J. Patrick Sutton Cases & Issues Blog

You can't escape HOA's even when you try!

I've been involved in a spate of cases where my clients purposely bought properties in subdivisions without mandatory HOA's, yet my clients STILL find themselves persecuted by HOA's!
What happens is that the same types of people who hijack mandatory HOA's and run them like petty tyrannies cannot abide living in a neighborhood without a local-local government (i.e., HOA) that they control. These folks go out and set up "River Bottom HOA" (or whatever) by forming a nonprofit corporation, then they start holding themselves out as "The HOA" governing the neighborhood. They set up websites, hold their elections, send out newsletters, drink Kool-Aid, etc., all as the "River Bottom HOA." Misleading? You bet. That's the point. It would take a 100% vote to amend the restrictive covenants to establish a mandatory HOA. Since many people buy in subdivisions without HOA's precisely because of the horror stories about what happens when HOA's run off the rails, these owners would never vote to implement one.

Now, a voluntary HOA is fine if it confines itself to being a social club or lobbying group, but certain sorts of people come along and aren't satisfied with that. The pattern I see is that "The HOA" has one or two prime-movers who use the money from the bake-sales to hire a lawyer to write threatening letters to neighbors whose activities the prime movers frown upon. These letters don't make clear that "The HOA" is completely bogus and illegitimate as a governing body for the neighborhood. Instead, the letters are full of corporate governance mumbo-jumbo and restrictive covenant buzzwords that sound legalistic and official -- and scary, since they're coming from a lawyer and therefore instantly call to mind "lawsuit."

Sometimes, the letters do directly threaten a lawsuit. I have seen these voluntary HOA's actually file lawsuits to enforce deed restrictions even though they have no standing to do so independently of the owners who comprise their membership. My position is that in a subdivision governed by restrictive covenants that do not authorize an HOA, only individual owners have standing to bring lawsuits to enforce the restrictive covenants. Thus, any bogus "HOA" corporation of which owners happen to be members, being a separate entity, would not have standing to bring suit because, quite simply, the corporation is not a lot owner given the power to do so by the restrictive covenants (unless there's a durable power of attorney that the owner executes in favor of the "HOA," or possibly if the "HOA" holds proxies). It would be no different if a homeowner started a donut company and claimed that the donut company could start suing neighbors for violations of the restrictive covenants.

Technicalities aside, I personally find it disturbing that a fellow lawyer, much less a homeowner, would write threatening letters that don't clarify the voluntary (i.e., bogus) nature of the HOA doing the threatening to homeowners in a non-HOA neighborhood. It smacks of bullying and scare tactics. I live to help people fight this nonsense. I personally have suffered (ulcers, sleepless nights) at the hands of "voluntary" neighborhood groups that have tried to dictate what my house should look like. And like my clients, I have had to pay real money to fight these control freaks, but fight them I did, and I won at City Hall, and I will keep fighting those sorts of people on behalf of people victimized by petty tyrants, narcissists, and busy-bodies.
J. Patrick Sutton Cases & Issues Blog