Steve Horvath: 0:00

There is advice out there, published in writing that says, Well, maybe you just shouldn't have the Open Meeting. If the law doesn't require it, just go ahead and don't have it. And there are attorneys and there are managers and other people who have given that advice to boards. The reality is that closing off a meeting that should otherwise be open or failing to disclose information that's obviously important to the members is never going to be the remedy for whatever you think is is going wrong.

Announcer: 0:29

HOA Insights is brought to you by five companies that care about board members, association, insights and marketplace Association, reserves, community, financials, Hoa invest and Kevin Davis, Insurance Services. You'll find links to their websites and social media in the show notes.

Robert Nordlund: 0:45

Welcome back to Hoa insights, common sense for common areas. I'm Robert Nordlund, and I'm here today for episode 101, with a special guest that I've corresponded with for years, someone who works tirelessly to make associations better. Steve Horvath has been a long time Community Association homeowner advocate founding condo connection to provide free education and resources. He runs the smart group to provide homeowner centric consulting services, and recently co founded HOA united, which is a local and national advocate for Community Association legislative reforms. I first worked with Steve many years ago when he was building a free reserve study, calculator, tool for condo connections, and helped him get that project completed. And I wanted to have Steve on the program today to share what he's learned from the homeowner side of things about the key actions that boards can take to improve life at their association. That's because we want to encourage and equip our podcast listeners here with all the information and tools available to create better communities. Well, this is a follow up to episode number 100 with regular co host Julie ademan, where it's always a treat to hear what she's doing and learning from a consultant point of view, helping boards and communities thrive. And if you missed that episode or any other prior episode, take a moment after today's program to listen from our podcast website, Hoa insights.org, or watch on our YouTube channel. But better yet, subscribe from any of the major podcast platforms, so you don't miss any future episodes. Well, those of you watching on YouTube can see the HOA insights mug that I have here, that I got from our merch store, which you can browse through from our, of course, Hoa insights.org website, or the link in the show notes, you'll find we have some great free stuff there, like board member zoom backgrounds and some specialty items for sale, like this mug. So go to the merch store, download a free zoom background, take a moment look around and find the mug you'd like, and email me at podcast, at reserves, a.com with your name, shipping address, and mug choice, mentioning episode 101. Mug giveaway, and if you're the 10th person to email me, I'll ship that mug to you free of charge. Well, we enjoy hearing from you responding to the issues you're facing at your association. So if you have a hot topic, a crazy story, or a question you'd like us to address, you can contact us at 805203313, 52033130, or email us at podcast@reservestudy.com but this episode is on me. Want to bring someone on the program that I've known for many years, so let's get right to it. Steve, what led you to create HOA united? Thanks,

Steve Horvath: 3:39

Robert and thanks, thanks for having me on the program today. You know, I finally dawned on me that changing state law was the most effective and efficient way to achieve the outcomes that I sought in my own condo association after having gone through a declaration, restatement and amendment a year or two before. So I was testifying, and I connected with another homeowner advocate who I probably should have known but but didn't, wasn't aware of. In fact, I think there's a lot of that throughout the United States. There's little pockets of advocates. But anyway, I I bet I yeah, I was testifying, and noticed a name Raylene chifano and HOA Fight Club associated with it, and so I, I went to Hoa Fight Club website, looked up rayleen. We connected, and we shortly thereafter, a couple of years ago, formed HOA united to really focus more on legislative advocacy.

Robert Nordlund: 4:38

Got it Well, tell me a little bit about yourself. You're in now, in your second condominium and up in the Seattle area.

Steve Horvath: 4:46

That's right, yeah, I live in in Belltown, which is part of which a neighborhood in downtown Seattle. This is the second condo that that my wife and I have have owned, and we've, we've owned this condo for. For about a decade, and I spent the first few years here. I was still doing a totally different career, didn't have the time to invest, had a lot of concerns, and certainly attended a number of board meetings and made myself known, but finally joined the board in 2019 so this is actually my fourth term, my seventh consecutive year on this board, not trying to set any records, but still have a lot of work to do. I was on

Robert Nordlund: 5:29

site inspection last year and set a record. I was talking to the person that met us on site, because we had a big place, we had a team, and we asked him what his role was, his experience, and he had been a board member 23 years. It's like, geez Louise. And wasn't sure if I was impressed or sad, but yeah. So anyway, hey, we have you here as a subject matter expert, but we could also have you here as a board member hero. So I'm going to kind of balance those two, because we want to celebrate you as a board member. You have same background as so many board members. You bought a home in the association. You felt like you could contribute so and you saw some pain points, so tell me more. Yeah.

Steve Horvath: 6:24

Well, so spent, yeah, many years volunteering. We've had committees. We've been through the gauntlet. And, I mean, that's, that's really all there is to say. I think it's, you know, I know there's a lot more that we're going to go through about board service, but to your point, people don't buy a home, any home, with the desire to join a board and govern their community or figure out how to make operations work. People need a place to live, and the notion that we have these common interest communities and that there are volunteers that serve on this board and and try to be the glue to make everything work, along with all the rest of the owners, is is really unique and bizarre in so many ways, because you just don't I

Robert Nordlund: 7:15

heard that. I heard that b word, and I was wondering if you were going

Unknown: 7:18

to say it. Yes, it is, it is bizarre.

Robert Nordlund: 7:22

I'm older than you. When I grew up, you either owned a home or you rented a home, and that was just it. And sometimes you would rent a home in what they called an apartment, and that was, that was pretty much it. It was pretty much the 60s, right, when this whole concept of CO ownership came together?

Steve Horvath: 7:41

Well, it certainly sprung more to life. Private topia by Evan McKenzie, something everybody should read from 1994 you can pick up copies online for five bucks. I think generally, he does a great job talking about how covenanted communities have existed for quite a long time, dating back in the United States, dating back to the early 1800s actually, back then talking, there wasn't a concept of Yeah, developers and building, building all of these giant communities, and having more of a template for how to roll out housing that all happened in in Yeah, you're right, in the 50s and 60s. And it was a collaboration, really, the government was trying to figure out how to house similar conversations we're having today about not having enough housing. 6070, years ago, the government was trying to figure out how to have more housing and common interest communities were the result of that.

Robert Nordlund: 8:34

Yeah, and arguably, it was a good result. We have almost 400,000 across the country at this time? Yeah,

Steve Horvath: 8:41

it's a big it's a big number. It keeps growing. There's lots of debates, healthy debates in in many legislatures, about how we got here and and and how to move forward. So it'll be interesting to see what happens. Yeah, and that's

Robert Nordlund: 8:55

the point of our conversation here. You're here helping homeowners have a good experience. So tell me more about that. How, what I see out there is a lot of boards and homeowners at cross purposes. How do we make that a smoother connection? And how do we begin to have communities that feel like they're thriving.

Steve Horvath: 9:22

You know, that's a good question. I think it's important to remember that board members and officers are almost exclusively homeowners there. There are some communities that have governing documents that allow potentially for somebody who's not an owner to serve on the board or to be an officer, but that's few and far between. So when you ask a question about tensions between board members and and owners, i i I think sometimes it's easy to forget that board members are owners and so I don't actually think there's any inherent tension between owners who are elected. Appointed to the board and owners who are not, but there is tension between individuals who are more interested in serving their own purposes than serving the purposes of the entire organization and all the members, well said. And so I think that's really where tension comes from. It's not some sort of inherent difference between the fact that I'm on the board and you're not okay.

Robert Nordlund: 10:22

Is it a personality issue? Is it someone who still is bothered that they weren't seventh grade class president, and this is finally an opportunity for them to take power of something, or is it just the weakness of this entire community association industry that it is reliant on virtuous people willing to serve just like people willing to serve on the PTA or to be a leader at their house of worship or something like that. Yeah, I

Steve Horvath: 10:57

think, well correctly, it's reliant on whoever raises their hand to serve there. There are no minimum requirements. And in fact, that one of the pretty interesting studies that see I did a few years ago, it was called Community next I think you're, you probably are familiar with that, and it talks about how the model actually is, is broken, and it's not like it broke recently. It's been the model's been broken. There are no minimum requirements. But, and here's where I really want to get into, more than just the board and the owners, because I think it's important to say there, there is no community that exists in a vacuum, whether you're self managed, whether you have a management company, whatever the case may be, unless you're a community that doesn't really need to assess anybody anymore, and there are associations like that that have a planting strip that, for all intents and purposes, don't have any. They have common elements, but there's actually no need to collect fiscal resources anymore. They don't owe taxes in common, they have a planting strip that, you know, the government maybe is willing to mow, or they've just let it go. There's communities like that in Washington state across the country, where there's covenants, but for all intents and purposes, the association is defunct. That's one extreme where you don't probably need any help. You don't need to call anybody in. You don't really need attorney advice. You don't need a manager. You don't even really need the board. Everybody can just exist. And the end, realtors are there to help buy and sell homes. And it goes forward, and then you have the other extreme, with massive Master Plan communities with single family homes, townhomes, condos, you have a business park, you have retail, you have the whole thing, and horses,

Robert Nordlund: 12:44

rec center, trails through the woods, everything, you

Steve Horvath: 12:48

name it. And, you know, some, there's probably one somewhere that's formed their own community bank. For all we know. You know so much, I don't even, yeah, type of Co Op, yeah, in any case there, there is, you know, there is no vacuum, so it's, it's really important. I came up with, probably not my own phrase, probably somebody else said this earlier, but year or two ago, I came up with advocate participate, escalate.

Robert Nordlund: 13:15

Okay, yes, advocate participate, escalate. Walk me through that. I

Steve Horvath: 13:18

think that's the formula for every homeowner, board member, anybody that wants to be involved in anything in life. This isn't just about common interest communities. That's That's the formula for getting the outcomes that that you want or or making change you have to, you have to participate in the process, and participation involves education and due diligence, learning receptiveness to different ideas and being able to interact with other people. It's the whole gamut. It's, it's more than just, you know, I think a lot of times people say, Well, go to the board meetings. There's more to it than that. And and some board members don't realize that there's more to it than getting elected and showing up at meetings. But, but there's, there's a lot more. You and Julie admin have talked about that. I, in preparing for this episode, I watched some snippets from from some podcasts. Good for you, but it's hard because there, there isn't time you, you know, everyone's an owner, as we Ray discussed, there's, there's other reasons you bought your home. You didn't buy your home intending to, to spend 510, 1520, hours, whatever it may be, even two hours serving on a board, necessarily so, participating, advocating for change and and and being involved, once you have whatever that baseline level of knowledge is working to, you know, achieve the goals you want. And if things aren't happening the way they should, you have to escalate. You have to be able to take things to another level in the right way at the right time for the right reasons, and and figure out how to do that. So I think that's a great formula for for anything you want to do at life. Yeah,

Robert Nordlund: 14:52

no, I like that. Things happen on the cutting edge. We know when you exercise you are. Troubling your muscles, you're troubling your heart, and your heart and your muscles respond, and they get stronger. And it's one thing to just sit on the sidelines and complain, and that does absolutely nothing. And the definition of mental illness is doing the same thing over and over again and expecting different results, or something like

Steve Horvath: 15:20

that. Insanity. Einstein, thank you. Yes, okay,

Robert Nordlund: 15:24

and so you can't just go to a board meeting, sit quietly and go home frustrated. You need to take that next step to participate and get on what was that your path? You got on a committee, you volunteered, you asked questions. How can this be done better? Something like that?

Steve Horvath: 15:43

Yeah, well, and I served aboard, you know, an initial transition board back in 2009 at my first condo here in Seattle, and then had concerns right from day one of buying this condo, we had a budget over$1,000,000.05 $1,000 in the bank. And so from day one as a brand new owner, we went through with the purchase anyway, but, but before we even closed on the unit, I was trying to contact the board and say, Why is our operating balance? Say there's only $5,000 when our budget is a million dollars a year. This isn't this isn't right. And so there, there were always things that from day one that I knew needed to be changed, but and that's the reality of purchasing into a common interest community, right? Whether you feel like you have a choice or you don't, and a lot of people don't feel like they have a choice, they need to live in a certain area because of where they work. They need to be in a certain school district for their kids. Whatever those things are, your ability to buy a home that's not in an HOA or that's in a condo or a co op is extremely limited, because that's an that's a it's condos and co ops are more affordable. So if you know, if it's price point that's driving you and you want to own a piece of real property, that's probably where you're going to be buying, unless you're out in a more affordable area of the country and you can afford a single family home. But by and large, condos and co ops are much more affordable by 50% or more, in some cases, in certain metro areas like Seattle and single family homes are, you know, the ones that are being produced and mass by DR Horton and other builders. But even high end homes are in HOAs and gated communities, over 80% according to the census bureau. So yep, yep, big numbers.

Robert Nordlund: 17:26

So we have this whole idea of a community associate, Community Association, and it has its inherent flaws. It was designed a long time ago. It rides on the backs of volunteer board members, and I don't want to say we're stuck with it, but economically, it is the way homes are being built. It's the way that people buy into them. And just like your experience, you're not sure, as a prospective buyer, what you're actually getting into or you may be nervous. I remember buying my condominium, and in probably the week after I bought it, I finally figured I should read the governing documents that they gave me at closing, where you I signed my name and said, I've read these therefore, and now I can get my key. I read them, and I was so disappointed that I did not have mineral rights underneath my condo. I was unit number eight, and I was over the parking and I had this kind of idea in my brain that if I struck oil or found gold underneath my condo unit, it was mine, you know, didn't I own unit number eight, and the the ground all the way down deep? Yeah, we have some inherent cracks in this entire industry. But Steve, how about we take a couple moments at this time for a break to hear from one of our generous sponsors, and then we'll come back and talk more about the solutions here, talking about common sense for common areas. Are

Paige Daniels: 18:59

you part of a homeowners association or condominium board, making the right financial decisions for your community's future is crucial. At Association reserves, we're proud to serve communities nationwide, specializing in reserve studies tailored to your community's unique needs. Our expert team helps you accurately assess your property's assets, forecast future expenses and develop a solid funding plan, whether you're a small HOA or a large condominium association, we've got you covered. Visit reservesteady.com to learn more and get a proposal for your association. And we're back,

Robert Nordlund: 19:31

Steve, as we were talking over the break, you talked about advocate, participate and escalate. What does participate and escalate actually look like as you're trying to make this community association industry a better place.

Steve Horvath: 19:43

There's a lot, and I think it's really important to go back to this, what I mentioned about condos, co ops and HOAs don't exist in a vacuum. There's sort of this pernicious concept that you just trust somebody that you're paying to. Do a job. And I think, as any of us have discovered in other parts of life, it's sometimes it is that simple, and sometimes you find the right vendor and they do what they said they were going to do when they said they were going to do it to an excellent degree of perfection and and it's done. But that's why we have Yelp and all of these other Angie list and all these other services. But there, there is no Yelp, there is no Angie's List for condos, co ops and HOAs and so you should be able to trust the people that you pay to deliver service to you. But as many of us have learned in life, you should trust and verify you. It's not enough to say I'm paying somebody. We're just going to trust the manager and and move on. And there are some ways that groups of people go about making poor decisions. Actually, there's a book by Jasmine matrosian That she published with CIS assistance back in 2001 called decision making in communities. Why groups of smart people sometimes make bad decisions? That's another book I think people should read, and it talks about these mental shortcuts that we take and major group decision defects. That's actually something that was adapted from Irving Janus. And so I just like to read a couple of these really quick and summarize them. Expertise. If an expert said it, it must be true. That's a mental shortcut. Expensive equals good. Sometimes, you know, we think that things are scarce, they have to be valuable, but that's not necessarily true either. Fix action patterns, and this thing called a click were response where familiar actions elicit the same response over and over, and the because justification because, by itself, is enough, and there's no explanation, don't it's just because. And then there's these decision making defects, failing to consider alternative courses of action, failure to delineate objectives and implied values of the decision. Failure to re examine the preferred course of action, to evaluate if there's some sort of non obvious risk or something you haven't evaluated. Failure to consider non obvious gains. There's all these different ways to slice and dice it. Failure to obtain information from experts. So you need you know you want information from experts. Sometimes you don't get it. It works both ways. And then there's selective bias and failure to really consider how Planning for Contingencies or the lack thereof might affect your decision making. So there's all kinds of ways that well intentioned people can go wrong. And the last thing is this word called satisficing, and I didn't misspell that or mispronounce it. Satisficing is basically a simplification where, regardless of whether you have pressure or not, a choice is made to agree to outcomes that only solve a portion of the problem that you actually need to solve. And I think that's one of the you know, this is sort of like the can't please everyone, or let's get this off our plate style of decision making, and that happens a lot, especially on with the board, with the way that meetings work. You have one meeting a month. We my association, having done this for seven years, you know, we've gone through a series of times where, for a period, we had meetings every two weeks because we had so much stuff, we were trying to get it done, right? Yeah, we've, we've had periods where there were enough people on the board that just only wanted to meet once a month, and they refused to meet for more than an hour, and they would just say, No, I have something better to do, unless there was something that really interested them. And then our meetings would go longer than an hour, yeah? But the reality is, you can't get unless you're really got everything finally honed. You're paying people you can trust to do a lot of a lot of work behind the scenes in between meetings, you're not going to be able to show up for a meeting once a month for an hour say we're done. That's it. And operate many communities that are more complex, those communities on the one end of the spectrum that don't have much to care for. That's one thing. Communities on the other end of the spectrum where there's all kinds of things happening, there's requirements you have to meet, you need to set a budget, you need to do your reserve study, you need to do all these things. It can't all be on autopilot. And that's the importance of having meetings, making time to come together and do it and open and have those sessions with other people. Yeah, you

Robert Nordlund: 24:25

attempted us earlier with the HOA united. I'm trying to stay away from HOA Fight Club, although I may have to ask you about that to after the session here. But tell me about HOA united and your advocacy. What kind of things are you doing in the are you talking about Seattle, King County, State of Washington, or national? How would you like to fix this with legislation? Yeah,

Steve Horvath: 24:49

nationally. And there's so much we're currently tracking, almost 300 bills specifically for common interest communities this year that have been in. Introduced, and it's impossible to actually meaningfully engage on every single one of those just just because of the sheer volume. Some of them are, are really simple bills that don't require much explanation or or engagement, and they they're written in such a way as as that they the the intent and the effect will will match other bills. Need, need help, and the reality is that we're all human, and these legislators aren't experts. I mean, they have, there's, I think, 3500 different ways to slice and dice decisions that could come before a legislature in terms of policy making at the state level and probably the federal level as well. But we're really talking about the state level here. There's no way for your eye to be an expert on 3500 different areas of policy. So it's it's interesting to understand how the legislative sausage gets made. It's a long term process. This isn't something there's a lot of people that expect, not just for common interest communities, but for other areas of the law or in life in general, want immediate gratification. That's not the way that the law works. And sometimes there are situations where something happens and there's an immediate reaction. And I think the you know, the Champlain towers collapse and tragedy in Surfside Florida elicited an almost immediate reaction from the Florida legislature, and then you had other legislatures responding to that. But that sort of cause and effect doesn't always yield the best results, and so now in Florida, we have 1000s and 1000s of condo owners getting issued assessments that are sometimes six figures per unit. And now the legislature is trying to figure out, well, what you know? What do we do about this? And everybody saw it coming. There were lots of articles from the get go to say, Well, if you pass these laws, we know what's going to happen. So, long story short, we're trying to engage where we can, to make a difference. But there's so much happening across the United States. In some states, there's nothing. In other states, there are. Hawaii is has, you know, 50 to 60 bills every biennium. It's incredible. Maryland has 40 bills. It's impossible to try to meaningfully engage on every single bill, so you definitely have to pick your battles right.

Robert Nordlund: 27:26

And there's agendas and hidden agendas, and you said it earlier, there's well intended legislation that actually will do what was intended. And the thing that bugs me is legislation that the title doesn't match what the body of the what the words actually say, and it's driven by legislators who are elected, and they may want something that is immediate or looks immediate, just so they can get re elected. So there's some challenges with the legislative process. Let me twist just a little bit to board members. We have a board member audience here. What can board members do at their association? Do you have some a top three, top five list of what they can do to improve their community? Trust

Steve Horvath: 28:17

and verify we talked about. Ask questions. Okay, don't make assumptions. Try to ask yourself if you're doing the right thing at the right time for the right reasons. Don't heed poor advice from managers, attorneys or anybody else you pay. Learn how to figure out what you should listen to and what you should look into further, and don't fall for the trap of adhering only to minimum requirements that are blessed by by anyone, including your attorney. And I think this is really important, and this is one of those areas that's a crossover explaining why laws are important. There is advice out there, published in writing that says, Well, maybe you just shouldn't have the Open Meeting if the law doesn't require just go ahead and don't have it. And there are there are attorneys, and there are managers and other people who have given that advice to boards. But you've had many podcasts where where you and your co hosts have talked about the importance of transparency and communication. And the reality is that closing off a meeting that should otherwise be open or failing to disclose information that's obviously important to the members is never going to be the remedy for whatever you think is is going wrong. And so you, you as a, as a, as a board member, as an owner, you need to be able to set reasonable expectations. And anybody that operates any business, you have a large business. Everybody knows that. You don't read the state law and figure out how to operate your business based on that. You need to be creative. You need to have your own drive behind it. You need to figure out how to go well above whatever the law says is the minimum requirement in order to operate a successful business that can thrive over time. And so I think people fall into this trade. App of Well, yeah, this is what the expert told us, you know, and this, this is what the minimum standards are. And so we're just, that's what we're going to do. It doesn't work well in any business, and it certainly doesn't work well in condos, co ops and HOAs,

Robert Nordlund: 30:14

and I would add, it doesn't work well in life. You and I drive an automobile, and it's the law to wear a seat belt, but it's not wearing a seat belt that keeps you and I safe. It's driving safely. It's putting head on a swivel, checking your mirrors, looking at the speed limit, looking at the weather, all these kinds of things. The seat belt is almost trivia. Yeah, it helps in emergencies, but you need to, as you've said, Be curious, ask the questions, don't just go with the minimum standards, trust but verify. I like that's that's a lot of good things. Well, thank you, Steve, it's been great. Talking with you, sharing your experience with our board member audience here, having you on the program. Any closing thoughts to add at this time. Wow,

Steve Horvath: 31:02

there's there's so much, I would just say, be curious. Try to figure out what you don't know, and advocate, participate and escalate. I

Robert Nordlund: 31:14

like that. I like that. Well, if you'd like to get in touch with Steve or see what's going on at HOA united, visit their website@hoaunited.org, we hope you learned some great HOA insights from our discussion today that helps you bring common sense to your common areas. We look forward to having you join us for another great episode next week.

Announcer: 31:36

You've been listening to Hoa insights, common sense for common areas, if you like the show and want to support the work that we do, you can do so in a number of ways. The most important thing that you can do is engage in the conversation. Leave a question in the comments section on our YouTube videos. You can also email your questions or voice memos to podcast@reservestudy.com or leave us a voicemail at 805-203-3130, 052033130, if you gain any insights from the show, please do us a HUGE favor by sharing the show with other board members that you know. You can also support us by supporting the brands that sponsor this program. Please remember that the views and opinions expressed in this program are those of the hosts and guests with the goal of providing general education about the community, association industry. You'll want to consult licensed professionals before making any important decisions. Finally, this podcast was expertly mixed and mastered by Stoke Light, video and marketing with Stoke Light on your team, you'll reach more customers with marketing expertise that inspires action. See the show notes to connect with Stoke Light. I'm.