America's HOA System Is Broken — And Millions of Homeowners Are Paying the Price
Homeowners associations were supposed to be a good idea. Keep the neighborhood tidy, maintain shared spaces, protect property values. But for tens of millions of Americans living under HOA governance, the reality has turned into something far darker: opaque finances, rigged elections, retaliatory lawsuits, and boards that answer to no one. Now, a growing movement — and at least one well-positioned startup — is trying to change that.
A Philadelphia Building That Became Ground Zero
In 2012, Jonathan Gropper purchased a condo in a historic Philadelphia building. He was drawn in by the exposed wooden trusses, the soaring ceilings, and the kind of architectural character that new construction simply can't replicate. But charm, he quickly discovered, doesn't fix a leaking roof or a broken elevator.
Gropper, a serial entrepreneur and lawyer by training, did what civically engaged homeowners are supposed to do. He ran for his building's homeowners association board. He won. And then, almost immediately, the problems started.
Once on the board, Gropper pushed for greater financial transparency. He wanted a forensic CPA brought in to review the association's books. The request was denied. According to Gropper, the board then voted internally to remove him and replace him with a member they considered more compliant. Rising fees, a deteriorating building, and inconsistent election practices left him with serious questions about how the association's finances were actually being managed.
His next-door neighbor, Jonathan Waldman — a patent attorney — ran for the board in 2017 and encountered the same wall of resistance. Election results were delayed for months over disputed ballots. When Waldman asked to review the results, the HOA allowed him to inspect the ballots only at the association's attorney's office, without his phone, without notes, and without his own legal counsel present. He counted the votes on his fingers. By his tally, he and several other candidates had won. The board said otherwise.
When Homeowners Sue Their HOA — And Lose Anyway
Gropper, Waldman, and a handful of neighbors decided to sue. What followed illustrated one of the most insidious features of HOA disputes across the country: associations can use reserve funds — and sometimes levy special assessments directly on homeowners — to finance their own legal defense. In other words, the very people challenging the board can be forced to help pay for the legal team fighting against them.
This dynamic is not unique to Philadelphia. It plays out in subdivisions, condominium towers, and planned communities from Florida to California every single day. And it points to a structural problem that goes well beyond any one bad actor on any one board.
How Big Is the HOA Problem in America?
The numbers are staggering. According to the Foundation for Community Association Research, there are approximately 365,000 community associations in the United States, governing roughly 74 million Americans — nearly a quarter of the country's entire population. That's more people than live in France.
For many of those residents, the HOA experience ranges from mildly frustrating to genuinely devastating. Common complaints include:
- Lack of financial transparency, with boards refusing to share budgets or audit results with members
- Elections that are delayed, manipulated, or outright rigged in favor of incumbent board members
- Fines levied arbitrarily or selectively against homeowners who speak out
- Reserve funds that are chronically underfunded, leading to sudden and massive special assessments
- Legal fees used as a weapon to silence dissent, with costs passed back to the very residents being silenced
Unlike local governments, HOAs operate with almost none of the transparency requirements, oversight mechanisms, or accountability structures that taxpayers have come to expect from public institutions. In most states, the regulatory framework governing HOAs is thin at best and nonexistent at worst.
Why This Problem Has Been So Hard to Solve
Part of the difficulty in fixing the HOA system is that it is, technically, a private legal structure. HOAs are typically incorporated as nonprofit corporations governed by their own bylaws, covenants, conditions, and restrictions — documents that were written, in many cases, by the developers who built the community and that heavily favor centralized board authority.
Homeowners who buy into HOA communities must agree to these terms as a condition of purchase. This contractual framing has historically made courts reluctant to intervene, even in cases of clear mismanagement or procedural abuse. And because the dollar amounts in individual disputes rarely justify the cost of litigation, many residents simply give up.
The result is a governance vacuum that bad actors can exploit almost indefinitely — and a legitimate crisis of democratic accountability hiding in plain sight inside America's suburbs.
A Startup Steps In
This is the problem that a new wave of proptech and civic-tech startups is trying to solve. The approach varies by company, but the common thread is technology-enabled transparency: giving homeowners better visibility into their association's finances, streamlining and securing election processes, and creating digital platforms where residents can communicate, organize, and hold boards accountable in ways that paper notices and monthly meetings simply never could.
For startups entering this space, the market opportunity is enormous. Seventy-four million people living in governed communities, most of them underserved by tools that haven't materially changed in decades, represent a significant addressable market — especially as younger, more digitally fluent homeowners begin to make up a larger share of HOA communities.
What Real HOA Reform Looks Like
Technology alone won't fix a system with structural legal problems baked in at the foundation. Meaningful reform likely requires action on several fronts simultaneously.
At the legislative level, states need to strengthen homeowner rights laws — mandating financial disclosures, establishing fair election standards, and limiting the use of reserve funds and special assessments for litigation against members. California, Florida, and a handful of other states have made some progress here, but the patchwork of state-by-state rules leaves most homeowners without adequate protection.
At the community level, homeowners need better tools for organizing, documenting abuses, and making their voices heard — both inside their associations and in the state legislatures that ultimately have the power to regulate them.
And at the cultural level, the HOA needs to be reimagined not as a private enforcement mechanism for neighborhood conformity, but as a genuine form of local democratic self-governance — one that takes seriously its obligation to the people it serves.
The Bottom Line
Jonathan Gropper and Jonathan Waldman's story is not exceptional. It is, by most accounts, ordinary. Millions of American homeowners have sat across the table from unaccountable boards, received bills they didn't understand, and discovered too late that the rules were never really designed to protect them. Whether startups, legislators, or both ultimately provide the solution, one thing is increasingly clear: the HOA system, as it currently exists, is failing the people it was built to serve — and the cost of doing nothing keeps getting higher.