to notify the resident in person or by registered mail, that the member was entitled to a hearing in front of the entire board, and that there had to be a 30-day period in which the problem could be addressed.

“It’s just not a good law. If the issue is repeatedly leaving trash cans out in the driveway or sidewalk, obviously they can be picked up and the fine avoided — even though the violations may have gone on for quite some time.

“But the 30-day limitation can be a problem in the other direction if, say, a member’s house is fading and the board notifies the person that it needs to be painted.

“If that happens in December, well, look outside. You’re not going to paint your house in the snow. The common-sense solution is for the board to say, ‘OK, we’ll visit this in April or May, and ask you to do the painting then.’”

Despite the odd laws — or what various attorneys claim are the lack of sensible statutes — HOAs continue to proliferate in North Idaho.

“They are basically designed to protect and enhance property values,” Tingey said, “so HOAs are always going to be useful for the type of people who want to live in a decent neighborhood and see the benefit in having some rules and restrictions.

“For people who don’t want anyone telling them what to do — which certainly describes plenty of Idahoans — we obviously would say that an HOA is not for you.”