California lawyer and L.A. columnist, Donie Vanitzian, reminds us that:
“It is the titleholder’s personal asset that functions as a kind of perverse collateral, requiring the owner to pay assessments to the association-entity or lose his asset. . . . On purchase of that home and without anything more, the titleholder’s asset became a personal risk and personal liability for the owner. Instantly, the titleholder’s asset also became collateral for the association-entity.”
(California Common Interest Developments — Homeowner’s Guide, Donie Vanitzian, p. xviii, xix, Thomson – West 2006).
In other words, that investment in a home that the industry special interests talk about, a home controlled by a homeowner’s association, is really the legal collateral provided by a homeowner to insure the survivability of the HOA. Stop paying, and your house is up for foreclosure. And it’s a lifetime obligation, even if the homeowner faces his own personal survival conditions due to ill health, death of the breadwinner, loss of job, or any other such personal financial condition. The HOA comes first and foremost if you stop paying your assessments to the HOA.
And that foreclosure is a draconian measure since the HOA need only sell the home for a small fraction of its market value, with the owner at high risk of losing ALL his equity in his home. And that’s regardless of how long he may have owned his home. Consider a contract for sale purchase where the buyer makes installment payments over a number of years with complete ownership at the end of the contract. Under this contract, the owner, by law, acquires a pro-rata equity interest in the home which is his money. Not so with the pledge of the home as collateral in an HOA when it comes time to foreclose.
No person in his right mind, and with full awareness, would seriously consider this type of investment, as the special interests like to refer to an HOA home purchase – a business investment — if he had other alternatives. And when the state government takes away any other alternative, we have coerced housing, a new form of national socialism, not freedom of choice in the land of the free and home of the brave.
No person in his right mind and with full awareness, would agree to the terms and conditions of the CC&Rs, backed by state laws, in any other serious financial commitment.
Give your home as collateral to a group of people you don’t know, never met, to whom you gave outlandish and broad powers over your private property, your very own home??