Bold Legislative Reform is needed to rein in HOAs

By Deborah Goonan, Independent American Communities deborahgoonan@gmail.com

My view is that HOA Reform is elusive, but not impossible.

HOA life won’t improve unless excessive HOA powers are revoked and homeowner rights are restored.

Every day I hear from frustrated homeowners that no one will hold their HOA accountable. It’s true even in states that enable owners to file formal complaints with a state agency. More often than not, those complaints fall into a black hole. The HOA gets notified of the complaint, but there’s no consequence for the HOA if they do nothing to address a valid complaint.

Unfortunately, filing complaints in states with weak enforcement authority has a very low chance of successfully resolving problems or forcing your HOA to fulfill its duties or stop its abusive actions.

Homeowner advocates have tried in vain to get state governments to enforce HOA laws regarding transparency, open meetings, and fair elections. But most HOAs are still about as transparent as a brick wall.

For decades, states have allowed condo and HOA infrastructure to deteriorate without intervening to prevent calamities. Then in 2022, a condo building collapsed in Florida.

Finally, several states have enacted legislation to address deferred maintenance and inadequate funding of reserves. (More states to follow suit.)

But the massive special assessments necessary to correct years of neglect and irresponsible leadership are backfiring, pricing many condo owners out of their homes.

Clearly, legislative reforms attempted over the past decade are not helping.

What can homeowners do to help themselves?

In recent years, there has been mire media attention to HOA problems like corruption and abuse of power.

But publicizing HOA dysfunction and abuse through media is a two-edged sword. It sometimes helps in the short run, but often triggers retaliation in the long run. Plus, it stigmatizes the community, reducing marketability of homes to new buyers. In my opinion, owners seeking media pressure should proceed with extreme caution.

If you are an owner trying to improve your community and hold your HOA accountable, I believe in carefully documenting every communication with and from your HOA. Take photos, keep detail logs, and research state laws and local ordinances relevant to your situation.

Read and understand your governing documents.

Seek out other owners of like mind to unite to effect change. Truthfully, this is much easier said than done, because most owners want to avoid conflict and don’t want to become targets of derision by their HOA and their neighbors. Owner advocates should be prepared to face these very real challenges.

Remain objective in dealing with the HOA. Avoid getting emotional/angry and making threats or (worse!) seeking revenge. Getting angry and emotional is a surefire path to failure.

If you’re lucky, you’ll gather enough information to persuade the HOA board to do the right thing. If not, you and your neighbors might be looking at doing a recall or attempting to elect new members to the HOA board.

Unfortunately, there’s not much else that homeowners can do, because full enforcement of HOA law or HOA covenant conditions and restrictions (CC&Rs) is exceedingly rare. And a few homeowners have the money or desire to sue their HOA, its board members, or its management company.

Legislative reform must address structural change of HOAs

My opinion is that the only legislative reform that will TRULY help owners is STRUCTURAL change that reverses and eliminates the power imbalances between HOA boards and individual homeowners.

This involves four pillars:

1) Eliminate and prohibit HOA fines,

2) Severely limit HOA foreclosure (only allow in judicially-sanctioned cases of abandonment or documented public health/safety threats),

3) Eliminate, invalidate, and prohibit CC&Rs regulating private homes/units (focus only on common property),

4) Completely eliminate developer control.

These four legislative changes would greatly reduce HOA abuse of power to bully and intimidate owners into submission. These reforms would force HOAs to thoughtfully choose their battles before unilaterally punishing owners and/or escalating the issues with lawsuits. These reforms would prevent stolen homes and stolen equity.

Institute fairness and integrity in HOA voting and elections

It’s imperative that we give homeowners a real vote that counts! That is the only way to effect internal change!

Advocates must ensure owners can successfully elect new HOA boards and amend governing documents.

But skewed allocation of voting rights can be an obstacle to progress. This obstacle is not isolated to a few HOAs!

It is growing more prevalent, with a growing trend of investors (including institutional investors) buying up distressed properties and converting them to rental homes/units. I expect many more HOAs/COAs will discover this imbalance of voting power to be a stark, grim reality in their future.

How to solve/prevent this problem?

It’s simple math. Limit the votes (percentage share of interests) in the association/corporation that any one owner can hold. The goal is to make it impossible for one or two owners of multiple properties to control the HOA board and force amendments that are harmful to the rest of the owners on the community.

Above that, ensure that HOA elections have integrity, that they are fair. (See California statutes for comprehensive guidelines.)

Finally, consumers need more non-HOA housing options. That involves convincing local governments/state legislatures to stop creating/building new common interest communities and HOAs!

Yes, deinstitutionalization of HOAs is Big Picture issue, but one that I believe is ultimately necessary to restore homeowner rights and freedoms. I also believe setting a moratorium on new HOAs is absolutely necessary to provide more homeownership opportunities.