By Deborah Goonan, Independent American Communities
An interesting trend is happening across the U.S. Local media are engaging in investigative reports that highlight the fact that homeowners associations (HOAs) have far too much power.
To illustrate, here is a recent report from the state of North Carolina.
Homeowners share cautionary tales of HOA nightmares
Diane Wilson, 11ABC
Monday, May 15, 2017 06:27PM
RALEIGH, North Carolina (WTVD) — The power of Homeowner’s Associations: You pay your mortgage and taxes, but HOAs still have the power to boot you from your home.
When you’re looking for a new home, you always make sure that home meets your needs, and that you like the neighborhood. But you also need to check out the kind of power the HOA has in the neighborhood.
Erica and Brandon Carter have been living in their Willow Spring neighborhood for 10 years. Erica said the HOA has had issues with where she parks her vehicles. The Carters were first fined for parking on the grass near their mailbox. The Carters said they stopped doing that and parked all of their vehicles in their driveway and in a gravel area beside their driveway, but Erica said there were still issues.
Read more (Video):
The report hits upon two of the most objectionable powers of association-governed communities: the power to order an owner to pay fines for alleged violations of the covenants and restrictions, and the power to place a lien on one’s home and foreclose on that lien.
The astonishing truth is that many home buyers and homeowners are blissfully unaware that their Association has these powers – unless and until they become the target of enforcement.
As you can see from the WTVD report, though it may seem unbelievable, a homeowners, condominium, or cooperative association can ultimately take your home and/or evict you over a dispute involving where you park your vehicles and what you are allowed to store in your own backyard.
Similarly, if you fall behind on your assessments – even if only by a few hundred dollars – you could be booted from your home within a few months, unless you agree to pay thousands of dollars in additional late charges and legal fees.
But chances are, if you struggle to pay regular assessments, you will probably be unable to pay additional fees and court costs.
In one case, a family lost their home to HOA foreclosure involving $150 unpaid assessment. And the kicker is that the homeowners were not even notified of their lapsed payment until years later, when thousands of dollars of fees had accumulated on top of the original $150 assessment.
And in Hawaii, a class action lawsuit is underway, an attempt to obtain justice for condo owners who lost their units for foreclosures over small amounts. Those foreclosures were allegedly conducted without proper notice.
Q: Why do HOAs get away with such harsh and unjust treatment of owners and residents?
A: Because most current state legislation favors the rights of corporate associations – and the industry that serves association-governed communities – over the rights of individuals who own property and reside under HOA rule.
It’s really that simple.
Therefore, it stands to reason that unjust laws can and should be repealed or amended, so as to remove or strictly limit the power of association-governed communities to impose fines and other penalties, up to and including taking away someone’s home.
Your HOA should not be permitted to act as rule maker, prosecutor, and judge with sole discretion to penalize its members.
Objections are predictable
Of course, there will be objections to this common sense approach. Most of them will come from the industry that lobbied for this enabling legislation in the first place, most notably, community association managers and attorneys.
However, some objections will come from a minority of obsessive homeowners or shareholders with exaggerated fears of viewing bright pink houses and cars up on blocks in their now pristine neighborhoods.
But it is important to note that, prior to the 1970s and 1980s, nearly every residential subdivision lacked complex aesthetic restrictions and mandatory association-governance. Yet very few homeowners chose to paint their house neon colors or create a junkyard on their properties.
Besides, nearly every town and county now has ordinances that prohibit public nuisances, and that maintain basic health and safety standards. Homeowners would be better off to report serious violations to local authorities, who can investigate and provide ample opportunity for homeowners to remedy problems.
If local code enforcement fails to respond to legitimate complaints, then the homeowner – or the HOA, if one is active – needs to keep the pressure up on their local code compliance agency.
Communicating with local government about code violations would be a far more legitimate and useful power for association boards, than, for example, hounding homeowners over the type of mailbox they choose to install or the color of their holiday lights.
Expect the “It’s not fair” argument, too
Yes, if homeowners and residents start fighting to rein in power to lien and foreclose over past due assessments, the industry will descend up state legislatures with their familiar talking point:
“When one member stops paying assessments, the other members have to pick up the difference, and that is not fair.”
That’s technically true. But what is fair about foreclosing on one member’s home to collect an assessment debt that is often less than 1 or 2% of the value of the property? What is fair about paying the bulk of HOA foreclosure proceeds to the attorney or collection company, rather than the association? What is fair about taking away someone’s home, or a lifetime accumulation of equity, over a few hundred or even a few thousand dollars in HOA fines or assessments? What is fair about creating a windfall for investors who purchase cheap homes at HOA foreclosure sales?
And, if foreclosure is such a wonderful tool for collecting unpaid debts, why do local governments go to great lengths to avoid a tax sale? Perhaps it is because they realize that selling homes at auction to disinterested investors tends to erode communities and reduce overall property values. And, of course, the government is not making any money on tax foreclosures.
What creates healthy communities?
Looking at the big picture, what kind of communities do we want for ourselves and future generations? Do we want the typical association-governed model, characterized by power and control over individual residents and homeowners?
Or would we rather allow ourselves and our neighbors to live free from unnecessary rules, to live without fear of abuse toward the most vulnerable among us?
If we want to curb abuse, it begins with removing excessive power of association-governed communities, and putting individual residents in control of their own homes.