Author: HOAGOV

In Phillips v. Snyder[i] the federal district court in Michigan repeatedly stated that,

 “The Supreme Court has had multiple opportunities to find a fundamental right to vote, and has passed each time. There are plenty of compelling arguments that the right to vote should be a fundamental right, but it is not this court’s place to extend the law. . . . The Act [Michigan PA 436 that was being challenged] does not take away a fundamental right to vote, because such a right has never been recognized by the courts.”[ii]

 WOW!  And we proudly declare that America is the model of democracy!  Wow!

This case involved a Michigan law that stripped elected officials of their legitimate powers and invested complete control of Detroit in the hands of a Governor appointed “Emergency Manager.”  Detroit being in bankruptcy, the State acted under a government general interest in the welfare of the people.

 In other words, the Act was subject to a loose “rational basis” for validity rather that the strict basis that requires a necessary and compelling reason for the law.  Strict scrutiny is for violations of fundamental rights and the Court held that the right to vote was not a fundamental right.  The strict scrutiny criteria did not allow a law to “burden a fundamental right.”

 The Court held that the Act did not remove the people’s right to vote and they could still vote for elected officials, ignoring the fact that these officials had no power whatsoever. “The Constitution does not compel a particular method of choosing state or local officers or representatives.”  The law did not violate the Guarantee Clause, according to the court, that all states be a republican form of government.

Therefore, the Act granting powers to the Emergency Manger did not violate the Constitution.  Its rationale was, “Since local governments are considered ‘convenient agencies’ whose powers depend on the discretion of the state, maintenance of republican form at the state level is sufficient to satisfy the Guarantee Clause.” So what if the subdivision of the state, the City of Detroit, was not republican.

 And there were other similarly decided positions by the Court that I omit here.

 As Evan McKenzie so well stated in his Privatopia Blog, “As for HOAs, if the state can take away your power to choose the city council and the mayor, making constitutional rights arguments about HOA elections would seem like a lost cause. So this case is significant.”[iii]

I am concerned that if a state can do as it pleases with respect to local governments, it can do even more than we now encounter with HOA private governments. The district court’s logic, if upheld, casts a dangerous shadow over what can come next in HOA-Land.

References

[i] Phillips v. Snyder, No. 2:13-CV-11370 (E.D. Mich.2014). (On appeal in the 6^th Cir. Plaintiff’s brief).

[ii] The argument here centered around the constitutional  equal protection of the law clause, and only voting that was not equal for all the people was unconstitutional.

[iii] Evan McKenzie,  “Michigan Lawsuit Shows U.S. Voters May Not Technically Have the Right to Elect Their Mayors – CityLab”

In my commentary, Landmark HOA legislation restores homeowner property rights, I indicated that Arizona’s HB 2382 was on the verge of being sent to the Governor.  The bill would restore “ex post facto” HOA amendment rights for homeowners that would, indeed, make the CC&Rs “contract” a more binding contract.  It would not allow amendments that harmed owners affected by the amendment unless they consented to the bill. It is a limited bill, but contains substantive HOA reforms.

That was back on March 28th. Today, the bill has been held in “limbo” for a month by the Speaker, David Gowan, whose powers allow the Speaker to control when and if a bill gets to a final vote. Approval in this final vote would have sent the bill to the Governor for signing. As the legislative session is in its last days, pending budget approval, this bill looks dead by “the establishment.”

This state of affairs came about as a result of a trivial amendment in the Senate by Sen. Kavanagh, a CAI stalwart, making technical changes. As a result, instead of the bill being sent to the Governor, it must go back to the House for approval.  House approval was recommended and the bill should have been placed on the Final Vote agenda within a week, as typical.

Arizonians! Your support is necessary to move the bill!  Email Speaker Gowan (dgowan@azleg.gov)  and sponsor, Eddie Farnsworth (efarnsworth@azleg.gov), urging the Speaker to allow the voice of the people, the legislators, to vote on the bill and stop “the Establishment” control of legislation.

HB 1720 seeks to correct the deficiencies in existing law in a very limited manner.  All it allows — read the bill carefully and compare it to the misinformation and fear mongering by CAI – is for the attendance of any attorney at a board meeting.  It does not make any changes with respect to participating in discussions or voting as CAI asserts would happen.  The HOA still controls all other aspects of attendance at board meetings.

CAI’s Call To Action urges opposition to the bill.

“In sum, AB 1720 is an unwarranted disruption to proper and orderly board discussions, causes unnecessary expenditures to associations, and will intimidate volunteer board members”. CALL TO ACTION: NO on AB 1720 Attorneys at Board Meetings  (April 15, 2016).

In its Blog, an active CAI attorney wrote, “While some may think this is a “common sense approach” to allowing members to protect their rights, it ignores the reality of how associations operate.”  Attorneys for Association Members at Every Board Meeting?  In his blog, CAI stalwart attorney Swedelson posted several calls to oppose HB 1720. “Let me conclude by saying that I believe that AB 1720 will cause an unwarranted interference to proper and orderly board discussions.”  Oppose California Assembly Bill 1720 (April 13, 2106).

Why is CAI so worried?  Let’s ignore CIA’s hype, half-truths, and fear mongering statements and deal with the issues.

HB 1720, in the short subsection (c) amendment to Civil Code 4925, simply reads:

The board shall permit an attorney who represents a member to attend any board meeting that the member is permitted to attend, regardless of whether the member attends. Where possible, the member shall give the board at least 48 hours advance written notice that his or her attorney will attend the board meeting. 

What is the problem with allowing a member’s attorney from attending a meeting that the member could attend?  It is accepted practice to allow for proxy voting whereby a member is not present and another appointed person votes in place of the non-attending member.  What’s the problem?  There is none if the board is acting in good faith, and has nothing to hide, which CAI seems to have implicitly acknowledged in its opposition to the bill.  “ignores the reality of how boards operate,” and “disruption to proper and orderly discussion.”

We know how boards operate, and it ain’t like what is written in the laws or governing documents, where the common defense by the board is, “this is what our attorney told us” without any written evidence or confirmation from the attorney.

Swedelson did a good job by reminding his readers that the laws are pro-HOA and that the CC&Rs are adhesion contracts, both which lack true opposing party, the homeowner party to the CC&Rs and the absence of homeowners in the stakeholder sponsored HOA bills.  He points out, quoting from SB Liberty v. Isla Verde (2013),  that 1) the CC&Rs only allow members to participate or attend, and are silent on “or his representative,” 2) attorneys cannot attend, 3) the board decides who may attend meetings, 3) and that the California statutes basically state the same restrictions as the governing documents.

Now any rational, objective person does not need any argument as to the lack of fair treatment and the injustice fostered upon the owner by “the law,” deriving him of his private property rights. These property rights would be protected under the Bill of Rights if the HOA were treated as a public entity.

What the bill would do, as I’ve pointed out elsewhere, is to allow the non-lawyer member to have an advisor present to hear and see, and have his client raise his questions.  What’s wrong with that?   If this is a serious problem for CAI and the board, then it is definitely a serious problem for the members.  

Based on CAI’s strong opposition, they fear being held accountable to questioning by competent attorneys.

This Research Memo focuses on the Illinois Supreme Court opinion in Spanish Court. Excerpts from the Memo —

Assessments are like taxes with no contractual right to offset ‘failures to perform.’

[CAI argued]

Although contract principles have sometimes been applied to the relationship between a condominium association and its unit owners based on the condominium’s declaration, bylaws, and rules and regulations the relationship is largely a creature of statute, defined by the provisions of the Condominium Act.

For the same reason that taxpayers may not lawfully decline to pay lawfully assessed taxes because of some grievance or claim against the taxing governmental unit, a condominium unit owner may not decline to pay lawful assessments.

The very real impact of the Second District’s  decision [appellate court validating the withholding of assessments for the HOA’s failure to perform] is peculiarly analogous to our government’s need to collect taxes free from objection by individual taxpayers. Surely, if people could refuse to pay taxes and then defend against their collection based upon a claim that the government had been negligent in the maintenance of public spaces and providing services, the government would find itself in dire financial straits and unable to fulfill its obligations.

Read the full Research Memo No. 3.

As a general principle, it is a self-feeding cycle whereby unjust, pro-HOA laws serve to further create unjust judicial precedent.  Homeowner justice is repeatedly denied as more and more cases rely on bad court opinions based on unjust laws, solidifying the strength and weight of these earlier cases that serve as precedent.  It is a primary cause of the failure to obtain justice for homeowners in HOAs.

“Reflecting this considerable body of law, the newest version of the Restatement of Property (Servitudes) provides that “a common-interest community has the power to raise the funds reasonably necessary to carry out its functions by levying assessments against the individually owned property in the community….” Restatement (Third) of Property: Servitudes § 6.5(1)(a) (2000). In addition, as explained in a comment to that section, the power to levy assessments “will be implied if not expressly granted by the declaration or by statute.” Id. at § 6.5 cmt. B.

(Florida Supreme Court opinion in Evergreen Village).

Read the full Research Memo, No. 2.