I am pleased to see that more and more court cases and legislation in many states directly addressing the unconstitutionality of the widespread Declarations of CC&Rs, which all flow from the 1964 HOA “bible,” The Homes Association Handbook.[1] The topic here is Montana’s SB 300 bill[2] that has CAI really worried. In its advocacy CAI quotes, “Randall Snyder Testimony – ‘SB 300 is unconstitutional’ and ‘Simkins Holdings, LLC, developer of the Big Sky Town Center – ‘As a real estate developer, SB 300 violates our ability to contract with our current members’ among others.[3]
SB 300 is a short bill that is “on point” with respect to making the CC&Rs agreement, held by the courts to be a contact, to abide by Contract Law 101 with respect to the requirement that both parties, the HOA and the homeowner, must agree to any changes and amendments. Under the general boiler plate CC&Rs amendments that alter your contract at the time of closing can become effective without your consent. The US Constitution prohibits ex post facto laws. In the public domain under contract law and common law this is not allowed, it’s a No-No.
Section 1 of the bill —
“(1) A homeowners’ association may not enter into, amend, or enforce a covenant or condition in such a way that imposes more onerous restrictions on a member’s basic rights to use the member’s real property than those restrictions that existed when the member acquired the member’s interest in the real property.”
“(4) Nothing in this section invalidates existing covenants of a homeowners’ association or creates a private right of action for actions or omissions occurring before [the effective date of this act]. However, after [the effective date of this act].”
Subsection 4 prohibits what I have referred to as “ex post facto” amendments,[4] making the HOA “constitution” compatible with the US Constitution.
The rational for the courts upholding ex post facto amendments has been the amendments clause of the CC&Rs whereby the homeowner agrees to the vote of the members if it meets the approval requirements. (See my full rebuttal as contained in note 4, “HOA Principalities”).
“But, they [the courts] want you to ignore the other side of due process — substantive due process where the HOA “law” is itself a violation of our system of government. And forget about any question of a buyer’s “reasonable expectation” as a requirement for a valid amendment. Or that there is no explicit waiver of the surrender of any property rights.”[5]
HOA constitutionality issues are an effective means to attaining HOA reforms as it will force an open, public discourse on these violations. It will force the legislators and CAI to defend their positions in public or remain silent. Advocates must make repeated recourse to these issues, and make sure that the media publicizes these valid arguments.
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Notes
[1] See Analysis of The Homes Association Handbook.
[2] Montana SB 300:
[3] Stop SB 300; A Bad Bill. CAI Advocacy Take Action, April 4, 2019.
[4] In general, see HOA principalities where there’s no ex post facto or eminent domain protections; state legislatures rejecting HOA “ex post facto” amendments; AZ court ends open-ended “ex post facto” HOA amendments.
[5] Id, see “HOA Principalities.”