It’s time to approach “the HOA is or is not a government” controversy from a new perspective — home rule. The HOA Establishment’s argument that the HOA government is really a business can equally apply to a government also being a business rather than a government. The criteria do not distinguish one from the other and is a meaningless decider. (Did you ever see the word ‘business’ when you bought your HOA home?)
The argument that the HOA is not a government because it was not created as a municipal corporation — but created and formed under the state’s nonprofit corporation laws — is a legal technicality. What that means is simply that the HOA is not recognized as a political subdivision of the state. It says nothing about HOAs being de facto governments! We all are well aware of that HOAs are not municipal corporations, but the real question is: WHY NOT?
Getting down to the issues of state laws relating to local governments, let’s examine the doctrine of home rule. Under the home rule doctrine local communities are permitted a large degree of self-government even to the extent that state legislative action is not necessary. Let’s keep in mind, as you continue to read, the mantras of “no government interference” and that self-governing HOAs are the democratic representation of the voice of the members.
Part 1. Home Rule doctrine.
A detailed discussion of home rule can be found in Nicholas C. Anthony’s presentation to the Nevada Legislature. In summary, there are home rule states and restrictive “Dillon’s Rule” states with respect to legislative delegation of local self-government powers. There are only 10 pure home rule states, the others being Dillon’s Rule or a modification of Dillon. Dillon’s Rule states that local governments get their authority, and no other authority, from the legislature enacting general laws and not special laws, much like an executive branch agency. However, home rule allows for restricted freedoms: “Most states grant a portion of their governing power . . . to establish laws, levy taxes, and administer government on a local level . . . without obtaining legislative approval.”
The point here is that even communities that are self-governing, either under Dillon or home rule, are subject to the state’s constitution and legislative grant of authority. They are not the voice of the people in total disregard of the authority of state government as insisted by the HOA Establishment. They are not formed by private business groups writing their own constitution for the community without any debate or discussion amongst the people. (The courts have often referred to the CC&Rs as the HOA’s constitution or charter).
The granting of this authority occurs by means of the state’s municipality corporation laws that deal with the formation and recognition of incorporated/unincorporated cities and towns. (Read your state laws in this area and you will see that all such entities are subject to their state’s respective constitution as a state entity.)
Of particular application to HOA de facto, private governments, Arizona offers an excellent example of the interplay between the power and authority of the legislature vs. the municipality. Arizona, and many other states, permits city/town charters for communities above a certain population. The opinion of the Arizona Supreme Court in Tucson v. Arizona presents this interplay between local government and state authority (my emphasis).
“Under Arizona’s Constitution, eligible cities may adopt a charter—effectively, a local constitution—for their own government without action by the state legislature. ‘[A] home rule city deriving its powers from the Constitution is independent of the state Legislature as to all subjects of strictly local municipal concern.’
“The purpose of the home rule charter provision of the Constitution was to render the cities adopting such charter provisions as nearly independent of state legislation as was possible.
“Article 13, Section 2 [Arizona Constitution] requires city charters to be “consistent with, and subject to, the Constitution and the laws of the state.” This provision, the Court held, does not subject charter cities to the legislature’s plenary power.
“[T]his court has uniformly held that a city charter, when regularly adopted and approved, becomes the organic law of the city and the provisions of the charter supersede all laws of the state in conflict with such charter provisions insofar as such laws relate to purely municipal affairs.”
The point being made here is the quite liberal degree of authority granted to charter cities in areas of local, community matters without legislative interference, but still subject to the state constitution as a government entity. The grant of authority comes not from a state grant under corporation law, but from a state grant under municipality law.
Why is the municipality mechanism inadequate for the local governance of subdivision communities known as HOAs? Why must the HOA exist under special laws for special entities? Is municipal corporation law completely inadequate and there is a compelling and necessary government interest to support and cooperate with HOA “private governments by contract” that deny due process and the equal protection of the laws? Here are some answers from some 20 years ago.
In 1992 Dilger wrote: “For example, most of those who advocate the formation of RCAs [HOAs] assume that RCAs . . . incorporate all the rights and privileges embodied in the US Constitution, including . . . the rights of due process and equal protection under the law found in the Fourteenth Amendment;” 
This leads to Mckenzie’s 1994 conclusion in Privatopia: “CIDs [HOAs/POAs/RCAs] currently engage in many activities that would be prohibited if they were viewed by the courts as the equivalent to local governments” 
There is no compelling and necessary justification for HOA special treatment. It’s time to end these outlaw private governments that violate even the most liberal home rule, self-governing provisions of state laws and constitutions.
 City of Tucson v. State of Arizona, Part II A, 273 P.3d 624 (Ariz. 2012).
 Roger Jay Dilger, Neighborhood Politics: Residential Community Associations in American Governance, p. 160, New York Univ. Press, 1992.
 Id., p. 136.
 Evan McKenzie, Privatopia: Homeowners Associations and the Rise of Residential Private Governments, p. 154, Yale Univ. Press, 1994.