Property owners are being faced with a new onslaught – the attack of the Homeowner’s Associations.

Typically, it’s the finance companies that have gone after delinquent homeowners . But in communities controlled by the mighty HOA , as the sour economy leaves more people unable to pay their fees , the HOA can be a terrible monster.

In the past, HOAs have gained infamy for dictating everything from the weight of your dog (one mandated a diet for a hound) to whether you can kiss in your driveway . Homeowners’ associations have served as the behavior police, banning solar panels, lemonade stands, and even hanging out in your own garage. One ordered a war veteran to remove his flag because of a “nonconforming” flag pole . Another demanded that residents with brown spots on their lawns dye their grass green.

Now, past the faux regal gates, beyond the clubhouses, many property owners in HOAs owe more than their homes are worth. Some are struggling to pay their bills after they lose a job. Others have had their pay cut. So they’ve stopped paying their association dues . To combat the rise in delinquencies, boards are switching off utilities, garnishing income and axing cable . They are yanking pool passes and banning the billiard room . In the most extreme cases, they are foreclosing.

“The treacherous part is that homeowners’ associations are acting like a local government without restraints, and they have this extraordinary power,” says Marjorie Murray, a lawyer and founder of the Center for California Homeowner Association Law.

Today, one in five U.S. property owners is subject to the rules of the homeowners’ association , whose boards oversee 24.4 million houses . More than 80 percent of newly constructed homes in the U.S are in association communities.

And of the nation’s 300K HOAs , more than half now face “serious financial problems,” according to a recent survey by the Community Association Institute. An October survey found that 65% of HOAs have delinquency rates higher than 5 percent, up from 19 percent of associations in 2005.

The government does not keep statistics on how frequently homeowners’ associations initiate foreclosures . But a nonprofit research group found that association-initiated foreclosures in the Houston area jumped from 500 in 1995 to 2,200 in 2007. Most HOA -related foreclosures in Texas do not go through the judicial process, so the group’s analysis represented only a fraction of the foreclosures that HOAs have initiated.

All the association board has to do is alert its attorney to put a lien on the home to begin the process. The house can then be auctioned by the board until the bank eventually takes ownership. Property owners typically have no right to a hearing.

This whole process; the over-reaching power of the associations, is firing the recent increase in public interest in small floor-plan housing. More and more property owners are exiting manicured suburbia, and choosing to erect a very small homestead on modest properties pretty much anywhere. The freedom of a tiny floor-plan is that it can litterally fit just about anywhere. The lifestyle change seems to be the biggest drawback, but for those who have made the change they see the difference as more liberating than daunting, as they embark on a lifestyle that requires that they get innovative, creative , and make it a priority to cut the excess and clutter .

California manufactured homes sales have been rising steadily throughout our recent recession, as more and more people flee the HOA lifestyle. All you need is a small piece of land; because even a tenth of an acre becomes a wonderous playland of gardens when not entirely taken up by a hulking McMansion. Manufactured homes seem to be the go-to answer for the small home movement, making it basically effortless to design and build the perfect home quickly and inexpensively . Floor plans designed for storage are far easier to create in manufactured home designs than in traditional construction.