The argument made by pro-HOA lobbyists and supporters, including the recent Goldwater Institute opposition to Arizona bill SB1162, is misapplied as these supporters fail to recognize the true nature of the CC&R “agreement”.
First, if indeed CC&Rs were a contract under Contract law 101, as is implied by all arguments claiming contract interference, then the CC&R agreement, held by the courts as a binding agreement, would fail the very basic requirements of a valid contract:
1. a genuine meeting of the minds — requires that the parties understood each other — full disclosure.
2. consideration for the agreement — requires a bargaining and “a give and take” between the parties.
3. cannot be an unconscionable contract — unfairness due to oppression or surprise (adhesion contracts are a “take it or leave it” agreement).
4. specificity of terms – “agreements to agree” are invalid, and open-ended amendments (no restrictions on the scope and extent of amendments appropriate to the HOA “mission”) are an example of an “agreement to agree”.
Second, the acceptance that there is an unquestionable valid consent to the CC&R agreement, as a result of the acceptance of a deed, alone, stands in sharp contrast and opposition to these public interests’ mission to protect and defend the private property rights of individuals.
Third, those who argue “freedom of contract” only present one side of this legal doctrine, freedom TO contract. Not discussed is the other side of freedom of contract, freedom FROM contract whereby contracts are imposed on the people without their consent. Freedom from contract is the true issue regarding HOAs and contractual interference, and has been avoided because the pro-HOA supporters understand the weakeness of their “voluntary consent” arguments.
Last, in their attempt to rationalize “consent to be governed” by the HOA, the pro-HOA supporters cross the line from treating the HOA as a private, contractual agreement to treating the HOA as if it were indeed a public government regulating the people within a territory. This ascribing of public government attributes to the contractual HOA allows the pro-HOA supporters to argue that living and remaining within the HOA jurisdiction reflects an implicit consent to be governed. Note, they do not argue explicit consent. Constitutional scholar Randy Barnett clearly presents the error of this argument that living and remaining within the jurisdiction is indication of a consent to be governed to all and everything that is decided by the “government”. And, there is nothing in the CC&R “contract” to support this conclusion.
Passing SB1162 will be a just and fair act that provides necessary homeowner protections, and will level the litigation playing field.
HOA Constitutional Government 