Month: March 2016

In state legislatures rejecting HOA “ex post facto” amendments I mentioned 2 bills that gave limited protection to homeowner property rights in regard to ex post facto amendments that constitute an eminent domain taking.  Idaho’s HB 511 was signed into law by the Governor on March 24^th, and Arizona’s HB 2382 is a technical done-deal as the House agreed to accept the Senate’s technical corrections, which would then be sent to the Governor for signing.

Idaho HB 511:  “No homeowner’s association may add, amend or enforce any covenant, condition or restriction in such a way that limits or prohibits the rental . . . unless expressly agreed to in writing at the time of such addition or amendment by the owner of the affected property.”

Arizona HB 2382:  “AN AMENDMENT TO A DECLARATION MAY APPLY TO FEWER THAN ALL OF THE LOTS OR LESS THAN ALL OF THE PROPERTY . . . (b) IF THE AMENDMENT RECEIVES THE AFFIRMATIVE VOTE OR WRITTEN CONSENT OF  ALL OF THE OWNERS OF THE LOTS OR PROPERTY TO WHICH THE AMENDMENT APPLIES.”

Idaho’s bill needs no explanation. It is a property right of the owner to lease his home if he so desires, and that constitutional right cannot be taken away by the HOA.

Typical applications of Arizona’s bill could in regard to no longer permitting certain trees landscaping and a mandatory removal of these unacceptable landscaping, or disallowing certain home colors or external features like shutters or attached awnings, etc.  How about lot owners facing a drainage ditch or right of way road that was maintained by the HOA and is now to be maintained by those homeowners?

Just one no vote by a homeowner whose CC&RS at the time of purchase said that the HOA was responsible would kill the amendment.  Keep in mind that there may have been several earlier versions of the CC&RS as a result of prior amendments, which would then make the attempted amendment applicable to less than all lots or owners.  Or, not all units have an outdoor deck.

Please note the absence of compensation for the loss of property rights.  Heaven forbid that the law, in the interest of justice and fair play, would ask the HOA to pay money to affected homeowners.  While America survived for over 240 years with this requirement, the defective HOA scheme needs the legislature to bail it out and not require fair compensation.

Gee, the HOA might fail.  The other members would not pay for it under their version of “it ain’t fair” mantra.  HOAs would lose their appeal.  Oh my gosh, plead the legislatures, we can’t let that happen. We got a good thing going here.

This 2002 Florida Supreme Court  case study reveals how the application of pro-HOA laws and, as a consequence, subsequent court decisions form the court’s opinion and rationale as related to the acceptance of HOA ex post facto laws and eminent domain takings.  This case, supporting such amendments as valid, touches on important constitutional questions of due process and the equal protection of the laws.

Unfortunately, the owners failed to raise these extremely important questions before the Florida Supreme Court. And to the detriment of homeowner rights advocates and HOA members, these questions are still not being raised in the courts.

Read the complete paper here.

The Idaho Governor was given a bill to sign, HB 511, that prevents HOAs from restricting rentals if the owner doesn’t agree with CC&Rs amendment.  If the CC&Rs did not have rental restrictions, the HOA cannot add one without the affected homeowner’s consent. A victory that applies ex post facto law restrictions, as set forth in the Constitution, to HOAs. This is a victory in which homeowner rights are restored on a case by case basis after being summarily denied by invalid and unconstitutional CC&Rs alleged contracts, with state legislators looking the other way.

Betsy Russell’s article in the Spokesman-Review[1] states that HB 511 declares,

“No homeowner’s association may add, amend or enforce any covenant, condition or restriction in such a way that limits or prohibits the rental, for any amount of time, of any property, land or structure … unless expressly agreed to in writing at the time of such addition or amendment by the owner of the affected property.”

According to Russell a supporter of the bill commented,

 “It’s not an imposition on a contract,” he said. “That contract is being applied in ways never intended, never understood, that devalue the property by taking away fundamental rights to the use and enjoyment of that property after the purchase. That’s the question. Is it appropriate for them to take it away without the consent of the purchaser.”

Of course, the author presents the old refrain by an opposition legislator, “To me, you signed on to a deal, and now we’re giving you an out – that it doesn’t have to be enforced. That doesn’t make sense to me. I’ll be voting no.”  As I wrote in “CAI flexes its muscle[2]”, enforcing invalid contracts makes a mockery of the law.

Also in the legislative hopper, having passed the House, the Arizona Senate is ready to vote on another ex post facto restoration bill, HB 2382[3], that would prevent CC&Rs amendments from being enforceable if the affected homeowner does not consent to the amendment.  This bill is a much broader bill pertaining to any amendment that affects less than all members. The effect of an HOA ex post facto amendment could be an eminent domain “taking” violation as the owner is not compensated by the “takings” amendment, which would bring the HOA in line with constitutional government.

 Advocates must get in the faces of their legislators and remind them who they work for: We the People, not the special interests, and definitely not their political party!

 

Notes

1. “Senate narrowly backs legislation to keep HOA’s from barring AirBnB or other short-term rentals,” Betsy Z. Russell, The Spokesman-Review, March 20, 2016.
2. CAI flexes its muscle in Congress arguing constitutional law and judicial review.
3. Arizona’s HB 2382 is an unconstitutional violation of eminent domain law.

The following is an example of how to read between the lines to interpret legislative procedures and legislator motives.  In short, how legislators use the rules to obtain their goals.

Arizona’s HB 2382 has an excellent amendment that would allow CC&Rs amendments to become valid only if no homeowner affected by the amendment objects to the amendment.  It applies to situations where the amendments affects less than all homeowners, like those with golf course views or like those whose properties borders some physical landscape condition as a runoff ditch or access road, etc.  It would restore the constitutional protection against ex post facto laws or eminent domain takings by the HOA.  A limited but major plus for homeowners.

The bill passed out of the House and out of the Senate committee and was set to be placed on the Consent Calendar.  Since there were no amendments to the House version, legislative procedure allows a fast route to final vote by bypassing the COW (Committee of the Whole) step. A legislator can object to a bill being placed on the Consent Calendar, as happened to HB 2382, and must undergo COW debate and vote.  In COW, a bill may be amended, a “floor amendment,” as also happened here.

The amendment was simply a technical correction – remove comma, change “or” to “and,” etc.  This was the essence of the floor amendment to HB 2382. Normally, these technical corrections are handled in committee before going to the final vote process, or in some later session.  So, what gives?

My reading is that in order to stop the bill from becoming law the amendment, if accepted by the Senate, forces the bill to return to the House for confirmation of the amendment or to resolve differences in the 2 versions of the bill.  It allows further opportunity to defeat a bill.  It says something about the amendment sponsor’s motives.

Now, a rational person would say that here should be no problem with accepting technical corrections to a bill.  But, this is politics influenced by a dominant special interest lobbyist effort.  People have been known to change their minds.  Let’s see what happens.

In 2013, Arizona Rep. Ugenti got caught in playing fast and loose with the rules and got an HOA bill passed in the wee hours of the legislative session. The bill was successfully challenged in court and rules invalid.   See AZ Attorney General admits SB 1454 HOA to be invalid and without effect.

Many of us have had anecdotal stories of unjust decisions by state bars that protect attorneys even in the face of point blank evidence of wrongdoing.  Some have had actual experiences, and are aware of documented decisions affecting others, of state bar rulings with the same astonishing and unreasonable results.  What’s the truth of the matter?  How do state bars work?

As an example of state bar procedures, let me use the Arizona Bar as an example. “A/CAP” is the designation of the first level complaint handler whose function is to screen calls and deal with written complaints. “ER” is a reference to an Ethical Rule of Professional Conduct. The Bar can apply sanctions or dismiss the complaint, or submit the complaint to the supreme court attorney complaint committee (in the judiciary) for handling.  It’s a two-step procedure. Here’s an email excerpt from a HOA member’s complaint, who had replied to the attorney’s answer..

 “Following A/CAP’s final determination finding no violation of the Rules of Professional Conduct and trusting A/CAP has diligently prescreened the information provided bar counsel alleging a conflict of interest (ERs 1.7 -1.10) . . . [provided] written notice to the respondent lawyer of the nature of the allegation . . . [obtained] a response which is copied to the complainant for comment and/or response to the bar’s request for additional information . . . .”

Here’s the Bar’s response email:

“Mr.xxx

 The emails you provided do not warrant reopening the file [sic].

 The HOA is represented by counsel.  The country club is represented by separate counsel.  If either of those attorneys thought there was a conflict, they would address the issue with each other and each of their clients.

 This matter will remain closed [sic].  You are of course free to return my phone call if you would like to discuss the matter.

Tom xxxx”

 Please note the basis upon which the Bar apparently decided the issue:  if the complaint were true, the alleged culprit attorneys would have addressed the issue in accordance with the Professional Rules of Conduct. But, isn’t that the nature of the complaint that they did not!   And whenever did you hear of an attorney telling the HOA that it did or will do wrong? (ER 1.13). Enough said about the State Bar’s integrity.

In my personal encounter with the Bar, I came away with the same conclusion:  whatever the attorney says is gospel truth, even if irrelevant.  In my case, the attorney complained about being late on assessments for a few months, causing trouble by demanding answers from the board, etc.  The attorney can do no wrong!  Case closed!

It is understandable that professionals who deal with the public will be subjected to wild allegations by parties simply seeking revenge on their attorney’s failure to get his desired results.  But, when the balance swings well over to protecting the attorney and not doing justice society has a problem.  The courts have a serious problem with the integrity of the judicial process. The lack of integrity of public-private state bars to do justice and the failure of the oversight state supreme court to monitor the integrity of the state bar process is appalling.

In 2009 I did a detailed analysis of Arizona’s Bar complaint handling for all attorneys, not just HOA attorneys (Will your State Bar HOA attorney complaint get results?).   It links to a detailed numerical analysis made more difficult by the sloppy recordkeeping by the Bar and supreme court.

Over 4 years only 15% of the complaints resulted in sanctions against the attorney.

Based on the large number of complaints filed and the nature of those complaints, one would reasonably expected a much higher percent of attorneys being sanctioned, especially HOA attorneys.