Tuesday, June 29, 2010


David Kahne, a Houston lawyer who advises homeowners, says that in Texas, the law is so weighted in favor of HOAs, he advises people that instead of hiring him, they should call their association and beg for mercy.

"I suggest you call the association and cry," he says.

If a homeowner misses a couple of association dues payments, the s250 or s500 they owe often becomes s3,000 after the association's lawyers add their legal fees, Kahne says.

It's not the HOA that has to pay the lawyer's bill but the delinquent homeowner. If the homeowner wishes to contest and loses, the owner is on the hook for legal fees that could run deep into the tens of thousands of dollars.

Kahne says that as the economy has gone under, HOA management companies and lawyers have been making millions off homeowners through this foreclosure process.

"We're having literally thousands of lawsuits filed over very small amounts of money," Kahne says. "And those very small amounts of money rapidly become large amounts of money when the association attorneys add their bills."

These are the worst of times and the best of times in Privatopia, USA. Texas attorney David Kahne reports as the HOA foreclosure machine grinds up delinquent homeowners and auctions off their properties for a relative pittance, the community association industry is enjoying a bonanza of legal and other fees. And as with mortgage lenders, homeowners in arrears can only beg for forbearance since they don't have the law on their side in most states that allow nonjudicial foreclosure by HOAs, Kahne notes.


Anonymous said...

It's disappointing that David would recommend "call the association and cry". As the article notes, it is the management companies and HOA attorneys that profit from this practice. As agents of the HOA corporation, guess who you call when you "call the association"?

The business of these HOA corp management companies and HOA attorneys is extortion, pure and simple. Their objective is to see how much they can extract from you by threatening you with the loss of your home under the pretext of representing the HOA corporation.

Anonymous said...

What's left unstated is that much of the alleged "delinquency" is trumped up out of thin air by the management companies and HOA attorneys. They think nothing of making up a dollar amount and then threatening to divest the homeowner of his home lest the homeowner pay the management company and HOA attorney's extortive demands.

The HOA corporation has never preserved value for any owner. Instead the owners are sitting ducks for the unscrupulous management company and HOA attorney practices. Although there is ever-more production home building with HOA corporations for new suckers to purchase due to the deceptive trade practices of this industry....those that have experienced it recognize just how undesirable HOA housing is and have vowed to avoid it like the plague. Those "pleased" with it tend to be board members and their affiliates - less than 1% of the homeowners. The market for the vast majority of HOA homes is eroding. More recent homeowner might want to first consider whether they want to lose BOTH the use and enjoyment of their home and any market value in their home before buying HOA burdened property.

Beth said...

I thought this news report was pretty hard-hitting; certainly it was better than the "homeowner is screwed, but hoa says it's his own fault for not following the rules" variety of stories. The reporter mentioned the problem of hoa board members buying foreclosed properties in their own communities and reselling them at a profit. A TX state senator (can't remember his name--the guy who owns that gigantic property mgmt company) said that the solution to the problem was "board should adopt conflict of interest rules for themselves." What a creep.

gnut said...

The Georgia Public Broadcasting (gpb.org) link is now broken, but the story is still available at National Public Radio (npr.org) at


According to the NPR story, "With the recession, foreclosure filings for delinquent HOA assessments in Texas have increased from about 1 percent of all home foreclosures to more than 10 percent currently, according to the industry."

Speaking of lawyers, John Stossel's Fox Business Network program this weekend was about parasitic tort lawyers. Ever since I became aware of the HOA issue last year, one of the things I realized is that the proponents of tort reform want to stop individuals from suing corporations, but not the other way around.

Since many of these people are also self-proclaimed proponents of individual private property rights -- the same crowd who were correct to be outraged by the Kelo decision five years ago -- their silence on what is being done to homeowners by HOA corporations and their aggressive attorneys is telling; although I'm not quite sure what it tells.

Perhaps Ms. Bartholomew can get John Stossel, Walter Olson (OverLawyered.com), or some representative from the Republican Party (which makes tort reform part of its platform) to explain this dichotomy.