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.

UCIOA (HOA) revisions in the works

The Uniform Common Interest Ownership Act (UCIOA) and Uniform Condominium Act (UCA) are currently in draft mode. (Essentially, they are being treated as one). As a model for states to adopt as their HOA laws, UCIOA was first introduced in 1982 and currently has 9 states adopting some version of UCIOA and some 14 states adopting UCA, the uniform condo act.

Among the changes being considered are amendments to governing documents (§1-206), owners and duties of the association (§3-102), executive board members and officers (§3-103), voting and ballots (§3-110), and assessments (§3-115).

A meeting of the drafting committee will be held this Friday and Saturday, April 3 & 4. The committee consists of lawyers generally appointed by their state Governor. Invited to attend are persons who have indicated an interest in the workings of the committee, designated as Observers. Observers are expected to contribute to the discussion of the issues and can submit amendments for consideration. Sort of like a citizen submitting a proposed bill to his legislator.

Not to be surprised, former CAI president and active NJ CAI member David Ramsey is an Observer.

In 2008, in response to David Kahne’s AARP paper on HOA member rights and the works of others including political scientists, a Member Bill of Rights was adopted as a separate add-on to UCIOA. It never took off. And still the ULC (Uniform Law Commission) has not revisited constitutional protections for members in spite of several bills advancing those rights in 3 states.

Read more about the objectives and purpose of ULC.

Now comes the downside to HOA paradise

It is only natural for a family suffering from the economic affect of the virus to save the mortgage payments first and to not pay their assessments. Members do not understand that the BOD is obligated not to allow this to happen and an increase in foreclosures looms a head. Their friendly, neighborly, smiling BOD directors will turn to foreclosures in an ineffective attempt to stem the tide.

We’re all familiar with the saying “there are no free lunches.” As the current economic crisis becomes more severe hitting the pocketbooks of many families, don’t neglect paying your HOA dues if you can. The survival of the HOA has always been a motivating factor of HOA boards supported by court rulings, and if assessment income drops as a result of decreasing member finances, guess what?

Whatcan the board  do? Stop maintenance, stop events, clubs, shows, etc. to save cash and help their members survive in an act of good neighbors. Hopefully you may have an enlightened, progressive BOD that ignores the advice of their HOA attorneys, who probably will scare them into you’re gonna get sued.

There are no free lunches living in an HOA.

 

 

The intent of the HOA “bible”, the Homes Association Handbook

I have quite often made reference to the 424 page Homes Association Handbook of 1964 as the HOA “bible.” It provided the fundamental basis for the mass marketing of HOAs and as the legal basis for the common place boilerplate CC&Rs.  It has everything for everyone except the HOA lot owners, the mandatory members.

The following is an excerpt from its Foreword by the ULI president says it all.

It is our firm belief that the information and recommendations contained in the handbook will be of major value to land developers, planners, home builders, appraisers, mortgage lenders, realtors, attorneys, association officers, and public officials concerned with the planning, development, and operation of stable and attractive residential areas for the home owner and the community.

See the cover pages here.

As can be noted from the above, the CAI brief equates the HOA interests with the members’ interests and that it is acting in the best interests of the members subject to “the needs and obligations of the community.” Sort of confusing doubletalk me thinks. Once again I’m touching upon a defect in the HOA legal scheme. Under corporation law the BOD is responsible to the HOA association, but we have a PRIVATE contract agreed to by the members that the BOD functions on the best interest of the members.

 

 

 

 

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.

 

Podcast: AZ omnibus HOA bill demonstrates workings of legislators

In 2013 Arizona Rep. Ugenti attempted twice to get this all or nothing HOA bill made law and having finally to resort to an unconstitutional dark of night successful passage. It violated the AZ Constitution and rules of the AZ legislature resulting in a successful court challenge of unconstitutionality. No ethics complaint was filed against Ugenti.

The video deals with the first attempt presentation by the sponsor, Ugenti, and AACM lobbyist (Arizona Assn of Community Managers). The bill passed the committee but failed in the Senate. In the late night hours with the legislature tired out from an extended budget debate, SB 1454, same bill content, was passed 5 minutes before sine die.

My comments (video and written) are included as the video moves along.

 

 

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