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Often you have a clause in your mortgage where the homeowners' association can foreclose on your home if you fail to abide by their rules or pay your dues.

This is becoming a more and more common thing in the US, and it's repugnant.

True, and I think it's horrible that they have that much power, but the intention is usually reasonable to me. After I got the notice, I went out into the courtyard and noticed how odd our windows looked. I then envisioned different-colored blinds on every window, purple, blue, yellow, orange... I think these kinds of guidelines can be good, provided they don't get too carried away and provided the reaction isn't too severe.

I've thought of a few options (paint, contact paper, etc). Shades wouldn't fit between the blinds and the window (they're thick blinds). In the end, I think we're going to have to return them and get new ones. If that happens, at least we can get fake wood blinds (less noticeable if they're white) and we might not be too bad off.
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Matt