Month: June 2023

financial statement: dangerous contract liability

Has anyone encountered a financial entry “contract liability” in their financial statements? Please look because what it means is that your HOA is holding a 3rd party harmless from financial damages.

To explain, if the 3rd party has been sued and is required to make financial payments, which could be substantial, your HOA agreed to hold that 3rd party harmless. Guess who that 3rd party may be. Check now!

“A contract liability is a responsibility or obligation that one party of a contract has to another party. It can be used to transfer the risk of lawsuits or damages from one party to another.”

I am aware of once such California HOA subject to a $3 million plus and growing amount. And the HOA is only a $2 million operation!

FYI — upgraded this site

I am using a private domain name of PVTGOV.INFO that should be used to reach this site instead of the wordpress.com address. Please update your web address accordingly. Also in regard to this site, I can be reached at admin@pvtgov.info.

Trump Era lessons for HOA Reformers

Before you turnoff not wanting to hear anything involving Donald Trump, that would be  big mistake. A BIG mistake!  Trump is a model of successful power politics at work that have not been adopted by advocates.

There are two important lessons that should be employed if substantial reforms are the object.  First, Trump is noted for attacking his accusers raising the argument of unclean hands.

“The legal term clean hands refers to a defense in a civil lawsuit regarding a contract, which allows a defendant (the person being sued) to claim that the plaintiff (the person suing) has engaged in wrongdoing. If the defendant is successful in proving the plaintiff had unclean hands through bad or illegal behavior, the plaintiff would not be able to obtain a remedy from the court.”

This tactic is so ripe for application against rogue HOA boards and officers, including CAI and the HOA managers.  Easily demonstrated if time is taken in the course of claims to collect this evidence for the court.  And also, when advancing proposed reform bills to your legislature – CAI will be whispering in the halls of the legislature.  Let the legislators know!

Second, and very effective, is to use CAI’s words and documents against it — there is plenty of fodder. Very difficult to explain after exposing a litany of common attitudes and hypocrisy.  Look at what Trump is facing in his numerous indictments.

What are reformers afraid of?  When getting very little anyway there is very little to lose.

Supreme Court finds taking excess foreclosure funds unconstitutional

The Supreme Court landmark decision in Tyler v. Hennepin County (No. 22-166, May 23, 2023), addressed an appeal by a  non-HOA homeowner in Minnesota who was foreclosed on by the state.  She brought “claims under the Takings Clause of the Fifth Amendment and the Excessive Fines Clause of the Eighth Amendment.” It has an immense impact on the constitutionality of HOA foreclosures. The Takings Clause is applicable to the action of states by means of the 14th Amendment.

(These claims of unconstitutional foreclosures and excess fines as a punished were argued in my 2013 pamphlet, HOA Common Sense: rejecting private government, No. 8, “Draconian punishment and intimidation.”)

In Tyler, the Court maintained that while states have imposed property  taxes,

“Such taxes are not themselves a taking, but are a mandated “contribution from individuals . . . for the support of the government . . . for which they receive compensation in the protection which government affords.”

And it posed, “The question is whether that remaining value is property under the Takings Clause, protected from uncompensated appropriation by the State.”  The Court answered,  “Our precedents have also recognized the principle that a taxpayer is entitled to the surplus in excess of the debt owed.” 

The Court’s reasoning extended the Takings Clause to other arenas beyond taxes,

“Finally, Minnesota law itself recognizes that in other contexts a property owner is entitled to the surplus in excess of her debt. Under state law, a private creditor may enforce a judgment against a debtor by selling her real property, but “[n)o more shall be sold than is sufficient to satisfy” the debt, and the creditor may receive only “so much [of the proceeds) as will satisfy” the debt. . . . Likewise, if a bank forecloses on a home because the homeowner fails to pay the mortgage, the homeowner is entitled to the surplus from the sale.”

The Supreme Cout concluded,

“Because we find that Tyler has plausibly alleged a taking under the Fifth Amendment, and she agrees that relief under “the Takings Clause would fully remedy [her] harm,” we need not decide whether she has also alleged an excessive fine under the Eighth Amendment.”

In a broad, extended view of this decision, one can say that any state law that does not allow excess funds from foreclosure to belong to the debtor, by public or by private foreclosures, would be deemed unconstitutional.  And that goes for HOA foreclosures!  No longer need we address the opposition that HOAs are private contracts and the Constitution and laws of the land do not apply.  This momentous Supreme Court decision has knocked down the doors for homeowners in HIOAs.  

Where is the “community” in a community association?

On the HOA Reform (FB) page a woman in medical distress and need of support wrote, in part, “Home health couldn’t get in, friends couldn’t get in, I live alone, no family here. I tried every local government and legal aid, no help. I wrote the BOD many times, and said at August meeting that I had stroke and need gate open.”

Her situation has occurred countless times — single or elderly woman, not on good health, low-income status, and living alone is the object of HOA board abuse. And she cannot get any support from her neighbors. I responded with:

This is the biggest hypocrisy of the use of the name, community association. There is no healthy, productive community of people and calling it so doesn’t make it so. Where is the good neighbor, help thy neighbor policy, and the compassion and the charity toward your neighbor by those who allegedly sought these values. No, none at all! Trying to call it an investment or a business is laughable when we all signed a real estate contract and not a commercial business (UCC) contract! The public has been conned. And your government believes its none of their business. It supports and encourages a successionist private government allowed to function outside the Constitution.

Welcome to The New America of Independent HOA Principalities.