13 Investigates: Homeowners Associations

The pool at Country Squire Lakes was filled with dirt, trash, weeds and broken concrete.

More than 62 million Americans live in homes governed by a Homeowners Association, and many of those homes are here in Indiana.  While HOAs can enhance your home's value and protect your investment, they can also lead to a neighborhood's demise.  Why are some HOA neighborhoods literally crumbling? 13 Investigates shows you what happened, and what steps you can take to prevent a HOA nightmare.

Ray Meador owns waterfront property in southern Indiana.

His retirement home sits along a picturesque lake in Jennings County – a quiet, scenic spot that Meador describes as love at first sight.

"When I drove through here the first time, it was just beautiful," he recalls. "This place was great. People were jolly and having a ball."

The Country Squires Lakes subdivision doesn't seem jolly anymore. Take a short walk down the street and around the block from Meador's home, and you'll understand why.

Burned out houses. Piles of trash. Weeds the size of mailboxes. A neighborhood plagued by neglect and severe disrepair. 

It's not at all what Meador expected when he moved in.

"This area is a blighted area compared to what it was ten years ago," Meador said, shaking his head in despair. "It really went downhill fast."

Broken promises

Country Squire Lakes, which locals refer to simply as CSL, is one of the largest subdivisions in Indiana.  With almost 4,000 lots spread over 1400 acres, it's bigger than some cities.

It was built in the 70s as a private, secure family resort community featuring boating, fishing, beaches, tennis, hiking trails, and swimming pools. Advertising materials promised residents "the good life" and brochures claimed an "investment in tomorrow" would "assure a lifetime of fun and happiness." 

That's not what Meador and other CSL residents got.

Hundreds of CSL homes are now vacant or abandoned, lots are overgrown, the marina is empty, the lake is full of algae, the bath houses are closed, the roads are crumbling, the beaches are littered, the hiking trails are no longer recognizable, the guard house is locked and the guards were laid off years ago.

And at the center of Country Squire Lakes is an Olympic-size community pool filled not with crystal-clear water, but with chunks of broken concrete, mud, dirty rain water, weeds, frogs and trash. What's left of the pool sits behind a locked gate and a badly-vandalized bath house where a sign reads "the pool will be closed till repairs can be made." The sign has been posted for years as the pool has sat as a community eyesore. But residents are still paying for the pool through annual assessments from the CSL neighborhood association.

"I'm disgusted, heartbroken," Meador said, looking through the chain-link fence that separates residents from what they refer to as their "pool of shame."

His dreams -- and his investment -- have taken a serious hit.

"Property values, a lot of them are half what they used to be," Meador said. "Some of these [lots], you couldn't give them away."

HOA failed early

The CSL Homeowners Association was supposed to prevent that. Over the past 40 years, it has collected millions of dollars from property owners like Meador to protect and maintain the community. 

So what happened to all that money?

13 Investigates visited the CSL main office to ask, but the office manager declined to talk. Instead she closed the blinds and, through a glass window, directed WTHR to speak to a property management company located in Indianapolis.

Jesse Angel, general manager of Elite Property Management, told 13 Investigates he was hired by CSL to clean things up. He admits that will be a monumental task.

"That neighborhood needs a lot of help. The people who live there are in a very bad situation. I feel disheartened and sad for them. It's not a community you want to come into on a day-to-day basis and feel happy you live there," Angel said.

According to the property manager, CSL residents and board members began fighting over the direction the community should take.  Many residents stopped paying their dues and assessment fees. At the same time, the homeowners association neglected to collect fees and stopped enforcing many rules spelled out in the community's regulations and covenants.

The result: lots of problems and little money to fix them.

"Right now, CSL sits on about $3 million of uncollected money that we have tied up in lawsuits or bankruptcy court. A lot went wrong before people finally started standing up and going 'what's going on?' explained Angel. "I believe this HOA failed early on and they've struggled to figure it out for many years."

Earlier this month, just a few days after 13 Investigates visited CSL and met with its property manager, CSL decided to bulldoze its Olympic-size pool, burying what was once a centerpiece of a thriving neighborhood with hundreds of tons of dirt.

The eyesore is gone. Residents' financial responsibility is not. 

Angel told WTHR he is now entertaining proposals to build a children's water park at CSL. He did not say where funds for such a water park would come from.

Playing by the rules

Around central Indiana, there are plenty of HOA success stories … homeowners associations that help manage beautiful neighborhoods with waterfalls, manicured lawns and lots of activities. 

But living in those neighborhoods means playing by the rules.

Joe Plankis is president of the Centennial homeowners association in Westfield. He says Centennial residents face lots of restrictions, from the color of their houses to the size of their fences to the placement of their flowerbeds.  Plankis says he looks for HOA violations as he drives around the neighborhood.

"Above-ground pools are not allowed. Sheds are not allowed at all. No boats in the driveway. No trailers in the driveway. We don't permit overnight street parking. If you have a weed problem or a grass problem, then we'll go in and cut it and bill the homeowner for it," Plankis explained. "I say to those who don't want to maintain their property, you can move and go move somewhere else."

Centennial homeowners pay $760 in annual dues. In return, they get neighborhood swimming, basketball, baseball, soccer, a sledding hill, community garden, a dog park and lots of inviting green space -- all maintained by the homeowners association.

"Our main mission is to preserve the property values of the homeowners in the association," Plankis said. "When you have a [HOA] board that's lenient, you lose the character of the neighborhood, the conditions deteriorate and then the property values drop."

Another pitfall for homeowners associations … failing to plan ahead for long-term care and improvements.

The Austin Oaks subdivision in Zionsville is now approaching 15 years old – a time when homes and neighborhood infrastructure begins to require increased maintenance and expense.  The Austin Oaks Homeowners Association has been setting aside reserves to plan for that. 

Decorative signs throughout the neighborhood are now being replaced, and the HOA president says residents may soon see a small increase in their $180 quarterly dues to help pay for pool, tennis court and clubhouse maintenance that will be necessary in the years ahead.

"I think people buy into a neighborhood like this because they want to maintain value, so they understand the need for occasional increases," said Austin Oaks HOA president Rob West. "This really is a comfortable place to live, and we want to keep it that way."

Shaky repairs, shaky finances

At the Pointe Retreats neighborhood near Bloomington, failure to plan ahead has taken a costly toll.

For years, residents have been complaining the 80-unit condo community, surrounded by golf courses and lakes, is literally falling apart.

"Anytime anyone walks up the steps, I can be in my living room which is in the back of the building and the whole building will shake," said Craig Terrell.

Condo owners showed WTHR broken stairs and decayed railings, leaking roofs and crumbling parking lots. They say when the HOA does make repairs, it cuts lots of corners with cheap labor and materials.  

"This is new construction, but there's a nail and it's not going anywhere," said Mary Baynes, pointing to a cracked and broken handrail leading to the front door of her condo. "My dog can easily fall through that [hole]."

After WTHR began investigating last summer, the homeowners association began replacing roofs and making some minor repairs, but most of the problems still exist.

Around every corner, residents point to deteriorating wood, broken concrete and badly faded paint. They wonder what's happening to the hundreds of thousands of dollars in dues they've paid to their homeowners association.

"We can't figure out where the money is going. All we know is they keep asking for more of it," said Terrell.

"We have a concern because our understanding is that the homeowners association is out of money," Baynes added.

Susan Slaven, president of the Pointe Retreats Homeowners Association, admits the HOA checkbook is running very low.

"The funds are not there that we would hope to always have," Slaven said. "But you know, there's only so much money you can work with. I mean this is expensive stuff. It's not just something people can just pull out of their handbag and say ‘Here's my credit card.' This is expensive."

Mistakes = sudden fee increases

Slaven says she took control of the HOA board after the former president abruptly resigned last summer. She says previous board leaders didn't plan for upcoming expenses, leaving the HOA with little  money to make major repairs. 

Now Pointe Retreats homeowners are facing consecutive 20% fee increases in the form of higher dues and an annual assessment to pay the repair bills, and it will take years to make things right.

"Things wouldn't be this way if there had been assessments," said Slaven. "With these [condo buildings] getting older, that really should have happened a long time ago."

The management company representing Pointe Retreats says the community's former HOA leadership made another mistake by signing a long-term contract with one contractor to do many different jobs.

"The homeowners association tied the hands of the future [HOA] board and the management company by hiring one company to do all the landscaping and maintenance," said Sharon Dalton, owner of Pegasus Properties.

Financial records show the HOA hired that one company for snow removal; painting; deck, stairway and walkway construction; mowing and landscaping; and roof replacement.

"I can tell you that company has been terminated," Dalton told WTHR. "We brought in separate companies to come in and do quality work."

The switch occurred after Pointe Retreats homeowners began asking questions and demanded to see financial records for the work performed.

Steps to take now

The lesson: if you belong to a homeowners association, ask questions and get involved – and do it sooner than later! 

"Every HOA needs to have involvement from everybody who lives there," said Angel. "You can just drive in and out the neighborhood every day and assume things are going to be OK."

Property management experts recommend all homeowners who live in a neighborhood governed by a HOA take these important steps:

  • Regularly attend your neighborhood's HOA meetings. Some HOAs formally meet once a year while others meet several times each month. Get a list of your HOA scheduled meetings, attend meetings and get to know your neighbors who are on the board. This will not only help you to stay informed of HOA decisions and neighborhood issues, but will also help if you should ever have your own concern to bring to the HOA's attention.
  • Carefully review budgets and expenses. Make sure the numbers add up. Look for expenses that seem odd, too vague or don't make sense. If necessary, ask for clarification to make sure you understand how your money is being spent.
  • Elect qualified board members.  This again means getting to know your neighbors who are running for positions and, of course, voting during HOA elections. Choosing unqualified candidates can cause big trouble. An HOA election should not be a popularity contest. The financial well-being of your neighborhood is at stake.
  • Volunteer and join the board yourself.  Some board positions are elected (in many cases uncontested due to a lack of interest). Other positions are appointed. If you have the time and interest, volunteer for a board position or for a committee assignment to help shape the decisions of your neighborhood.
  • Know your neighborhood rules and restrictions. You are bound by the covenants of your HOA. Those neighborhood rules have the weight of law. Not knowing the rules is not an excuse for breaking them.  If you don't like the rules, make sure you are taking the other steps listed above.

Homeowners rights

If you break the rules of your homeowners association, be prepared to hear about it.

Most HOAs contract with a property management company to enforce the rules, and that usually begins with a letter in your mailbox.

"We don't physically go knock on doors and harass our residents. That's not what we signed on for and not what we do," explained West. "If there is a repeated problem, our [property] manager will send a letter explaining the concern, and the concern is usually addressed right away."

If you receive a letter alleging a violation of HOA rules and believe you are wrongly accused (or that the HOA is overstepping its authority), West recommends you contact the property management company or HOA president and calmly discuss it. 

If the situation cannot be resolved, take a another close look at your HOA covenants and restrictions, and decide whether it's worth your time and expense to fight.

"For most of these cases, court is not the way to go," said Phil Nicely, a longtime real estate attorney in Indianapolis. "As a practical matter, the best way to proceed with an overzealous HOA is to get a new board of directors. If they are not doing their job, get the people out that are running the association and vote some new ones in that are more reasonable."

Last year, Indiana lawmakers passed a new law that allows Hoosiers to hold their HOAs accountable for acts of mismanagement and fraud.  The law allows the attorney general to file legal action against a HOA and its board members that engaged in illegal or fraudulent activity. The AG may seek injunctions against illegal conduct or seek restitution and civil penalties of up to $5,000 per violation.

Indiana's attorney general applauded the new law.

"Because they impose fees on and require certain things of residents, homeowners associations exist almost as their own form of government," attorney general Greg Zoeller said last summer. "Therefore it is appropriate that they be publicly accountable and subject to review."

The new law was triggered by complaints from Ray Meador and what was considered to be highly questionable funding allocations by the CSL Homeowners Association.

Residents at CSL and at Pointe Retreats say, so far, the attorney general's office has not been willing to assist them further by actually pursuing a legal case against their HOAs.

"They haven't done a thing for me," Meador said.

So he decided to fight back on his own.

Legal setback for HOA

Meador decided to take the CSL Homeowners Association to court, claiming the HOA violated its obligations to homeowners by not enforcing restrictions and by not providing services and amenities promised when residents first purchased homes and moved into the neighborhood. Meador argued he should not be required to pay his HOA assessments for services he was not receiving.

To the surprise of the HOA and many legal experts, the judge ruled in Meador's favor. 

For now, Meador does not have to pay hundreds of dollars in assessments. CSL is appealing the ruling.

"I don't see any way possible the court of appeals would uphold this ruling," Angel said. "I've never seen anything like that."

If the ruling is upheld, it could set an important precedent that impacts other residents at CSL and at thousands of other homeowners associations around the state.


According to the Community Associations Institute, there are more than 314,000 homeowners associations in the United States, impacting more than 62 million people.  The following resources are for those who currently live in a HOA or who are considering moving into a neighborhood governed by a HOA:

Questions before you buy a home in a community association

130 tips to guide you and to ensure that your community association experience enhances your life and your community

Indiana Law Regarding Homeowners Associations

What to Know About Homeowner Associations

What Homeowners' Associations May Regulate

Homeowner associations: Devils or angels?

10 Things a Homeowners Association Won't Tell You