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a failing homeowner association located in Chester County, Pennsylvania

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1 The PENCO Management Difference

Almost all Homeowner Associations are managed by an industry known as Management Companies. This companies employ "certified professionals", which means that the "professional" has taken a 20 hour PowerPoint class and passed a 120 multiple choice test administered immediately afterwords with at least a 70% score to pass. The successful candidates are then awarded the right to use the trademarked word logo of "CMCA™ by paying a yearly fee. No other previous experience or education is required to become a "certified professional", a "CMCA".

At Willistown Knoll, the management company is PENCO. At the 2016 Annual Budget Meeting, Michael Blaustein, the current Willistown Knoll Board president, stated that the PENCO's Management team are not happy that their company's partnership with the Willistown Knoll Homeowner Association is being documented on websites.

During the Budget Meeting, Mr. Blaustein was asked how do Members of the Association verify the financial data that was being presented on Powerpoint slides, Mr. Blaustein indicated that the Portfolio Manager of PENCO Management should be contacted. When it was explained to Mr. Blaustein that this PENCO individual had been contacted for inspection of financial data to no avail, Mr. Blaustein provided no answer other than to contact PENCO again. Next will come a complaint that certain owners contact PENCO too often.

But is Mr. Blaustein complicit in a game of blaming PENCO rather than taking responsibility for his actions? When asked, by way of example, why the new 2016 Reserve Study was not provided to the owners, Mr. Blaustein stated that PENCO management should have provided this weeks ago to the owners, stating it was his intent. Unfortunately, no owners were provided access to the important 2016 Reserve Study. Mr. Blaustein verified this by consulting the PENCO management representative at the meeting.

Who is one to believe in this finger pointing game? Perhaps by posting examples like this, PENCO and / or the Board will investigate ways of into doing a better job with open and honest communications and acting in accordance with Pennsylvania Law with reference to information rights of the members.

2 Board Members of a Homeowner Association

Keep this in mind, do Board members in an Homeowner Association:

  • pay your mortgage?
  • pay your insurance?
  • pay your taxes?
  • provide you employment?

They are just five of your neighbors, They are not particularly special, talented, experienced, or skilled than any of the other owners of an association. Many times, they are less talented; they just have a lot of time on their hands. For example, Willistown Knoll has some extremely talented and capable residents. The problem is they are too busy with their lives and careers to get involved within their homeowner association.

That's the irony, homeowner associations attract residents who are told "The Association" will take care of their homes. Little did they know, their neighbors would be in charge, many times becoming petty autocrats who are not particularly good at providing proper and balanced governance for a community. Often not being particularly capable, they become puppets for vendors who make money from the owners within an HOA. The vendors prop up the Board Members for the advantage of benefiting from the cash flow that can be derived from the "unit owners".

More frightening, homeowner association boards can be magnets for sociopaths. Martha Stout, author of "The Sociopath Next Door," says 1 in 25 Americans secretly has no conscience and can do anything at all without feeling guilty. Stout says sociopaths typically gravitate to situations that allow them unsupervised control over small groups of people who are relatively helpless, or vulnerable. They become psychotherapists, divorce lawyers, human services directors or board members of their homeowner association.

Remember HOA Board Members are not your boss, not your parents, they don't deserve your respect just because they volunteer. Inept Volunteers can do more damage than good, they need to be evaluated on their results, not on what they say they've accomplished.

The board members are ultimately accountable to the owners. In this association, they can be removed by a simple majority of owners. For that matter, the association can be dissolved by an 80% vote of owners.

Here's the challenge; are many of the more capable owners willing to step up and address the situations that exist now?

If you don't like what they are doing, tell them, organize, and remove them. You don't have to put up with it, but you will also have to work towards a better governance.

3 Competence / Integrity / Fairness Anyone?

The Board's has spent years dreaming of redesigning the stucco clad homes of Willistown Knoll by covering them with Cement Board Siding. Just this summer, the Board of Willistown Knoll's Association announced they made significant progress and made a startling discovery. The project will cost not less $25,000 per homeowner. It will cost not less than $50,000 per homeowner. And even this "not less" than number has variables in it (not fixed price commitments) that could increase it even more.

Not to worry, perhaps the Board can borrow the money. Perhaps this esteemed group of people will even suggest something along the lines of a Balloon Loan (a type of loan that does not fully amortize over its term), With this imaginative method of financing, dues will be kept perhaps below $500 per month, up from $265. Let the future owners worry about paying off the loan principal. With a "low" monthly payment that doesn't cover the principle, the existing owners will have a chance to bail out and stick it to the unsuspecting future owners.

When selling, just slide all of the financial disclosures across the table at closing (along with the Declaration, Bylaws, and various Resolutions) and hope the unsuspecting buyer doesn't read any of it within their 5 day grace period when they can back out.

Here's another brilliant idea; have the homeowners vote to include even more items (such as decks, windows, and wood replacement). This way, end unit owners and owners with bigger than average homes can share costs they don't want to pay with the more modest middle unit owners.

More realistically, this will probably tear the community (or what is left of it), apart. Many end unit owners are quite happy with the situation, they will not be paying their fair share and are enthused about the project.

4 HOA Loans - Information for Willistown Knoll Homeowners

Now that the board has admitted that their "siding" project will cost in excess of their previous statements, a 10 million dollar project, not a 5 million dollar project, homeowners should be understand the options they face:

  • understand HOA corporate financing options and the financial liability the board can place homeowners within this HOA without their approval (reference - Mr. Blaustein's statement that he has no use for consensus within a membership based non-profit homeowner association)
  • consider recalling and replacing the board with a simple majority vote
  • rethink the entire endeavor and consider alternatives that other Associations in similar situations have used.

Does anyone think by plunging a Homeowner Association into millions of dollars of debt, it will make the location a more attractive place to live?

4.1 HOA loans

Rather than go into detail here, there are some excellent resources available on the web. Simply use a an internet search tool with the term "HOA loans". Here are a few examples of websites that describe HOA loans, how they work, and the issues. Excerpts are provided:


Needless to say, building appropriate levels of reserves has been the exception versus the rule. Enter the financiers. A very important lesson to appreciate in obtaining a loan for a capital maintenance project is that the loan is not to fund the project. The loan is in reality replacing the lack of reserves that should have been in place so the association could self fund the project.
The next unfortunate mistake that a community association makes is trying to take the loan out for as long a possible because of the desire to keep assessment dues low. The real result of that desire is the cost of the project is increased via higher total loan interest costs. This issue is turning out to the most dangerous problem that the banks are creating for themselves and the associations they have stepped forward to help. The variations of this unfortunate evolution have been the advent of interest only loan, loans that amortized over 25 or 30 years and balloon payment structures. One of the worst financing tools that has been brought forth in recent years is the idea of a bond structure. Such a structure allows for interest only payment for 20 years with the principal coming due in full at maturity. If you appreciate the nature of community associations, it is highly unlikely that the association will create what is referred to as a sinking fund that accumulates the cash needed to pay off the bond after 20 years. It is far more likely that the debt will be refinanced by some willing banker over some long term. The end result really is a seemingly never ending life of paying interest on a debt that financed a common element replaced that has expired and needs to be replaced again.


Does an HOA Loan Require Collateral or Other Security? Typically, if the loan went into default, we’d have the right to collect HOA, CID, and PUD assessments directly from the homeowners. Individual officers and homeowners are not required to personally guarantee an HOA loan or line of credit, because the borrower is the HOA, which is a separate business entity.


There are loan structures to avoid. They promote irresponsibility or can result in the association paying far too much in interest or can create a repayment trap. An association should never enter into a loan structure that has a balloon payment. Such a structure is alluring because it keeps payments low but it results in a large lump sum payment to be paid at a point far into the future. All this has done is gotten current unit/lot owners out of paying for the obligation and dump the burden onto future owners. Then, there is the question of where the money is going to come from. Chances are that reserves will not be available. That leaves a special assessment on the unit/lot owners in the future, or, refinancing the large remaining principal balance that causes a much larger overall interest expense to the association than if the loan had been paid over a normal amortization schedule.


Do not base any legal decisions upon this website; for official information, contact the Board of Directors via the Board President, Michael Blaustein of 302 Princeton Court, Newtown Square, PA. If he refers you to PENCO Management, keep in mind that the Management Company and their employees do not legally represent the Homeowner Association. (Refer to Manager's Functions in the Bylaws.)

When dealing with Willistown Knoll Homeowner Association, Incl, for important decisions (e.g. thinking of buy or selling a home within the association), make sure the information you received is in writing and signed signed by the President of the Association and/or one of the several association's attorneys. DO NOT TRUST verbal statements.

Information on this site is provided in good faith by members within the association; please immediately report any errors, unsubstantiated statements, or statements that are believed to be falsely incriminating to the administrator of the website. Please read the General Disclaimer for more information.

6 Types of Board Members - The Community Associates Institute

For those who have never heard the name, The Community Associates Institute (CAI for short) is a nationwide industry and lobbyist group. CAI has lobbyist organizations in every state of the United States. In Pennsylvania, CAI's Legislative Action Committee is lead by Steven Sugarman, Esquire, of Sugarman Associates, one of the law firms employed by Willistown Knoll. This Legislative Action Committee meets with Pennsylvania legislators, advises them, and pays for a lobbyist group to influence Pennsylvania laws that affect Homeowner and Condo Associations.

Mid-Atlantic Associa, Pennco Management, Holly Setzler, Esquire, Falcon Engineering are all members. Falcon Engineering is one of the top contributors to the Legislative Action Committee lead by Steven Sugarman, Esquire.


This diagram is from the HOA Warrior website. To quote the author of this site:

Board members are your neighbors--sometimes they are caring and organized, systematically carrying out their duties in a rational and equitable manner. Sometimes they become little egomaniacs drunk with power. Often they are retired folk with too much time on their hands. These little dictocrats runaround imposing their version of utopia on you by enforcing the holy grail of conflict...

All it takes is three out of five board members who accept the trade-off of assuming the role of Neighborhood Dictocrats and the HOA Board has the support of these vendors that manipulate advise them. The best part, the cost of facilitating these three or more Board Members acting the way in which they do is borne by all the homeowners who must pay the association bills. The vendors have a direct line to the homeowners bank accounts and the Board Members, well the readers can figure it out.

7 Elliot H. Berton, Esquire of Steven L. Sugarman & Associates

7.1 ...you can squeeze blood from a stone, you just have to squeeze hard enough...

During a recent "Information Meeting" where vendors were presenting information while Knoll's board president, Mr. Michael Blaustein, ran the slide projector, a homeowner asked for information on how these Vendor's proposed multi-million dollar project would affect her financially. Being completely honest and brave, she stated as an owner, she may not be able to continue to live here due to the financial burdens this project would place on her. She would like to act in a responsible manner, perhaps selling before the additional bills start coming in. After all, she confessed, you can't squeeze blood from a stone, I may simply not have the money.

Mr. Burton Elliot, Esquire, who the board paid to attend this meeting (at what cost?), helpfully replied: "when I work collections for my clients, I tell them that of course you can squeeze blood from a stone, you just have to squeeze hard enough and to make sure none of it is your own blood".

This vendor should have been made to immediately apologize to all homeowners for his crude and thoughtless statement, if not simply fired. Our Board of Michael A. Blaustein, William Horst, David Keating, and Eileen McAnally; showed no sense of disapproval of Mr. Elliot's joke. Mr. Burton and Mr Blaustein were clearly on a first name basis; one of many experts from whom Mr. Blaustein seeks out advice.

8 Michael Blaustein's Letter - Living in Willistown Knoll

Anyone wondering about this association only needs to read Mr. Blaustein's recent letter which he sent to most but not all of the homeowners within Willistown Knoll. Mr. Blaustein was running for election (he had been previously appointed to be a Board Member by his friends on the Board).

The direction that Mr. Blaustein and friends have taken with this Association is whether to borrow $7 million to $10 million dollars to make questionable architectural changes to the homes. Please note: this stimate based upon non-union labor rates and the square footage of the siding within the development ($20/square foot, roughly 350,000 square feet of stucco, other work is also planned by the Board). Mr. Blaustein and the board received legally binding quotations for the work they have unanimously endorsed (according to Mr. Blaustein's April 14, 2016 letter) in April 2016 but as of June 13, 2016, have not updated their previous disclosure of a year ago that the project costs will be greater than $5 million dollars ($25,000 per homeowner) minimum. Does Mr. Blaustein stand by that lower estimate or is there a new minimum? Why the long delay in updates? Perhaps rather than simply quoting a minimum; how about providing homeowners of a NOT TO EXCEED amount? Wouldn't that be a better planning tool for the owners withing the association or potential buyers? Or perhaps after years, no one knows how much the project will cost; that's hard to believe. Thus this site is making a good faith estimate in lieu of any released information from the Board.

For anyone seeking more accurate and timely estimates, please contact Mr. Blaustein, president of the Board. He and the Board have been in possession of the contractor quotations for weeks. Accurate and official answers are the Board's responsibility, not this website or it's authors.

Whatever the cost, this is known. Owners will be obliged to pay the unfunded amount, either by special assessment of a lump sum or increased monthly payments to pay back a loan taken out by the Board on behalf of the association. If some owners cannot pay, the board have announced after three months, the full years worth of assessments will become immediately due and a lien will be placed on the owner's home. Additional legal action could include foreclosure.

In the interim, the other owners who can pay will need to pick up the difference.

The Board has not disclosed that they received a proposal in 2013 for the repair and continued maintenance of the stucco from a well respected Professional Engineering firm in conjunction with one of the area's top stucco remediation companies.

Getting back to Mr. Blaustein's letter, Consult owners? Work towards a consensus owners, comparing alternatives to total replacement of the siding? Mr. Blaustein did not even make the new board members of 2015 aware of the 2013 proposal and option/. The Board has also not responded to requests to make this proposal available to the owners along with an explanation of why it was discarded and never disclosed.

Mr. Blaustein did not extend the courtesy of providing copies of his letter to the people whom he was criticizing but that would be par for the course, perhaps it was a coincidental accident.

Please read the letter below. There will be more disclosures on this website regarding Mr. Blaustein's "track record of accomplishment for the Association." This will include past financial mismanagement when he was previously president of the Board, potential abrogation of his Board responsibilities to Vendors (a theme in his letter, the board follows what "experts" tell them to do. What value then does Mr. Blaustein bring? Perhaps the vendors (management company, lawyers, and others) could simply run the association. Questions also exist as to the Board's failure to act in fidelity to the governing documents and Pennsylvania Law.

Sadly, living within Willistown Knoll has become a miserable experience for many of residents. Another theme of the letter, it is all about Mr. Blaustein and his friends, not the people who live here. Given that multi-million dollar contracts are soon to be signed, all rather concerning that Mr. Blaustein and friends think they must continue being on the Board; welcoming no outsiders as it would interfere with their unanimous position of replacing all of the stucco without ever disclosing any alternatives.

Here is Mr. Michael A. Blaustein's letter in full.

April 14, 2016
Dear Fellow Homeowner,
We are in the midst of an important Board of Directors election at Willistown Knoll. It is important not because of the personalities involved, but because of the candidates' positions on what constitutes good governance of our Homeowners' Association. I am writing to ask your support for effective governance that is consistent with our Declaration and Bylaws, best practices, and common sense by casting your vote for Bill Horst, Eileen McAnally, and me-incumbent Directors with a track record of accomplishment for the Association.
Our Declarations and Bylaws have a lot to say about governance, including the Duties of the Board> "It shall be the duty [emphasis added] of the Board to act as fiduciaries for the Association in the administration, operation, and management of the business affairs of the Association and the Property." [Bylaws, Article XIII, Section 1. ] Our documents list numerous specific duties of the Board, including budgeting, maintaining those property elements the Association has responsibility for, collecting fees and assessments, and enforcing the rules and regulations of the Association. The documents also enable the Board to obtain and rely on the support of "accountants, architects, engineers, legal counsel, Manager... " in performance of its duties.
Two candidates have proposed that "consensus" be a primary principle of governance in Willistown Knoll for "big decisions" or "weighty matters." Besides the fact that this notion does not appear in our governing documents, it shouldn't be supported because it is vague and impractical. This is not to say that the Board does not consider homeowners' needs/wants when making decisions, big or small; after all, we were elected to represent all of you. However, making decisions through homeowner consensus presents unmanageable challenges, starting with: What is meant by deciding through consensus? Does it mean that a Special Meeting should be convened for every decision over a certain threshold? What would the threshold be? Does it mean that a vote, subject to a 25% quorum requirement, should be taken on issues at those meetings? Does it mean that the vast majority of the homeowners who understand and support the governance principles of the HOA should turn over power to a vocal minority who happen to be engaged on one issue or another? If a quorum is not achieved and consensus is not reached, an all-too-likely event, does it mean we do nothing?
I don't know the answers to those questions, but I do know that the current Board is committed to fulfilling, not abdicating, our duties; we view them as required, not optional. In fulfilling our duties, we have continuously sought out guidance from professionals on best practices and content. We are not perfect, but we are always learning.
As President of the Board, I have had the opportunity to lead a strong Board of Directors over the past year. We came together in a cloud of controversy after the 2015 election. We proceeded to capitalize on the diversity of experience from our work in the government, non-profit, and for-profit sectors and with backgrounds including human resources, finance, marketing and sales, information technology, business management, and science. On the most challenging issue the Association faces-siding replacement- it was important to me that the Board reach a unanimous conclusion about the path the Association would take. To ensure this, we revisited every report and observation, reconvened the Stucco Committee, reengaged our engineers and experts, and arrived at the conclusions we have communicated to the membership. This is how a Board committed to fulfilling its duties operates.
I appreciate the opportunity I have had to serve the Association, and I hope you will give me, Eileen, and Bill the opportunity to continue to work for you.
Michael Blaustein

9 Management Company:

PENCO Management, Inc

Staff Person Position
Debbie Marchiano Community Manager
Steve Enrey, CMCA®, AMS® Vice-President
Bobbie Castellotti President

10 Licensed Attorney Performing Collections & "General Counsel":

Holly L. Setzler, Esq. :Landis & Setzler, P.C.

Ms Setzler provides collection services for Willistown Knoll and many other clients of the Associa Mid-Atlantic Management Corporation, She was referred to the Association by Associa Mid-Atlantic Management Corporation roughly a decade ago.

11 Footnotes:

Please read the Disclaimers before using this website.