The Dallas Morning News reported on another HOA foreclosure. This time it was on Capt. Clauer who, while fighting in Iraq, lost his $315,000 home in 2008 for a mere $977.55 owed to his HOA. That's far in excess of the money owed the HOA, with the homeowner getting nothing in almost every case. In fact, it's 322 times in excess to a private entity that has not, unlike a bank or mortgage company, advanced any hard cash or funds to justify the right to foreclose.
If this were a product liability case, punitive damages, as the punitive nature of HOA foreclosures can easily be described, are limited to 10 times damages under the 2003 US Supreme Court holdings (see State Farm v. Campbell, 538 U.S. 408). How can our judicial system and state legislatures allow such an unconscionable agreement to benefit not the people, but a private entity?
More accurately described, HOA assessments are like public taxes because they go on forever and are not used to purchase any specific product or service offered by the HOA government. They are just $$$ for the HOA government to operate — just like taxes are to public government. And while the HOA private entity is ascribed rights and privileges of public government, it is not subject to the restraints and prohibitions that protect the people as are public governments. Suppose, to clarify the unconscionable nature of this contractual arrangement, solidified by statute in almost every state, HUD has now instituted new mortgage contracts in order to insure its survivability. It now required payments to be made forever during the lifetime of the borrower. How do you think the people would react? Why is it acceptable with HOAs that are not public entities with the right to tax?
This is disgraceful! It reflects the New America where people have been misguided into believing that HOAs make a better America — landscaping, that is. Other important values, beliefs and principles as Jim Wallis wrote in Rediscovering Values, no longer count.
"We have . . . substituted 'market value' for 'moral value'. What has been deliberately and carefully made 'socially acceptable' was, not too long ago, thought to be irresponsible — both financially and morally."
What America did Capt. Clauer fight for? The New America of HOA-land (now 23% of Americans live in HOAs), or the America of our forefathers? HOAs are unrecognized, de facto political governments operating outside the US Constitution. The HOA private government repudiates the Constitution, and it is allowed to do so with the permission and approval of your state legislature. This is disgraceful!
HOAs must be made subject to and accountable under the Constitution as all other forms of political government in this country are subject.