How does HOA litigation affect owners and residents?

By Deborah Goonan, Independent American Communities

I’m not an attorney. However, over the past 5 years, I have been reading legal complaints, case summaries, and generally following the progress of legal disputes in Association-Governed Housing. I read and analyze pages and pages of dry, verbose information, including legal opinions, to gain a better understanding of exactly how current laws work for or against housing consumers.

In other words, I look for patterns of dysfunction and injustice through the lens of consumer protection.

Here’s what consumers need to know:

Homeowners, condominium, cooperative, and property owners associations are collective legal entities – usually incorporated. Governing documents of HOAs – which include Declarations of Covenants, Conditions, and Restrictions (CC&Rs), By Laws, and Articles of Incorporation – are legally binding on both individual members and their Association, with U.S. courts generally viewing the relationship as contractual between and among the parties.

But that contract is usually written by and for developers, making it one-sided in favor of the HOA. In addition, governing documents are not subject to state or federal review, and state laws impose very few restrictions on the terms of HOA contracts. A buyer or heir to HOA property must agree to all terms without any opportunity for negotiation before taking title to that property. Take it or leave it.

And, it’s important to note that state laws governing HOAs are usually written by, and therefore heavily skewed in favor of, real estate industry stakeholders: land developers and home builders, bulk investors, HOA management firms, HOA attorneys, and so on.

The HOA industry is, at best, loosely regulated by a patchwork of inconsistent state laws, and a handful of regulatory agencies. Most often, state Ombuds and regulatory departments of business or real estate – if they exist – are established with virtually no budget to investigate consumer complaints, and no mandate or authority to enforce statutes or HOA governing documents.

I call it Regulatory Window Dressing. Elected officials give the appearance of doing something to rein in excessive power and abuse of HOAs, without really doing anything at all.

That’s why, in most cases, an Association member’s sole option to enforce or defend their rights against their Association is engaging in a legal battle in civil court.

Read more at HOA Lawsuits: a reality check

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1 thought on “How does HOA litigation affect owners and residents?

  1. Anonymous former condo owner October 29, 2016 — 8:30 pm

    You are right. Suing your condo or HOA is not an easy thing. I did it and financially came out of it okay but it took three years and the strain was tremendous.

    One point. The other owners may know you are in the right but they will not put in any, or not much, money into the fight. They will sit back and watch from the sidelines.

    The smarter ones see what is going on and they sell. As they leave, your potential support dissolves, one unit at a time. The ones who stayed, were upset that we sold as “we let them down”.

    After we sold, a group of owners had to go to court and re-start the fight. Eventually they “won”. Now they are in a rundown condo with double the monthly fees plus special assessments. We saved ourselves years of misery.

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