Do not be fooled by the glossy ads promising carefree living, enhanced property values, recreational amenities and yes, even romance. The reality is very different.
A conservative estimate has it that one in six Americans, or over 57 million people, live in some 270,000 mandatory membership common ownership developments across the country. These include condominiums, cooperatives, townhouses and single-family homes that are all part of a homeowners association. These numbers keep growing.
Today, over half of all new housing built nationally is part of an association. However, many municipal jurisdictions mandate HOAs so that in those towns, cities and counties, virtually all new housing includes automatic membership in an association. In fact, in some of the fast growing areas of the country it is impossible to buy a house that does not include an association of some sort.
Contrary to the glossy ads promising carefree living, recreational amenities for pennies a day and the promise of protected and enhanced property values, HOAs are not an asset but a liability.
The first thing housing consumers should understand is that associations were never intended to benefit them. They benefit municipal governments, builders/developers and the growing industry that feeds off associations. This $30 billion annual industry includes managers, attorneys, landscape companies, pool companies, CPAs, insurance companies and now, banks as well.
One of the main purposes of an association, and the reason they are required to be part of all new construction in many parts of the country, is to serve as a vehicle for local governments to shunt their responsibilities off onto the private sector, while still taxing the citizens – at the full rate. What this means for the taxpayer, homeowner and voter, is that not only are they double-taxed, they are subjected to a second layer of government — a private government, one that is not bound by the protections afforded in the Constitution.
Because homeowners associations are "private" enclaves, developers can increase density, thus building and selling more units than would otherwise be permissible. Moreover, since the streets, sidewalks, lighting and other facilities will be privately maintained, they are not always built to code. Since substandard construction is considerably less expensive, this maximizes the builder's profit but saddles the homeowners with the cost of maintaining expensive infrastructure that all too often breaks down.
Another equally important fact to keep in mind is that failure by the association to properly maintain the common areas will adversely affect property values. Furthermore, unfunded future repairs and replacements could easily result in enormous special assessments. Special assessments of $10,000, $20,000, $50,000 even $90,000 are not unheard of. Associations have the power to foreclose to collect these assessments.
However, the physical condition of the common elements of the association is not the only are where homeowners are left holding the bag. Because associations are private entities, local governments and law enforcement are reluctant to get involved when internal disputes arise. Citizens who seek protection from their elected and appointed officials for illegal actions are often told that their problems are civil matters to be litigated in court, since they occurred on "private property."
Homeowners associations enforce enormous powers – powers real government can only dream of having. These powers and their abuse by boards and management often lead to arbitrary rules that give the governing committee power over property owners. For example, recorded deed restrictions have gone from as few as one page to hundreds of pages long, controlling everything from the weight of a dog to the exact shade of white of the interior window treatments. Along the way, some associations have even taken it upon themselves to approve reading material and clothing articles kept on the premises. As completely ridiculous as this may seem, newspaper archives and court records are full of such stories and cases.
And state legislators, at the insistence of the homeowner association industry, amend state statutes increasing the powers associations already enjoy. The most heinous of these laws is the statutory power to fine and then to foreclose; in some states, this includes the power to foreclose non-judicially. In the absence of any adult supervision and oversight, these powers are being misused and abused on a daily basis.
Consider the case of Wenonah Blevins, an 82-year-old Texas widow, whose mortgage-free $150,000 house was sold on the courthouse steps for $5,000 to satisfy an $814 assessment. What is so incredible about this case is that Mrs. Blevins had remitted a check for the full amount shown on her bill from the association but the association refused to accept her payment, preferring to foreclose instead.
There are many myths and misstatements associated with this type of housing. Do not be fooled by the glossy ads promising carefree living, enhanced property values, recreational amenities and yes, even romance. The reality is very different. It means giving up part of the American dream. It means leaving the American zone.
This article is distributed by the American Policy Center, 70 Main Street, Suite 23, Warrenton, VA 20186 www.americanpolicy.org. Tom DeWeese, President.
To be honest, you should have disclosed that poor Widow Blevins challenged the sale and won $300k in damages! According to the Houston Chronicle, “With a stunned grin and a $300,000 lawsuit victory, the suburban Houston widow whose eviction in April became a rallying point for homeowners’ rights got her house back Friday.” Link: http://members.tripod.com/the_whole_story/WenonahBlevinsResolution.html You might also have disclosed that your lone example of these HOA “horrors” dates back to 2001. If there really is an “evolution” going on, why don’t you have anything more recent to use as an example?
Can HOAs overreach? Certainly. Any human institution delegated power can abuse it — a village, a school district, even churches and other charities have misused their authority at times. There is nothing unique about HOAs in that respect. The nice thing about HOAs is that if you don’t like their rules you don’t need to live in their neighborhood. Live the next street over. Find a different development. You have freedom of choice there that does not as clearly exist with school districts and state boundaries.
I live in a community with an HOA. Yes, I hate the fact that I have to submit plans for approval if I want to build a new fence or paint the house a different color. That can be annoying. But when a neighbor down the street decided to park his big ugly rig in his driveway every night, and another wanted to operate a kennel in his backyard, our HOA rules helped put a stop to it.
In my own experience, HOAs can really help prevent neighborhood blight. I nearly bought a home in a community that advertsied it had no HOA. I visited there 2 years later, and the house that could have been next to my home was adorned two eight-foot wide satellite dishes ON THE FRONT LAWN! So, I say God bless the HOAs.
Mick:
I agree with you for the most part. The author of this article didn’t give associations a fair shake. There are good associations and bad associations. When I was shopping for a homesite, I read ads that said “NOT in ‘Such-And-Such’ Association” (the largest one around). My thought was if they are using that as a selling point, I don’t really want to buy there. I have since found out that they strictly enforce the rules and have the authority to fine. I settled on an association that had reasonable rules that I read BEFORE making an offer.
I have lived in two associations and been the board of both. What board invariably discovers is that almost no one who buys into and association even knows about it until they are in. Whenever a member is informed he has run afoul of the rules, his first response is, “No one can tell me what I can and cannot do.” After he has been told in effect to grow up, his second is invariably, “Well, no one told me there was an association when I bought my house.” And he is usually right. This is the fault of the 1) title company, 2) the real estate agent, or 3) the owner who failed to read every piece of paper he was asked to sign. Here in Arizona, HOAs are so common that it is nearly impossible to find property not in one, and when you do, the neighborhood is in poor shape, but we still get new members who don’t know they are buying into an association and therefore are entering into a contract.
Last year, the governor signed into law some new procedures for associations to conform to. For the most part, they protect both member and association, but my favorite is the one obligating the buyer to sign a statement acknowledging that he is entering into a contract with the association, and that he will abide by its rules.
Associations here also wield a lot of political clout. This is where the author fell down in his article: Local government does rely on HOAs so they ask their input on proposed developments. Recently, a rich so-and-so use to getting his way applied for a permit to land his helicopter on his property and went so far as to build a landing pad. The committee of the various HOAs lobbied the local government and got it stopped. This is the sort of boring thing that never makes headlines, but an association throwing Grandma Moses out in the cold is so much more sensational.