Homeowners’ Associations: 3 facts vs. myths

By Deborah Goonan, Independent American Communities



Top 3 Fact Check list about life in common interest, Association-Governed Housing, including Condominium Associations and Homeowners Associations (HOAs) – also known as Planned Communities or Private Communities.


Myth #1. HOAs are enclaves for the wealthy


A recent article in the Wall Street Journal, entitled Neighbor Disputes Turn Wealthy Areas Into War Zones, certainly perpetuates the misconception that only the uber-rich live in HOAs.

But nothing could be further from the truth.

Yes, it’s true that posh high-rise condo towers and gated communities of McMansions have taken over some of the most desirable land in the U.S. And, of course, these properties attract a lot of well-to-do business leaders and celebrities. So naturally they attract a lot of attention from mainstream media and local politicians.

But if you visit most U.S. urban areas, or research real estate listings for sale, it’s easy to see that millions of Americans reside in middle-of-the-road urban and suburban condo and homeowners associations across the U.S. In some HOAs, an increasing number of those homes are investor owned and tenant occupied. Additionally, affordable home options for limited income buyers include Association Governed HUD-approved condominiums, townhouses, or mobile homes.

Specifically, Community Association Atlas has compiled a data summary of Older Americans (age 55+) residing in condominium associations. The data is derived from the U.S. Census American Community Survey. The Atlas report concludes that as of 2013, 11.8 million Older Americans reside in condo associations, and, furthermore, more than 30% of those residents have a monthly cost burden exceeding 33% of their monthly income. (Cost burden is a total of mortgage payment, taxes, insurance, utilities, and condo fees.)

Another little known fact is that many aging, run-down, formerly middle and working class HOA neighborhoods and Condo projects have transitioned from primarily owner-occupied to primarily tenant-occupied over the decades. Low income tenants often receive rent subsidies (such as Section 8 vouchers), but reside in condominium associations rather than traditional apartment homes. Some of these troubled Associations have become infamous, such at Tymber Skan in Orlando and Brannon Hills in DeKalb County, Georgia.

This trend is most prevalent in southern and western regions of the U.S., but also common in major metropolitan areas of the northeast and midwestern states. (For example New York, Boston, Chicago)



Myth #2. If you don’t like to live by rules, it’s easy to avoid buying into HOAs


It depends on where you live, but in many of the fastest growing regions of the U.S., finding suitable housing that is not subject to a mandatory association of some kind is becoming more and more difficult.

First, you must understand that over the past half-century, there has been a huge migration of the population from rural to urban areas.

U.S. Cities are Home to 62.7 Percent of the U.S. Population, but Comprise Just 3.5 Percent of Land Area
March 04, 2015 (U.S. Census)

A majority of the U.S. population lives in incorporated places or cities, although these areas only make up a small fraction of the U.S. land area, according to a new report released today by the U.S. Census Bureau. The percentage of the population living in cities in 2013 was highest in the Midwest and West at 71.2 percent and 76.4 percent, respectively.

“The higher percentage of people living in cities in the West can partly be explained by the limited access to water outside of western cities and federally held land surrounding many of these cities, which limits growth outside incorporated areas,” said Darryl Cohen, a Census Bureau analyst and the report’s author. “This is especially true in Utah, where 88.4 percent of the population lives in an incorporated place.”


Residents of a small town or less-developed areas are often unaware of just how prevalent Association Governed Housing is in the majority of urban areas, and that real estate developers have been buying inexpensive land near their hometowns to expand their empire ever further from urban centers. In other words, if it has not happened already, HOA-land may soon be coming to your town, too.

The fact is, the majority of new construction establishes mandatory HOAs. Here are some statistics to ponder, according to the Census Bureau’s Survey of Construction (SOC):

59% percent of new single family homes were built in communities with mandatory HOAs in 2014, compared to 46% of homes in 2009. That represents a 28% increase in construction of HOA homes in just 5 years. However, those figures include construction of homes for rent.

Looking strictly at homes for sale, 73% were built in HOAs in the US. Broken down by region of the country, the figures are as follows:

46% Northeast
55% Midwest
80% South
73% West

And, keep in mind that these statistics do not include construction of multifamily condominium associations!

Source file: https://www.census.gov/construction/chars/pdf/association.pdf

Where most people live, work, and play, it can be next to impossible to purchase or even rent property without an HOA. In dense urban areas, the only type of housing within reach for middle-income households are condominiums and townhouses in mandatory Associations.


Property does not have rights People do

Myth #3. HOAs are a form of democracy up close and personal


According to industry trade group, Community Associations Institute, in their publication

An Introduction to Community Association Living: See page 33

Community associations are one of the most representative and responsive forms of democracy in America today. Residents of a community freely elect neighbors to serve on the board of directors of the community. Numerous other owners or residents serve on committees and help with special tasks as they arise. Board members and committee members are volunteer leaders who meet regularly to discuss pertinent details about running their community. A board meeting at a community association is comparable to a town council meeting of a municipality.

Sounds great, right? A group of well-meaning homeowners chosen by their neighbors to lead the association in a democratic fashion, just like a town council.

But CAI’s description is a fantastical idealization of reality. Association Governance is very different from that of a town council in several ways.

Created by and for real estate developers

The truth is, real estate developers have created nearly all Association Governed residential communities in the past 5 decades. Attorneys have written restrictive covenants and bylaws to the primary economic benefit of their clients – land owners, real estate investors and developers. In some cases, developers manage to maintain a level of perpetual control over these communities for decades.

In other cases, an excessive amount of power and control is handed over to volunteer homeowner boards, but those boards find themselves obligated to enforce restrictive covenants and architectural standards they had no part in creating. Thus, the vast, vast majority of mandatory membership associations are not created of, by, and for the people who own property or reside in them.


Most mandatory Association Governed residential development are (non-profit) corporations

As corporate entities, voting rights in Association-Governed Housing are based upon your “share” of property owned (one vote per lot owned, or proportional votes based on the square footage of a condo unit). There is no such thing as One Person, One Vote – a cornerstone of Representative Democracy in the U.S. In fact, it is perfectly legal for One Person – or even a corporation – in a mandatory association to cast multiple votes in any election or on any important issue requiring a membership vote. Furthermore, a property owner does not have to reside in the common interest community in order to cast votes, and may not even be required to be a resident to serve on its board. Developers often retain weighted voting interests (for example, 3 or 5 votes per undeveloped lot) while construction is ongoing.

Try getting away with that kind of “democratic” process in your next town council election.


Democracy vs. Republic

In the rare case of an association with 100% owner-occupancy and where no one person has the right to cast more than one vote, the arrangement mimics a democracy.

But, be aware that, in a true democracy, majority rules. The desires of 51% of owners override those of the other 49%, with no requirement to consider the rights of the minority or reach a compromise by consensus.

This reminds me of a famous quote:

“Democracies have been spectacles of turbulence and contention; have ever been found incompatible with personal security, or the rights of property; and have, in general, been as short in their lives as they have been violent in their deaths.”– James Madison in Federalist Paper #10

A town council, and any other form of U.S. government is obligated to operate as a Republic under the constraints of the U.S. Constitution, which protects certain inalienable and minority rights of Americans.

Here’s a concise summary of the difference between a Democracy and a Republic.

The key difference between a democracy and a republic lies in the limits placed on government by the law, which has implications for minority rights. Both forms of government tend to use a representational system — i.e., citizens vote to elect politicians to represent their interests and form the government. In a republic, a constitution or charter of rights protects certain inalienable rights that cannot be taken away by the government, even if it has been elected by a majority of voters. In a “pure democracy,” the majority is not restrained in this way and can impose its will on the minority.

Most modern nations are democratic republics with a constitution, which can be amended by a popularly elected government. This comparison therefore contrasts the form of government in most countries today with a theoretical construct of a “pure democracy”, mainly to highlight the features of a republic.

Source: http://www.diffen.com/difference/Democracy_vs_Republic



The general public tends to hold significant misconceptions about Association Governed Housing. The three myths listed above are not an exhaustive list, but an introduction to the facts for housing consumers, elected officials, and non-elected policy makers.

Housing consumers must recognize that the realities of life in common interest, Association Governed Housing is not as advertised by the real estate industry, nor is it as perpetuated by the majority of mainstream media. American taxpayers must recognize that decades of misguided government policy has enabled – even mandated – the majority of new development in common interest communities, despite limited demand for this type of housing that limits private property rights and civil liberties.

Government leaders, in particular, need to recognize that their constituents who reside in Association Governed Housing deserve equal protection of their rights, and that consumers increasingly demand non-common interest, non-Association-Governed Housing options.


2 thoughts on “Homeowners’ Associations: 3 facts vs. myths

  1. Great point, Mike. Having lived in a large scale association with sub-associations, I can agree with you that the more bureaucracy there is in a planned community, the more conflict and less democratic governance tends to be. I hear about some outrageous behavior from many owners who deal with these issues on a regular basis. The typical complaint is that the Master HOA board tends to operate independently of the sub-associations that it is supposed to represent. And it often seems that some sub-associations are more equal than others! Great idea for a future blog. Thanks for the suggestion.

  2. Deborah: All of your points are clear and truthful. Consider, however, the complication of sub-associations or SBAs (special benefit areas) within larger HOAs. These include communities with a mix of condominiums and single-family homes. In our community, there has been much tension between the “competing” entities over this singular issue. One could write a book or blog on this topic alone with shocking revelations that are anti-democratic.

Comments are closed.

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close