There is a huge difference between the way businesses and governments operate. Businesses typically keep their eye on the bottom line and minimize unnecessary expenses. If there is a cost effective way of doing something, they’ll find it and use it. Governments, on the other hand, only seem to care about the size of their departments. The more staff they have, the greater their budgets and the higher their salaries. To help get to that point they rely on regulations, red tape and more staff to oversee useless rules. And the money to pay for all this waste? No worries, just raise taxes. I knew all that so when I first encountered HOAs and was told that certain services were provided “privately” the only thing I found alarming was that the taxes were 3 times as high as they had been where I had come from where everything was included, in fact the HOA assessments were higher than my property taxes had been.
My long held beliefs about the efficiency and cost effectiveness of businesses began to unravel as I watched a “privatized government” at work. These creations of the special interests enjoyed all the benefits of the unaccountable governments while masquerading as efficient businesses. This new model was forced on owners in residential associations, be they condos, co-ops, HOAs or any of the newer concoctions that seem to creep into our daily vocabulary. It embodies all the worst characteristics of both businesses and governments.
Chuck Welsh joins us On The Commons. Chuck, an avid boater, a US Naval Officer for a number of years and a former developer bought a brand new pre-construction condo in a gated development in Florida. The design for the property came complete with plans for a marina. The entire project sounded like it was designed with Chuck in mind. A beautiful unit, amazing views, room for his boat and the promise of a carefree lifestyle with property values soaring through the roof. Isn’t that what we are all promised? Regular listeners and readers of this blog know that when it comes to housing in the US, things are never quite as smooth or problem free as one might expect. Sadly that was the case with Chuck’s ideal condo. All the elements of his dream home were there – in a dream – the problem was that the nightmares started when Chuck woke up. We’ll talk to Chuck about what happened that led to 10 years of his life that was far from “carefree” and his condo – well, even with an upswing in property values, ended up costing him a lot of money, not to mention being dragged through the courts for four years. And that private marina that was the icing on his cake? Well, that didn’t work out so well either. Tune in for all the details as well as a fascinating discussion on the future of privatized residential governments.
Tell us your stories in your own words 
Chuck had a lot to share regarding his HOA experience. Glad he got out after 3 years of Harassment. The key issue here is the ineptness of the board. It continues to plaque the HOA world. Bad people who want to become board members. There should be some kind of requirement through the corporation commission that these people be screened. Those who want to become board members just to show their “muscles” need to be weeded out. HOA will remain problematic because of the people who have the wrong interest in serving their communities. The insurance companies, lawyers and management companies are the benefactors of bad board members.
“The key issue here is the ineptness of the board. It continues to plaque the HOA world.”
And the unaccountability of the board. In 2015, I successfully prosecuted a Contempt of Court charge against the Madison Hill H.O.A. corporation. Contempt of Court is a crime that people go to jail for.
Judge Greene said she was “not inclined” (her words) to hold the officers of the H.O.A. corporation personally accountable in any way. At the sentencing hearing the next month, she said she didn’t even have the authority to do so.
Which goes back to the “inequality of legal remedies” that John Cowherd talked about a few weeks ago. On one hand, H.O.A. corporations can hold a homeowner’s property hostage for the most trivial of amounts and reasons without due process. Conversely, the officers of the H.O.A. corporation can’t even be held accountable for actual crimes committed by the H.O.A. corporation, because they get to hide behind the corporate veil.
Anyone who believes in “equality before the law” should be absolutely alarmed by this. Unfortunately, politicians — both Republicans and Democrats — are more than content to let the predation of homeowners by the $85 billion (with a “b”) per year H.O.A. industry continue unabated.
“My long held beliefs about the efficiency and cost effectiveness of businesses began to unravel as I watched a ‘privatized government’ at work. These creations of the special interests enjoyed all the benefits of the unaccountable governments while masquerading as efficient businesses.“
Perhaps you should have some of the advocates of privatization — politicians and/or pundits — on your program to talk about this; e.g., John Stossel (Fox Business), Ron Paul, Rand Paul, Glenn Reynolds (Instapundit), the writers and editors of “Reason” magazine, folks from the Cato Institute (such as Randal O’Toole), and other self-proclaimed Ayn Radians and free marketeers.
Bonus points if these privatarians believe that involuntary membership in a labor union as a condition of employment should be outlawed (i.e., “right to work” laws), but celebrate involuntary membership in an H.O.A. corporation as a condition of home ownership as “freedom of contract” which the government should not interfere with.
As Evan McKenzie once said, “Anybody who espouses the philosophy of ‘privatism,’ claiming that the so-called private sector is superior to government, has to answer for the obvious and growing problems of homeowner and condo associations”. That was over six years ago, and so far, nobody has yet to make them explain the real-world failures of their ideology.