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HOAs trying to keep corporate rental house investors out

Posted by John Reed on

"Investor Sprawl Resisted" is the page 2 jump headline to a story about some homeowners associations trying to pass rules that make it harder for corporations to buy homes for the purpose of renting them out.
1. Generally, that takes a 2/3 vote. My HOA has never gotten 2/3 except once to stop a billionaire from building a home the size of a country club. And his lawyers intimidated the HOA board into capitulating on that.
2. The word "sprawl" is a dysphemism---opposite of a euphemism. Euphemisms and dysphemisms have no separate definition from the neutral word. They are dishonest words intended to make something innocuous sound like a crime. My 2020 book How to Spot Dishonest Arguments has a chapter listing a bunch of euphemisms and dysphemisms. The latter includes gouging, profiteering, operative. I do not think I have "sprawl" in there. I should have.
2. One such proposed rule says the buyer of the home has to move in and live in it or leave it vacant for six months before renting it.
A. How can the HOA enforce the live in it requirement. That is a requirement for most home mortgages but I have never heard of it being enforced. And if the buyer is a corporation---which is an abstract legal concept---who is the non-abstract human who gas to live in it?
B. Since when are vacant homes a virtue? You cannot get homeowners insurance on them. These corporations are likely self-insuring, but that calculation must be redone for such long vacancies. Such vacant homes could be identified by activists and they could easily put squatters into all of them.
3. HOAs do not operate under some anything-goes Constitution. Anti-corporations-buying homes are also anti-selling-to-corporations rules. One called all-cash offers "bullying." Gee, I kind liked the all-cash offer we got on our son's condo ESPECIALLY SINCE IT WAS NEXT TO IMPOSSIBLE TO GET A MORTGAGE IN THAT COMPLEX.
4. Rules that make it harder for anyone to buy lower home prices in the affected HOAs. Since when do homeowners favor that.
5. Government imposing such rules would arguably violate the last 12 words of the Fifth Amendment: "nor shall private property be taken for public purpose without just compensation." The HOA doing it may not trigger that because all owners there agreed to the CC&Rs when they bought. But there may still be some standard of reasonableness. 2/3 of the HOA members cannot vote to confiscate the other third's homes for free.
6. I oppose buying in any HOA other than de minimis PUDs. They can be difficult or impossible to get a mortgage on. The whole concept of HOAs is an abomination that should not have become so popular. They are a litigation magnet and inept management scourge. You cannot operate an apartment building with unpaid unqualified volunteer residents making all decisions. But convert that same building to a condo and residents with no pertinent knowledge get control like some middle school election for student council. Insane.
7. Housing activists say these rules are really anti tenant which is evil per se. Like hell! Tenants as a group are well-known less attractive residents as evidenced by many metrics like crime, taking care of their home, poor voting records, seeking city-destroying laws like rent control, etc. The bias against tenants is soundly based not some arbitrary prohibited-by-law discrimination.

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