There are few things more delicious than a homeowners association horror story. All over the internet, you can find tales of people getting fined for parking their vehicles in their own driveways or having a potted tomato plant on their back porches or leaving a bottle of Gatorade out for one day. In Tennessee, a man returned from vacation to discover his car was missing; he thought it had been stolen, but in reality, his HOA had towed it because it had a flat tire. A Maryland HOA fined a homeowner $40,000 because the fence she built was 8 inches too long. A Missouri HOA threatened a family with jail time because they’d put up a play set that was — gasp! — purple.
It’s easy to laugh at the inanity of so much of it ... until you find yourself peeking through your curtains trying to catch your neighbor putting her trash can out five minutes early because last year she reported you to the HOA for leaving up your Christmas lights past the New Year.
HOAs, condo associations, and co-op boards — all private forms of governing what’s called common-interest communities — are increasingly becoming an inevitability of homeownership in America. According to a 2020 report by the Foundation for Community Association Research, some 73.9 million Americans — more than a quarter of the population — live under such an arrangement. More than 75 percent of new housing built for sale is part of a community association. In other words, if you own a home in the US today, you’ve got a one in four chance of living under an HOA. (For the purposes of this story, I’m going to use “HOA” as the umbrella term here.) And if you are buying a home, well, have fun meeting your new neighbor-overlords!
Not all HOAs are evil. With people living in such close proximity, it makes sense to set some general rules and guidelines for coexistence. But it’s hard not to look at their setup and think they’re at least suboptimal.
HOAs exist in service of community well-being, which is often just code for preserving property values, making developers rich in the process. They have a history of being discriminatory and exclusionary. They are micro-sized super-local governments that are largely left to their own devices by the actual government, giving them the ability to exercise an enormous amount of unchecked power. In a nutshell, HOAs are privatization on hyperdrive.
“This is the most widespread, dramatic privatization of local government functions that has ever happened. That’s essentially what’s happened. These are private governments that are doing all the things that local governments traditionally do. And it’s unregulated,” said Evan McKenzie, a political science professor at the University of Illinois Chicago and the author of Privatopia: Homeowner Associations and the Rise of Residential Private Government. “This is the Reagan-era idea, the market will solve all our problems. No, it won’t. It’s not going to solve everybody’s problems. It’ll work out for some people, and for some people, it will be a disaster.”
HOAs mean dollar signs for developers (and save dollars for cities)
Homeowners associations in the US have been on the rise since the 1960s, the result of the suburban housing development boom and, in some cases, a desire by certain communities to keep certain people — namely, Black people — out. That legacy persists today: As Insider notes, neighborhoods with HOAs have more white and Asian residents and fewer Black residents than non-HOA neighborhoods, and Black residents continue to face discrimination in such arrangements.
In modern-day America, HOAs — which are usually set up as not-for-profit private corporations — persist and have proliferated as part of a win-win deal for real estate developers and for cities. A developer goes to a city offering to put a new subdivision in, offering to build out private streets and put in a private pool and a sewer system and whatever else to try to attract buyers, who will subsequently wind up paying for those amenities through fees. The city, which is likely cash-strapped, likes the deal — that way it doesn’t have to put in the street or sewer system or deal with the pool.
“Real estate developers and cities see dollar signs with private governments. If you create a private subdivision or ideally a condominium, you can get much greater density, and the developers can get more houses on less land,” McKenzie said. “Cities love this because they get a whole bunch of new taxpayers paying a full property tax and they don’t have to provide the services to them they have to provide to everybody else.”
The deal is supposed to be good for homeowners, too. People get some rules of the road, like that their neighbors won’t be blasting music at 3 am, and get access to that private pool if there is one. HOA-governed properties can also be worth more — one 2019 study found that houses in such subdivisions are worth at least 4 percent more than similar houses outside of them.
“Being in an HOA actually makes your housing value go up,” said Wyatt Clarke, one of the authors of the paper. However, he acknowledged most of that value is captured by the developer, and that over time, that extra value diminishes as properties age and houses start to turn over. “The fact that you’re in this unit, over time, becomes less and less valuable,” he said.
Trying to keep that property value up is by and large the main function of the HOA, and the way it accomplishes that is, in part, by enforcing all sorts of rules. The underlying theory is that everything staying the same and sticking to the original plan is the best way to maintain property values, McKenzie explained, which is why the houses have to be some shade of beige and the curtains have to be visible from the street and the mailboxes have to be a certain color and the lawns have to be maintained and watered. “The idea is that this is good for property value,” he said.
Don’t like your HOA? Good luck.
The big issue with HOAs is that if you’ve got a problem with them — or they’ve got a problem with you — it can be quite a dilemma. Association rules aren’t just kind little suggestions, they’re enforced through fines and liens and in extreme cases even foreclosures on people’s properties. And if you want to fight back against your HOA, you might be out of luck.
States and courts are generally pretty hands-off when it comes to dealing with HOAs, explained Michael Pollack, a professor at Cardozo Law School specializing in property law who has written about the way courts do — and don’t — handle HOA rules in the past. “Most states have some statute on the books that says something about the circumstances under which a court should not enforce a particular HOA rule or something like that, but usually, those statutes are written to say something like a court should not enforce a restriction or the rule if it is totally arbitrary or against public policy, which is a very narrow set of things,” he said. “It’s almost unheard of for a court to intervene in the day-to-day.”
Part of the philosophy here is that “the market” is supposed to address the problem on its own and will punish HOAs with bad rules or overzealous enforcement because people will not buy in those communities and will flee. But that’s not how it works in practice. A lot of the time, buyers don’t fully know the consequences of buying in a development ruled by an HOA or even see the rules and regulations ahead of time. Buyers trying to sell might not be so open about the association, nor will the broader community trying to keep property values up. And in many communities, HOAs are the only game in town. In New York City, for example, you’ve practically always got to buy an apartment in a condo or co-op building — and in a co-op, the board can turn prospective buyers down.
“Courts tend to take the view of, look, if you don’t like it, you can leave, or you can work within the community to change things, exercise your voice,” Pollack said. But it’s not so easy to pick up and go; it’s financially and emotionally costly to move. Being on an HOA isn’t a particularly rewarding or fun job, either. It’s unpaid, thankless, and can be a lot of work. Sometimes, the people on the boards are the ones who are most eager to impose rules on their neighbors. “That creates the sort of predictable consequences that we see, which are boards of similar compositions remaining in place with pretty unhappy communities,” he said.
Scott, who asked to use a pseudonym to protect his privacy, says most of his experience serving on his HOA board about a decade ago in South Florida was pretty ho-hum, with the exception of what to do about invasive snakes and alligators living in the nearby Everglades, which some board members were “obsessed” with. “I felt the emphasis on large reptiles was quite unnecessary, but if it helped people feel safe, then who am I to complain about it,” Scott said, noting that he thinks just a few people had died as a result of alligator attacks in the area over the years.
Apart from dealing with the reptile situation, board members would drive around once a week with a checklist to make sure everything in the 24-house subdivision was in order, making sure lawns were mowed, trash was in order, and driveways didn’t have any cracks. I asked Scott why a crack in the driveway would matter — it’s not like it affects anyone else. He responded that people could see it, and there were golf courses in the area, reassuring me that the weekly drive-by situation “really is not as bad as it sounds.” The potential killer alligator situation he’d seemingly minimized did sound quite bad in comparison to some driveway cracks, but we moved on.
In an HOA situation, everybody’s a little bit hero, a little bit villain.
Unaccountable little local governments, maybe not great
Whenever someone tells me a story about their homeowners association or co-op board, I send them this 2021 Wall Street Journal gem that likens co-op boards to “Ted Bundy, whoever designed Gmail, and bad paper cuts” and large condo boards to “airplane passengers who clip their nails in flight.” Going forward, I will also be sending them this Last Week Tonight segment with John Oliver on HOAs, in which he describes state postures toward people looking for legal remedies to deal with their associations as, “You’re fucked!”
HOAs can do a lot of things that government can’t do. They can tell you what signs you can and can’t put outside of your home, because the First Amendment protects your right to free speech from being infringed upon by the government but not by a private entity. They can tell you that your truck has to be parked in the garage or not parked at all because they don’t want the neighborhood to look too “working class.” They can’t overtly say they don’t want people of color in the subdivision, but they can make it very hard for people of color to get in.
There is no great fix to HOAs in the US, and truth be told, they’re not going away. But are there ways to make them better? Tighter regulations — which developers push hard to avoid — could be a start. There’s also a conversation to be had about why municipalities are so cash-strapped, which is part of what drives them to allow for more private subdivisions and condos in the first place.
McKenzie pointed out that more attention needs to be paid to how much money these associations and boards have to make sure they’re able to make repairs when necessary and buildings don’t entirely go under. In some scenarios, condo associations wind up having to sell buildings off entirely. Or, in the most dire scenario, you end up with the Surfside condominium collapse in Florida in 2021, which killed nearly 100 people, after the building had trouble getting residents to put up funds to pay for repairs.
To put it short, these unaccountable little governments could stand to be held a little more accountable. “The only way to make it work in the long term is a little bit more assertive role of government,” McKenzie said. “But this really just epitomizes the whole era we’ve been in for the last 40 years: privatize everything, the market solves all our problems. I’m sorry, no.”
We live in a world that’s constantly trying to sucker us and trick us, where we’re always surrounded by scams big and small. It can feel impossible to navigate. Every two weeks, join Emily Stewart to look at all the little ways our economic systems control and manipulate the average person. Welcome to The Big Squeeze.
Have ideas for a future column or thoughts on this one? Email email@example.com.