It’s time to debunk one of the most deceptive political statements repeatedly made by the HOA industry’s most influential trade group
By Deborah Goonan, Independent American Communities
On their Facebook Page, Community Association’s Institute (CAI) prominently posts an infographic entitled “The HOA Fundamentals.”
Here’s a screen shot, along with the source link: www.facebook.com/CAIsocial/photos/a.393580374014337.87323.297394356966273/1750665821639112/?type=3&theater
Every single one of these misleading bullet points can be easily refuted by facts and examples of real-life association-governed communities.
For example, to the educated housing consumer, the statement that homeowners,’ condominium, and cooperative associations “strive to respect and preserve the collective rights and interests of all homeowners,” does not imply that HOAs respect and preserve rights and interest of individuals who own property in the community. On the contrary, collective rights and interests held in the HOA quite often conflict with the rights and interests of homeowners.
And although each HOA theoretically provides services and recreational amenities in exchange for payment of monthly, quarterly, or annual assessments, this website chronicles thousands of examples of HOAs that fail to uphold those alleged contractual promises. As a result, many HOAs fail to protect property values, and, in fact, can actually do more economic harm than good.
By now, it’s also common knowledge that a substantial percentage of HOA leaders, even though theoretically responsible for “protecting the community’s financial health,” fail to fulfill their duties, and state laws provide no meaningful recourse for homeowners who wish to hold irresponsible HOA leaders accountable.
To be fair, some communities are fortunate to have ethical and competent HOA leaders who do a reasonably good job at keeping their association solvent. However, most well-meaning HOA board members lack adequate knowledge and skill to manage their community’s finances well. Other HOA boards are unfairly burdened with a community that has never been adequately funded from Day One. And the industry trade group can no longer proclaim that instances of HOA corruption, fraud, embezzlement, and theft are isolated incidents. Indeed, as documented on this website, community association managers and HOA attorneys are frequently the perpetrators of wrongdoing.
And the statement that HOAs promote a “true sense of community and active homeowner involvement” are nothing more than theoretical ideals — wishful thinking on the part of CAI. Although association-governed communities should embody these qualities, most do not. Again, that fact is well documented here on this website and in the media.
Ironically, many of CAI’s most outspoken members have spent years lamenting the reality of rampant owner and resident apathy, including the fact that member meetings are sparsely attended, and the fact that the HOA has difficulty obtaining minimum attendance and voting thresholds (quorums) necessary to conduct elections and other business in the community.
But the most deceptive fundamental in CAI’s list is this:
Associations…are a form of local democracy, with leaders elected by their neighbors.”
Tell that to the millions of homeowners living under developer-controlled association-governed, common interest communities. Obviously, members of these HOAs are not electing their neighbors to the board. The developer in control (known as the Declarant in legal terminology) continues to appoint members of the board, or at least a majority of those trustees. In that respect, a developer-controlled HOA is much more akin to a monarchy than a democracy. Property owners under the rule of a developer-monarch have virtually no voice, and no control over their community’s destiny.
But, for the sake of argument, let’s consider a majority of communities where the developers have handed over the reins of control to a homeowner-shareholder elected board.
Are they operated democratically?
Consider that U.S. principles of democracy rely on several basic social concepts, among them, the idea that citizens freely elect their leaders and representatives in fair, equitable, and reliable elections.
Fundamental to any fair election is the idea that every adult U.S. citizen (age 18 and up, except convicted felons) has the right and civic obligation to register to vote, and participate regularly in the elections at the local, state, and federal government levels.
In the U.S., as in other democratically-governed countries, each citizen is entitled to cast votes only one time in each election — one vote for each candidate or referendum. Each registered voter’s ballot carries the same weight as any that of any other voter.
But mandatory-membership association-governed corporations (non-profit, mutual benefit, etc.) assign voting interests to property, not to the people who own the property. Simply put, in a mandatory membership HOA, the more property you own in the community, the greater your voting power. That means any wealthy real estate investor can buy control of the corporation, and influence the destiny of the association the community it governs.
Is that democratic?
Furthermore, U.S. representative democracy is based upon a foundation of division of power among three branches of government (Executive, Legislative, and Judicial) and levels of government (Local, State, and Federal).
But because most HOAs are, in fact, legally established corporations, or similar private entities, there is no division of power in governance. All governing power is vested in a board of directors or trustees for the association. Therefore, an association’s board simultaneously serves all three roles of government: Executive (enforcing covenants, restrictions, and rules), Legislative (rule-making authority), and Judicial (interpreting rules).
Does that make HOAs democratic?
Finally, as a democracy, U.S. government at all levels is based upon the rule of law and the principles of the U.S. and respective state Constitutions.
By contrast, CAI has long argued that HOAs are private entities based upon contractual agreements among members, and therefore HOAs need not be constrained by Constitutional standards.
See this press release from 2007, in particular, the following statement:
Community associations are private entities and historically not subject to the same constitutional standards as government.
Despite the fact that more recent court rulings have found HOAs to be quasi-governmental, CAI clings to its view of associations as private entities based upon contractual relationships.
In this 2016 article in NJ Cooperator, Following House Rules, CAI CEO Tom Skiba proclaims:
“The reality is, particularly when you get to constitutional issues related to free speech, the courts have historically and consistently said that community associations are not government entities,” says Skiba. “The U.S. Constitution and the state constitutions state that the government cannot limit free speech. Since owners freely entered into a contract with their association, which is not a governmental entity, they’ve agreed to these limitations when they signed that contract.”
Given their interpretation of the law, and their agreement with previous court decisions that give associations the sacred right to obligate homeowners to contracts they had no role in creating, how can CAI declare that association-governed communities are democracies?
Why does it matter?
According to several political think tanks, American confidence in U.S. government’s democracy is shrinking. (See Further Reading)
Regardless of political affiliation or ideology, there is growing concern that Americans no longer have equal voting rights, that moneyed interests heavily influence policymakers and government spending, and that governments over-regulate and intrude upon the privacy of Americans.
Is it possible that more than four decades of eroding private property rights, a direct result of rule by inherently undemocratic HOAs, based upon one-sided and virtually unconstrained restrictive covenant “contracts,” has undermined the very foundation of our representative democratic Constitutional republic?
Let the reader decide.
“Democracy” has long included representative democracy as well as direct democracy; and “Republic” was used by the Framers to refer to regimes that were not representative. (Eugene Volokh|