Ask anyone living in a neighborhood managed by an HOA, and you will likely hear a rant.
It could be about anything from fights over paint colors to parking or garbage cans.
HOAs are one of the most controversial topics I have covered during my 22-year tenure as a real-estate reporter in metro Phoenix.
Half of all Valley homeowners live in a community association; many people have strong opinions about them.
I hadn’t delved deeply into the world of HOAs before this year because many of the issues were community stories.
But last year, complaints against HOAs in the Phoenix area ratcheted up. I started hearing from homeowners with HOA issues almost daily.
Arizona Republic community reporter Jessica Boehm has written many stories about HOA battles in the West and East Valley, and she quickly became an expert.
Late last year, Boehm began to hear about homeowners losing houses to HOAs through foreclosure, something most people don’t realize is legal.
I am, unhappily, a foreclosure expert because of the housing crash. So we teamed up and have spent the past eight months investigating HOA foreclosures.
It wasn’t easy. Before 2014, there were so few HOA foreclosures that no one was tracking them.
We looked for a state agency that regulated HOAs and found there isn’t one. The Arizona Department of Real Estate began handling arbitration between HOAs and homeowners last year, but unfortunately it can’t help people facing foreclosure.
"While so many professions and places are regulated – from Realtors to pet cremation centers – community managers and HOAs have no such oversight by the state," said Boehm. "This made it difficult for us to navigate this expanding industry."
And HOA foreclosures aren’t filed like regular foreclosures that can be tracked through real-estate records. Half of an HOA foreclosure is filed as a court document and the other half is a real-estate record.
So we built a comprehensive database of all the HOA records, with help from The Information Market.
Our investigation found HOAs were foreclosing on a record number of homeowners for as little as $1,200 or a year of missed dues.
We also found out who those homeowners were, what HOAs were foreclosing the most, the attorneys who handled the most foreclosures for HOAs, and the investors who bought the HOA foreclosure homes at auction.
And we were shocked by some of the legal fees being heaped on homeowners who weren't making their payments.
From the beginning of the investigation, we had a hunch more HOAs were foreclosing because Valley home values are up, and investors are now lining up to buy the houses. Three or four years ago, Valley homes were worth much less than they are now.
We went to several HOA Sheriff's auctions in downtown Phoenix. The room was packed with bidders because there were so many more bargains among HOA foreclosure homes on the block.
We reached out to dozens of homeowners who were in danger of losing their house to foreclosure or already had. Some didn’t want to talk to us because they were embarrassed; others were angry and wanted people to know their stories.
All the homeowners we spoke to said they feel bad about not being able to pay their HOA fees and want to catch up and keep their home.
A pretty horrible recession and real-estate crash from 2008 to 2011 forced many of these homeowners into tough choices. Sometimes it was whether to pay HOA dues or buy food.
Almost every homeowner we spoke to was shocked their HOA could foreclose. Most people don't know it's legal, even though it's in the covenants, conditions and restrictions homeowners sign when they close on their home purchase — often buried in those many pages of rules.
I have never lived in an HOA. Boehm, who now covers the city of Phoenix, grew up in an HOA community and bought her first house in a neighborhood with an HOA.
"I had no idea the amount of power these associations have until Catherine and I started getting calls from people who were about to lose their homes," Boehm said.
"I’ve been covering basic HOA issues for years – things like paint colors and quarrels between neighbors. But I was shocked that there was a more serious underlying issue."
Boehm and I are looking into other HOA issues besides foreclosures. We have talked extensively with the Arizona Association of Community Managers. We know HOAs serve a needed purpose for many homeowners.
But not all HOAs are members of that industry group – only about 60 percent – and Valley homeowners in a dispute with a community association have little recourse but to lawyer up.
We started with the HOA foreclosure issue because of its severity for homeowners. But we know homeowners are confronting many other issues. Please contact us if you have a story to share.