By Deborah Goonan
(Independent American Communities Blog, http://independentamericancommunities.com/)
Spokespersons for the US Common Interest, Association-Governed Communities industry give plenty of lip service to the concept of property rights. But what does that mean for special interests such as Community Associations Institute (CAI), National Association of Home Builders (NAHB), and National Association of Realtors (NAR), to name three of the biggest players in the HOA industry?
I’ll let you in on a little secret: the industry is not interested in preserving your individual property rights, or even your Constitutional rights, for that matter. When CAI, NAHB, and NAR speak about property rights for residents in HOAs, it is generally in the context of balancing the rights of owners with the rights of the Association.
CAI attorneys are especially vocal about the rights of Associations. In their Public Policy Guide, here’s what CAI has to say about private property rights: (emphasis added)
Community Associations Institute (CAI) supports protections that enable property owners to challenge governmental taking of common or private property. CAI opposes legislative or judicial actions that would limit or restrict the ability and rights of community associations to maintain control over association common property.
Read between the lines. When CAI refers to “private property,” it is really talking about the Association’s “private” property. However, to be more precise, commonly owned property is, in fact, collective not private. And that collective ownership is structured as individual shareholders in a corporation.
Due to its collective nature, a homeowner or condo or cooperative association almost always holds more rights than the individual. It is the Association that controls and spends assessment funds collected from individual owners. And as we all know, the one that holds the purse strings tends to hold power and influence.
Whose interest is served by HOA industry groups?
Here’s my observation: both CAI and NAHB (and related investor groups) want to increase and preserve the power of Owner Association Boards. That’s one of the most insidious hazards of HOA living, not only for owners, but also tenants. But one needs to recognize that these special interest groups seek to preserve the power of HOAs for different reasons.
CAI benefits from a powerful HOA Board that will engage in contracts, that will in turn collectively pay millions to their CAI-members: management companies, attorneys, insurance and reserve professionals, landscape companies, and other community service providers.
NAHB and investor groups, on the other hand, create and control HOA Boards. They find it imperative to control the voting interests – and therefore HOA finances. From their perspective, it is of critical importance to maintain developer’s rights and a corporate shield from liability for as long as possible. At heart, these real estate moguls do not trust common owners to properly manage what they see as their Creations and Empires.
But individual homeowners and residents also endure the effect of other conflicting interests of builders, developers, and speculative investor groups. After all, developers and their affiliates are the ones who can choose to cut corners on construction and do fracking right under your house, but yet they don’t want to be held accountable for resulting health and safety hazards or damage to your home. Association-Governed Residential Communities are often intentionally designed to provide ongoing income streams that outlive the developer’s construction phase.
Too many developers and savvy investors are the kind of people who want the right to sell homes and condos at inflated prices, and then take over the association and buy back your property at pennies on the dollar. These are the folks who want to turn a residential property into their personal real estate investment – as they morph what was sold as owner-occupant communities into poorly managed apartments or Airbnb, VRBO hotels.
The Realtor association (NAR) has its own special interests — they want their members to sell as much real estate as possible and avoid legal liability for selling you a money pit, or a bad investment. Of course, some real estate agents are ethical, but the current system with regard to sale of property with HOA strings attached lacks accountability.
But by far the biggest consumer problem we face is this: federal government policy makers and local politicians often bow down to these special interests and throw the rights of individual housing consumers under the bus.
It’s time to change that dynamic and shift rights back where they belong – to individual consumers of housing. Learn more at Coalition for Community Housing Policy in the Public Interest, http://www.chppi.org/
Great information Deborah!
I would like to remind the readers that while Realtors might be ethical they can also be ignorant of what can happen to the buyer that they sell into the HOA.
The seller pays a commission to the Realtors to advertise and orchestrate a sales contract. At no time is the Realtor (for seller or buyer) under any obligation to disclose to the buyer that the HOA is near bankruptcy, has a number of lawsuits pending, or has recently taken a million dollar loan. The due diligence to acquire that information is the job of the buyer. And if that buyer does not have the knowledge to know what questions to ask they are buying totally on the blind. Not to mention, even if all is well in the HOA today it could become engaged in ten lawsuits and taking out a three million dollar loan six months from now.
Perhaps, if the millions of real estate agents across the country had extensive knowledge of the risks of HOA living they would rethink making their living by selling buyers into the nightmares? If enough of them refused to sell HOA properties we would no doubt see big changes.
This has absolutely been my experience. Condos are the absolute worst as we are treated like renters, but we have all the responsibilities of owning. While I’ve read worse horror stories than what I’ve experienced I have experienced enough to know I’m in trouble. Further local governments are FOR HOAs. I recently heard of some new houses that were built in the middle of an existing neighborhood. Most of the houses in the neighborhood did not have HOAs, but there was a small HOA development near the new houses. The local government was pressuring these new owners to try to join the existing HOA so that the city would not have to maintain the drainage pond and other “common areas” of the new homes. The existing HOA did not want to add the new homes either so the city was pressuring the new owners to form their own HOA. Perhaps the only recourse is the federal government?
Deborah,
Thank you for providing such excellent information and analysis. All HOA homeowners across America and home buyers have to be informed as to what is and has been going on in the HOA industry for decades and what has been done to HOA homeowners in the egregious and malicious many times greed driven HOA criminality and property thefts. No American should be forced to endure this syndicated criminality; the many times secretive injustices, secretive legal and judicial abuses and secretive taking of their victims finances and property with no due process, no protections of the laws, or their victims rights. Another reality of the HOA industry is the benefits to the states and local governments. The states and local governments assess and collect the same tax revenues from HOA homeowners as they do from property and homeowners not in HOAs. Property and homes not in HOAs are the beneficiaries of services provided by the states and/or local governments for their tax dollars that owners in HOAs do not receive, such as roadway maintenance and repair, trash collection, storm water management, and in some states and locales even police protections it has been reported. If one looks at the magnitude and growth of HOAs in countless states and locales across America, it is mind-boggling to think of how much more it would be costing states and locales if they were required to provide the same “traditional” services to all, whether in an HOA, or not! There is a lot of tax revenues coming into the states and locales that they do absolutely nothing for, nor have any responsibility, or accountability to provide because of the HOA concept. Where does this additional income to the states locales go? I also want to mention that even though HOAs exist by statute in every state I know of, there appears to be no legal protections and very few judicial enforcement’s of HOA homeowner protections in numerous states and countless locales across America! I do not believe this is by accident. I believe it is by the “design” of some and it is illegal, criminal, maybe RICO, but some kind of organized crime and organized influence!