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Homeowners associations (HOAs) are a common feature of many neighborhoods in the United States. Though the purpose of an HOA is to maintain and improve the quality of life in a community by enforcing rules and regulations, collecting dues, and providing services and amenities to residents, some people claim they aren't all they're cut out to be. 

"HOA is by far the biggest scam in real estate history," says one Redditor, describing how some of these organizations "take your money and use the funds to destroy what was once a peaceful community."

Other HOA issues include: excessive fees, arbitrary rules, and abuses of power by the association in the form of "misappropriating or embezzling funds," users say. We did a deep dive to compile everything you need to know about HOAs, including the pros and cons, real-life experiences, and what tools are available if you feel like your HOA is scamming its residents. 

@that.dude.fokes HOA’s were invented by racist NIMBY’s and I want all of them destroyed. #hoa #homeowner #scam #legaladvice #whatisgoingon #renovation #diy ♬ Circus - Color Clownies

What Exactly Is a Homeowners Association?

A homeowners association is a legal entity created to manage and maintain a residential community. HOAs are typically established for neighborhoods with shared amenities like a community pool, clubhouse, or landscaping. The purpose of an HOA is to ensure that the community is well-maintained — and to enforce rules and regulations that are meant to improve the quality of life for its residents.

HOAs are typically governed by a board of directors, usually made up of volunteer homeowners who are elected by the community's residents. After residents vote by either mail-in ballot or at an in-person community meeting, the board members are elected for a specific term and are responsible for overseeing the day-to-day operations of the HOA, including managing finances, enforcing rules and regulations, and making decisions that affect the community. 

It's important to note, however, that not all HOAs are created equal, and the level of control that an HOA has over a community can vary. Some HOAs are very strict and have a large say in how residents can use and maintain their property, while others are more hands-off and only intervene when an issue arises. Additionally, the fees associated with HOAs can vary widely depending on the community and the services provided.

Gallery: HOA Horror Stories That Will Make Your Blood Boil

Shot of a young father having fun with his daughter at homePhoto credit: PeopleImages/istockphoto

The Pros of HOAs

Supporters argue that HOAs can help maintain property values by ensuring that all residents comply with certain standards. They also argue that HOAs can provide a sense of community and help foster social connections between neighbors. In addition, some HOAs may offer amenities such as pools, tennis courts, and playgrounds that would not be possible without the collective resources of the community.

"I don’t know about your neighborhood, but in our neighborhood an HOA is necessary because we are all on the same water and sewer and share a pump house that must be maintained," says one Redditor, adding, "Without an HOA, who is going to manage the funds to maintain the pump houses and pay the water and sewer bills? Not to mention common area maintenance/road repair/road plowing, etc."

The Cons of HOAs

On the other hand, opponents of HOAs argue that they can be a total scam, with excessive fees and arbitrary rules that do little to improve the community and its surroundings. Judging by the sheer amount of negative feedback on HOAs, it appears there are a lot more critics than there are supporters. Many Reddit users argue that HOAs can be overly restrictive, limiting residents' freedoms and making it difficult for them to make changes to their own homes or properties.

In many cases, you may not have a choice over whether an HOA oversees your residence or not. 

"In Florida, essentially every single new neighborhood that is built has an HOA and possibly a CDD (Community Development District) that you have to deal with," shares one Redditor, adding, "They have the ability to put a lien on your home and eventually foreclose for the most minor of infractions. They're tyrannical domestic terrorists in a sense. They need to be treated as [poorly] as they treat the residents. I'm sure not all HOA boards are evil, but way too many are, and happily abuse their position."

Others had even harsher criticism to offer. "HOAs are legalized white-collar crime hubs that offer easy access to rip off and tyrannize the people," writes one user, adding, "In another words, living in an HOA is like living in the movie 'Lord Of The Flies' where primitive-minded criminals go around beating the residents with sticks in their own private property." (Note to self: Perhaps renting is the right way to go, after all.) 

Person Reading HOA RulesPhoto credit: AndreyPopov/istockphoto

If, as a homeowner, you feel like your HOA is taking advantage of you and other residents, there are several actions you can take, including: 

  • Review the HOA's Financial Records: As a homeowner, you are entitled to find out where your money is going. Reach out to your HOA and request copies of its financial records, such as bank statements, receipts, and invoices. Review these records to check for any irregularities or discrepancies that indicate financial mismanagement or fraud.

  • Attend Your Community's HOA Meetings: Homeowners can attend HOA meetings to voice their concerns about the HOA's financial practices. They can ask questions and request explanations for any financial decisions that seem questionable or lack transparency. If a homeowner is not satisfied with the response, they can escalate the matter to the HOA board.

  • File a Formal Complaint: If you feel like your HOA's board is being sketchy with residents' funds, you can file a complaint with your state agency that oversees HOAs. Most states have a regulatory agency or a department of real estate that handles complaints related to HOAs, and homeowners can file a complaint to request an investigation into the HOA's financial practices.

  • Consult an Attorney: If you feel strongly about your HOAs lack of transparency or have proof of wrongdoing, homeowners can speak to an attorney who specializes in HOA law. The attorney can review the HOA's bylaws and financial records and provide advice on how to proceed. If necessary, the attorney may be able to represent you in legal proceedings against the HOA.

  • Team Up With Other Homeowners: There is strength in numbers, and if multiple homeowners in the community have similar concerns, they can organize and work together to hold an HOA accountable. This can include forming a watchdog group to monitor the HOA's financial practices and advocate for transparency and accountability.

Van full of moving boxes and furniture near housePhoto credit: Liudmila Chernetska/istockphoto

The Bottom Line

In summary, an HOA is a legal entity created to (hopefully) manage and maintain a residential community. Board members are typically elected by the community's residents through a nomination and voting process, and are responsible for overseeing the HOA's day-to-day operations. While the level of control and fees associated with an HOA can vary, the overall purpose of an HOA should be to ensure that the community is well-maintained and help improve the quality of life for its residents. 

However, the debate over whether or not HOAs are a scam is complex and multifaceted. While some residents find them to be a valuable tool for maintaining a community, an overwhelming amount of people feel that they can be a burden and a scam. Ultimately, it is up to each individual homeowner to decide whether or not they want to live in a community with an HOA, and to carefully review the rules and regulations before deciding to purchase a home in such a community.

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