Is CAI pushing HOA-industry trade group propaganda?

By Deborah Goonan, Independent American Communities

debgoonan@icloud.com

This morning in my Twitter feed, I stumbled upon the most recent Public Relations video by HOA-industry trade group, Community Associations Institute (CAI). It’s an attempt to urge housing consumers to “be an informed home buyer.”

In its latest defensive move, CAI directly addresses highly unpopular and controversial rules in HOA-governed communities.

If you’ve been following HOA news across the U.S., you know that HOAs are getting a lot of negative publicity for restrictions on pets, exterior design of private homes, holiday decorations, and parking rules, including rules governing how residents can use their own garages and driveways.

I’m not going to post the link to the 2-minute video, because I’m not interested in sharing and racking up social media views to push up CAI-video rankings in Google and other search engines.

I will, however, debunk a few of the HOA-industry propaganda points made in the video.

 

Point #1: who actually controls an HOA-governed community?

CAI starts off by making the following dubious claim about community associations, which they define as a catch-all term for homeowners associations, condominiums, housing cooperatives, or planned communities:

“Each community association is run by the homeowners who make and enforce the rules.”

For most HOA-governed communities, this statement is either misleading or blatantly false.

First of all, CAI begins with the faulty assumption that HOA-governed communities are never developer-controlled.

But, the truth is, virtually all mandatory membership community associations are established by and for the financial benefit of a real estate developer, affiliated home builders, and the local government issuing construction permits.

Despite CAI’s claims, HOAs are not created for the benefit of home buyers. It’s a business model that increases profit potential for the real estate industry, and double tax revenue for local governments.

 

HOA-governed communities under construction

While homes are being built, the “Declarant” appoints the community associations board of directors. (Declarant is a legal term referring to the developer and affiliated landowners in the business of selling lots, homes, condos, or co-ops.)

In many cases, a developer controls the HOA board until most or all of the homes are built and sold to non-affiliated buyers. How long will an HOA be under developer control?

Well, that varies a lot. The build-out process might take a few years or several decades, depending on the size of the community and economic conditions in the real estate market.

To be clear, in a developer-controlled community, a homeowner has no voice and very little control over community association financial decisions or rules.

That’s because Declarant voting power overrides homeowner votes. So a developer is relatively free to change the governing documents, make and enforce new rules, and increase HOA fees and assessments — without any input from homeowners.

 

HOAs with homeowner-run boards

Even after a developer completes most or all home building, and gives up direct control of the HOA board, homeowners may continue to have little influence over board decisions.

That’s because state laws typically grant boards of HOA-governed communities too much power, and almost no accountability.

Of course, IAC is the source of thousands of well-referenced articles documenting HOA corruption, dysfunction, and abuse of power. And this website also highlights the utter failure of state and federal legislators to address serious HOA consumer protection issues.

By the way, guess who writes state laws, and lobbies against regulation of the HOA-industry?

Yep, none other than Community Associations Institute.

 

Point #2: the purpose of rules

Oh, boy! This next CAI claim is so defensive, it’s amusing.

“Association rules aren’t meant to ruin your life. They exist to protect your biggest investment by preserving home and property values with consistent design and color patterns, and ensuring a clean, safe, peaceful neighborhood for you and for your family.”

More propaganda, including the typical HOA-industry claims that HOAs “preserve property values.”

But recent research debunks those claims.

Read about this study by Leon S. Robertson, PhD, of Yale University. Correlation of Homeowners Associations and Inferior Property Value Appreciation.

And check out this research review of the waning effects of Covenants, Conditions, and Restrictions (CC&Rs) on home values as neighborhoods mature.  The Impact of Community Associations on Residential Property Values: A Review of the Literature. (Prepared by: Erin A. Hopkins, Assistant Professor, Virginia Tech, Blacksburg, VA)

Or, perhaps the real purpose of HOA rules is rooted in prejudice? After all, many an HOA-ville is the perfect setting for exclusion of “undesirable” homeowners and renters, a perfect incubator for tribalism. See The rise and effects of homeowners associations, Journal of Urban EconomicsWyatt Clarke, IBM, United States and Matthew Freedman, University of California, Irvine, United States. Received 7 May 2018, Revised 29 April 2019, Available online 7 May 2019.

And that brings me to my final point today.

 

Point #3: are you “up for HOA or condo living?”

This particular talking point reveals the arrogance of CAI and supporters of the common interest, HOA-governance model.

“So before you buy a home or a condo that’s governed by a community association, make sure you read the rules to make sure you’re up for HOA or condo living.”

Wow. Just wow.

CAI might as well say:

…maybe you’re not good enough to live in a controlled neighborhood.

Maybe you’re not cut out for the perceived added prestige of living behind gated entries with roving security guards or secure high-rise lobbies, under the constant surveillance of HOA cameras.

Maybe you’re not smart enough to follow the rules — no matter how inconvenient, unjust, or petty — for your own good.

If so, the CAI rhetoric implies that you can simply choose not to buy a home in a community association.

If only it were that simple.

Why does CAI refuse to acknowledge the fact that, in the fastest growing U.S. housing markets, home buyers don’t really have the choice to avoid HOA-governed communities?

And, unless American housing consumers begin to put heavy pressure on politicians to stop issuing mandates and construction permits for new common interest, HOA-governed “community associations,” the next generation will be forced to live the HOA-rules, whether they’re “up to it” or not. ♦