First, homeowners who unwittingly sign those real estate papers to buy into an HOA generally don’t realize that they’re stepping out of the Constitutional government we’re all so used to. And they’re stepping into an entirely new form of government. A true democracy. The kind of democracy that our founding fathers warned us to avoid. A lot of bad things happen in a democracy, such things as slavery or discrimination, or complete suppression of minority factions.
Second, the typical HOA has no checks and balances. Our founding fathers created a representative government that was stuffed with checks and balances. No branch of government was allowed to assume dictatorial powers over the other. The sense was that the people owned the government, not the other way around. Sadly, in the HOA, the people do not own the HOA, because there’s generally no court of last resort.
Third, the main presumption of the HOA movement is that its primary goal is to protect your property values. That promise is a complete and total lie. Just ask the people of Las Vegas, Modesto, Houston, Florida, North Carolina, or any other city or state how their property values are doing now! And it’s not just a result of the housing bubble. It’s because all members of an HOA are locked into a sink or swim agreement with their neighbors. Try selling your house when the neighborhood swimming pool is filled with green algae, and every third or fourth house has a “For Sale” sign in front of it. All neighborhood home values take a dive together. That is not “protection of property values.”
Now look at the thousands, even tens of thousands of embezzlements from HOAs across the country. When HOA members have to make up the lost money in special assessments, is that a protection of property values?
Government jurisdictions love HOAs, because taxes can be secretly transferred from government to HOA. Homeowners pay those taxes in the form of dues. And they’re not deductible as taxes might be.
In many, many ways, the HOA does not protect and defend your property values.
If you start checking real estate trends around the country, you may find something surprising. You may find that houses OUTSIDE of Homeowners Associations actually lost very little in the housing crash. And once the economy improves, you may find those outsiders enjoying a more robust growth in property values than those folks in the nearby HOA.
Ward Lucas, author of Neighbors At War! The Creepy Case Against Your Homeowners Association