Commentary: It’s time to rein in the excessive power of Homeowners Associations (HOAs)

I was recently contacted by CNBC to interview for a video about the excessive power of HOAs. We also discussed potential negative effects on a homeowner’s personal finances. This post poses the question, do HOAs have too much power? It also includes general commentary and additional insights related to the investigative report on The Rise of Homeowners Associations (HOAs) 

By Deborah Goonan, Independent American Communities

The Rise of HOAs (CNBC) – Video summary 

This informative CNBC video highlights the case of a Georgia HOA homeowner in Belmont Park community of Newnan, Georgia. Jewel Inostroza was surprised to learn that the home she bought in 2008 came with a $1,600 liability. According to the homeowner, her home had accumulated HOA fees were never paid by the seller.

For unknown reasons, the debt was not paid by the former owner at closing. (Usually HOA fees are paid out of the proceeds of the sale.) The HOA instead transferred those unpaid fees to the buyer, Jewel Inostroza. Unfortunately, Jewel and her husband, Enrique, only found out about the unpaid HOA debt after she purchased the home. 

To put this debt into perspective, the official HOA fees at Belmont Park are only $200 annually.

Inostroza tried to get the HOA to remove the fees to remove from her account. But the management company at the time, HOA Management LLC, refused to do so. Instead, the HOA filed a lien against her home.

To make matters worse, Belmont HOA continued to add fees, and the account was sent to collections. In 2015, the HOA began garnishing Inostroza’s wages.  

Inostroza hired an attorney and negotiating an agreement to repay $3,200 in installments. The couple says they finally repaid the debt by January 2023. However, the HOA now has a new management company. Sentry Management recently sent Inostroza another invoice for almost $8,000 in past due HOA fees. 

How can it be?   

Neither Inostroza nor CNBC have been able to get to the bottom of how the HOA can justify collecting another $8,000 in HOA fees and collection costs, after the homeowners have already paid $12,000 in garnished wages over the past 8 years.  

Read the CNBC article:  

What the rise of homeowners associations means for Americans ( In some states, it’s ‘nearly impossible’ to buy a home that isn’t part of a homeowners association, expert says  

You can watch the CNBC video here:

How homeowners associations became so powerful ( 

Similar case in Florida, circa 2020 

Regular subscribers of IAC might remember a similar HOA collections horror story that took place in Florida. It’s the story of the owner of a condo at Palm Aire Country Club, a widow. She had been fighting to keep the condo association from foreclosing on her unit. Her situation is similar to Inostroza’s, in that the unit owner started out with a small lien. The debt kept escalating as the HOA collection attorneys added late fees, interest, and legal fees.  

The owner kept making regular payments but could never catch up on the additional fees that were added each month. After a bitter election resulted in a new condo board, a new management company was hired. The HOA collection account was then transferred to another attorney. IAC reviewed of the HOA fee statements provided by the unit owner. They seem to show that the current HOA law firm is trying to collect legal fees racked up by the former collections law firm. The owner’s attorney claims she is being billed for collection services that were never officially authorized by the condo board at the time. 

You can view the details here: 

It’s time to rein in predatory HOA collection attorney fees • IAC ( 

Grass roots activism 

Back at Belmont Park, CNBC interviewed Jessica Navas and Matt Bozone, who also own a home in Belmont Park. The couple started to suspect something was wrong with their HOA in 2020. After they were able to secure a forensic audit of Belmont HOA’s records, they discovered the HOA had been collecting a substantial part of their operating income as fines and fees. Further investigation revealed that 25 homes had been the target of HOA foreclosure over the past 15 years. 

The couple tried to obtain assistance from local government officials. As usual, none of them wanted to get involved in an HOA dispute.  So Navas and Bozone started going door to door to talk to fellow homeowners, including Inostroza.

There is some good news. As a result of these grass roots efforts, the members of the community have elected a new board of directors. Matt Bozone is on his HOA board as of October 2023.  

The owners on the new board hope to end abusive fines, fees, and collection practices. They aim to promote transparency to their fellow co-owners in the HOA.  

HOAs can abuse their power 

This CNBC report is one of many that highlight the power of HOAs to make life miserable for owners and residents. But it also reveals that sometimes homeowners can fight back and begin to hold their HOA boards accountable. 

Indeed, grass roots movements against bad HOAs are gaining traction across the U.S.

Check out the HOAs in the News post here on IAC for many more examples of rogue HOA boards and management companies. Read about the epidemic of poorly managed communities suffering the effects of deferred maintenance. Learn about the demise of owners in developer controlled HOAs.  

After talking to many homeowners across the U.S, I recognize that the same HOA problems occur over and over again. They repeat in many states across the U.S. I hear about the same problems in small communities and large ones, in wealthy neighborhoods and not-so-affluent communities.  

Kudos to CNBC and other media corporations for finally starting to shed light on the systemic dysfunction that plagues HOAs. It’s about time that the media started to ask serious questions of HOA industry management companies and attorneys. This isn’t always just the fault of rogue HOA board members. 

Bogus CAI claims 

I’d also like to challenge some of the commentary of Tom Skiba, the CEO of Community Associations Institute (CAI), a trade group for the HOA industry.  

Tom Skiba has been CEO of CAI since I started making posts to IAC blog in 2015. Back then, CAI used to say corruption and abuse were ‘isolated incidents.’ That claim prompted me to start documenting the many reports of HOA problems, all in one place here on IAC.

My purpose for doing so was twofold. First, I wanted homeowners and residents across the U.S. to realize that they were not alone in their struggles with their HOAs. Second, I wanted state legislators to see that problems were not ‘isolated incidents’ but systemic and widespread.  

CAI’s strategy has now shifted from dismissing HOA disputes and fraud as ‘isolated incidents’ to blaming HOA problems on an HOA board’s lack of direction and oversight of HOA managers. That’s more than evident by Skiba’s the-buck-stops-with-the-board explanation offered in the CNBC interview. Naturally, Skiba project the belief that the professional managers who are members of CAI can do no wrong. 

I also noticed that, instead of stressing the allure of community amenities, Skiba points out that some owners rely on the HOA to cut their lawns and remove snow from their personal sidewalks and driveways. He claims this results in cost savings for owners. That’s a misleading assumption, at best.

Even if the lawn contractors offer a lower rate per lot, the homeowners in the HOA must pay additional fees to take care of common areas, HOA insurance, administrative and management costs. Overall, it’s doubtful that owners are saving money.  

Furthermore, the fact is, most HOAs don’t maintain lawns and do snow removal for homeowners.

Evolution of media coverage of HOA problems  

A decade ago, most newspapers ran PR pieces boasting about the benefits of HOA-governed communities. The messages CAI wanted to convey were that HOAs protect property values, that HOAs provide desirable amenities, and that condominiums provide ‘affordable’ housing alternatives to single family homes.

Up until the last decade, print media used to rely heavily on real estate classified ads for revenue. But as real estate listings became widely available on apps like Zillow and, print ads became obsolete. As those real estate advertising dollars dried up, newspapers picked up more stories that reveal the darker side of HOA community association life.  

I can remember when coverage of HOAs was mostly about outrage over HOAs banning the American flag and Christmas holiday decorations. Then came the stories about disputes over paint colors and display of political signs. These disputes generated a lot of anti-HOA sentiment. In some cases, they spawned the creation of state laws that prohibit HOAs from banning free speech through political signs.  

For legislative details, see previous posts summarizing laws in Arizona, California, Missouri, and Texas. These states prohibit outright bans of political signs posted on private property, but still allow the HOA to determine the timing, size, and placement of signs. Most state laws still allow HOAs to prohibit political signs.  

Even though these hot-button issues garnered lots of attention, they barely scratch the surface of anti-HOA angst that was brewing in America.  

The power of HOAs to take your home away 

HOA foreclosures became a hot discussion topic circa 2008 –2015, with HOA horror stories of people losing their homes to HOA foreclosure over a few hundred or a few thousand dollars. This bad news persisted until home prices started to recover from the Great Recession. Although more recently, as Americans deal with post-COVID inflation, we’re seeing an increase of reports about HOA foreclosures.  

And in the past decade, vulture investors have cashed in on financially distressed condominiums, buying units in bulk, then taking over the HOA and forcing a condo termination. The problem has been most acute in Florida, Illinois, and Arizona. Many owners have been forced to sell their units to real estate investors and developers at prices well below market value.  

HOA Embezzlement, fraud and corruption 

Coinciding with the Great Recession of 2008, print and television media exploded with reports on criminal cases involving HOA embezzlement, fraud and corruption. The perpetrators of these crimes were HOA board Treasurers and Presidents, or – even worse — HOA management company professionals.

Sometimes the theft went on for years until it was discovered. Some cases involved crooked vendors billing the HOA for services they never performed. One prominent case in Nevada involved a bogus construction defect conspiracy with an attorney and some government officials.  

Read more on IAC 

Corruption, Fraud & theft Archives • Independent American Communities 

Deferred maintenance + deficient HOA reserves = personal finance crisis for homeowners  

As the economy began to recover, local papers and TV stations started exposing an even more prevalent and growing problem — the lack of maintenance and dangerous living conditions that exist in many condo and homeowners’ associations. From crumbling private roads to broken elevators and non-functioning heating and air conditioning, owners and residents across the U.S. increasingly feel the pain of ineffective HOA management.  

After the collapse of Surfside FL condo building in 2021, HOA-industry stakeholders led by CAI started pushing for mandatory, fully funded reserves to pay for reconstruction and repairs after years of neglect. 

Fannie Mae and Freddie Mac now require much tighter financing guidelines for HOAs, particularly condominium associations. This limits the homebuyer market for many condos to all-cash buyers. In other words, mainly investors looking for properties to buy at below market prices, then convert them to rental units.  

Multiple natural disaster claims, as well as our current inflationary economy, have also led to an insurance crisis in HOA-dense states like California and Florida.  

Not only do all these factors make HOA living more expensive, but they also make homes and condos less valuable and harder to sell. 

My view: It’s time to rein in the power of HOAs

Where does this leave HOA property owners and home buyers?

The rise of HOAs – both in numbers and in their legal power over homeowners and residents — has led to a corresponding rise in HOA problems.   

Tom Skiba and CAI keep insisting that Legislatures must balance the rights of HOAs and homeowner members of HOAs. That’s nonsense.  

NO. We don’t need a balance of interest between owners and HOAs.  We need to reduce the power of HOAs.

What we need is legal, strictly enforced protection for all HOA consumers.  

I say this because the HOA industry stakeholders, to include management, legal and business members of CAI, are not equal peers of homeowners and residents in HOA governed communities. State laws have created a situation where HOA board members – even volunteers – have authority over co-owners and residents. Because this is not a peer-to-peer relationship, it is inappropriate to require a balancing of interests.  

Instead, combatting HOA abuse and dysfunction demands protection of the interests of the weaker party. In this case, homeowners and residents of HOA-governed regimes.  

I believe the best solutions to HOA disputes, abuse of power and corruption are the ones that prevent HOA problems with meaningful legislative reforms, as summarized in this previous post: 

Prevent HOA problems with these 5 legislative reforms • Independent American Communities 

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