A Good Reason for an HOA?

I will certainly concede that I wouldn’t like living across the street from this guy. Still, I suspect that many victims of HOA abuse would rather live next to this house than next to the bullies who run much of HOA Amerika.

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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.

11 thoughts on “A Good Reason for an HOA?

  1. Nila Ridings

    No doubt about it! I would live with one of these all around me before I would live in another HOA! This owner doesn’t appear to be a boring nosy busy body bully. He/she is too busy painting and putting smiles on the house.

    I’m so tired of basic beige and grey with white trim, I hope to never see it again once I escape this hellhole.

    Reply
  2. robert

    Ward,

    Are you serious?!

    Implicit in your question — “A Good Reason for an HOA?” — is the widely believed but unfounded assumption that H.O.A. corporations are necessary to enforce deed restrictions and covenants. You’re buying into the false dilemma of “heavy handed corporate governance” or “neighbors gone wild”. You’ve been at this for several years, and should know better by now. But apparently this needs to be explained….again.

    H.O.A.s are corporations, a legal entity with rights.

    Covenants and restrictions are the “neighborhood rules”.

    Conflating “H.O.A.” with “the rules” is a common mistake, but still a mistake. And it’s not a trivial mistake, because it’s led to some incredibly bad policy decisions with horrific consequences that’s taken a toll on society both financially and in terms of widespread human misery.

    As we all know, H.O.A. corporations enforce the neighborhood rules. And their ability to do so is backed by threats of fines, liens, and foreclosure. As a result — plus the profit motive of the industry’s managers and attorneys to create strife and conflict — H.O.A. corporations have every perverse incentive and moral hazard to engage in the most destructive of litigation for the most trivial of amounts and reasons.

    Without an H.O.A. corporation, the individual owners would still be free to enforce the neighborhood rules. However, there would be some very important differences:

    Unlike an H.O.A. corporation, the individual owner would not be able to unilaterally declare his neighbor to be in breach of contract and fine his neighbors. He would have to take his (allegedly) rule-breaking neighbor to civil court.

    Unlike an H.O.A. corporation, the individual owner suing his neighbor would have to demonstrate actual damages to recover a monetary award, instead of being able to claim fines, fees, and other arbitrary and artificial accounting artifacts as actual damages.

    Unlike an H.O.A. corporation, the individual owner suing his neighbor has an incentive to control his legal expenses.

    Unlike an H.O.A. corporation, the individual owner suing his neighbor would be responsible for his own up-front legal expenses.

    Unlike an H.O.A. corporation, which compels other home owners (including the defendant) to pay its legal expenses through mandatory assessments, the individual owner suing his neighbor would still be free to have other home owners fund and/or join in his litigation. But he’d have to “pass the hat” and persuade them to do so.

    Unlike an H.O.A. corporation, the individual owner suing his neighbor would not be able to “hide behind the corporate veil”.

    Unlike an H.O.A. corporation, which by definition are sociopaths — legal “persons” without a conscience, empathy, or morality — natural persons are subject to moral and social pressures that make most of us “behave nice” (or, as economists and game theorists would say, “cooperate” instead of “defect”).

    “Organizations are of course made up of individuals, who bring with them the sorts of societal dilemmas we’ve already discussed: both the dilemmas between the organization interest and the individual’s own competing interests, and the societal dilemmas that come from the individual being a member of the organization and a member of society as a whole. But we often treat organizations as if they actually were individuals, assuming that societal pressures work on them in the same way they do on individuals. This doesn’t work, and results in some pretty bad trust failures, and high scopes of defection.”

    ( Bruce Schneier. Liars and Outliers. 2012. Chapter 12. emphasis added )

    The end result of the elimination of H.O.A. corporations, or at least a law that prohibits H.O.A. corporations from enforcing covenants and restrictions, would be that individual home owners aren’t going to sue their neighbors, unless it’s over something that is really damn important. Imagine that! It would reduce expensive litigation to almost zero (something that the Republican proponents of “tort reform” claim they want to accomplish).

    Even the HOApologists admit that H.O.A. corporations behave in ways that individual home owners do not and would not, except that they tout this as a benefit! For example, H.O.A. attorney Tyler Berding wrote that

    Many owners see the “association” as a faceless antagonist run by people that they don’t know. The reality is different.

    . . .

    Disputes between an owner and the “association” are at base just arguments among individual owners. But many still don’t see it that way and choose instead to see the association as a monolith operating independently of the owners. And they can be excused for thinking that way. When disputes arise, they are characterized as “Happy Valley Homeowners Association vs. John Smith” not, “All of His Neighbors in Happy Valley vs. John Smith.” A corporation can be bureaucratic, but it also provides anonymity — a delegation of authority so individual owners do not have to personally enforce the rules. Those who believe the rules are beneficial want others to abide by them. Others just want to be left alone. But as long as there are rules in play, someone or something has to do it.

    . . .

    Owners can sue each other directly to enforce the rules but most would rather not do that. It’s messy and expensive and personal.

    ( “It’s Your Neighbors, Stupid” May 21, 2011 at http://condoissues.blogspot.com/2011/05/its-your-neighbors-stupid.html emphasis added )

    According to the H.O.A. industry professionals, we’re supposed to believe that when the Make-A-Wish Foundation offered to build a playhouse for Ella Shultz earlier this year, her neighbors acted collectively through the Stonegate H.O.A. corporation to deny the wish of a (possibly dying) 6-year old cancer patient. After all, if her neighbors had to do it themselves, rather than acting anonymously by hiding behind the H.O.A.’s corporate veil, “most would rather not do that” because it would have been “messy and expensive and personal”.

    Hmmm. If most neighbors would rather not take personal responsibility for enforcing the neighborhood rules, then perhaps they would exercise some common sense about which neighborhood rules they actually enforce. What a concept! (It’s no coincidence that “personal responsibility” and “common sense” — two other things that Republicans claim they want more of — are absent where H.O.A. corporations exist).

    There’s probably a reason why “Two-thirds of people who live in the jurisdiction of a homeowners association” have a negative opinion of them, why “19% have been in what they call a ‘war’ with their HOA“, why “54% of respondents said they’d rather live with a ‘sloppy neighbor’ than deal with an HOA”, and why “78% of those responding to the poll said they might consider NOT buying a home because it would be under the jurisdiction of an HOA” ( Kathy Price-Robinson. “Two-Thirds ‘Annoyed’ With HOA, Survey Says”. Los Angeles Times blog. September 05, 2007 at https://web.archive.org/web/20110928024521/http://latimesblogs.latimes.com/pardonourdust/2007/09/two-thirds-anno.html emphasis added). If only our elected representatives could figure out what that reason is, and do something about it…

    Reply
  3. robert

    From the home owner’s web site:

    “This is our crazy home, Calico, the House That Sweaters Built! It’s been quite a renovation journey to get it to its psychedelic rainbow state. This is just the first coat. It will only get weirder.”

    More pictures at http://katwise.com/house.html

    Reply
    1. Nila Ridings

      She looks like a fun, active, creative, and full-of-life woman. I’d say she is living life to the fullest!

      I doubt she would have time nor even care to video tape her neighbors and have her nose in their business like I deal with.

      Her house reminds me of something you’d see in Aspen, Colorado. You know that bright and colorful place where the billionaires get their mail.

      Reply
  4. robert

    “I will certainly concede that I wouldn’t like living across the street from this guy.”

    You know who else wouldn’t want this gal — not “guy”, her name is Kat O’Sullivan — living across the street?

    Saddam Hussein.

    http://www.nytimes.com/2011/05/15/world/middleeast/15baghdad.html

    As Baghdad Erupts in Riot of Color, Calls to Tone It Down

    by Michael S. Schmidt and Yasir Ghazi
    New York Times. May 14, 2011

    …For decades, Saddam Hussein’s government ruled over aesthetics in Iraq’s capital with the same grip it exercised over its people. A committee of artists, architects and designers approved the color of buildings as well as the placement of shrubs. With many beige brick buildings, and color used sparingly — most often on mosques — the city’s appearance was uniform and restrained.

    But the committee, like Mr. Hussein’s government, fell apart after the United States invasion in 2003. Some years later, when Iraqis started rebuilding as the violence declined, there was no central arbiter. Bright colors started appearing, and places like the Trade Ministry were done up in pink, orange and yellow…

    And check out the accompanying photos at http://www.nytimes.com/slideshow/2011/05/15/world/middleeast/15baghdad.html

    Conservative commentator Glenn “Instapundit” Reynolds blogged that “When all the New York Times can complain about is the color of buildings in Baghdad, can we officially say that the war was a success? Oh the horrors of tackiness! If only we had left Saddam in power!” ( http://pjmedia.com/instapundit/120735/ )

    The good news for Saddam’s henchmen is that there is plenty of work for them in the United States. There’s an organization in Falls Church, Virginia, that would love to hire them as consultants and enforcers.

    Reply
  5. Deborah Goonan

    The point is not CAN we legislate matters of taste, but SHOULD we?

    As far as I am concerned, if what my neighbor does with his or her property does no harm to me or others, then live and let live.

    A percieved “eyesore” is not a harmful disease or a threat to anyone’s health and well-being.

    The colorful house is MUCH preferable to a yard full of garbage, or rusty abandoned vehicles, or waist high weeds and grass harboring snakes and rodents. THOSE would be true health and safety hazards, and most cities or counties could enforce such code violations without the need for an HOA. Or, as Robert points out, the affected neghbor(s) can fight their own battle. And chances are, the wild paint colors won’t result in a lawsuit, but a yard full of garbage probably would.

    Reply
  6. Holly HOA

    I want to be her neighbor! Her house makes me smile, unlike the boring brown and gray houses in my HOA which make me frown. We don’t have “approved” paint palettes here, but long-time residents shake their heads in disapproval and point fingers at any paint colors that are not forest-like. They don’t like our terracotta color. It’s not muted enough. My neighbors with a peach colored house are the talk of the neighborhood. Imagine that! A peach colored house in Florida. So terribly un-forest like.

    Reply
    1. Nila Ridings

      For years we had a townhouse with a pumpkin color. As the story goes the HOA contractors made an error in their color mix and when it dried they had a bright pumpkin house in the middle of basic beige and grey. The owners loved it, but when they sold and the HOA borrowed a million dollars to paint the houses the pumpkin house was turned to the drab old basic HOA beige.

      I guess it probably makes it difficult for the witches riding their brooms looking to fine, lien, and foreclose on a neighbor to find a place to land with the pumpkin house gone.

      Reply
  7. Cynthia

    Gosh, what great posts on this blog! All of them. I would live next to a dozen of these homes before having anything to do with an HOA. HOAs bring out the worst in neighbors and “neighborhoods.” The reality is that in every state that I know of homeowners have been duped when buying into any deed restricted property with a mandatory association. It was not always like this in HOAs though. The late 1990’s brought industry lobbyists to many locales and especially infiltrating legislatures, HOA, etc., boards, attorneys and the unfortunately too many in the courts, it appears. The HOA homeowner abuses, the range of crimes selectively targeting innocent homeowners for malicious, or greed driven motives and the property thefts, costing innocent HOA homeowners thousands, upon thousands from their finances, equity and too many their homes is a disgrace and I believe criminal. If someone has a mortgage, they sign a PUD rider with the mortgage instrument that is supposed to “guarantee” that any assessments, fines, dues, legal costs, or other assessed to the property the lender will pay. When an HOA homeowner is targeted, why is their lender not stepping up to the plate. Furthermore, if one reads the HOA insurance policy, yes, it has director liability coverage but the policy insure the association, not the board members. Who is the association? The members. I just had a long conversation earlier this week with an HOA homeowner attorney who is looking at this and hopefully, in the near future, will be insisting for coverage for the association members, when they are targeted in one of the horrible and criminal acts. Yes, Holly, this house makes me smile too!

    Reply

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