One of our regular readers (and my old college roommate), Nick, sent me this question regarding a debate he’d wandered into:

So, I have recently found myself in a discussion about HOA’s and the power they have. While this started out as a RKBA issue, it developed into a more general discussion about contracts. I put forth that since our rights are ours, we could actually contract them away. Got an opinion?

I sent him the below response:

Let’s say, for example, that we have a neighborhood with only you and I as residents. Yes, it’s a pretty small neighborhood that only has two people, but so be it. We sign a contract that says we need to have unanimous agreement on a major change to either of our property. We’re both sacrificing some of our property rights in order to meet a common goal, that of ensuring that you or I don’t do something that will damage both of our property values. So far, we’ve done absolutely nothing that gets in the way of libertarianism.

But let’s posit a few different scenarios:

1- Instead of two residences in the neighborhood, we have three. You and I really badly want this HOA to ensure that our property values remain high. But the third person in our neighborhood doesn’t want any part of it. Can you and I “vote” to restrict his rights? We’re a majority, right? Well, obviously that wouldn’t be him contracting away those rights, correct? So such a covenant as an HOA would need unanimous approval from the homeowners to be an acceptable institution on a section of property.

2- Let’s say we’re in the first scenario, and it’s just you and I. I choose to sell my house, and the person who buys it hasn’t agreed to the HOA. Now, I can write into the contract that the new owner is bound by the original agreement between you and I, and that may make it harder for me to sell my house. But it becomes a problem when you’re forcing new entrants into the neighborhood to agree to restricting their property rights without really having them agreed to the terms of the contract at its inception. (This is more related to the government scenario, where governments are instituted with power over geographic areas, and are much harder to escape/avoid).

3- Let’s say we have a large neighborhood, and our original contract (which was unanimous) was designed in such a way that it had severe restrictions on how much power the HOA had over individual homeowners (i.e. no power to mandate house colors). The HOA bylaws say that if we have 80% approval, we can change the amount of power the HOA wields. All of a sudden, the HOA decides that it wants to force every homeowner to paint his house lime green, and 85% of the houses agree, but I do not. The contract has changed without my consent, am I still bound by it?

When you extrapolate scenario 1 out to a much larger neighborhood, such as the one where I live (65 houses), it would make it impossible to get unanimous approval for such an HOA. Thus, existing communities might decide on a majority vote to institute an HOA, and therefore infringe upon the rights of anyone who votes “No”. In my neighborhood, we have an HOA, but I think it was instituted by the builder when the neighborhood was originally built, and thus became a part of the original terms of sale. That gets us out of the first problem, but into the second. When I bought my house, it was understood that I would be bound by an HOA. I was forced into a choice, whether to accept that I was buying a house that my wife had fallen in love with where my rights were curtailed, or continuing to look for a house that might not be as nice, but wouldn’t have an HOA. Where I live it’s a pretty lax HOA, and I’m a pretty agreeable neighbor, so it’s not something that I considered to be a major problem.

The third scenario is more of a discussion of government in general. We like to state that there’s a social contract between individuals and government (well, I vacillate between saying this and not saying this). But the terms of that contract are not quite clear. In the US, we have a Constitution, which is a contract limiting the power of the government. If the US were an HOA that actually listened to its charter, it would still be a pretty free place. But that contract has been broken by the government, over and over and over. They have continually expanded their power, and their demands on citizens. Now, a case can be made that there is a social contract between US citizens and our government, and that the contract is described by the Constitution. As I previously said, I’m not sure that’s a strong case, but a lot of people do make it. But when the government steps far outside the bounds of their Constitution, am I really required to be bound by their laws and mandates? When the government refuses to live by the bounds of their contract (most of the unconstitutional stuff they do on a daily basis), or unilaterally changes the terms of the contract in ways antithetical to the original purpose (i.e. the 16th Amendment, 18th Amendment, etc), why should I be bound by such a contract?

An HOA, in itself, is not a bad thing, as long as we have a clear way to contract our rights away and do so voluntarily. But, it’s a troubling example, because there are so many ways for the debate to spiral out into scenarios where we’re forcing people to do things they didn’t really contract themselves into, or (in the case of buying into an HOA-governed neighborhood), that they agreed to the contract under mild duress, when they wanted a certain house and would be forced to accept an HOA to purchase the house.

It’s a great question, though. I would say that HOA’s, much like our government, have seen their power spiral out of control, and like with government, our populace doesn’t think they can really change it. I would think that if you’re getting into an RKBA debate about HOA’s, you’re probably well into the scenarios I described, and have really left the areas where an HOA is legitimate.