Red State vs. Blue State Conundrum

One of our frequent contributors to this site used to be a researcher for a conservative think tank in Colorado. He says he recently dropped by the Republican booth at the Louisville town fair and made a point of asking opinions about HOAs. He asked about Captain Michael Clauer, the Texas man whose HOA home was illegally seized and sold while he was assigned to a war zone in the Middle East. It’s absolutely a violation of federal law for an overseas serviceman to be treated like that.

Well, our friend says the Republicans at the booth said, “Captain Clauer agreed to the covenants. He chose to live in an HOA. He didn’t have to buy into one of them.”

Jeesh! The ACLU occasionally stands up for a Constitutional right here and there. Republicans traditionally believe in smaller government and protection of property rights.  The rampant abuses of homeowners by HOAs should be in the crosshairs of both the left and the right, the Democrats and the Republicans. But we’ve got idiots on both sides of the political aisle. With 63 million people living in HOAs, that’s a heck of a lot of votes. It sounds like we may have to do a lot more educating of people in both the red and blue states.

I’ve got to believe, though, that great masses of Republicans and Democrats believe HOA abuse has gone too far. The smart candidates ought to put HOA reform in a prominent place on their platforms.

 

 

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About

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.

22 thoughts on “Red State vs. Blue State Conundrum

  1. Deborah Goonan

    Ward, I, too, am puzzled by the response of some (maybe most) Republicans on HOA issues: “You agreed to covenants, and chose to live in an HOA. Too bad for you if you did not read and understand the legalese, and if it didn’t work out.”

    That’s like telling someone defrauded or unjustifiably denied on their insurance claim, “you chose that insurance company and policy, and agreed to their terms. Too bad if you didn’t read the policy and fully understand it. You’re on your own.”

    But we have an Insurance Commission, federal and state regulations on the insurance industry. Both parties recognize that the insurance wields enormous power and has a tendancy to take advantage of the little guy.

    And in HOA Land, the multi-billion dollar real estate industry takes advantage of the little guy, too.

    Why do some Republicans and some Democrats blame HOA owners and residents (tenants get caught in the cross hairs, too) for exploitation of power by Developers, Boards, Community Association managers and attorneys?

    Do we blame a victim of malpractice when a surgeon removes the wrong kidney? Do we blame the consumer when a pharmaceutical product’s bad side effects cause cancer?

    It seems that Republican idealogues have perverted the notion of property rights and free market economics to mean that Developers and Real Estate Investors deserve all the rights and privileges of the Constitution AT THE EXPENSE OF THE PEOPLE.

    Time for us to wise them up.

    Reply
    1. robert

      It seems that Republican idealogues have perverted the notion of property rights and free market economics to mean that Developers and Real Estate Investors deserve all the rights and privileges of the Constitution AT THE EXPENSE OF THE PEOPLE.

      Exactly. There’s a joke I recently heard that goes something like: In 1990, capitalism defeated communism. By 2010, it defeated democracy and free-markets.

      Conservatives and libertarians have conflated capitalism with free-markets, and abandoned their ideas of economic liberty in favor of fetishizing corporations. Evan McKenzie once defined “repressive libertarianism” as a system

      “where certain people who call themselves libertarians invariably side with property owners who want to limit other people’s liberties through the use of contract law. Property rights (usually held by somebody with a whole lot of economic clout) trump every other liberty. The libertarian defense of HOAs is the perfect example. The developer writes covenants and leaves. Everybody who lives there has to obey them forever, even if they lose due process of law and expressive liberties. As private corporations take over more functions of government, this position could lead to gradual elimination of constitutional liberties.”

      Some guy who comments on various internet forums using the handle “fuzzyfuzzyfungus” observed that (emphasis added)

      ‘libertarians’ seem to have a hard-on that just won’t quit for petty authoritarianism and power imbalances, so long as they can be couched in the language of contract

      In this case, an HOA is basically what happens when you think that ‘zoning’ is fascist but you want control over what color your neighbor’s house is.

      J. Alan Kantz commented on Free Capitalists that

      HOAs do a great job of illustrating to libertarians (who seem to need to learn this more than the average person, for some reason) that the world is not a deductive system, and all facts about human relations don’t follow from a simple logical calculus. Simply spinning out definitions of voluntary and involuntary quickly gets you into a conundrum here. . . Very quickly, you will have an immaculate conception of a totalitarian state in this thought experiment.

      And, as I’ve been saying for years

      H.O.A. corporations are evidence that conservatives and libertarians are as ignorant of the real world consequences of their ideas as your stereotypical college campus Leftist wearing a Che Guevara t-shirt driving around in a Prius sporting a “Hope and Change” bumper sticker.

      When Robert Metcalf was the treasurer of the Conords Crossing H.O.A. corporation, he described H.O.A. corporations (PDF, emphasis in original) as

      a systematic infusion of corporate culture and governance into the domestic lives of an ever larger share of the American population. Who wants to live at work?

      and that

      this is as much a battle for civil rights as what occurred in the 1950s and 1960s.

      The Republican party really needs to pull its head out of its arse on this issue, because telling people who are being abused that they agreed to be abused will only work for so long, before the victims start looking for their rights elsewhere.

      Reply
  2. Cynthia

    “The smart candidates ought to put HOA reform on their platforms.”
    I, and many other’s have been saying the same thing for almost 15 years and some longer.

    Reply
  3. robert

    That encounter inspired me to create this riddle:

    Q. How do you turn a Reagan Republican into a Communist?

    A. Get him to talk about H.O.A. corporations.

    And I say that as somebody who was a Reagan Republican in the 1980s. So it’s no coincidence that my proposed policy is a Republican one. As that old Vulcan proverb says, “Only Nixon could go to China”. So for those of you who haven’t heard this before, here is what I told the G.O.P. workers at the faire:

    It has long been the official position of the Republican Party that mandatory membership in a labor union as a condition of employment should be prohibited by law. They call this “Right to Work”.

    If the Republican Party were logically consistent, they would extend that same protection to home owners, and prohibit mandatory membership in an H.O.A. corporation as a condition of home ownership.

    For example, Texas’s “Right to Work” law, Texas Codes Title 3 § 101.053 :

    Contract Requiring or Prohibiting Labor Union Membership Void

    A contract is void if it requires that, to work for an employer, employees or applicants for employment:

    (1) must be or may not be members of a labor union; or

    (2) must remain or may not remain members of a labor union. (Enacted 1993.)

    could become what I call a “Right to Own Your Own Home” law, or “Right to Own” for short :

    Contract Requiring or Prohibiting Homeowners Association (H.O.A.) Membership Void

    A contract is void if it requires that, to own a home, homeowners or applicants for home ownership:

    (1) must be or may not be members of an H.O.A. corporation ; or

    (2) must remain or may not remain members of an H.O.A. corporation

    From a campaign perspective, it seems that one simple idea would be a lot easier to explain and sell to the public than a long laundry list of affirmative defenses and arcane changes to corporate codes and governing documents, or whatever else it is H.O.A. reformers want. Once home owners are allowed to opt-out of their H.O.A. corporation (without having to give up their home), the perverse incentives and moral hazards that currently exist become irrelevant, and most of the problems will sort themselves out according to the Republican’s theories of free-market economics. Allowing home owners to opt-out of their H.O.A. corporation is the only way home owners will be treated as customers, rather than as as a product to be farmed out to the industry’s vendors and attorneys. No other H.O.A. reform proposal I am aware of can accomplish this.

    But humans are rationalizing creatures, not rational creatures. While the G.O.P. workers at the Louisville faire were in favor of prohibiting mandatory membership in labor unions, they were opposed to prohibiting mandatory membership in H.O.A. corporations, because “that would be government interference with a contract”. ( For another example of Republican cognitive dissonance when it comes to H.O.A. corporations, see my blog post about Jon Caldara. It’s long, but it does get to a point, so please bear with it ).

    When Ronald Reagan went to Berlin in 1987, he didn’t ask “Mr. Gorbachev, could you lower this wall by five or ten feet?” At the time, President Reagan’s advisors — including Chief of Staff Howard Baker, Secretary of State George Shultz, and security advisor General Colin Powell — objected to the now-iconic line, “Tear down this wall!” They thought it was too extreme, too inflammatory, too unrealistic. The Soviet news agency TASS reported that it was an “openly provocative, war-mongering speech”. In 1989, the Wall came down.

    H.O.A. corporations are a hybrid system: enforcing the wretched political aims of Communism — including the collective ownership of your private property — using ruthlessly efficient capitalist means. Living in an H.O.A. means “вы выезжаете из Американского сектора”. And today’s Republican Party insists on keeping 60 million Americans trapped behind the Irony Curtain that has descended across America’s neighborhoods.

    Reply
    1. Nila Ridings

      Robert when you make the membership in the association an option and everybody opts out…who pays for the water, sewer, streets, lighting, pools, clubhouse, lawncare, etc? And if dues are adjusted to cover the expenses what if two or three people get hit with paying for the entire neighborhood? How does that work?

      Comparing an HOA to a union membership is not comparing apples to apples. The union dues do not pay the company expenses.

      HOAs wouldn’t have nearly as many problems if the people serving on the boards were intelligent, reasonable, honest, and had common sense. That can never be achieved so it’s time to stop building them and try and figure out how to dissolve the rest. In the meantime, the homeowners need to have rights. And legal battles are not the solution.

      Reply
      1. Deborah Goonan

        I agree, Nila. After 50 years, the HOA experiment is failing. Privatization of housing developments does not work. Property owned in common creates social and political strife.

        The physical homes and infrastructure can remain, but governance needs to be shifted away from corporate HOA and COA structures and back to public governance – back to the American Zone (as Shu Bartholomew would say).

        Reply
      2. robert

        Nila,

        We have an irreconcilable difference: You accept the legitimacy of the contractual relationship between home owner and H.O.A. corporation. I do not (although I recognize that it is legally enforced as such). You can deny and spin it all you want, but the bottom line is that your position is the home owners should be required to remain obligated to their H.O.A. corporation. Period. End of discussion.

        Instead of policy proposals that treat H.O.A. corporations as Too Big To Fail ™, we need policies that protect the rights, property of the individual home owners.

        when you make the membership in the association an option and everybody opts out…who pays for the water, sewer, streets, lighting, pools, clubhouse, lawncare, etc?

        Maybe you’re too young to remember, but there was a time when all of those functions were accomplished without H.O.A. corporations.

        And if dues are adjusted to cover the expenses what if two or three people get hit with paying for the entire neighborhood? How does that work?

        Membership has its privileges. If the remaining home owners don’t like it, they would also be free to opt-out.

        dissolve the rest.

        But you just said that H.O.A. corporations are necessary to pay for water, sewer, streets, lighting, pools, clubhouse, lawncare, etc. Which is it? Like a lot of H.O.A. reformers, you say the system is unworkable, then expend a lot of effort trying to make the system work. I seriously do not understand this dichotomy.

        To quote you, if H.O.A. corporations are disolved, “who pays for the water, sewer, streets, lighting, pools, clubhouse, lawncare, etc?”

        In the meantime, the homeowners need to have rights.

        What rights? And who decides what those rights are? You? Me? Ward? The C.A.I.?

        Rights sounds wonderful, but the recent flag case of Larry Murphree in Florida is a textbook example showing that giving home owners a list of “rights”, which are usually nothing more than an affirmative defense, doesn’t work. For those not familiar with the case, long story short (see here for more details and links to sources):

        (1) Under both federal law and Florida state law, home owners have a right to display the American flag.

        (2) Beginning in December 2011, the Tides Condominium H.O.A. corporation began fining Mr. Murphree for dispalying the American flag, and suspended several of his privileges.

        (3) Mr. Murphree sued the H.O.A. corporation. Mr. Murphree dismissed his lawsuit in April 2012, after the case was settled out-of-court in his favor.

        (4) Two weeks later, the Tides Condominium H.O.A. corporation unilatterally amended their operating rules, once again prohibiting Mr. Murphree from dispalying his American flag.

        (5) In February 2013, the H.O.A. corporation began issuing him written notices that he was violating their rules.

        (6) In June 2013, Mr. Murphree received a bill for $1,000 in fines (the maximum allowed under Florida law), for violation of H.O.A. rules.

        (7) Mr. Murphree sued the H.O.A. corporation again, for violation of his rights.

        (8) In March 2014, the judge dismissed Mr. Murphree’s case against the H.O.A. corporation. The judge denied the defendant’s (Tides Condominium H.O.A.corporation) motion for attorney fees.

        (9) In June 2014 Mr. Murphree was told that if he did not pay the H.O.A. corporation $8,000 within 30 days, they would proceed with foreclosure of his home.

        (10) In July 2014, after the story became national news, businessmen from California paid the $8,000 fine. Around the same time, the Tides Condominium H.O.A. corporation filed a lawsuit against Mr. Murphree, demanding he pay $15,000 in fines and all legal fees. The lawsuit also asked the judge to impose a gag order on Murphree, preventing him from talking to the media.

        (11) In July 2014 lawsuit against Mr. Murhpree is dismissed.

        (12) In his appearance on the radio program “On the Commons” later that month, Mr. Murphree says that he is still struggling to pay his legal costs.

        So you can enact all of the “rights” you want, but it won’t make a difference. As former H.O.A. attorney Evan McKenzie told Shu Bartholomew back in June 2010:

        It’s like something you would see in Nazi Germany or Soviet Russia. People think these things don’t go on. But we know they go on every day in condo and homeowners associations.

        These people who have no idea how to use power at all. They won’t even accept limits on their power. They don’t know what the law requires of them, these directors. They go by what some lawyer tells them to do, which the lawyer tells them to do only because he or she knows they can get away with it. Because the only recourse you have is some civil suit….

        There’s nowhere for owners to turn. If the lawyer tells them “Oh, just jack ‘em around. Who cares what the rules are? Who cares what the law says?” it doesn’t make any difference. The transaction costs of enforcing an owner’s rights are so great that they are hardly ever able to it.

        That last line “Who cares what the rules are? Who cares what the law says? It doesn’t make any difference. The transaction costs of enforcing an owner’s rights are so great that they are hardly ever able to do it” is why most H.O.A. reform is worthless. Your idea of legislated “rights” depends on an owners ability and willingness to protect them. How many people, when threatened by their H.O.A. corporation, simply pay the extortionist fees, because they can’t afford — financially and/or emotionally — to do so? Those of us who have done it know that it’s not for the faint of heart.

        When confronted with the Gordian Knot, Alexander didn’t untangle it — he cut it.

        Likewise, you are not going to “untangle” the H.O.A. mess with a long laundry list of reforms. Thinking that you can is pure arrogance. Rather than you or me or Ward or George or Tom deciding what rights home owners are entitled to, how about empowering home owners to make that decision for themselves, by giving them the right to opt-out if they feel they’re not getting value for what they pay?

        It may be too radical of an idea for you, but if you ask home owners governed by H.O.A. corporations if they want the right to opt-out, I bet most of them would say “yes”.

        Reply
  4. Nila Ridings

    I will never be convinced that the HOA problems stem from Republicans. Should it not be considered that we’ve had a Democrat president for over five years and the HOA problems have gotten worse and worse and he’s done nothing to stop it? Not to mention he completely ignores the US Constitution anyway so where’s his pen been? Why hasn’t he stopped it?

    Because the HOA problems have nothing to do with the political parties! I have no doubts the CAI is contributing to the campaigns of anybody who runs for office regardless of donkey, elephant, or independent.

    I know people from pure blue states have tried to get help with HOA issues to no avail.

    I live in a red state and we were able to get a bill passed with the help of the following legislators:

    Senators Terrie Huntington & Julia Lynn (Republicans)
    Representatives Eugene Rardin & Ann Mah (Democrats)

    Governor Mark Parkinson signed the bill and he was a Republican until 2006 and then became a Democrat.

    There were many other legislators that helped with the Kansas Uniform Common Interests Owners Bill of Rights Act and they were from both parties.

    Perhaps the people of the states that cannot get legislative attention should think about who they are electing?. Elect the person on their own merits not on their party affiliation and possibly that could make all the difference?

    Reply
    1. Deborah Goonan

      It seems to me that both Republicans and Democrats play a role on both sides of HOA issues. It appears to depend on whether or not the politician has significant financial interests, either as an investor or developer.

      If you looks at how the industry operates, they play both sides. The arguments for Republican support of HOAs are non-interference with contracts, personal choice, and personal responsibility. The arguments for Democratic support are to perpetuate the myth that HOAs are “a form of Democracy” and that they are designed to preserve and protect the environment by building in green space, or redeveloping urban buildings as condos where residents can walk everywhere and have a smaller carbon footprint.

      Of course, all of that political double-speak is grossly exaggerated and misleading. It’s really all about control of assets and wealth.

      Reply
    2. melody

      Perhaps the people of the states that cannot get legislative attention should think about who they are electing?. Elect the person on their own merits not on their party affiliation and possibly that could make all the difference?

      Now it is the homeowners fault for not electing the right people. No wonder we are getting responses like we are getting from politicians that people should vote these people out as a solution. POSSIBLY. Do you really think that the threats and fraudclosures homeowners are getting deserve a possibly attitude. The wrongs in all the other states OUTWEIGHS the good in Kansas. Unbelievable comment

      Reply
    3. robert

      I will never be convinced that the HOA problems stem from Republicans.

      I never have claimed that they do. What I have been saying for years is that H.O.A.s — governance by an unregulated private corporation under the guise of contract law with no consumer protections — is the Republican Party vision for America. As a result, Republicans generally oppose H.O.A. reform, becuase they believe that regulations would be government interference in a private contract.

      For example, see Deborah’s commdent at “Marketing of HOAs” (August 18, 2014)” :

      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

      Are there exceptions on both sides? Of course. But the numbers don’t lie.

      the Kansas Uniform Common Interests Owners Bill of Rights Act

      Except for 58-4608 (6)(A), 58-4608 (6)(C), and half of 58-4608 (6)(B), what’s so good about this law?

      It uses the phrase “common interest community”.

      58-4617 gives boards the power to unilatterally adopt, amend, or repeal rules.

      I don’t see anything in the act about protecting home owners from fines and foreclosure.

      Judging by your personal stories you have posted on this blog, it doesn’t sound like it has been effective in resolving the issues you have with your H.O.A. corporation.

      Reply
  5. Cynthia

    http://www.ncjustice.org, headed by Al Ripley tried to address this very issue prior to the 2012 elections.

    http://www.ncjustice.org/?q=special-campaigns/election-2012-issue-brief-abuses-homeowners-associations

    “Election 2012 Issue Brief – Abuses by Homeowners Associations”

    Background

    “North Carolina, like most states, has laws that authorize and govern homeowner associations. Associations can levy fines, collect monthly assessments, and regulate the color of houses or the size of mailboxes. An HOA can even foreclose on a homeowner for not paying association dues or fees for rule violations.

    Well-run HOAs that treat homeowners fairly and respectfully can improve community living. Unfortunately, some HOAs in North Carolina abuse their authority. The problem is so prevalent that the NC General Assembly has formed several committees to study these associations.

    One legislative committee has heard a wide range of complaints from homeowners, including the following:
    •Abusive and unnecessary use of the power of foreclosure
    •Unpredictable demands for payment of fees months or even years after they were allegedly due
    •Misuse and/or embezzlement of association funds
    •Failure to offer payment plans to homeowners who have fallen behind on payments
    •Assessment of unnecessary attorney fees
    •Giving of association business to friends and family for overpriced services
    •Selective, arbitrary, and discriminatory enforcement of covenants
    •Unfair association elections and dismissal of officers
    •Proxy voting that concentrates voting power in a few officeholders
    •Improper notice of meetings
    •Unfair assessment of fines for alleged failure to abide by association covenants

    Questions for Candidates
    •Do you support new laws to stop abusive homeowner associations?
    •Do you support the creation of a Homeowners Association Division in the NC Real Estate Commission to regulate associations and help homeowners with complaints against abusive associations?
    Attachment

    Size”

    Reply
  6. melody

    As individuals and as a nation, our homes represent our greatest economic and social investment. Did someone forget that? Just because 1 in 50 is fixed is not helping everyone else

    I guess some believe all should sit back and wait every 2 or 4 years because the only solution to any problem is wait until everyone votes the right people into office.

    Some should worry about the problem and fixing it instead of just talking about it. Lets face it if something does not and has not worked you need to get off your duff and do something different

    Reply
  7. Nila Ridings

    Robert to address all of your statements…

    I’ve never claimed the KUCIOBORA solved all of the HOA problems in Kansas. The bill is a start, it have given us more rights than we had before and most of all it gives the homeowners the ability to request the judge to reimburse their legal fees when they have to litigate with the HOA.

    I would love to abolish all HOAs. But when many of us live with shared water meters and sewers, roofs, fences, sidewalks, driveways, etc. we can’t just say okay, opt in or out of the HOA. If everybody opted out we would have no way to have water because that’s all billed to the HOA. That is just one issue for starters. The other is all the common ownership property of pools, clubhouses, golf courses, tennis courts, playgrounds, etc. Who maintains and insures all of that if nobody maintains membership in the HOA?

    I am trying to be reasonable in a resolution to the problems. We can’t just end HOAs and condo associations once and for all with 60+ million people living inside of them. Sure for the HOAs with free-standing houses that do not share water, walls, or common property and amenities they should be able to dissolve very easily. Otherwise a workable solution needs to be figured out.

    I don’t blame any of this HOA mess on the Republicans or the Democrats. This is a problem created by a design on paper that didn’t work in real life. With the divorce rate in America over 50% who would ever think you could place anonymous people into a business partnership and have them basically guarantee all the debts of that corporation with their bank accounts and live happily ever after? Marriage works in theory, too, but again over 50% end in divorce. HOAs are more like arranged marriages with multiple people involved.

    The biggest problem I see with the entire HOA concept is the fact far too many people are using the dues as their private cash stash, making decisions they are not qualified to make thus hiring property managers who are salivating to take advantage of their stupidity. Back when HOAs were created our society was very different than it is today. It has taken this long for the nightmares to expose themselves and all the attorneys to learn these HOAs are cash cows. If there were laws that governed HOAs with oversight…similar to consumer protection laws…and homeowners had a resource to contact that did not involve a massively expensive legal battle when HOA boards are out of control with power and abusing homeowners…then until these places are bulldozed down for redevelopment or turned into rental units people could co-exist without being in a war all the time. But they will never work as designed on paper.

    People feel powerless because there is no place to go for help. 100% of the power lies with the HOA board.

    There just isn’t a cut and dried way to solve the problem like you are proposing. I do believe if every HOA was ordered by law to dissolve and become an option you would see massive ghettos of former HOAs all across America. Owners would then walk away and the mortgage companies that financed them would collapse. The burden would fall on the cities where they exist and the taxpayers would all take a hit with higher taxes.

    The CAI has played the biggest role in creating this mess because they are protecting the board members, property managers, vendors, attorneys, and controlling the legislators. They never have been about protecting the homeowners rights and property values.

    The other problem is HOAs have always been sold using deception. If buyers had been told the truth 40 years ago HOAs would have ceased to exist. It hasn’t been until enough people have suffered and activists have started exposing the truth that John Q. Homebuyer has learned to stay away from an HOA.

    I see no way to fix this massive problem overnight.

    Reply
    1. robert

      The bill is a start,

      A start to what? Back in 2007, Evan McKenzie described the C.A.I.’s goal to get

      state legislatures would pass UCIOA [ Uniform Common Interest Ownership Acts ] and move on from HOA legislation to other matters, like selling the state tollway system to Spanish and Australian corporations to finance free health care and early childhood education for all. Happy ending. That’s the desired endgame as I see it.

      I guess they can cross Kansas off of their list.

      it have given us more rights than we had before

      Like what?

      it gives the homeowners the ability to request the judge to reimburse their legal fees when they have to litigate with the HOA.

      Which is great for people who can litigate, but as I’ve pointed out in my other comments, most owners can’t afford that. “The transaction costs of enforcing an owner’s rights are so great that they are hardly ever able to it.

      According to the Washington Examiner (August 07, 2014):

      If you have $400 to spare, count yourself lucky: Half of Americans would have trouble raising that amount in an emergency, according to a new report that suggests that many U.S. families face surprising financial difficulties…

      Only 48 percent said that they could easily handle an emergency expense of $400 without running a balance on their credit card. Almost a fifth said they simply could not come up with the funds, and a similar share said they would have to take on credit card debt. Others said they would either have to sell something (9 percent), ask a family member or friend for help (12 percent), or turn to a payday lender (4 percent) to come up with the money.

      How does the Kansas Uniform Common Interest Owners Bill Of Rights Act [ KUCIOBORA ] help those people? And does it make the imbalance of power any less lopsided? Because telling home owners “you can collect attorney fees if you win in court” does them no good if the law is so weighted against them that the chance of that happening is near zero.

      If you asked home owners, “Do you want a Unfirom H.O.A. Act, or the right to opt-out of your H.O.A.”, I bet most people would choose the latter.

      Reply
  8. Nila Ridings

    Robert please tell me what year was it that adjoined housing that was individually-owned did not have an HOA as you have stated:

    “when you make the membership in the association an option and everybody opts out…who pays for the water, sewer, streets, lighting, pools, clubhouse, lawncare, etc??

    “Maybe you’re too young to remember, but there was a time when all of those functions were accomplished without H.O.A. corporations.”

    Reply
    1. robert

      Condominium ownership was not legally recognized in this country until the 1960s, about fifty years ago.

      These new forms of medium- and high-density housing involving common interest forms of ownership were largely made possible by the broad enactment in the 1960s of statutes authorizing, for the first time, the condominium form of ownership, a form of ownership that was unknown at common law. [ 23 ]

      23. Before 1960, the condominium form of ownership was unknown in the United States. Beginning in the early 1960s, the states began enacting statues authorizing the condominium form of ownership, principally in response to the enactment of the National Housing Act of 1961, which extended Federal Housing Administration mortgage insurance to the condominium form of ownership. See McKenzie, supra note 2, at 95. By 1967, all fifty states had enacted condominium statutes. Id. at 95–96.

      source: Steven Siegel. “The Public Role in Establishing Private Residential Communities: Towards a New Formulation of Local Government Land Use Policies That Eliminates the Legal Requirements to Privatize New Communities in the United States” The Urban Lawyer. Vol. 38, No. 4. Fall 2006. pp 868 – 869. (PDF, TOC). You can also listen to his “On the Commons” interview (April 28, 2007, streaming, .mp3)

      Speaking at the Urban Institute in 2001, Evan McKenzie said that (at about 2:30 into the video)

      “The condominium…it’s kind of almost a fictional real estate interest. These things can only exist by statute…Condominiums can only exist where statutes authorize them to exist. So we’ve had them since about 1960.”

      See Deborah’s comment below:

      row homes have been in existence for more than a century. Traditionally each owner is responsible for his or her own home’s exterior and yard. There is no requirement for uniformity. Drive or walk through any older downtown or any Eurpoean city and you will notice that attached homes each have their own unique appearance, customized to the owner’s personal taste. Admittedly, there are occasions where next door neighbors need to talk to one another and cooperate on certain improvements and repairs, but it is far less complicated to deal with ONE neighbor that hundreds, plus a self-interested Board.

      Reply
  9. Deborah Goonan

    The way I see it, there are two possible courses of action:
    1) stop building HOAs and Condos with common areas. Give buyers the choice to build and purchase in publicly governed neighborhoods once again.
    2) shift private governance of HOAs and Condos, to the extent possible, to public governance.

    In both cases, instead of paying assessments to a corporate Board, owners pay taxes to a special taxing district, electing officials as we elect city, town, or county councils, and with the full support of the state’s executive, legislative, and judicial systems. Funding is still provided by the users of services. Small HOAs can merge into a larger special taxing district to take advantage of economies of scale. Another option is for HOAs to consider annexing to neighboring municipalities for the purposes of maintaining infrastructure, police and fire protecion, and refuse collection.

    Common recreational amenities and condo exteriors would probably still need to be handled by the HOA Board, unless private investors are willing to purchase the amenities and/or buy out condo owners’ interests and/or convert to a rental community.

    Townhouses are a different situation. Up in northern states, row homes have been in existence for more than a century. Traditionally each owner is responsible for his or her own home’s exterior and yard. There is no requirement for uniformity. Drive or walk through any older downtown or any Eurpoean city and you will notice that attached homes each have their own unique appearance, customized to the owner’s personal taste. Admittedly, there are occasions where next door neighbors need to talk to one another and cooperate on certain improvements and repairs, but it is far less complicated to deal with ONE neighbor that hundreds, plus a self-interested Board.

    The premise behind shifting financing and governance away from corporate Boards: the less money we pay a Board, the less money that can be wasted and embezzled, and the less motivation and opportunity for abuse of power without consequence to the Board and/or manager.

    Reply
    1. robert

      The way I see it, there are two possible courses of action:
      1) stop building HOAs and Condos with common areas. Give buyers the choice to build and purchase in publicly governed neighborhoods once again.
      2) shift private governance of HOAs and Condos, to the extent possible, to public governance.

      In the case of condominiums, there is a 3rd option: convert them to co-ops, where the owners have a share of a single mortgage, or apartments, where one party owns the building and the owners become renters.

      Tyler Berding, the author of “The Uncertain Future of Community Associations” (2005, PDF, shorter 2014 article here) has gone on the record as saying that (emphasis added)

      Community Associations are dying financially. Their business model is fundamentally flawed and many will eventually become obsolete and fail…

      …Community associations are a financial disaster in normal times, and when hidden or unexpected damage or expenses arise, most associations lack the financial reserves to meet the demand. The water bill case is just one example. The average association does not have half the financial reserves it needs to properly maintain the expected issues—and they have zero funding for the unexpected…

      Better, all of us should be discussing how to help owners save whatever remaining equity they have, and then second, how to convince government to quit mandating for sale housing that will inevitably become obsolete because it has a form of governance that cannot fund its operations–just for the sake of additional property tax revenues….

      Mr. Berding is absolutely correct that we “should be discussing how to help owners save whatever remaining equity they have”, which is something that most H.O.A. reform does not even begin to address (e.g., show me where in the KUCIOBORA home owners are shielded from the uninsured liabilities of their H.O.A. corporations). Instead, what we have now are situations where

      – investors (usually corporations) buy a majority of units in a condo complex,
      – giving them control of the condominium corporation.
      – They vote to dissolve the condo corporation
      – and turn the units into rental apartments.
      – The existing owners are evicted and divested of their property,
      – left only with the obligation to pay their mortgages.

      Americans should be appaled that this is going on in this country.

      Mr. Berding has also proposed that

      “It seems that I am increasingly a prophet of doom. But really, if owners are unwilling to govern themselves then condominiums are merely apartments, and if they are unwilling to make the contributions that must be made for a community association to survive, then they must be willing to surrender their ownership interests and be renters. This is a housing crisis as serious as the present economic one, and it may be worse, because the crisis in community association government is not likely to end in a year or two.”

      That was in 2009 — five years ago.

      The idea of turning home owners into renters was Mitt Romney’s prescription for the housing crisis. On October 17, 2011, Mr. Romney told the editors of the Las Vegas Review-Journal

      “Are there things that you can do to encourage housing. One is, don’t try and stop the foreclosure process. Let it run its course and hit the bottom, allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up. The Obama Administration has slow-walked the foreclosure processes that have long existed, and as a result we still have a foreclosure overhang.”

      The Wall Street Journal called it “Romney’s Finest Hour” (October 28, 2011).

      Condominiums are a flawed, unsustainable business model that are going to ruin a lot of owners. As I noted in another comment above, condominium ownership was not legal in this country until about fifty years ago, and has no basis in common law or tradition. Our ancestors probably knew something that we did not.

      The question before us is: are our public policies going to favor investors like Romney wanted to do, or “help owners save whatever remaining equity they have” when condominiums inevitably fail.

      Reply
  10. Deborah Goonan

    To illustrate the complexity of the problems outlined by Nila and Robert, read this http://insurancenewsnet.com/oarticle/2014/08/24/troubled-waters-at-seacoast-shores-a-547276.html#.U_sab2K9KSM

    Seacoast Shores is a Voluntary HOA. The article details what happens when paying dues is not mandatory – a small percentage of owners pay all expenses while all enjoy beach access, in this case. Obviously, a different arrangement will be necessary, and I highly doubt it will be a Mandatory HOA. The beach will either have to be open to public access, with local or state government taking over maintenance OR a private investor will have to purchase the land and access rights. If the latter occurs, then that complicates access for owners in Seacoast. So allowing public access would appear to be the best option overall. It is possible that the clubhouse and pool can be sold to private investors as well.

    Reply
  11. robert

    The smart candidates ought to put HOA reform in a prominent place on their platforms.

    I’m not a campaign consultant nor political advisor, so take the following for what it’s worth:

    The conventional wisdom is that there are three ways to win elections

    (1) Energeize your base to get out and vote

    (2) Alienate your opponent from his base, to discourage them from voting

    (3) Win over the middle and undecided voters

    It seems like there’s more and more of option # 1 going on, with candidates beating the typical horses to death (e.g., abortion, environmentalism, gay marriage, gun-owner control, , etc.), resurrecting those horses, and beating them to death again and again.

    What I don’t see is any appeal to the non-ideologues and non-partisans in the middle. 65 million Americans — 20% of the population — live in properties governed by some type of H.O.A. corporation (PDF). According to a Service Magic survey

    08% think they’re great
    16% think they’re OK (24% positive)

    21% think they’re a minor annoyance
    48% think they’re a major headache (69% negative)

    07% gave no opinion

    19% said they had been in what they call a “war” with their HOA
    54% said they “would rather live with a ‘sloppy neighbor’ than deal with an HOA.”
    78% said they might consider NOT buying a home under the jurisdiction of an HOA

    If those numbers are accurate, that means over 40 million Americans have a negative view of their H.O.A. corporation, over 10 million Americans “have been in what they call a ‘war’with their HOA”, nearly 50 million Americans “might consider NOT buying a home” governed by an H.O.A. corporation.

    Granted that not all 65 million H.O.A. residents are of voting age, but this is an astoundingly large constituency that our politicians are ignoring.

    Contrast that 65 million number with the 15 million workers who are members of a labor union, about 11% of the work force.

    H.O.A. corporations collect $65 billion (with a “b”) per year from home owners (PDF). That’s $1,000 per resident per year.

    By contrast, labor unions collection about $9 billion per year from workers, or about $600 per worker.

    Furthermore, union membership has been declining for decades — “In 1983, the first year for which comparable union data are available, the union membership rate was 20.1 percent, and there were 17.7 million union workers.” — while H.O.A. membership has been growing — from 10 million in 1980 to 65 million today, PDF, both in absolute numbers and percentage of population, due to government policies increasing the supply of H.O.A. corporate governed housing. By every objective measure, the H.O.A. issue is a bigger one than the labor union issue. Besides, labor unions aren’t stealing people’s houses.

    Why are libertarians and Republicans so fixated on passing “right to work” laws, while ignoring the much larger bloc of potential voters waiting to be won over? Are they really that stupid?

    Bonus question: Provide an example of any other form of regulation and/or legislation favored by libertarians and Republicans to “protect workers”.

    Reply

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