HOAs Wield Unconstitutional Powers. Checks & Balances are Absent.

QUESTION: Who in America writes laws, accuses you of violating those laws, acts as judge and jury, decides your guilt or innocence, determines the punishment, inflicts the punishment, and decides whether the punishment will end or continue?

ANSWER: Your HOA board of directors.

The Constitution of the United States established three separate branches of government: legislative, executive, and judicial. The separation of powers between the branches is crucial. Allowing powers to accumulate in any government body is, as James Madison said, “the very definition of tyranny.”

Homeowner associations (HOAs) are fairly new creations of state law, having been conjured up during the suburban-sprawling 1970s by lobbyists for real estate corporations. The “checks and balances” (that ought to limit the powers of HOAs) are feeble because there is only one authority–the HOA itself. The same people (the board of directors, who are volunteers) do the work of all three branches–legislative, executive, and judicial. No other civilian body in the United States performs all of these functions and wields such a range of powers over its constituents.

If an HOA’s abuses were limited to fining you $50 because your cat scratched your window screen, that might be tolerable. But our HOA has fined its members tens of thousands of dollars, placed liens on their homes, damaged their credit rating, and hauled them into court based on trivial issues or, indeed, based on the HOA's own errors. A word about those specific examples: these properties are well cared for; the dues are paid; all four homeowners are ethnic or linguistic minorities. When the HOA attacks you, it’s your monthly dues that's paying for the (HOA’s) prosecuting attorney, but you (the homeowner) are not afforded legal counsel, informed or otherwise. You pay for the whip that whups you.

One thing that makes this system so dangerous–it’s a profit-generating stream for players in the HOA industry. “It’s a well-documented fact that state leaders tend to resist serious regulation of HOAs, due to opposition from community developers, institutional investors, and the HOA management industry.” Although HOAs themselves are “nonprofit” entities, they often rely on fines and fees to balance their budgets. The result? HOAs have strong incentives to create debt traps for their residents. In our next essay, we'll provide evidence that our HOA routinely tests homeowners, each year, with excessive, absurd and/or erroneous violations (e.g., “house numbers unapproved”) to see who will stand up to defend themselves, and who will not or cannot. Homeowners are the target. Young parents that speak English as a second language are baffled with violations that are vaguely worded. Old timers are shocked when they prepare to put their house on the market, and suddenly HOA fines and fees spring up. Somebody or other will have to pay these bills before or at closing. For the HOA-industry players, that is the desired outcome. I know of four families who have fled our community due to “harassment by the HOA.” All of them were ethnic minorities.

Such practices by HOAs are a form of “equity theft,” a concept that’s receiving new attention from the U.S. Department of Justice and advocates of property rights. For most Americans, their home is their largest purchase, and for many it’s their largest financial asset. But when your own home has become a target for HOA runaway fines and fees, it feels more like a liability.

I do not think this situation is sustainable– socially, legally, or spiritually. I think it’s unconstitutional. The HOA system is designed to be abusive, whatever might be the personal virtues or vices of individual board members. As Deborah Goonan wrote at Independent American Communities, “Property owners’ and residents’ rights are reduced to that of mere feudal serfs, who are expected to put up with all their HOA nonsense, and shut up about it. … There’s no shortage of documented cases of HOAs abusing their power to exploit homeowners and residents.” John Oliver made the case recently that HOAs serve as the hood ornament of a predatory industry, offering examples of abuse from across the United States.

So, this year, while I’ll continue to live in this HOA community, to vote in HOA board elections, and to work with HOA board members and property management as we try to solve a few practical problems on the ground, I will also be studying whether abolition is a viable alternative to having an HOA.

The laws governing Maryland’s HOAs were written to make it very difficult to dissolve an HOA. But the results of abolition might be worth the effort. Without an HOA, the administration of our neighborhood would turn over to Montgomery County, Maryland. Many neighborhoods in our county function perfectly well without an HOA. Maybe ours would too.

** *** **

Steven Sellers Lapham, is a 22-year resident of the Quail Valley HOA community and author of the “Cuckoo Court” blogs on PATCH.COM, at tinyurl.com/CuckooCourt.