HOA Horror Stories Abound — California Needs Better Regulation

by Steve Rodriguez – March 4, 2025, 11:05 p.m.

Ask current or former members of a California Homeowners Association to relate a mismanagement or overly zealous board of directors horror story pertaining to owning or living in such a community of homes — chances are good they will respond with a few interesting tales. 

If it seems these kind of stories are growing more prevalent, there is good reason.  HOAs are no longer the exception to the rule when it comes to living the California lifestyle. The latest statistics reveal there are over 50,000 HOAs in this state (highest of all U.S. states), with 14.3 million state homeowners currently living in HOAs.  

These self-governing entities are run by volunteer homeowner boards of directors guided by state civil code and HOA Covenants, Conditions and Restrictions (CC&Rs), by-laws, and other rules and regulations. They rely on the supposed expert advisement of contracted property management companies.

However, the increase in HOAs and the corresponding level of conflict produced within these communities has exposed a need for greater state regulation. Current reliance on the small claims and superior court systems to settle disputes between HOAs and individual homeowners is not effective. 

Individual HOA members need a less expensive and more practical forum when seeking relief from unfair HOA demands and misguided decision making. A state agency responsible for regulating HOA activities, efficiently resolving disputes, education of HOA board members and property management company employees, and proper enforcement of decisions related to dispute resolution, should be established immediately.

Many HOAs are managed efficiently by duly elected board members working together with highly professional property management companies.They also enjoy support from engaged homeowner members eager to stay apprised of board actions.  

Nevertheless, based on the growing number of HOAs and recorded disputes, there is still much room for incompetence, abuse, fraud, embezzlement, and misinterpretation of civil statutes associated with the Davis-Stirling Act, the California law regulating HOA operations.  Much can be at stake in these situations, including property valuations, the fiscal health of the HOA (funded by monthly homeowners dues), and protection of the individual rights of homeowners.   

Disputes arising from HOAs can be attributed to a number of factors, including: 

• Inexperienced volunteer board members unfamiliar with or unwilling to become educated about civil code or even their own HOA’s CC&Rs, by-laws, rules and regulations.
• HOA board members exercising a combative and bully-like sense of power in conflict with civil code. 
• Disengaged homeowners who rarely if ever attend HOA board meetings. 
• Ineffective property management companies (and their community managers) incapable or unwilling to advise HOA boards of directors and help them make wise decisions in compliance with civil code. 
• Homeowners who challenge the norms of the community and test the limits of what an inexperienced HOA board of directors can do to effectively and legally respond.  
• Power hungry board members who circumvent board election procedures to stay in office and prevent legitimate recall efforts. 
• An unwillingness on the part of HOA boards to be transparent and provide required HOA documents to homeowners. 
• Honest misinterpretation of complex civil code and how it applies to an HOA’s particular by-laws, rules and regulations, and the rights of homeowners.  

When conflicts arise, and an HOA board is incapable of accommodating a homeowner’s complaint or interpretation of the law (even through informal internal dispute resolution proceedings), the only resort left to individual California homeowners is litigation, which means small claims or superior court. Both options put the individual homeowner at a distinct disadvantage.

First, small claims courts are often presided by commissioners generally unfamiliar with the nuances of the Davis-Stirling Act and how an HOA operates. The complex nature of HOA law and management norms can rarely be adequately explained by individual homeowners in the short amount of time allotted by this overburdened court system. Furthermore, these commissioners have no power to enforce court judgements.

Second, legal costs associated with a superior court hearing often prove too expensive for individual homeowners who must hire a lawyer for advice and court representation, and though high legal costs must also be borne by the HOA, that money eventually comes from homeowner dues, which perversely means any individual homeowner will, in effect, pay twice. 

State regulation of HOAs can offer more appropriate and less expensive options.  Some suggestions are: 

• Appointment of a state ombudsman office.  This office, which is found in some states, could quickly hear disputes of homeowners to ascertain whether the HOA has violated Davis-Stirling and resolve the issue quickly. 
• Mandated training for HOA board members. Most ethical volunteers would welcome the chance to receive training in the law.  Other mandated classes could be ethics and leadership, insurance,  board and owner meeting conduct, elections, maintenance responsibility, rules enforcement, fiduciary duties, and transparency.  
• Use of an internal dispute resolution process. Although IDR is currently mandated, an accountability method should be created to ensure an honest effort at using this option is sought by HOA boards.  
• Penalties for violation of the established mandates. 

The cost of an ombudsman office can come in the form of a small monthly charge added to HOA homeowners’ assessments and collected yearly by the state.  Homeowners who have spent thousands of dollars on attorneys and suffered delay after delay by HOA attorneys to the point that any resolution may be so late in coming as to be worthless, would much rather contribute to a system assuring that homeowners receive a fair shot in an otherwise lopsided system. 

Critics of California’s expansive bureaucracy may blanch at the idea of state legislators crafting a bill that creates one more regulatory agency. However, HOA reform is a far cry from attempting to impose a misguided, unwarranted regulatory luxury on citizens already saddled by numerous state requirements. 

Instead, this proposal demands the state be more responsive, nimble, and realistic in dealing with property owner versus HOA disputes, and thus reducing the burden on our court system via a forum that encourages a better understanding of current HOA-related statutes and best practices.