Not sure why the game of Monopoly always led to fights when we were kids. Someone would invariably cheat, the others would protest, and….there went the neighborhood!
Same thing goes on today in many American Homeowners Associations! Your new retirement community seems perfect, the dues seem about right. Suddenly, without notice the rules change. Monthly dues skyrocket from $180 to $500 a month, with even more hikes on the way.
When you weren’t watching the rules changed. They changed because a new developer or a new majority took over the HOA. Now, you suddenly find yourself foreclosed upon, or you’re priced right out of the neighborhood where you once had your dream home.
1. Developer builds 182-unit subdivision ( the story is not clear how many homes were actually completed ).
2. 16 homes are sold.
3. Developer goes bankrupt. Bank takes control of the unbuilt/unsold lots and the HOA corporation.
4. The bank paid HOA assessments on the vacant lots/units it owned.
5. Investor Hans Hsu — one of the Job Creatorz ™ — buys the bank’s property, giving him control of the HOA corporation.
6. Hsu changes the governing documents, which courts enforce as a “contract”, giving him power to
– approve or reject any sale in the community
– evict a new buyer who is unapproved
– eliminated the veto power of the homeowners over the budget
– raise fees by more than 15% (which was the limit in the old governing documents)
– eliminate requirement for a reserve fund
– created new expense: $10,000 in attorney fees
7. Hsu raises HOA assessments from $180 per month to $500 per month — a 278% increase.
8. Any owner who does not pay can have his house foreclosed upon.
9. As in other HOAs, the personal assets of the homeowners are forever collateral to whatever debts and liabilities the HOA corporation creates.
If this is free-market capitalism, as proponents of HOAs claim, then something is seriously wrong with free-market capitalism.
It’s a sad commentary, isn’t it?