Legislature should address HOAs’ role, instead of picking away at their power

Once upon a time, the Arizona Legislature embarked on a legitimate mission to bring more accountability and transparency to that ubiquitous level of government known as the homeowner association.

But that cause has morphed in recent years into a series of small, unconnected changes that are gradually undermining the ability of HOAs to fulfill their traditional purpose of establishing a particular lifestyle for a particular neighborhood. Rather than unintentionally rendering HOAs impotent in the face of ongoing expectations from their members, state lawmakers should refocus on their attention on what should be the overall proper role for HOAs in our communities today.

The concept of HOAs grew out of the idea of neighbors uniting together to establish a consistent atmosphere and image to promote the property values of their most prized possession, their homes. In theory, HOAs are created when homeowners enter a mutual agreement or contract to surrender certain decisions about the use of private property in public view to a centrally elected group.

Arizona law makes HOAs unique among voluntary associations by authorizing sweeping powers to set and to enforce property rules and to take someone’s home for failing to pay HOA dues. Of course, voluntary is a somewhat misleading term to describe HOAs these days, as homebuilders usually establish such associations before the first neighbor moves in, and some communities require HOAs to govern every new subdivision. As a result, even the earliest homebuyers have less influence over the nature of their HOA and there are fewer choices for people who want to avoid such associations altogether.

About 10 years ago, outrage started to build against HOAs that resembled local governments but lacked the basic democratic checks-and-balances that apply to even the smallest towns. Board meetings were held secretly and elections were rigged to favor a certain faction. HOA records were hidden from members. Rules were increasingly nitpicky and fines for the smallest infractions could result in home foreclosures. Fighting bad HOA decisions was always costly and frequently fruitless, leaving homeowners trapped in a bureaucratic nightmare.

To be fair, the extreme examples that grabbed headlines always were vastly outnumbered by HOA boards that capably served their residents. But the litany of rogue HOAs reached a boiling point.

For a few years, the Legislature tried comprehensive reform with single, massive bill. The sheer number of changes grouped together doomed the effort as critics were able to pick off legislative votes with objections to individual sections. Successful reform came only when key lawmakers broke down the various changes into separate bills, making it easier for the Legislature to concentrate on the real need of each proposal.

But the necessary reforms largely were accomplished three years ago when the Legislature revoked a HOA’s power to foreclose for unpaid fines related to rule violations (as opposed to unpaid dues). Since then, the Legislature has been chipping away at the ability of residents to decide through their HOA what rules they want to impose on themselves.

First, HOAs were stopped from banning flag poles for flying the U.S. flag. Then, flags for the military branches were added to that exception. HOAs also can’t forbid political signs in front yards any more. This year, the Legislature is debating whether to also protect “for sale” signs and to end an HOA’s ability to restrict parking on public streets.

Taken in isolation, each of these changes seem to be common sense. (Why should any private group be able to forbid parking on streets owned by taxpayers?) But the trend is to gradually strip HOAs of their authority to carry out the interests and wishes of their members. If the state restrictions keep accumulating, how long will it be before HOAs can only repeat citywide or county rules — and what would be the point?

Perhaps the HOA experience has been plagued with enough problems that our freedom-loving society should shed the institution. But the Legislature should honestly confront and debate this question, instead of quietly eating away at HOAs in a manner that could eventually leave a shell without any substance.