Wednesday, September 03, 2008

Homeowner associations in disrepute | ®

Homeowner associations in disrepute | ®: "Across the United States, homeowner associations are falling into disrepute. People hate them. But what's the alternative?
Most planned communities include common areas and amenities like swimming pools, tennis courts and clubhouses, all of which must be maintained. Somebody has to hire tradesmen, pay the bills and maintain standards. And who better than the residents themselves?
In theory, it's a great idea. Unfortunately, it no longer seems to work in practice — if it ever did."

Fred Pilot forwarded this piece, written by an HOA officer from Arizona. I imagine some law firm will draft a response to protect the rice bowl.


Don Nordeen said...

This is the same question that is discussed in the Comments to Kannapolis subdivision.

Some property owners associations (POAs) work well, probably because norms are established that serve the owner members and avoid abuses inherent when power is concentrated in the hands of a few without oversight. But it is probably only a matter of time until those also fail unless major power is retained by the owners, and internal checks and balances are created in the governing documents such as independent advisory committees of the members for audit and governing documents. These advisory committees of the members should have the authority to communicate with members if the board refuses to include their reports in the board's periodic communications to members. A member-elected "judicial body" would also be helpful so that the board doesn't perform all the functions: rule making, enforcement, fact finding and determination of violation, assessment of penalty, and enforcement of penalty. And, there is no reason the POA cannot have an independent press paid for at association expense. The editor/publisher could be elected by the members.

Many villages and small towns operate "common areas and amenities like swimming pools, tennis courts and clubhouses" and do so quite well. However, there is a body of state law that provides the democratic principles and oversight. Included in the oversight is an independent press. Power is not in the hands of a few because of the separation of powers. There is much more to a village than a village council. There is independent enforcement and independent courts. And there is an independent press.

Again, I conclude that, since is not practical (nor likely possible) to convert planned unit communities or common interest developments (CIDs) into villages, legislation is needed for CIDs that is modeled after the law for villages and towns, and adapted to the specific aspects of CIDs and POAs.

Don Nordeen
Governance of Property Owners Associations

Anonymous said...

"Again, I conclude that, since is not practical (nor likely possible) to convert planned unit communities or common interest developments (CIDs) into villages, legislation is needed for CIDs that is modeled after the law for villages and towns, and adapted to the specific aspects of CIDs and POAs."

And why is it not practical or likely possible?

Fred Fischer said...

Private corporate governance as CIDs/PUDs use today has been doomed to endless and irreconcilable issues since the 1960’s when municipalities started mandating them after FHA and ULI encouraged their use. Despite the historical fact that America abandoned corporate governance over two hundred years ago for many good reasons. But what about the maintenance of the common elements, simple there are other ways such as improvement districts that can be used once again.

Today’s CID housing with its corporate residential private governance are “corporate products” that evolved out of the national urban growth policies of the 1960’s and not from public or market demand.

Except this new product requires a great deal of time, learning and support to run and is beyond the abilities and skills of most volunteer members to administer properly from past history. Who are also legally required to manage under a governance system that historically has been proven to be “fundamentally unworkable.” So after many years of member complaints about developer and Board mismanagement a new quasi-public organization was created in 1973 and hence a new industry was born. That today has thousands of industry members who in part or in whole depend on HOAs for their livelihood.

So after thirty four years of being organized why do we still have so many management and other endless issues surrounding CID housing ? Simple first because the members best interests are not represented in the CIDs because they are exclusive corporate created products. Second because CID housing was not created or intended to primarily benefit its members since the 1960’s. Instead they were created as an alternative to earlier large scale real-estate development concepts that failed economically. To primarily benefit the developers, municipalities and others who would economically benefit from the future spread of CID housing under private governance control.

Don Nordeen said...

Answer to Second Comment above.

For planned unit developments with 1000 or more home, conversion to a village might be practical. However, such conversion would require construction of the necessary municipal and service facilities. The restrictions on use of property could become ordinances. However, elimination of the restrictive covenants and the owners association would likely require approval of all owners — likely impossible without enabling legislation.

For smaller developments that are within a municipality (village, town, township, or city), conversion would likely mean adopting the ordinances to replace the restrictive covenants since the municipality would likely not be interested in having different ordinances for the various developments.

Condos create similar issues.


The mandate by FHA and ULI in the 1960s described by Mr. Fischer recognized that a more democratic model was needed after turnover from the developer. However, none was provided.

The legislative effort is a struggle to produce a democratic model that will better serve the owners and avoid the many abuses reported in Privatopia and other weblogs and websites on common interest developments and property owners associations.

Don Nordeen
Governance of Property Owners Associations