By Deborah Goonan, Independent American Communities
Overall, the industry that builds, sells, and serves HOAs promotes the wildly unrealistic assumption that unit owners and shareholders will forever engage in fair and friendly cooperation with their association leaders and their neighbors.
But the association governance model is based on several faulty assumptions, and is dependent upon several uncontrollable factors.
The truth is, most modern HOAs are designed for the financial benefit of real estate developers, major real estate stakeholders, and local governments, as opposed to providing a true value to members at large. The power structure is blatantly unbalanced in favor of association corporations.
With regard to enforcing covenants, restrictions, and rules, homeowners and residents are too easily penalized and held accountable by their HOAs. The power of the HOA to impose fines or otherwise punish members is often abused.
However, to hold their association leaders accountable for poor decisions, negligence, or misconduct, members must be willing and able to bring a legal challenge in court. And with laws skewed in favor of the industry, suing the HOA may not result in meaningful accountability of boards and managers, even if the developer has already relinquished control to homeowners.
That’s why critics of association governed common interest communities agree that the governance, economic, and social structure of the institution is fundamentally flawed.
It’s not that homeowners, condominium, and cooperative associations can never work as envisioned by its proponents.
It’s just that the list of conditions that must be fulfilled to ensure an effective, benign, and desirable common interest housing organization is quite long.
Leadership must set the right tone, and that rarely happens when the primary focus is on property values vs. social or true community values.
Checklist: What does it take for an HOA to work well for its members?
How many of these conditions are met in the HOA where you currently reside or own property? How many of these factors are present in the community where you are considering a home purchase?
- Sufficient money and a consistent revenue stream to sustain operation over the long term life of the community
- Willingness of owners to contribute both their time and money necessary to achieve better than adequate community maintenance, timely and proper repairs, and occasional improvements
- Administrative policies that include internal checks and balances to prevent theft, corruption, conflicts of interest, fraud, and general misconduct of the board and its agents
- Reasonable board members that do not fear, and, in fact, encourage transparency, open communication, and resident involvement.
- Knowledgeable board members, or the willingness to educate themselves or seek out expertise as needed
- Access to competent and ethical experts, especially community managers and attorneys, but also construction and maintenance vendors
- Administrative and government support and guidance, especially for economically disadvantaged or struggling communities (almost nonexistent in most areas of the country)
- Appropriate insurance coverage for a full range of liabilities, from financially sound, reliable companies
- Members of the association that share common values and vision for the community (very rare)
- Good quality construction and design of residential structures as well as community infrastructure and amenities
- Proper siting of the community, and no inherent adverse issues with location or the land itself
- Willingness of board and members at large to stand up to bully behavior or abusive leadership
- An effective emergency response plan, for unforseen disasters
- A community of residents that are actively involved in neighborhood safety and security, including common sense measures for prevention of crime (like background checks, good lighting, locking doors, etc.)
- And, of course, an overall attitude of cooperation, service to others, and kindness, consideration, and compassion toward one’s neighbors.