Homeowners Associations Quickly Becoming the Bane of U.S. Homeownership

One of the sought-after milestones of adulthood is moving into your dream home. But what if you find yourself entangled in a web of unexpected fees, stringent rules, and legal battles?

This is the reality for many homeowners living under Homeowners Associations (HOAs) governance.

In 2022, 84% of newly built single-family homes in the U.S. were part of HOAs. While these organizations promise community harmony and enhanced property values, they often come with a hidden cost that can turn the American dream into a financial nightmare.

The Rise of HOAs

Image Credit: Francesco Scatena/ShutterStock.

HOAs have become increasingly common, particularly in new constructions. Rooted in the desire of local governments to offload responsibilities like maintenance and community services, these associations are seen as a value-add for homeowners.

However, the reality is more nuanced. While some residents appreciate the order and amenities HOAs provide, others find themselves in a Kafkaesque scenario of escalating fees and rigid control.

The Power & Price of HOA Living

HOAs are run by boards of volunteer property owners and often hire for-profit management companies for day-to-day operations.

Homeowners contribute to an operating budget, with typical monthly fees ranging from $200 to $300. These associations wield considerable power, including the ability to fine residents and, in extreme cases, place liens on homes for unpaid debts.

An HOA Ordeal

The Inostroza family’s experience in Newnan, Georgia, exemplifies the darker side of HOAs. Their annual dues seemed manageable at $200, but they soon found themselves saddled with a previous owner’s unpaid fines and escalating late fees.

Despite attempts to resolve the issue, they faced wage garnishments and legal battles, culminating in over $12,000 in payments to the HOA, with still more claimed to be owed.

The Impact on Property Values & Community Life

HOAs often justify their existence and fees by claiming to protect and enhance property values. Studies show mixed results: some find HOA homes worth more, while others see no significant difference.

The Inostrozas, for example, believe their property value increase is due to community efforts, not HOA management.

“I feel like it should be a positive thing when the community works together, keeping our houses looking good and good for property value,” says Enrique Inostroza.

The Role of Management Companies

Professional management companies can streamline HOA operations, but their for-profit nature can lead to conflicts of interest. Excessive reliance on these companies can lead to mismanagement and a disconnect between the board’s decisions and the community’s needs.

Homeowners like Jessica Navas and Matt Bazan have begun pushing for more transparency in their HOAs, uncovering histories of foreclosures and financial discrepancies.

Their efforts highlight the need for better oversight and regulation of these quasi-governmental entities.

The Legal & Regulatory Landscape

Homeowners facing disputes with their HOAs often find little support from government channels. Only a few states, such as Colorado, Delaware, and Florida, offer Ombudsman offices for HOA issues, but these are typically underfunded and limited in scope. For most homeowners, legal recourse remains the primary option.

This path, however, is fraught with challenges. Navigating HOA disputes requires a deep understanding of covenants, conditions, and restrictions (CC&Rs) that govern homeowner associations.

These disputes often involve complex legalities related to property use, maintenance rules, and community regulations. The enforcement of these rules can vary significantly, depending on the HOA board’s approach, which adds another layer of complexity.

Homeowners must be prepared for potential legal battles that can be both time-consuming and expensive, highlighting the need for more accessible and effective dispute resolution mechanisms in homeowners associations.

Grassroots Change & Legislative Action

Change in the HOA landscape will likely come from the grassroots level, with homeowners like Matt Bazan, now president of his HOA board, leading the charge.

Legislative efforts in states like Texas and Florida are underway but face opposition from the powerful HOA management industry.

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Davin is a jack-of-all-trades but has professional training and experience in various home and garden subjects. He leans on other experts when needed and edits and fact-checks all articles.