HOAs often pit Investors vs. Homeowners, and homeowners usually lose

guest blog by Deborah Goonan
Even in the nation’s Heartland, homeowners’ and condo associations are subject to considerable consumer risk. The Des Moines Register story highlights just one example of what happens when investors take over an Association, a common occurrence across the country.

Here’s the blatant truth. The corporate structure of HOAs — allocating voting rights to the Property instead of allocating those rights to People based upon residency — leads to the inevitable consequence of pitting investors against homestead property owners.

Because an HOA property owner gains voting rights for EACH property owned, it creates the incentive for investors or developers to buy up – or retain – as many “shares” of the HOA corporation as possible. And everyone knows that a majority shareholder controls a corporation.

But not everyone realizes that nearly all HOAs are corporations. Share this story with everyone you know, especially if they are considering buying a home.

We need to decide in this country: are homes a place to live and gradually accumulate stable personal wealth over time, or are they merely investment commodities subject to the whims of a volatile real estate market – where a few people profit at the expense of everyone else?

(link to warning in Des Moines Register)


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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.

3 thoughts on “HOAs often pit Investors vs. Homeowners, and homeowners usually lose

  1. robert

    We need to decide in this country: are homes a place to live and gradually accumulate stable personal wealth over time, or are they merely investment commodities subject to the whims of a volatile real estate market – where a few people profit at the expense of everyone else?

    On October 17, 2011, Mitt 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).

    While this was in the context of bank foreclosures, it does reveal a mindset that favors rich investors over the individual American home owners. If Romney, the Wall Street Journal, or any other Republican politician or pundit is ever asked about condo conversions, I’m sure their attitude would be the same: speed up the process and allow investors to turn owners into renters. As Evan McKenzie wrote:

    “Note that Lord Romney has not a word to say about the people who bought and live in those homes with their spouses and children. He is concerned about the Important People. That would be the ‘investors.'”

    On the other hand, while the Democrats talk about protecting consumers from predatory corporations, they are not serious about it, and haven’t done ****. And they’re not going to. Ever.

    After several election cycles of trying to get the attention of my elected representatives (and those who want their job), I am convinced that our policy makers will never do anything on behalf of home owners, and that it’s time to put these issues to a popular vote (in states that allow ballot referendums). Too bad there isn’t anybody in my state with the means and/or connections willing to do this.

  2. robert

    (link to warning in Des Moines Register)

    Three years ago, Lee Rodd — the same Des Moines Register reporter– wrote that

    Bill Brauch, who heads the state attorney general’s consumer protection division, told me he would never join a homeowners’ association.

    “You have so little control over the many negative things that can happen to you,” he said. “And then you become trapped in a situation beyond your control that only continues to deteriorate.”

    Condo Group’s Moves Have Homeowners Crying Foul. August 18, 2012.

    Think about that. A state government’s Assistant Attorney General for consumer protection said that he would be powerless in an H.O.A. corporation. And then think about how even more powerless an average home owner is.

    Yet we have one political party that is philisophically and ideologically opposed to providing home owners with legislative relief, becasue that would be “government interference in private contracts”. And we have another political party that talks a lot about protecting consumers from predatory corporations but, for whatever reason, is unable or unwilling to actually do so.

    This is a problem that our legislators are not going to fix. Ever.

  3. Cynthia

    What homeowners, HOA, etc., and those non deed restricted to a mandatory association do not understand is that in these groups HOAs etc., it does not have to be investors buying up, or attaining in some way the majority vote. It can be just one new owner, typically non residential, and their unit is a rental property, with the want to destroy the property, lives, families, health and finances of their intended victims and to drive them from their homes to steal them and they can take their place within the community, on a board, or whatever they want. Then a double whammy is when these property predators team up with other unscrupulous HOA, etc., board members and they decide they can target, farm, comb, or selectively discriminate and fabricate charges, or fraudulently assess unauthorized, non voted, illegal charges for work, or other they have no legal, or other right to contract. Probably, if they do this, they get theirs free, or they are providing jobs for friends. The innocent homeowner asks about these illegal charges and their life as they know i is over, in their community. Death threats, slapp lawsuits, more property damages, harassment, terrorizing until the innocent homeowner cannot take anymore. They are forced out so their home and equity can be stolen! Many of our courts are corrupt, it appears, and especially in the HOA cases. Wake up America!


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