HOAs: What Homebuyers Need to Know

You may recall the story of Captain Michael Clauer and his wife, May. The couple, who live in Frisco, Texas, owned their $300,000 home free and clear. But when Michael, an Army reservist, was deployed to Iraq, his wife got into a funk and failed to pay their $800 homeowner association dues. Next thing you know, the Heritage Lakes Homeowners Association foreclosed on the house, then sold it for just $3,500.

The Clauers' case demonstrates the power that homeowner associations (HOAs) can wield. In Texas, for example, HOAs can foreclose on a home without a court order. "That's more power than our local government has," May Clauer told HousingWatch. "We did not know HOAs could do that."