Disbanding an HOA

I think I’ve written about this before, so forgive me if this is repetitive. But a friend of mine lives in a tiny HOA of about a dozen houses. Last year he bought a dozen copies of my book and lobbied every member of the association to read it. The neighbors voted unanimously to disband their corporation.

Now, my friend says, there are sounds of kids laughing and playing. Several basketball hoops have gone up. Neighbors are now talking over the back fence and inviting each other over for dinner. He says the difference in the neighborhood is incredible.

Plus, insurance liability costs have gone down.

Life is amazing, isn’t it?

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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.

21 thoughts on “Disbanding an HOA

  1. Deborah Goonan

    Ward, disbanding an HOA is much more doable when the HOA is small and with very limited common areas.

    Why do you think so many developers build complex mega-developments that are large enough to be small towns and cities? Besides obvious reasons of financial gain and long-term revenue flow from common amenities (in which they often retain a financial interest), I am convinced the intent is to make it very difficult if not impossible for homestead owners to ever completely dissolve or terminate the Association.

    Condominiums have built-in common elements that, of course, offer additional risk for owners. If they wish to terminate the Association, essentially they must end their ownership and move out. That’s all well and good if homestead owners mutually decide to cash out by selling to an investor or developer. But, as is seen in Florida, New York, California, etc., what often happens is that investors move in like vultures looking to devour struggling condo associations that just so happen to be in prime locations. Then the homestead owners lose – big time.

    Then we have developers who have intentionally created a townhouses as either homeowners’ associations (with individually deeded lots) or, worse, as condominiums. Some of these town house communities are small, standalone Associations that might be able to do what your friend did. Many others are part of an umbrella Master Assocation, which could complicate the process.

    For homestead owners to disband larger, more complex associations, there will need to be homeowner-friendly legislation and housing policy that allows homestead owners to petition their local government or state for dissolution,

    Poinciana HOA has been trying to become a city for the past three years, and the state keeps throwing up road blocks. And, ironically, even once they are successful at incoporating as a city, the HOA will still exist with limited powers unless and until the owners vote to dissolve it!

    In the meantime, it would be valuable to start documenting all of these cases where owners have disbanded their HOA — and the resulting positive effects. It will serve as proof positive that getting rid of HOAs does not cause blight and dropping property values!

    1. Ward Lucas Post author

      Conversely, Deborah, we should also be keeping close track of the number of HOAs that are going down the tubes because of bankruptcy, massive liability costs, collapse of infrastructure, collapse from embezzled funds, sudden unavailability of new mortgages and the resulting crash of property values. There are so many dangers and huge political implications as traditional government hands over our freedoms to the whims of corporate developers. The Kelo decision was a cannon shot that developers are the new American government, sans any Constitutional protections.

    2. Joseph Groh

      Your article about disbanding HOA’s is disingenuous. Your article would imply that the only thing standing in the way of happiness in this neighborhood was the disbanding of the Association. That could not be the only variable involved, there is something else at play that you are not telling us. Please do not let your bias against hoa’s bleed into your journalistic integrity. Tell us what else was at work in this scenario.

  2. hoasavers

    I sat in a class last night, attended by mostly board members, to talk about architectural issues. If all people in the US had to live with this kind of governance, there would be an uprising. One lady asked if they can just change the CCRS without an owner vote, a fellow wanted to break open meeting laws by discussing HOA business socially. Was I the only one sitting there thinking how ridiculous it was that a owner had to have a max of 3 trees in their yard? That the owners had to get permission to paint, what color to paint, and repaint if they painted an unapproved color…

  3. Kim

    I get so frustrated when people continue to say that when it comes to Town Homes and Condo’s along with single family homes you need an HOA?

    There are Condo’s and Townhomes without HOA’s all the unit owners are under contract when they purchase they set up a monthly amount for things such as garbage pickup, snow removal, exterior maintenance, common elements such as roof repairs pipes, electrical, etc.

    (Almost like a monthly inheritance and distribution overseen)

    With regards to single family homes it would be the neighborhood everyone remembers growing up in.

    Without the HOA it becomes a true contract agreed upon by all owners the monthly amount is deposited into an account overseen by the trustee (this may not be the right word) I personally would rather have this than an HOA overseeing my investment without oversight and accountability and a board without the proper knowledge.

    I have more recourse with a broken contract not under an HOA than under an HOA. As we all know our hands are tied when they break their own rules. This would no longer be a corporate law issue.

    There are always risks, but risks can be managed. We know the HOA is a flawed system.

    If in fact an association doesn’t file their annual report and may be involuntarily dissolved doesn’t discount the physical existence, title or characteristics.

    This concept is a great way to remove the HOA system all together and is very doable.

    If you honestly think that condo’s and town homes can not be ran independently instead of under an HOA, you are not thinking outside the box, you are falling into the marketing scam all over again. That is what they want you to think, they want you to think that these buildings could never exist without them.

    You can do anything you set your mind to and it does not have to be an HOA lawyer under the direction of CAI. It is a true contract with disclosures agreed by all parties involved.

    What happens to rules and regulations without one, well the rules and regulations would be under city and county ordinances.

    A poorly run HOA can hurt property values as much or worse as bad neighbors.

    1. Deborah Goonan

      Kim, Can you provide all of us with an example of a condo run by contract instead of an Association?

    2. BA

      Kim, You speak of the HOA as if it is an entity separate from the homeowner’s. A home owners association is way for home owners with a common cause to organize. Often HOA’s go wrong by giving boards too much power or, in some cases, they take too much power or are given too much power by the CCR’s. Your point is correct though. In my HOA the board has no more power than any individual owner; if there is a violation they have to sue to force compliance, something any property owner can do under the deed restrictions. The problem is that without an HOA, owners will rarely agree on how to manage common areas.

      1. Deborah Goonan

        Of course owners will rarely agree on management! That is a core flaw and folly of the HOA concept! So the solution is to eliminate as many common areas as possible — preferably all of them. No common areas – no need for an HOA. The fewer the common areas, the less expensive to manage, the less conflict and financial risk for the owners.

        And if it were a state law or federal policy that violations must be enforced through the civil court system (just as any other homeowner would enforce a deed restriction upon his neighbor), that would eliminate the kangaroo court and unilateral power to fine or otherwise take away rights without any due process.

        My guess is there would be far less litigation, far fewer fines, liens, and foreclosures.

  4. Cynthia

    So simply and truthfully told by Ward Lucas, this is a real life example of the invisible and visible life destructive powers of an HOA. This the last kind of truth the industry wants to be told to the public. Dissolve the HOA and people LIVE! No power struggles, no fights, no stealing of monies. or inappropriate assessment of monies for self serving HOA board members personal needs and wants, no hatred, no selective discrimination for greed driven, or slapp lawsuits, no terrorizing innocent homeowners and the children, and more healthy life occurrences among neighbors! Thank you Ward Lucas for sharing!

  5. Norman McCullough

    The politicians in Washington need to stop these Abuse’s of Power.

    The abuse of power to steal money by controlling the bidding process.

    (When I need a landscaper I can use the Yellow Pages)

    The abuse of power to steal money from homeowners to pay for lawyers that are intent to harm them.

    The abuse of power to Fine or otherwise charge a citizen money for doing something that board members consider wrong (like flying a flag for example)

    The abuse of power to openly hate someone because they are a different color or religion or disagree with the board members political views.

    The abuse of power to act as judge and jury while denying a citizen his/her constitutional rights to Due Process.

    These are the acts of dictators and should not be tolerated.

  6. BA

    Something not mentioned in the article is that elimination of an HOA does not eliminate the deed restrictions. The restrictions can usually be eliminated with enough votes but until that happens the property is still bound to them. In my subdivision, for example, any owner can take another owner to court for a deed restriction violation. Even though that is unlikely for minor offenses, the restrictions don’t just go away.

      1. BA

        I think you are right Lanty about forcing HOA’s to enforce restrictions but I think that is a good thing. Too many people like to use the HOA to be the bad guy. We had a guy in our HOA who threatened to sue the board because they were not enforcing things to his liking but he was the only one who had a problem with the things he was complaining about. As an HOA member he could have taking the person to court if he believed there was a violation but he wanted others to be the bad guy.

  7. Nila Ridings

    “We had a guy in our HOA who threatened to sue the board because they were not enforcing things to his liking but he was the only one who had a problem with the things he was complaining about”

    BA…wait until this guy manages to get elected to the board of directors. LOOK OUT! He’ll go rogue and the HOA will be filing lawsuits right and left. It happens this way quite often. And the entire neighborhood goes down the drain in property values, assessments, and real estate agents run from the area.

  8. Christine Bryant

    I live in an 80 unit condominium complex in Southern, CA built in 1982. Due to (what seems to be the norm, rather than an anomaly) years of board corruption, cronyism, owner complacency, rigged elections, etc. our current board was FINALLY forced by the City to address the dangerous and unsightly condition of deferred maintenance permeating the complex. A couple of desperately concerned owners saw no other recourse but to implore the City to get involved. Since the deferred maintenance has gone on for decades, the current board (“meet the new boss, same as the old boss”) had no choice but to impose an emergency special assessment.
    The emergency assessment is $10k per unit. My hope is to get some feedback from others on the terms of the loan the board and management has secured for those owners who can’t afford to pay the entire amount when it becomes due and payable in a few months. I believe the loan is the epitome of usury.

    The loan term is for six years, the first 12 months consist of interest only payments. Commencing year two, the payments convert to fully amortized monthly payments for the remainder of the term of the loan.
    Here’s what I find particularly outrageous and usury, besides the first year interest only payments. Owners who utilize the HOA’s financing will NOT have the option to make increased or partial pay downs OR payoff the loan prior to end of the entire term. The only exception is in the event that an owner sells their unit.
    Our property manager said it would be too troublesome for accounting purposes to allow that feature?!

    Is this type of loan traditional HOA financing for a special assessment?

    RE: a previous subject, HOA’s MUST be disbanded!!!! I’m in for the fight!!!

  9. Nila Ridings


    Why would someone borrow money from an HOA associated lender? All that would be doing is making the HOA homeowner into more of a cash cow for the HOA industry.

    Borrowing from your own bank or credit union would be an option, correct? Or borrowing from your investments and paying the interest to yourself would be even better, would it not?

    Have you checked with your insurance agent to see if your homeowner’s policy carries assessment coverage? It’s an extra fee to have it, but it’s a very small amount compared to saving the homeowner payment of an assessment.

    The HOA associated loan sounds like the worst option to me. It sounds like a five year amortized loan with some gimmick of the first year being nothing but payments to the lender. Is that to cover closing costs or some other hidden charges?

    If a credit union or bank would loan the $10,000 at 4% interest for 60 months the payment would be $184.20. If it’s for 48 months it would be $225.80. Those amounts include principle and interest.

    This HOA loan sounds like it’s a very high interest rate that has the bulk of the interest paid in the first year and then the following 60 months are amortized at some other interest rate. Are the scheduled payments the exact same amount for 72 months?

    The HOA associated loan is for 72 months, correct? Is that filed as a second mortgage on your home? Are they requiring mortgage insurance or some other insurance to cover that loan in the event of the owner’s death? Based on what you have shared here, I would run from that lender ASAP. And, I would never sign anything involving their loan without consulting with an attorney and having him/her read their contract. This sounds ‘fishy’ to me!


    Remember one assessment does not guarantee you will not get hit with more assessments. Make sure you are keeping a close eye on the financials of this HOA! If I were in your shoes, I would be considering selling out and renting an apartment. Reduce your risks as soon as you can. Good Luck.

  10. Deborah Goonan

    Christine — I would bet that the management company is financing these consumer-unfriendly loans, using an affiliated lending corporation. This is probably a money-making scheme for the management company.

    If it were me, I would seek a loan from my credit union or bank before I would go with the HOA financing.

    Check out the CHPPI Resources page (see tabs at the top). Scroll down to links for Consumer Financial Protection Bureau (CFPB).

    Owners may wish to file a complaint with CFPB regarding the terms of these loans.


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