HOAs Are No Joke!

Why Do People and the Media (Even John Oliver) Pick on HOAs?

By Nathan McGuire, Esq., CCAL 

HOAs are incredibly popular. And statistics show that the vast majority of people living in HOAs are happy with their HOA. But if that’s true, why does it seem we are constantly hearing that people hate their HOAs? It is simple: the few who don’t like them are incredibly vocal. And who loves a good negative story? The media. Even comedians are getting in on the fun.

John Oliver’s popular weekly late night HBO quasi news show, Last Week Tonight, devoted an entire 30-minute episode to badmouthing HOAs. The show aired on April 9, 2023. If you haven’t seen it, I highly recommend you watch it. You can easily find it online without a subscription to HBO. The episode is undeniably hilarious, likely even more so for those who live in an HOA or work in the HOA industry. I watched it the day after it aired. And I laughed. But after it was over, I felt another emotion – anger. Why was I feeling so angry? Because 99% of what John Oliver and his writing team said about HOAs was demonstrably wrong. In fact, they seemed to go out of their way hide the other side of each story. The more I thought about it, the more I felt that the show could have been funny without the disinformation. One thing we’ve learned in the last few years is that disinformation can be harmful. I also felt sad. I felt especially sad for the volunteers, especially board members, who serve within their HOAs without thanks and are often increasingly the target of unfair criticism. Let’s look at some examples from the show:

TED’S BENCH

The story of Ted’s bench comes first. John plays some footage from a local news station explaining that an HOA (in Arizona) was forcing an elderly man (Ted) to remove his bench from in front of his residence or the HOA would. The news interviews a sympathetic neighbor. And John sums it up with, "Let that man have his f^{∗∗∗∗∗∗} bench!" What they avoided explaining is that Ted lives in a condominium project. If you weren’t paying careful attention, you would have assumed that Ted placed his bench in his own front yard. However, Ted placed his bench on the common area – property that the HOA controls for the benefit of all owners. Anyone who knows anything about condominium projects knows that owners are not permitted, for very good reasons, to place their own property in the common areas without permission. I couldn’t help but imagine the unusual things people would put in the common area (driving their neighbors mad) if they were allowed to. They also flashed some letters on the screen to demonstrate that the HOA was harassing and threatening Ted. If you pause the show at exactly the right moments, you can see that the HOA’s letters were actually very courteous and gave Ted several chances to remove the bench. The letters invited a written response from Ted and concluded, "We appreciate your cooperation and caring about our community." In short, the HOA was far from the overbearing nitpicky regime it was portrayed to be. Maybe the community would benefit from having a bench (or several benches) in the common area, but that isn’t up to one member to decide unilaterally. When someone moves into an HOA, they should understand that they are giving up some rights in order to gain some protections from the common scheme.

STATISTICAL REVIEW

John goes on to show statistics demonstrating the increased popularity of HOAs. He shows a few negative comments from online (without attribution or context) and concludes, "So if they are this widely used, and this widely loathed, tonight let’s look at HOAs – what they are, what purpose they serve, and the surprising powers they have to wreak havoc in people’s lives." While John actually shows CAI’s Foundation for Community Association Research (FCAR) 2021-2022 U.S. National and State Statistic Review publication to evidence the increasing numbers of HOAs, the writers apparently decided to ignore FCAR’s 2022 Homeowner Satisfaction Survey, conducted by the independent firm Zogby Analytics, which contains some obviously relevant data:

• 89% of those living in HOAs rate their experience as very good, good, or neutral.
• 87% say their board serves the best interests of the HOA.
• 74% say their HOA manager provides value and support to residents.

The results are even more positive in California.

DEBRA’S SHUTTERS

The next segment is about Debra’s shutters. As John explains, "She got fined for the color of her shutters, took them down, and then got fined for the absence of shutters. It’s one of those situations where no matter what you do, you lose." When presented like that, it sounds awful. But what is John missing? The reality is that Debra’s HOA likely requires approval of exterior modifications and has a certain color scheme used throughout the community. In spite of the actual or legal knowledge of these rules, it sounds like Debra decided to paint her shutters a color of her choosing. Debra likely received a courtesy warning (or many courtesy warnings) and was told to paint her shutters an approved color (or back to the original color). After having received notice that she could be subject to fines, having a hearing, due process, etc., Debra still refused to repaint the shutters. It likely took many months for the fines to pile up, at which point instead of correcting the violation by painting the shutters an approved color, Debra decided to remove them entirely, again, in violation of the HOA’s requirements for approval of exterior modifications. I don’t think it would be a stretch to say that Debra repeatedly thumbed her nose at her HOA.

… while it’s ok to poke fun at HOAs, and there are certainly some horror stories … the vast majority of HOAs and the volunteers who operate them are doing great and important work to make people’s daily lives better by making them happier and safer, and protecting what is often their most important investment. So, when we see or hear misinformation or disinformation about HOAs and how terrible they are, let’s go ahead and push back.

PATRICIA’S FORECLOSURE

John goes on to talk about HOA foreclosures. He shares one example of an HOA buying Patricia’s house at auction, saying, "That happened! They bought her whole house for $3.24. And losing your home alone is horrifying, but seeing it sold for so little is genuinely insulting." He also suggests that Patricia was unaware that her home was foreclosed, saying, "… homes can then be sold at auction, sometimes without the homeowner even realizing." That sounds terrible! But what is John hiding here?

The truth is far less inflammatory and entertaining. The logical explanation for the HOA buying her house at foreclosure auction for $3.24, is that she had no equity in the home due to a loan already on the property. In most states, including California, the HOA’s lien is junior in priority to the owner’s mortgage. For example, if Patricia’s home was worth $500,000 but she had a mortgage against the property of $510,000, then nobody is going to buy her house at auction and the HOA gets stuck with it (with the mortgage loan still encumbering the property). The way John explains it, you would think that the HOA would end up with a huge windfall. And the claim that Patricia was unaware of the foreclosure is also absurd. While I didn’t do a survey, I’m pretty sure all states require notice to be given to the homeowner facing foreclosure. In California, for example, homeowners are entitled to notice before their property is liened and additional notices along the way, including notice by personal service before foreclosure. And in addition, HOAs in California can’t foreclose unless an owner is delinquent by 12 months or $1,800.

The reality is plain to see, and I don’t mind saying it … there are some people who shouldn’t live in an HOA. If you want to be able to do whatever you want, you might be better suited for a community without restrictions. For most people though, living in an HOA is a great experience. The data shows this. There are tradeoffs to living in an HOA, and for most the benefits far outweigh the downsides. Not to mention, HOAs are the only game in town when it comes to creating both density and homeownership, both of which are critical to California’s policy priorities.

And while it’s ok to poke fun at HOAs, and there are certainly some horror stories (just like any housing sector, business, etc. – human beings are capable of screwing things up from time to time), the vast majority of HOAs and the volunteers who operate them are doing great and important work to make people’s daily lives better by making them happier and safer, and protecting what is often their most important investment. So, when we see or hear misinformation or disinformation about HOAs and how terrible they are, let’s go ahead and push back. Let them know you are happy to live in, volunteer in, or work with an HOA, and that the negative things you hear about HOAs are just noise. HOAs are no joke! 

Nathan McGuire, Esq., CCAL, is a founder and partner of McGuire Schubert Sohal LLP, specializing in representing community associations. He has been involved in CAI-CLAC for many years and is currently an emeritus delegate and serves on CAI’s Government & Public Affairs Committee.