Good golly Miss Molly, what are we gonna do? What are we gonna do? If state governments refuse to pay assessments on HOA property it owns by foreclosure, how is the HOA to survive? The “stakeholders”, which does not mean the owners but all those vendors who feed off the HOA income streams, are aghast! How are we gonna make a living? How are we gonna make a living? Good golly Miss Molly!
A Tennessee bill is proposing an exception to its laws to exempt the state from having to pay HOA assessments on properties that it took over by foreclosure. “But state lawmakers are considering a bill that hands those foreclosure charges to the rest of the homeowners’ association instead of the municipality. What it does is increase the cost to the homeowner.” (TN bill would pass foreclosure fees to neighborhoods).
Um, what happened to the battle cry in favor of HOA foreclosure, “It ain’t fair for others to pay for deadbeat homeowners?” Why should taxpayers not living in the private contractual HOA governed community, with its private amenities, pay for deadbeat HOAs? It ain’t fair!
As with any business enterprise, when times are good all defects are masked and hidden from daily concerns. Policies, procedures, rules and regulations, and the legal structure and purpose of the entity can escape serious concern. The world is good. HOWEVER, when things start falling apart, like the financial quagmire facing HOAs, the poorly formed and drafted organizations functioning under faulty premises and legal structure start falling apart. And this is what is happening to defective HOA legal concept.
I cannot count the number of times state legislators told homeowners that they had agreed to a contract and now that it is working against them they want the legislature change that contract. NO, was the position of the legislator. Well, the nature of the CC&Rs contract is defective as it imposes a financial liability on the members much like a partnership with its joint and severable liability on all the partners. Also, the member liability is much like buying stock in a small closely-held business with limited ability to raise additional funds except from the members themselves. It’s all part of the “deal.” Didn’t the national pro-HOA lobbying organization explain that to you?
Or, were you just told that the HOA was a great way to preserve property values?
And let’s not forget that state legislatures have granted the HOA “special dispensation” in terms of special laws for a special entity – no oversight and very little HOA accountability. They have played their part in creating the HOA financial quagmire. Instead of a city or two going bankrupt, the state has set the stage for hundreds of communities governed by HOAs to go bankrupt.
For the state to pay assessments would be like throwing good money after bad money.
A good part of the failure to provide for education in civic awareness lies in the rapidly growing residential housing industry that requires a governmental body over developers’ subdivisions that contain common elements. Some entity, if not the local municipality, must govern these common elements and that has fallen to the homeowners association (HOA) legal scheme. . . . There is no civic virtue or civil servants in HOAs, because the HOA legal structure for governance is a corporation. The equivalent of civics or civil virtue is HOA virtue, which amounts to two simple attitudes: pay your assessments on time and follow the rules. (See High Noon in HOA-Land: members who permit lawless boards to function). 
HOA Constitutional Government 