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.

In search of the elusive ideal HOA agreement

 

I received an email from a well-intentioned homeowner in Georgia. He was on the committee to rewrite the CC&Rs to make it fair both to the 692 homeowners and the HOA, which, I hope he realizes, is the current board of directors. He asked for my input, so I wrote in return:

 

  1. Do you think the Committee can create a more perfect union than that attempted in writing the US Constitution?

  2. Do you think 692 people can agree on everything in the CC&RS that you are putting together?

  3. Do you think 692 people really care about HOA government participation, or did they just want to buy a home?

  4. Would the Committee and the HOA Board sign, along with the 692 owners, the  Truth in HOAs Disclosure Agreement?

  5. Would the Committee include a guarantee that the HOA will maintain property values in exchange for the various waivers and surrenders of the owner’s private property rights and interests, both explicitly stated or implied by the CC&Rs, or by future court rulings? If not, then what is the buyer getting from the HOA? In a true democracy, people give up certain of their rights to the government in exchange for gurantees, justice, protections against more powerful factions, and to obtain an orderly, smooth-running society.

  6. Would the Committee include a prohibition on“ex post facto” amendments to the CC&Rs, similar to that in the US Constitution? That is, honor all prior CC&Rs versions existing at the time of each owner’s purchase? In other words, they are all grandfathered.

  7. Would the Committee include wording to the effect that the HOA irrevocably agrees to be bound and subject to the US Constitution and Bill of Rights in the same manner as if it were a local public government entity, as all other forms of are bound and subject? The phrase, “in the same manner as if it were a local public government entity,” is mandatory. Simply agreeing to obey the Constitution, as found in some CC&Rs, is meaningless would not subject the private HOA entity to the 5th and 14th Amendments.

Now, I hope you will realize the impossibility of your task and its expected failure. No one can expect a bona fide acceptance and willingness to obey any CC&Rs that are created as a mass marketing device to be sold to the public at large. And one that cannot be modified by the buyer in a true give and take exchange necessary for a valid and binding contract.

Alleged waiver of rights in HOAs are invalid

I congratulate California Senate Majority Leader Ellen M. Corbett for sponsoring SB 561. This bill asserts California’s rightful authority to impose and restore law and order over this second form of political local governments known as HOAs. This is still America, a land under the rule of law. The disintegration and fragmentation of government and society must be stopped before anarchy reigns, right here in America.

 

The law firm of Swedelson & Gottlieb (S & G) argues on its Blog that they know of no one losing their home just because they waiver their rights to have their payments applied first to assessment reduction rather than to collection costs. There are good, equitable and just reasons for paying down the debt first: paying the costs first prolongs the collection agency income stream, not the HOA’s, as the amount of debt goes on forever and may never decrease. Under these circumstances, like “being under water” in today’s housing market, why pay at all?

 

HOAs are required to apply payments to debt reduction, just like your credit card companies. With a straight face S & G states, “We are aware of no homeowners who have ever lost their homes in an association’s foreclosure simply because of unpaid fees and costs of collection.” So, I guess all is well and right with this use of the payment waiver.

 

This attitude, used by other proponents favoring the survival of the HOA and their incomes streams, portrays all members of an HOA as being so enamored with their HOA that they place their well being and financial conditions in the hands of the HOA board. They are portrayed as being true believers seeing no wrong with the HOA, much as one sees with many religious cults. They are portrayed as openly and eagerly waiving their rights in favor of the HOA no matter how disastrous to them. How insulting to all Americans: your obligation to the “state”, the HOA, is to make timely payments, and any rights, freedoms, privileges or immunities are notwithstanding.

 

In its argument for payment plans, created by the HOA’s agent, but “the board dictates the terms of the agreement,” S & G seems to contradict its argument that the “pay costs first” is for the benefit of the HOA, not the collection agency (emphasis added).

 

There is good reason for this– boards know from experience that many homeowners pay the assessment portion of the payment plan agreement but do not pay the costs of collection, knowing full well that the association cannot foreclose for costs of collection only.

 

Say what? The debtors will pay their assessments to the HOA, making the effort for the benefit of the HOA, not the collection agency? Why would a board give up its first claim to $$$ for the benefit of the collection agency? That doesn’t make sense at all, does it? Why are HOA boards allowing their right to first $$$ go to a “hired-hand” vendor, in violation of their duties to the HOA? Why?

 

It makes sense if the whole purpose of S & G’s position is not to benefit the HOA but its own pocketbook. Furthermore, S& G continues to whine about the debt owed to them that the HOA cannot pay since all the money is going to the HOA first. Boo hoo! I guess they know all about “You can’t get blood from a turnip.”

 

Isn’t that a business decision all businesses face? The loss against the cost of collecting? What about contingency collection agency arrangements? Don’t let S & G slip past this point! If they are so good, the HOA should insist on this type of an arrangement rather than the punitive arrangement now commonly used.

 

And when all else fails, we hear the familiar mantra, “But really, is it fair for the paying/current homeowners to have to subsidize delinquent homeowners?” Well, you see, that “contract S & G says binds all homeowners may not be fair to some homeowners, but that’s what the legal structure of an HOA imposes on members. Is it fair not to tell home buyers about this, and about some other waivers and surrenders of rights unbeknownst to them? Take a look at “The Truth in HOAs Disclosure Agreement” for some eye-openers.

 

Cleverly, S & G avoids the question of a violation of public policy, which as stated in the Restatement (3rd) of Property:Servitudes, Sec. 3.1, makes any covenant invalid. The argument against SB 561 is simply: How dare the California Legislature prohibit a homeowner, exercising his write to contract, without any duress, from surrendering his right to the ethical and fair procedure of debt reduction before costs. How dare the legislature!

HOA foreclosure rights — in-depth discussion with CAI’s CEO and Berding

An excellent news feature from CNBC on HOA foreclosures including CAI’s Tom Skiba and attorney Bill Davis, who is the fellow being sued by John Carona’s corporate entities has been posted on Evan McKenizie’s The Privatopia Papers blog.  See The next foreclosure fight, redux…

An amazing 32 comments in two linked threads have been posted by interested persons including, among “anonymouses,” Evan McKenzie, Tom Skiba (CAI CEO), HOA defender Tyler Berding, Fred Pilot, Fred Fischer,  and yours truly, G K. Staropoli (PVTGOV).  Where are you other guys?

The issue of HOA foreclosure rights is covered quite extensively from several points of view.  If you want to be in the “know”, you must read these comments to better understand the lunacy of “they signed an agreement to pay assessments” and “it ain’t fair for good owners to pay for  these people.”

Get your voice heard.  Send this Privatopia link to your state repesentatives today!

 

Philippine HOA “Magna Carta” law not based on servitudes

Running through the first few pages of this 20-page PDF on what we would call an HOA Act, but called a “Magna Carta” for HOAs in the Philippines. “SECTION 1. Title. – This Act shall be known as the “Magna Carta for Homeowners and Homeowners’ Associations”. It is a combined social welfare land, reform act and local citizen governance by means of non-profit entities  that allow multiple HOAs within a subdivision.

There is no equitable servitudes law for covenants running with the land that make a mockery of US claims to be the best democratic country in the world. There is no private agreements to replace the Constitution, and allowing the Justices and judges to treat as if it were just another piece of paper.

Most decisions are made by simple majority vote, and members “shall have the following duties (a) to pay membership fees, dues and special assessments; (b) to attend meetings of the association.” It appears that the Filipino law contains most of the same operating provisions as found in the US version. However, audited statements must be posted annually and filed with the national government agency overseeing HOAs (Sec. 17(c)).

Now, how about this requirement of one unified government rather than independent principalities as in the US”

SEC. 19. Relationship with National Government Agencies. – The associations shall complement, support and strengthen the efforts of the national government agencies in providing vital services to their members and help implement the national government policies and programs.
Associations are encouraged to actively cooperate with national government agencies in the furtherance of their common goals and activities for the benefit of the residents of the subdivisions and its environs.
National government agencies shall consult the associations where proposed rules, projects and/or programs may affect their welfare.

Interesting reading for the American legal-academic aristocrats seeking to become Philosopher-Kings, and announce what is good for the American people.

ADRE: Licensed AZ R.E. agents can do as they please in HOAs — Not My Job

In its internet PR statement to consumers, “Information for Consumers” page, the Arizona real estate department, ADRE, assures the consumer that (emphasis added),

We want to protect consumers from being harmed in real estate transactions. You will find a wealth of information on this website that will help you be a smarter real estate consumer. You will also find information about what to do if something goes wrong in your transaction. Remember, we are always willing to help.

If you need to speak with an ADRE staff person, phone the ADRE Consumer Assistance Team at 602.771.7730.

(AZ R.E. dept ignores HOA laws in its policy of “No Negatives About HOAs” (July 2010)).

In May 2011, when asked for the third time over 7 years why ADRE doesn’t enforce this rule (R4-28-1101) when it comes to HOA transactions, its typical answer dealt with their non-regulation of HOAs, and, in this recent reply (emphasis added),

However the Department has to be advised, typically by way of official complaint, that there is an apparent abuse of the laws occurring. At that time, the Department would investigate and proceed from there. Without knowledge of a perceived violation occurring, the investigation cannot begin.

What we have here is a failure to act, a failure of government authorities to make their allegations about consumer protection — in effect their propaganda that deceives the people — a reality.

(Do not buy an HOA controlled home in Arizona — you are on your own!)

 

Please understand, as I’ve pointed out in earlier writings, there are no exemptions for HOA properties in the real estate statutes or Commissioner’s Rules (also law) pertaining to licensed property managers. So, I wondered what ADRE’s answer would be if indeed a complaint was filed against an ADRE licensed property manager who happened to manager an HOA. Fortunately, I was able to uncover a copy of an ADRE response to this question, dating back to March 2010, signed by a Senior Investigator:

The Department reviewed your complaint against THE XXXX COMPANY and its employed real estate licensees and found it involves a matter where the Department has no jurisdiction. Management of homeowner associations and regulation of CC&R’s are not regulated by the Arizona Department of Real Estate. There is currently no state agency that regulates homeowner associations. This situation is civil in nature and requires mediation or litigation. Your best course of action is to seek counsel and resolve your issues through the appropriate court.

When it comes to policing its licensed agents to protect consumer home buyers, ADRE jumps on the bandwagon, “NOT MY JOB.” The issue is not the type of property, but the actions of its licensed agents with respect to their obligations and duties as a licensed real estate agent.  And that’s where ADRE has its powers and authority to act. The unspoken alliance comes out quite strongly here with ADRE’s hands-off policy.

 

Ladies and gentlemen, you are already living in the NEW AMERICA OF HOA-LAND. Just accept it. You will soon learn to adjust.