Month: March 2024

Law review article criticizes HOA public policy

In her 44-page OK Univ. Law Review “Note” (2022) the author, Saige Culbertson, concentrates on the questions of agency relationships and duty of care. However, in order to discuss the question of agency relationships, Culbertson addressed many of the issues still causing problems in HOA-Land including the status of HOAs as quasi-governments, the validity of the CC&Rs “contract,” and the reality of maintaining property values.

With respect to agreeing to be bound, the author maintains in regard to the individual homeowner subject to the CC&Rs,  that

  • “HOAs use these contracts as a basis for their decision making because courts often presume the homeowners have a full understanding of their HOA’s obligations, because they have the duty to examine their contract for real property. The typical HOA contract is overly generalized and broad.
  • “When buying a home, a homeowner does not often have the option to not join. Homeowners also have little-to-no choice of which actions the HOA may take on their behalf, or, crucially, any actions taken by the HOA for any purpose.  
  • “However, the lack of mutual assent is constant throughout the relationship with the HOA. At the beginning, the homeowner might not have agreed to a relationship with the HOA, and those who have agreed might not have a full understanding of the rules of the HOA.
  • “[S]ome courts and scholars argue that HOA contracts are a form of adhesion contracts. Adhesion contracts are exclusively pre-determined by a single party and are presented as “take it or leave it,” while the non-drafting party has no room to negotiate.”

With respect maintaining property values, Culbertson is concerned about “The Fictional Purpose of a Homeowners’ Association,”

  • “The Community Association Institute recently reported 71% of individuals believed their community association rules ‘protect and enhance property values.’ While this belief may have been true in 2005,  more recent research indicates otherwise. 
  • “[A] study found that “[p]roperties located in HOAs do not appreciate faster, on average, than properties not located in any type of neighborhood government”

 and cites this study by Robertson,

  • “[A] 2021 study conducted by former Yale Professor Leon S. Robertson found that “[c]urrent sales price[s] [are] related to property characteristics and local market conditions[,]” and that “sales prices do not reflect the efficacy of homeowners associations to protect property values.
  • “Robertson remarked that “[s]tate and local laws that sanction homeowners associations and allow their coercive practices based on the premise of property value preservation are ill founded.”

With respect to quasi or local government, the author favors making “HOAs part of local government, founded in democratic ideals, and with regulation by the state or municipality,”

  • “The nature and purpose of the HOA are so closely linked to that of local government that . . . clearly give rise to a special sense of responsibility . . . . This special responsibility is manifested in the . . . requirements of due process, equal protection, and fair dealing. The severity of the risks associated with the substantial overreach by HOAs is further shown by actions depriving individuals of their basic rights.
  • “[U]pon analysis of the association’s functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government. As a “mini-government,” the association provides to its members . . . . [citing Cohen v. Kite Hill Cmty. Ass’n, 142 Cal. App. 3d 642].
  • “The lack of checks and balances on HOA actions is a national problem and homeowners are often left with no remedy for violations of their rights. The need for regulation of HOA activities, and further federal protections for individuals, is especially apparent . . . .
  • “[H]omeowners should urge their local government to increase regulations on HOAs to protect their fundamental rights as Americans. States should therefore pass legislation to make HOAs part of local government, founded in democratic ideals, and with regulation by the state or municipality.”

Source: OK Univ. Law Review (PDF download).

CAI amicus brief: candor to the tribunal

Still think CAI is on your side and can be trusted to act in good faith?  Here’s the latest CAI propaganda bordering on a violation of the Rules of the AZ Supreme Court, R42, E.R. 3.3, (found in Rules in every state):

“Candor Toward the Tribunal: (a) A lawyer shall not knowingly:

(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer;”

(3) offer evidence that the lawyer knows to be false. 

(b) A lawyer who represents a client . . .  and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.”

In CAI’s amicus brief to the AZ Supreme Court in CAO v. PFP Dorsey (Case No: CV-22-0228-PR, 2024), we see repeated half-truths about who CAI represents and what are its purpose and functions.  Some excerpts from “Interest of CAI as Amicus Curiae” (emphasis added),

  • is an international organization dedicated to providing information, education, resources and advocacy for community association leaders, members
  • CAI’s more than 43,000 members include homeowners, board members
  • serving more than 74.1 million homeowners
  • CAI is representing not only itself, but also its tens of thousands of members on this important issue.

CAI misrepresents its position and status.  It’s a miniscule organization and no way close to the estimated AARP’s 66% of 55 plus persons. The shortcomings include:

  • Failure to state it’s a business trade nonprofit, 501(c)6 and not an educational (c)3; (everybody knows does not count)
  • As a business trade entity, it is not allowed to have HOAs, the consumer of CAI’s member services, as members;
  • Not informing the court that “individual volunteers” constitute a minority class of membership, and
  • Failure to inform that the Management of CAI is controlled by a Board of Trustees in which its “volunteers” members are only 13% of the Board that is dominated by the management class;
  • ·         a 15-member Trustee Board supported by 2 groups of 12 representatives and the Homeowners Leadership Council  of only 6 representatives;
  • The current Trustees Board has a president from Dubai and a president-elect from the US, both managers; 6 more managers; 2 “HOA managers,” 2 lawyers and 3 others. (See Board of Trustees).
  • Failure to inform that no HOA board of directors, to my knowledge, has granted CAI the right to represent or speak for the HOA before government tribunals;
  • ·         Exaggerating its scope of influence and alleged representations when its total membership is less than 36% of HOAs or persons living in an HOA.  (Based on 2007 & 2012 data, See HOA homeowner membership in CAI is a mere 36%; Who controls CAI and its 50 state HOA lobbying committees?)
  • ·         As of this writing, CAI claims 45,000 members; 75.5 million residents, and 365,000 HOAs. With an estimated population of some 331 million people, 23% live in an HOA  — .06% of HOA residents are CAI members!

Would you consider the brief being honest and forthwith to the Court?

Constitutional weakness as applied to HOA-Land

Yes, I admit the Constitution based on democratic principles and values  is not perfect. It is not an end-state but a practice. Democracy requires an active and informed electorate especially when applied to HOAs.  And so, the will of the people —  the voice of the people — in practicality is measured and expressed by majority vote. A “majority”  implies the existence of factions, of people with differing views and attitudes.

The Founding Fathers had to address the issue of the will of the majority trampling on the rights of the minority.  Since democratic principles require all the people to be  treated equally, how do you deal with factions within the  community?  John Adams, in The Federalist Papers #10 and #51, attempts to resolve this weakness.

Madison defines a faction as “a number of citizens, whether amounting to a minority or majority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens.” Like we see in HOA-Land, most predominately it’s a small minority in control because of member apathy; or the acquiescence of a majority of  members who believe the BOD can do no wrong.

Madison’s best answer is for democracy to function in a larger group or society where we can expect to have several factions vying and contending with each other for dominance, making it more difficult, but not eliminating, for a majority clique to dominate. (I am sure the Fathers  are rolling over in their graves due to the Trump Era politics). As reality has revealed over the years, it’s wishful thinking in HOA-Land.

The existence of a well-informed, knowledgeable, and involved citizenry is necessary for a healthy democratic society or community. That’s why free speech and the freedom of the press was made the first amendment to the Bill of Rights.  That is why public education is mandated by having states provide public schooling within the state. It doesn’t exist in fat, dumb, and stupid HOA-Land, unless provided by CAI’s “political correctness” education.

HOA reform advocates: the enemy is us

Let me start by saying that I have the utmost respect to the handful of persons, advocates, who have actively supported HOA reforms of substance over the years, and have had some success.  To all others I say, the enemy is us.

I well understand the reasons and justifications of people refusing to get actively involved. Personally, talking over the phone and through emails, that most do not have the temperament, want someone to solve their own personal issue with an attempt to expand it nationally, fear retaliation, fear legal issues and the government, and just don’t care about government issues in general.

The numerous social media reform groups, some old but most are new less than 3 years, have not only failed but have  resisted the establishment of a unified,  bona fide and legitimate, national entity; argued as far back by Evan McKenzie when interviewed by Shu Bartholomew, to the best of my recall, sometime before 2004. Today, I must regrettably say some groups make this claim, but they are in name only.

And so, the many Davids believe that they can defeat the mighty Goliath of CAI. The newbie leaders who rise from time to time and disappear a few years later, start by believing that CAI acts in good faith and they can work things out for the protection of homeowner rights. They quickly discover that they have been had, been played with, and realize they are helpless to withstand the entrenched CAI. Today, many who are beginning to be actively involved realize the dominance of CAI over their legislature.

Watch AZ CAI lobbyist at work, 2010, before committee dodge questions, make false statements, and avoid hard questions. Who Controls public streets? HOA or municipality? Part 2 of 3 (youtube.com). (Early quality video).

As the adage goes, as a figural demonstration of one’s commitment to reforms, “put your money where your mouth is.” However, in reality, I have asked people to buy my book, HOA Constitutional Government, as a demonstration of national commitment on a national website, Amazon, but have received token response.

In my announcement I  clearly stated, and still abide by it, that if there were such a legitimate national reform group I would assign all my royalties to that organization.  $15.00 is a trivial show of commitment but will be effective for recognition of national support. BUY NOW! Amazon books.

Taking a positive perspective, I noticed over the past few years a growing trend toward legislation and court decisions in several states affirming constitutional and fundamental rights of HOA members. That’s a good sign that advocate messages and communications are having an effect. 

Now is the time to strike while the iron is hot! Get unified, get organized, get focused, and stop the HOA social media reform groups’ fragmentation of me first, NIMBY policy.

AZ bill returns homestead protection against HOA claims.

We must make the injustice visible. We must provoke until they respond and change the laws.[1]

Arizona alert – strike everything HB 2648 (2024)  returns homestead protections against HOA claims.  

“ARS 33-1807 and 33-1256. “B. THE COMMON EXPENSE ASSESSMENT LIEN PRESCRIBED BY THIS SECTION IS NOT SUBJECT TO THE HOMESTEAD EXEMPTION.”

Let’s go back into the forgotten history of the homestead exemption in Arizona, starting in 2004,[2] 2007[3] and 2023.  The issue was and is the use of statutes to mimic the common boilerplate of the CC&Rs:   Statutory vs consensual lien. “A 12 item list is presented mimicking the CC&Rs, a common tactic to legitimize contractual challenges to the governing documents.”[4]

In 2004, still learning the ropes, I did not follow up on the state actors controversy based on the ARS statutes saying (my emphasis), “‘The association has a lien on a unit for any assessment.” 

“Representative Farnsworth made quite clear that ARS33-1807(A), which opens with, ‘The association has a lien . . . . is a statutory lien and not a consensual lien – the homeowner has no choice in the matter whatsoever.” (emphasis added).”

This can only be interpreted as a mandatory statute making the HOA an arm of the state, acting in place of the state – a state actor.[5] No, and, if, or buts! It is not a consensual lien if mandated by the state!

A second argument raised many times subsequent to 2004 questions the validity of a genuine consensus – “an agreement to be bound.”  In short, the argument raised in Common Sense[6],

“First, the application of contract law to the CC&Rs agreement reveals the many invalid aspects of the CC&Rs as a bona fide contract.  It is obvious from a simple review of contract law.  Yet, courts have held that the CC&Rs are a contract or are to be interpreted as a contract, and have even analyzed the meanings of CC&Rs in the same manner as a contract. But, the courts do not question the validity of the CC&RS contract with respect to contract law.  The courts resort to equitable servitudes law, which simply requires the acceptance of a deed in order to bind the home buyer to the CC&Rs sight unseen.”

On this point alone, HB2468 must be strongly supported. The controversy of statutory vs consensual is avoided to the relief of homeowners.

It is the Achilles heel of CAI’s reason for being  — cruel foreclosure and no homestead exemption as a punishment to coerce obedience.

Notes

[1] Mahatma Gandhi, fighting for India’s independence from British rule, 1948.

[2] HOA Homestead Exemption Exclusion (SB1470) (2023) (A 2004 look back and a comment by Fred F).

[3] See, The constitutionality of legislation: AZ Gov. vetoes homestead exemption bill (2007);

Arizona SB1330 restores lost homestead protection in HOAs (2007).

[4] See, All state “may/shall” statutes imply HOAs as state actors.

[5] See in general, Are HOA state actors created by statutory use of shall/may? (Section 2, paragraphs 5 +). (2019).

[6] HOA Common Sense, No. 4: Consent to be governed