Tuesday, December 29, 2009

A Comparitive View Of DirectTV's Business Practices And The Methods Of The Sand Lake Hills Homeowners Association

This week, Washington state has filed a lawsuit against DirectTV for maintaining a business model based on deception.  This lawsuit had made me consider the workings of a particular homeowners association, the Sand Lake Hills Homeowners Association, Inc. (SLHHOA).  I continue to focus on the SLHHOA for many reasons, but mostly to illustrate the problems with private government and the lack of actual government oversight that tends to allow abuses to occur.  The SLHHOA just happens to have numerous problems that I enjoy pointing out to help educate my fellow homeowners, especially those who live in the neighborhood, but do not want to get involved for fear that they will incur a financial burden.  These homeowners are willing to sacrifice their rights just so that they are not to be bothered and so I try my best to inform them, despite their reluctance, hoping that one day they see the light and fight for their rights.

The lawsuit against DirectTV involves 16 different causes of action, some of which I will highlight for the purpose of comparison below:
  • The sales scripts used by telemarketers include nothing about the terms and conditions on the discount plan.
The SLHHOA had made a push to amend the covenants and restrictions a couple years back, sending volunteers throughout the neighborhood.  Those volunteers asked homeowners to sign a joinder and consent form, accepting the rewritten covenants for their property.  Those volunteers did not have the rewritten covenants for homeowners to review, and the HOA had actually failed to send them out to every homeowner.  If a homeowner refused to sign the joinder and consent form, the volunteer simply threatened that one day they will be forced to pay.  According to the DirectTV article, this practice is called "layering", or hiding the conditions in various places.  The SLHHOA had actually split up their rules, with some being outlined in the covenants and restrictions while others in the by-laws or articles of incorporation, with each referencing only a portion of the rules and directing the homeowner to the various other documents, with some requiring the homeowner to actually purchase them from the state because those documents are not available in digitial format.
  • Consumers who buy a DirecTV unit at an electronics store like Best Buy have been unknowingly enrolled in a lease agreement. Even thought the units are purchased like any other electronic equipment -- often for around $100 -- the consumers don’t own them. If they fail to activate DirecTV service, they can face a $150 "activation failure" fee. If they turn off the service early, they can face a $480 early-termination fee and must return the unit to DirecTV.
The SLHHOA had written into their new set of illegal covenants that if a homeowner joins the association, they are forced to be members forever, making their property subject to regulation by the association forever, even if ownership changes.  The SLHHOA had also wrote that even if you are not a member, if you sell your home, the future homeowner would be a member of the association and be required to pay the association assessments.  This is similar to purchasing a unit at the store but later discovering they are not owned by the consumer.  The association has created these roach motel contracts to trap homeowners into their corporation so that they can collect money and force the homeowner to be legally liable to the corporation.
  • Consumers who are given "Free HBO" stations for a trial period are often rolled into a paid subscription without their express consent.
The SLHHOA allows homeowners the option to not pay the maintenance assessment if they join and pay the membership to the association, to appear as if the homeowner is not incurring extra costs.
  • Customers who refuse a credit check or have bad credit face "hundreds of dollars" in extra fees.
Homeowners who refuse to pay the SLHHOA's assessments face legal action, regardless if they are not liable to the corporation.

Obviously, this is not everything the association has done wrong, and maybe this comparison will seem as a bit of a stretch, but for some this will hit home.  How would you feel if you were required to purchase a service because your neighbors have decided that you have to pay because they are, regardless of if you actually use the service?  This is what the SLHHOA is doing.  They are trying to force homeowners, regardless of membership to their corporation, pay for their expenses...

Maybe it is late and my mind is going in too many directions, but to me, this makes sense!

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