Homeowners Associations Debated

The Colorado Freedom Report:  A libertarian journal of politics and culture.

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Homeowners Associations Debated

[Joe Johnson submitted the following critique February 17 in response to Ari Armstrong's notes on homeowners associations. Armstrong replies in turn.]

Ari, in your piece about Homeowner's associations, you made a statement that I think deserves some review. I will certainly agree that there are as many libertarian arguments in favor of home owner's associations as there are against.

The obvious argument against being however, that it is just another form of government. After all, the "board members" are elected by the majority, and the minority MUST adhere to their rules. The one thing that makes them actually WORSE than Federal, state, county, or city government, is that they have the ability to levy a fine without the home owner having a course of redress. If a cop gives you a ticket, you automatically have your opportunity for a day in court. If a homeowner's association hits you with a fine, they have the power to place a lien against your home until you pay it (with the fines growing steadily until the balance is paid in full), but if you wish for redress, you MUST hire a lawyer and sue.

The obvious difference here is that in the case of a dispute with the government, the burden of proof sits with the government (or at least that's the way it's supposed to work -- anyone having witnessed the Stanley trials knows better), and thus innocent till proven guilty. However, as a homeowner must file suit against the association in order to get redress, he is now on the side of prosecution, and the burden of proof falls on the homeowner, not the association which levied the fine in the first place. Thus, the homeowner is guilty till proven innocent.

This is not to say that I do not see the arguments which you raised as valid, it's just that it's not so cut and dried. I know nothing about the bill of which you spoke, save for what I read in the COFREE. However, from what I gathered, the state was attempting to strengthen property rights by weakening HOA rights. The state would have forbade HOA's from forcing homeowners to install bluegrass against their will, but still allow homeowners to install bluegrass if they so choose. And this appears on the surface to be a situation of the state DEFENDING rights against those who would deny them. Again, my interpretation.

When in doubt, I'll come up on the side of property rights every time. The reason that I am writing, however, is to bring a statement that you made to your attention. You wrote:

"Obviously, the associations are not always going to get the rules right. But the rules may be changed internally, without government interference. If you don't like the rules, you are free to move somewhere with different rules."

Funny, but that's the same argument that an anti-gunner made to me during the Amendment 22 battle. After all, if I don't like it, I can move to another state. Mayor Webb feels the same way about his gun prohibition, and does not mind that we do not live in Denver. Ask Sara Brady, and I'm sure that she'll find the option of your residing in a country other than the USA to be preferable to overturning the Brady Law.

Be careful... when you find yourself making a statist argument to defend your position, your position needs a closer look.


PS, just in case: The Constitution does not grant us our rights, it only spells out rights which are inalienable. To me, I'd include property rights, even if the founders left them out.

Armstrong Replies

Obviously property rights are the foundation of libertarian theory. That's why statist interventions in voluntary contracts such as homeowners associations (HOAs) are so bad.

Johnson suggests an HOA "is just another form of government" and "the minority MUST adhere" to the rules passed by the majority. Granted, an HOA is a form of governance, and that's a good thing. Libertarians aren't against governance; they are against violations of property rights. Governance is a necessary means to the enforcement of property rights. (This is true even for anarchocapitalists.)

If we follow out Johnson's argument, corporations too are run by the vote of stockholders. Yet, like HOAs, corporations are strictly opt-in organizations. It's just not true that the minority must follow the rules: they can choose not to join the group in the first place.

The crucial difference between an HOA and a statist organization is that an HOA originates as a unanimous contract. The ability to form contracts is crucial for libertarian theory as well for the development of the economy.

True, HOAs can asses fines. On the other hand, they cannot throw a person in jail. It is not true, as Johnson claims, that a person assessed a fine must hire a lawyer. For example, in my HOA, a person can call for a hearing by the board. Granted, after that the person would have to sue.

Apparently, this system is not problematic because a lot of people voluntarily choose to abide by such rules. I thank God my HOA is able to asses fines. Fines have discouraged neighbors from blaring loud music at night and leaving trash in common areas. Without those rules, the place would simply be unlivable. Those creating the HOA are perfectly able to implement whatever measures of redress they wish.

Libertarians have always held communal arrangements are perfectly compatible with libertarianism -- so long as they are based on the principles of unanimous contract. People are (or should be) perfectly free to purchase plots of land and adopt whatever rules they feel appropriate concerning the use of that land.

Johnson claims that by restricting the right to contract, the legislature can somehow protect property rights. While some indeed supported the bill based on the argument that it protects private property, the bill in fact sought to violate property rights. The proposal in question in fact would have used state force to interfere with people's ability to contract.

Sure, some people who contract with others then want to pull out of the contract. This happens all the time. That doesn't imply the state should protect those who wish to violate contracts. If libertarianism does not support the right to create contracts, then it loses all meaning. Rand writes, "A unilateral breach of contract involves an indirect use of physical force..."

Of course, this doesn't mean we can't complain about stupid HOA rules or their unfair enfocement. Members of an HOA may seek to change the rules and the way they're enforced.

Johnson claims I employ a "statist argument" when I write, "If you don't like the rules, you are free to move somewhere with different rules." But Johnson ignores the distinction between a unanimous contract and the imposition of rules by force against unwilling participants. Advocates of disarmament are NOT trying to employ a unanimous contract; they are trying to unilaterally force the rest of us to surrender our rights.

Johnson, though, is invoking a "statist argument," because he is claiming the state should use force to interfere with the ability of people to create contracts. You have a right not to contract with people -- e.g., not to join an HOA -- but once you make that contract you have a moral and legal obligation to abide by it.

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