Author: HOAGOV

"The Voice for HOA Constitutionality". I have been a long-term homeowner rights authority, advocate and author of "The HOA-Land Nation Within America" (2019) and" Establishing the New America of independent HOA principalities" (2008). See HOA Constitutional Government at http://pvtgov.org. My efforts with HOAs took me to a broader concern that was deeply affecting the constituionality of HOAs. Those broad societal and plotical concerns caused me to start this new blog for my commentaries on the State of the New America.

What is an HOA’s duty of care liability to its members and to all others?

State laws, in general, hold that the duty HOA board of directors is one of good faith, and as a fiduciary or prudent person with respect to the members, where “members” does not mean an individual member.  This is based on the nonprofit, membership corporation and HOA/condo Acts that can be found in almost every state.

But, what about tortious or wrongful acts under tort law negligence, or agency law, or real estate law on an owner liability for injuries to others on his property?  And there is also the charitable volunteer laws shielding all but grossly negligent acts by volunteers.   These laws apply although you can’t find them in your CC&Rs or in the HOA/condo statutory Acts, and the average board member probably has very little, if any, awareness of their applicability to HOAs.

I write as a lay person, because no one else is writing and the national lobbying organization is not likely to tell it like it is — nothing bad about HOAs.  Not even any of your state consumer protection agencies.  With respect to the Trayvon murder incident, I wrote about some of these HOA liability issues in, “What is the HOA liability for wrongful acts by its security officers?”   Information has come forth in the media that the Retreat at Twin Lakes, the HOA, either “hired” Zimmerman or at least had knowledge, or should have had knowledge, of Zimmerman’s history.

My initial research into the question of HOA duty of care under tort law of negligent acts revealed a few court cases that shed some light on this question.  The most recent case (The Landings v. Williams, No. A10A1956, GA App. 2011) is the mauling by an alligator of an 83 year old woman on the common property of the HOA in Georgia.  The woman was visiting her family and is an “invitee” (legal term pertaining to a third-party on property held out to the public), and the appellate court denied a motion for reconsideration and upheld the HOA to have a duty of care and was negligent in this instance.

In California, several related cases have been reported by attorney Jeffrey A. Barnett in “Aberrant Behavior in Associations.”  He references the California Supreme Court holding that,

the owner’s duty to provide protection from foreseeable third party crime has always been determined in part by balancing the foresee ability of the harm against the burden of the duty to be imposed . . . . The board can be liable for failure to take reasonable steps to prevent injuries from foreseeable criminal activity.  (Isaac’s v. Huntington Memorial Hospital,38 Cal 30 112 (1985)).

The Court further held (Frances T. v. Village Green Owners Assn., 42 Cal 3d. 490 (1986), “that a homeowners association has a duty to exercise due care for the safety of residents in those areas under the association’s control.”  And that,

the property owner’s duty includes exercising reasonable care to discover whether criminal acts are being, or are likely to be, committed upon the owner’s land. If an investigation would in all probability lead to the discovery of prior similar incidents to the occurrence giving rise to an injury, constructive knowledge of such incidents is imparted to the property owner, and the owner may be liable for the damage resulting from the criminal activity.  (Phillips v. Perils of Pauline Food Production, Inc., 35 Cal.App. 4th 1510 (1995).

The HOA board cannot be allowed to justify negligence of this magnitude in the Trayvon slaying by claiming that they are just poor unpaid volunteers working for the community.  No!  HOA boards must be held accountable like all other government officials and entities.  Our public officials and entities are not given absolute immunity, and neither should that be given to HOA boards.

What is the HOA liability for wrongful acts by its security officers?

 

As a private government, HOAs are not subject to government immunity as other government entities.  Its officers are not covered by limited immunity for discretionary decisions as government officials are.    Can the HOA board escape liability because they are volunteers?  Does their D & O insurance cover such negligence as appears to have occurred in the tragic incident described below?  Or escape liability under the pro-HOA attorney’s business judgment rule defense (my emphasis)?

 

The business judgment rule thus provides significant protection to directors (and officers) from personal liability for their good faith, informed, business decisions. The presumption may be rebutted where it is shown that a director . . . did not inform himself of all information that was reasonably available, failed to exercise the requisite level of care . . . .

 

In other words, doesn’t the HOA board of directors have a duty of care as a prudent person acting in good faith, and under fiduciary duties to the HOA to properly supervise and oversee the acts of their agents?    Under agency law and tort respondeat superior liability, the answer is YES.   And how much can that liability amount to?   Millions of $$$?  I think in the following incident it could well be.

I call your attention to the killing of a 17 year-old in a gated Florida HOA by an armed HOA security guard who is not even a police officer.  Read this report and judge for yourself:  Shooter of Trayvon Martin a habitual caller to cops.  By what authority do HOA governments usurp legitimate public government police powers to stop and detain others?  A recent Illinois court says that stopping and detaining, no less shooting others, was a violation of government authority. See How far will independent HOA principalities go in usurping police powers.

HOAs must be held subject to the Constitution and the laws of the land.  They must not be permitted to hide behind exaggerated claims of “private contract” exclusions and escape application of the 14th Amendment that applies to all legitimate public government entities. They must not be permitted to escape application of their state’s constitution and its Declaration of Rights.

Good night and very good luck – the unspoken media HOA alliance

I hope that the paraphrased quote of, “Good Night and Good Luck,” the signoff by the renowned Edward R. Murrow, who was the only journalist to openly oppose the commie scare by Sen. McCarthy in the 50s, is recognized by the news media. The media of today, especially the local news media, the young and laughing personalities of the 5:00 PM news seem to be totally oblivious to important HOA bills before state legislatures. Bills that would affect some 20% of the people in across the country.

Why? It seems that they prefer to see no evil, hear no evil, speak no evil about HOAs. Or is it really corporate media making the call?

Murrow, upon leaving the CBS network in 1953 had this to say about the TV news media.

Our history will be what we make it. And if there are any historians about fifty or a hundred years from now . . . they will there find . . . evidence of decadence, escapism and insulation from the realities of the world in which we live. I invite your attention to the television schedules of all networks between the hours of 8 and 11 p.m., Eastern Time.

We are currently wealthy, fat, comfortable and complacent. We have currently a built-in allergy to unpleasant or disturbing information. Our mass media reflect this.

Are the big corporations who pay the freight for radio and television programs wise to use that time exclusively for the sale of goods and services? Is it in their own interest and that of the stockholders so to do?

Since this statement was made, the news has become highly editorialized and selective, geared to entertain. It appears that providing important matters of civic concern affecting their private property and community to their viewers is a secondary concern, and only such information as the media moguls deem to be appropriate. (For a brief history of Arizona’s HOA news coverage, see Arizona HOA News History).

There have been no in-depth analyses or debates of the HOA legal concept even at the national level, as the spread of HOA-Land is nationwide. The Sunday news talk shows, or by 20-20 and Dateline, are silent. There have been no discussions on whether HOAs, as de facto governments, should by made a government entity. Or whether state legislatures should continue to allow equitable servitude law to supersede contract and constitutional law. Or the lack of debate on the absence of “truth in HOAs” disclosures, similar to truth in lending and truth in advertising.

Or what is the legitimate government interest to allow private governments to deny the equal application of the laws. Or to allow constructive notice – just take your deed — to bind unsuspecting home buyers to the CC&Rs sight unseen. Apparently there is no need to inform buyers at closing of the great leap that they are taking into the unknown.

Doesn’t the news media understand, haven’t they been taught in journalism 101, that silence carries an acceptance of conditions and events. With no opposing views, what do they think their viewers will accept and believe. Obviously, “No news is good news.” And this silence has helped generate the national groupthink that “HOAs are the next best thing to Mom’s apple pie.” This silence helps generate an inbreeding, a closed group without outside reality testing for verification. (See the seminal work by Irving Janis, Victims of Groupthink, 1972).

Here’s what the activist group, Psychologists for Social Responsibility (PsySR), has to say about groupthink (my emphasis).

A group is especially vulnerable to groupthink when its members are similar in background, when the group is insulated from outside opinions, and when there are no clear rules for decision making. Groupthink occurs when groups are highly cohesive and when they are under considerable pressure . . . . When pressures for unanimity seem overwhelming, members are less motivated to realistically appraise the alternative courses of action available to them. These group pressures lead to carelessness and irrational thinking since groups experiencing groupthink fail to consider all alternatives and seek to maintain unanimity. Decisions shaped by groupthink have low probability of achieving successful outcomes.

And PsySR finds fault with the media for failing to inform its viewers about the alternative views of others.

Knowledge is power and we as citizens and as a nation are becoming less powerful. The American press, especially the television news media, has let down the American people and the American people have allowed this to happen. US television news is geared more toward providing entertainment than information.

We can now answer why this silence, why this unspoken alliance of no negatives about HOAs. The history of the media’s role with respect to substantive issues on HOA constitutionality, and other legalities, has gone through four stages: 1) repeat what the special interests have to say, 2) allow advocates to speak out in opposition, 3) report only favorable stories, and 4) withdrawal from the controversy. (See Arizona HOA News History).

The reason for this withdrawal by the media can be found in their realization that the HOA legal concept cannot be defended without renouncing the US Constitution and our system of democratic government. In short, any such attempt would be Defending the Indefensible. So, silence is the only option if one truly believes, in spite of the overwhelming evidence, that HOAs are better than Mom’s apple pie.

With that I say, “Good night and good luck.”   Those of you living in HOAs surely need lots of it.

Who is the only true HOA stakeholder?

I’m tired of hearing the term, stakeholder, over and over again by CAI, and used by others including legislators. I don’t think that they know the real meaning of “stakeholder” as bastardized by CAI. Let me explain.

The term or concept of “stakeholder” is not found in the HOA “bible,” the Homes Association Handbook of 1964. I cannot find it either HOA texts, in the 1992 book by Prof. Jay Dilger, Neighborhood Politics, or in Prof. McKenzie’s 1994 book, Privatopia. However, McKenzie describes the beginnings of CAI in 1973 as an organization to solve the problems with HOAs. It was to consist of various “interest groups” that had an interest in making the HOA legal scheme work.

Even then, the real focus, as is today, was on the HOA directors and not on the homeowners per se – the five groups were: public officials (rapidly departed), professionals (attorneys), managers, developers and “homeowner associations directors (referred to by CAI as ‘homeowners’)”. Under “professional” there was reference to landscapers and accountants, etc., which makes these stakeholders also equal partners in your home, according to CAI. Gee, what would your spouse say to that? Talk about redefinitions and “newspeak.”

The term or concept of “stakeholder” is also not found in the 2000 CAI – ULI jointly funded testament to CAI, Community Associations, by Donald R. Stabile. But, in his discussion of history, Stabile speaks of The Homes Association Handbook (1963), “To establish the satisfaction all components of the housing industry expressed for [HOAs] . . . TB50 evaluated the perspectives of each [group].” It reflects the concern of various business interest groups – the stakeholders (this term is not used by Stabile), but not the homeowners, just the “association owners.” Stabile does point out that CAI was initially organized (1973) by these same groups of “interested” parties necessary to make the problems with HOAs go away, but then again, he mentions “homeowner leaders of associations,” but not homeowners.

 I believe this was the genesis of what later became the CAI argument that the stakeholders have an equal stake in the member’s private property home, for which the owner alone has monetary liability.

It should be obvious by now that the term “stakeholder” as used by CAI definitely excludes the homeowner, and has evolved from the long term focus on the “interest groups” with a stake in selling and making the HOA concept a success. It is obvious, too, from the false and misleading statements before Arizona legislative committees that CAI had met with all the stakeholders, but not one homeowner rights advocate was ever invited or attended these stakeholder meetings, just who CAI sees as “stakeholders.”

Who controls CAI and its 50 state HOA lobbying committees?

CAI recently announced a record membership of some 31,000 members. But what does that mean?  Just what is the composition of its membership between attorneys, managers  and management firms, individual “volunteers” from HOAs, and others?  Is the composition of CAI’s governing body  similar to that of its membership?

CAI membership facts (CAI Industry Data)

Estimated percent members from different HOAs:                                  9.8%

Estimated percent members who are individual HOA members:          5.9%

Estimated percent individual members to  people in an HOA:                 .6%

In comparison: Estimated AARP percentage membership:                  36.0%

Estimated members who are individuals in a distinct HOA:                 18,600

CAI’s latest “Industry Data” shows 314,000 HOAs in America, making its membership some 9.8% of HOAs. Just about what it was back in 2006 when I did a similar analysis. BUT, and a big but, is it really 9.8%? Only if all members came from a different HOA and all members live in an HOA. For instance, do all lawyers and managers live in an HOA? Not revealed by CAI.

Before CAI reacted to my revelations in 2006 and “circled its wagons,” I was able to determine that “individual volunteers” amounted to some 55% – 60% of its membership, which was 26,000 strong. And that was after dropping HOAs per se as members and allowing for this new category. Discounts were allowed for multiple members from the same HOA. It is assumed by this offer that it is the HOA itself that is paying for these “volunteers.” (Prior to this change in membership, CAI advertised some 16,000 members).

 Looking at the ratios again, CAI could have members in at most only 5.9% different HOAs (.6 x 31,000 / 314,000). About the same as in 2006. Yet, its lobbyists like to say before the media and legislative committees that there are 10,000 or 4,000 HOAs in this state without indicating their “at best” membership size.

 Taking the CAI “people” figure of 62.3 million residents, that means CAI “represents” a meager .6% – that’s .006 – of the people living in HOAs.  In contrast, 2010 AARP states membership of 35,700,000, and that’s  36% of the 50 plus population based on the US Census  estimate.

CAI Governing body (CAI Governance, 2012)

Estimated percent individual representation on CAI Board:                         14%

Estimated percent individual members:                                                          60%

CAI is governed by a 14 person Board of Trustees, not to be confused with its “three Membership Representation Groups (MRGs), elected members who give their constituencies a voice in crafting CAI policy and work to ensure that CAI continues to provide services and benefits that members need and value.” (My emphasis). They are: Association of Professional Community Managers (APCM) Board, Business Partners Council, and Community Association Volunteers Committee, none of which can be accessed by the public.

 However, from a CAI recent press release, the14 member Board of Trustees consists of:

*  CAI’s president and president-elect are elected by members of the Board of Trustees.

* Four at-large members are appointed by a board-selected Nominating Committee (“at large” members), and

* eight members are appointed by CAI’s three membership representation groups:

* four by APCM Board members (managers), and

* two each by the CAVC (“volunteers”) and BPC (service providers).

Note that no attorneys are listed, but the BoT in 2006 showed 4 attorneys as members. The 2012 composition is the same:

President/president-elect – 2 managers

Trustees – 6 managers

4 attorneys (including Scott Carpenter)

2 “volunteers”

That’s about 14% representation by homeowners on the CAI governing body whose membership consists of 60% homeowner “volunteers.”

 Surely CAI is NOT an association representing HOAs or even homeowners, but representing the business interested vendors serving HOAs.