HOA Detective: April 8, 2025 – Homeowners associations are among the most ineffectively regulated, and least accountable legal organization in the United States.
Is this paradoxical? Yes, but only on the surface.
Is this paradox intentional? Perhaps, but we are not here to point fingers.
Whatever the intentions of lawmakers may be, there is no shortage of laws governing HOAs – on this we can agree.
Statutory Morass: State nonprofit statutes, Fair Housing regulations, reserve study mandates, document transparency laws, accounting and audit rules, even special requirements for elections and recordkeeping. And yet, violations abound.
Why? Because enforcement is a farce! Boards break the law every day with impunity, secure in the knowledge that almost no one – not the state, not the feds, and certainly not the average homeowner – will hold them accountable.
- Want to ignore your annual audit requirements?
- Skip the annual reserve study update?
- Fail to register your nonprofit properly with the Secretary of State?
Go right ahead. The risk is minimal, the consequences minimal.
But what if that this situation could be changed with just a single law consisting of 52 words and a single paragraph?
No Lawsuit Without Legal Compliance: Is there a simple fix that won’t add to the morass of HOA legislation which is almost as varied as the number of states in the country?
Answer: Yes, there is. A simple statutory change that could radically reform HOA governance overnight if the following paragraph were to be added to the legislative language of states across the country:
“No common interest community, whether a homeowner association, property owner association, condominium or cooperative real estate organization shall be permitted to initiate or maintain a civil action in any state or federal court unless it is in material compliance with all applicable state and federal laws governing its formation, operation, and governance.”
This is not radical. This is how accountability is supposed to work. In fact, this is EXACTLY how we treat numerous licensed professionals, public agencies, and even businesses in highly regulated sectors. You can’t enforce your rights if you’re not living up to your obligations.
- Should an HOA be allowed to file a lien, foreclose on a home, or sue a contractor when it’s been operating illegally for years?
- Should a board that hasn’t held a legal election in three cycles, or ratified a budget for the current year have standing to sue a homeowner over weeds or satellite dishes?
- Should an HOA that has ignored the mandatory reserve study laws for a decade or more be allowed to enforce collection of assessments which are not determined by a reserve study conducted in compliance with state law?
Answer: Of course not. But today, they can. And they do.
Examples of Structural Failure: Let’s look at just a few compliance black holes:
- Reserve Studies – In California, the Davis-Stirling Act requires a reserve study every three years. In Washington, it’s required annually for condominiums. Oregon requires almost all HOAs to conduct a reserve study update every year. And yet, enforcement is Nonexistent.
- Audit and Financial Reviews – Many states require annual audits or financial reviews once revenue exceeds a certain threshold. In Oregon, for instance, ORS 100.480 requires an annual review or audit for P.U.D.s and condominiums with gross annual assessment revenues over $75,000. But many HOAs ignore the law -and continue to fine and foreclose on members as if they were squeaky clean.
- Nonprofit Registration and Bylaw Violations – Across the country, it’s common to find HOAs operating with expired nonprofit status, outdated or unenforceable bylaws, and directors serving years beyond their term limits. Some associations haven’t updated their governing documents since before the Fair Housing Act was amended. Yet these same boards often head straight to court when a homeowner pushes back.
Why It Would Work: The magic of this one simple law is its leverage and simplicity. It doesn’t require costly new enforcement agencies or compliance audits. It simply aligns the right to sue with the duty to obey the law. This isn’t about empowering homeowners to sue their HOA. It’s about disarming boards that weaponize civil litigation while refusing to comply with the law themselves. The real value lies in deterrence.
Knowing that a court will scrutinize your records before hearing your case puts every board on notice: Get your house in order, or you won’t be able to use the courts to punish others.
And it doesn’t just protect homeowners – it protects vendors and contractors too. Too often, HOAs sue professionals for supposed contract breaches while being in breach themselves – of financial reporting rules, of insurance mandates, of their own operating agreements.
Implementation – Simpler Than You Think: A compliance gatekeeping statute doesn’t need to be burdensome. Compliance could be self-certified or verified with simple documentation – current annual filings, copies of required financial reviews, proof of elections, reserve disclosure forms.
If a board cannot provide this, their case is paused or dismissed without prejudice until they bring themselves into compliance. Think of it like a driver’s license checkpoint for institutional plaintiffs.
The Bottom Line: We don’t need another 300-page rulebook to fix broken HOA governance. We need teeth. We need to stop rewarding lawbreakers with access to the courts they use as cudgels against homeowners, whistleblowers, and dissenters.
One law – one gatekeeper statute – could change the incentives overnight. Make court access contingent on compliance, and watch how quickly board members start reading the laws they’ve been ignoring for years. Let’s stop pretending that “more laws” are the solution. The laws already exist. It’s time to make them matter.
Because You’re Buying More Than a Home!
