CAI School faculty advice – managing HOAs

I have described the CAI School of HOA Governance in an earlier post. In short its programs educate and promote the biased CAI view of governing HOAs.[1] I consider the School’s faculty consisting of those learned professionals, real estate attorneys, CAI former Trustees and national Presidents and some misguided constitutional attorneys and nonprofit organizations.

The latest School pronouncements come from a highly respected real estate attorney that is deeply involved in CAI, Kelly G. Richardson.[2] In view of his background and publications, seminars and speeches, I consider him to be part of the of the CAI School faculty that sets CAI’s objectives, missions and programs. Note that Richardson’s profile shows no credentials or expertise to speak about corporation management or governance, or constitutional or municipal laws.

Yet he feels free to speak outside his expertise about HOA governance that I maintain is founded on real estate equitable servitudes, covenants running with the land, where “The policy makers have failed to understand that the HOA CC&Rs have crossed over the line between purely property restrictions to establishing unregulated and authoritarian private governments.”[3] Richardson, with all due respect, does not have the credentials to advise HOA directors on governing the HOA.

In his “Homefront: Fiduciary Duty” article[4] he takes the time to clarify in some detail, finally for the members, that the BOD (board of directors) acts in the interests of the corporation and not the individual member. That’s straight corporation law not HOA law. However, I’m confused by the following statement: “If the director were a fiduciary to the individual member, that pursuit of delinquency or violation would breach the duty of loyalty toward that member, but the loyalty is to the corporation.” Richardson seems to be saying that indeed a director has a fiduciary duty to the member but that duty to the HOA comes first.

Then he goes on to advise directors that a dissenting director, one who voted in the minority, owes his allegiance to the HOA and must muzzle himself.

“Even though the director believes the decision is a poor one, the director’s loyalty to the corporation compels the director to support and not frustrate the board’s decision.” This appears to be one of the fundamental flawed teachings of the CAI School, never go against the HOA or BOD. Never! It is contrary to all expert advise on effective and productive management[5] or city management.[6]

Richardson closes with advice on the need to conduct due diligence so the director can fulfill his duty to the HOA.

“The duty of care requires directors to have sufficient information from qualified persons to make the decision.” But then comes the plug for CAI, “Savvy directors know their role as directors is to make good decisions and not to advise, and so support hiring outside experts for advice.”

He further warns directors, who have relevant knowledge and expertise, to remain mum and not speak out least he be sued. If the director chooses to speak out as he should do in the best interests of the HOA, ”the director is not acting as a director but is an unpaid consultant and could be held liable for their advice.”

 Once again Richardson is advising directors to remain silent and to trust in the experts adding support to my earlier assertion, “BODs, in general, resort to CAI not for legal advice on how to run the HOA government but as a crutch to allow them to dodge their obligations to govern the people.”[7] His managerial advice does not come from any credentials in political science, or constitutional law, or municipal government, but as a real estate professional espousing the CAI School of HOA Governance model of contractual, private, local government. In short, by fear mongering, it gives credence to the view that the HOA lawyers control the BODs.

Indoctrination “is the process of teaching a person or group to accept a set of beliefs uncritically.” Over the years CAI has been very successful in indoctrinating all the people: the policymakers, the state legislators, the state real estate departments, the media and the homebuyers. Richardson’s article justifies the need for a restructuring of the independent HOA principality and a reorienting the board of directors away from the CAI School doctrine.[8]

 Notes

[1] The foundation and principles of the School can be traced back to CAI’s Public Policies, The CAI Manifesto (its 2016 “white paper”), its numerous seminars and conferences, its Factbooks and surveys, its amicus briefs to the courts, and its advisories, letters, emails, newsletters, blogs etc. I have designated these foundations and principles collectively as the CAI School of HOA Governance.

^[2] Kelly G. Richardson: CAI Board of Trustees 2011-2017; Community Associations Institute (CAI), National, President, 2016; College of Community Association Lawyers (CCAL), 2006; CAI’s California Legislative Action Committee, Chair, 2009, 2010; National Association of Realtors; California State Bar Association, Real Estate & Litigation Sections.

[3] See in general Restructuring HOAs: “CAI School and member benefits” pt. 2.

[4] HOA Homefront: Fiduciary Duty – What It Is, And Is NOT, The Public Record, (Feb. 26, 2020).

[5] See for example: Are You Creating ‘Yes Men’ And Hindering Your Own Leadership Success?”, Terin Allen, Forbes.com (Nov. 10, 2018). “In my experience, most people get this way because they are responding to a culture or people in management who elicit and reward this type of behavior. . . . [in order to] survive on a dysfunctional leadership landscape where all the signals and messages confirm for them that dissent is bad and agreement is good.”; “7 Ways “Yes People” Can Destroy Your Business,” Barry Moltz, American Express Company (May 27, 2013). “Yes people don’t tell the truth. They only tell the . . . business owner what they want to hear. This doesn’t help a leader, who needs the whole story, good and bad, to operate a business. It only serves to increase your vulnerability.”

[6] Orville W. Powell, City Management: Keys to Success, AuthorHouse (2002). Powell “is recognized in this country and internationally as an expert in the field of city administration.”

[7] See Restructuring the HOA model.

[8] See HOAs are in need of a major restructuring.