Marketing of HOAs

guest blog by Beanie Adolph

Incredible! How can something so destructive of family life and of the American system of governance continue to dominate American housing?  MARKETING! Chant the lie over and over:  HOAs protect property values. THEY DON’T!  Promise Utopia but hide the reality.  Deny every plea for full disclosure – for openness.  In 2004, two realtors were discussing on an industry blog how to ensure a buyer knew “what he was getting into” and concluded “…if ALL the potential pitfalls are enumerated, no one in his right mind would purchase.”

Most buyers saw the opportunity of owning the home of their dreams at a manageable price with the added inducements of “amenities” previously available only to members of country clubs. There was, then, and still is the lie that HOAs protect property values. There was not and still is not any disclosure that:

  • The quoted cost does not include the extra costs, e.g. increase in assessments and all types of fees.
  • The Reuler-Hailey paper* states “… some HOA managers contract with HOA boards at below-market rates with the expectation of making up the difference from individual owners. How? With a myriad of specific purpose fees, such as resale certificate fees, document fees, collection fees, inspection fees, and violation enforcement fees.”
  • Most new developments are HOA developments and buyers really do not have a choice.
  • Buying into an HOA is far worse than co-signing a note with strangers. A note has a fixed amount, defined terms, and can be paid off. In an HOA there is a lien that can never be paid off. The homeowner is a guarantor for all debts incurred by the HOA, and his house is security for their spending sprees.
  • The reality is that amenities are not “freebies” but burdens that constantly deteriorate, and are the responsibility of the homeowner.
  • HOAs are private quasi-governments that regulate and control the behavior of citizens without the same due process and equal protection clauses of the 14th Amendment.
  • The HOA system places rules and regulations above the rights and freedoms guaranteed to all Americans.
  • Once an HOA is established the governing documents ensure its continuance forever.
  • The HOA Industry constantly lobbies state legislators to increase their power – their control.  Their bills usually have homeowner-friendly names but not homeowner-friendly results. Lobby Watch, June 1, 2011, revealed funds raised for PACs, the distribution to the legislators, and how they voted.

Why do homeowners endure this?

Two of the most powerful motivations are fear and greed.  Homeowners, legislators, and politicians bought the concept that HOAs protect property values.  No facts were ever given to support the statement, but prospects of pink houses, cars up on cinder blocks, and unacceptable neighbors were the threatened  alternative.  In one TV debate the CAI attorney must have thought one car on cinder blocks was not scary enough.  He described a non-HOA community adjacent to his where one house had “6 or 7 cars up on cinder blocks, grass overgrown, trailers out.” When the goal is to instill fear the argument has no limit.

It is a fact that property values are determined by the economy and affect homes in and out of HOAs.   According to an exhaustive study of Harris County homes, homes not in HOAs fared better. Fear was and still is a major factor.  But in HOAs the fear of being targeted with fines, fees, and foreclosure keeps most defenseless owners silent.

* Statutory Evolution of Condominiums and Property Owners Associations in Texas, by Sharon Reuler and Roy. D. Hailey, September 2002. Mortgage Lending Institute, U.T. School of Law

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Ward Lucas is a longtime investigative journalist and television news anchor. He has won more than 70 national and regional awards for Excellence in Journalism, Creative Writing and community involvement. His new book, "Neighbors At War: the Creepy Case Against Your Homeowners Association," is now available for purchase. In it, he discusses the American homeowners association movement, from its racist origins, to its transformation into a lucrative money machine for the nation's legal industry. From scams to outright violence to foreclosures and neighborhood collapses across the country, the reader will find this book enormously compelling and a necessary read for every homeowner. Knowledge is self-defense. No homeowner contemplating life in an HOA should neglect reading this book. No HOA board officer should overlook this examination of the pitfalls in HOA management. And no lawyer representing either side in an HOA dispute should gloss over what homeowners are saying or believing about the lawsuit industry.

5 thoughts on “Marketing of HOAs

  1. Nila Ridings

    Amen, Beanie! How great it is to have yet another long-time expert on the HOA industry speaking up.

    If every reader of this website would invest just 5 minutes per day reading the wisdom and research of the experts we would have a mass of people contacting their legislators with knowledge that would blow them away.

    Thank you for making yourself known to this website!

  2. hoasavers

    The condition of so many condos is so bad, that HOAs are definitely making the values LESS, because they have not done what they are suppose to do…I am tired of giving $2800 a year to people that are not managing it well. This is a scam and homeowners need to learn and fight for what’s right. The terms extortion, fraud, collusion and corruption come to mind…this could be one of the biggest jokes on Americans, and I can’t help wondering if someone is liable for not doing their job and protecting the homeowners with appropriate laws in the HOA industry.

  3. Deborah Goonan

    Great information, Beanie.

    The most fascinating part of this blog is the link to Lobby Watch (June 1, 2011).

    Let’s review who votes for and against HOA Reform in Texas:

    Democrats – 61% FOR, 29% AGAINST, 10% no votes
    Republicans – 33% FOR, 59% AGAINST, 9% no votes

    It would seem that, at least in Texas, Republicans are more anti-homeowner rights than Democrats. Nevertheless, there is significant bi-partisan support for special interests that develop, promote and manage HOAs.

    It seems it’s all about the money. A significant number of members of both parties are apparently more loyal to HOA lobbyists than their own constituents.

    And what about the No-Voters? Not enough spine to take a stand?

    Just a few votes could have swayed the opposite direction, passing needed HOA Reform. The 63 FOR, 73 AGAINST tally hardly indicates a landslide victory for HOA special interests. With education and public awareness, that tide will turn.

    In my opinion, the best reforms would a) make it easy for owners to dissolve the HOA corporation, and b) make it nearly impossible to construct new HOAs from this point forward, giving buyers a CHOICE of new construction in Free American Neighborhoods.

  4. Caroline

    This is a brilliant piece, written with the knowledge, expertise and insight of long time HOA homeowner advocate. I have to disagree with one statement in Beanie Aldophs’s article, and that statement is:”HOAs are private quasi-governments that regulate and control the behavior of citizens without the same due process and equal protection clauses of the 14th Amendment.”
    To the best of my knowledge and what I have found in researching is that the “private,” or “quasi” government designation, or the combination of the two, as Beanie has described is a myth and a fallacy, probably, furthered by those who it serves, or benefit from it. HOA’s and other CID’s exist by statute. There is no statute for private government’s in America, nor any Constitutional provision, or amendment. I have been advised private governments, or feudal states are illegal in America and rightfully so. If anyone knows any different, I trust they will post a response on this blog.
    HOA’s and all the other forms of common interest communities have presented countless issues for homeowners including on going criminality of many forms involving “the money”, unthinkable legal abuses, and many times of the most vulnerable, and knowingly fraudulent property takings in illegitimate foreclosures. If the true accounts were reported on and the perpetrators charged and prosecuted, no matter who they are, or who they know, these abuses would begin to end. If those who are and have been made very rich carrying out these crimes were held accountable and made to pay their victim’s for their losses, including the medical and psychological abuses, these boards, attorneys and/or property managers would think twice before initiating, or orchestrating the criminality and abuse.

  5. Cynthia

    In reference to this blog, you may want to take a look at:
    ” HOAs by An Informed Attorney”
    Here is the beginning and well worth reading.

    “RE: HOAs by An Informed Attorney”

    “The first false assumption is that HOAs are more fiscally responsible than municipalities. HOAs are about forced consumption of goods and services under threat of loss of your home. Note that one of CAI’s Public Policies is to promote a lack of any kind of cap on assessments. Why? Because it fuels the attorney and management company fees resulting from the extortion racket. Unlimited assessments expands the population of likely prey for CAI’s members.

    A private government is a “private person” under the law. We imprison natural persons for taking property that belongs to others. Why should it be okay for an “unnatural” person to take property belonging to others? Is the offense any less because the perpetrator is an HOA?”


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