Category: amicus civitas

With the confirmation of Brett Kavanaugh as a Supreme Court Justice, the US joins the list failed democracies, not by revolution or coup d’état, but by the slow decay and corruption of its democratic institutions and norms.  In their book,  How Democracies Die,[i]  the authors wrote,

Democracies may die at the hands . . .  of elected leaders . . . who subvert the very process that brought them to power. . .. More often, though, democracies erode slowly, in barely visible steps.

Elected autocrats [and parties who] subvert democracy – packing and ‘weaponizing’ the courts and other neutral agencies, buying off the media and the private sector (or bullying them into silence), and rewriting the rules of politics to tilt the playing field against opponents.  Democracy’s assassins use the very institutions of democracy — gradually, subtly, and even legally – to kill it.

And this is just what happened with the Kavanaugh vote.  Not being in the majority, the Democrats could do nothing but hope several Republicans broke rank and voted no.  This did not happen.

Would you want Kavanaugh to be the deciding vote on your life-death case that involved controversial political positions?

In my  January 2018 post, HOA-Land: the product of the decline in democratic institutions in America, I argued that HOA-Land was the result of this slow death of democracy.  Deborah Goonan makes a strong case for the trickle down effect of the death of democracy on HOA due process.  Her lengthy and highly informative post, Does an HOA respect your due process rights? Don’t count on it., goes into a detailed analysis of the Hearing and relates it to HOA due process. She writes,

It’s sad to say that America’s association-governed communities operate under the same dysfunctional and divisive politics — with the exception of occurring at the local level rather than the national level.

The common boiler plate in CC&Rs shortens the requirements for due process to simply, “an opportunity to be heard.”  But, Deborah writes,

But due process, as understood in the context of the U.S. Constitution and centuries of law going back to 16th Century England, is intended to offer greater protections for the accused, ensuring a fair hearing of the issues before a disinterested third party, and, preferably, a jury of one’s peers.

She quotes from LegalDictionary.net, constitutional due process means

The right to an unbiased trial
The right to be given notice of the proposed trial and the reason for it
The right of the individual to be aware of evidence against him
The right to cross-examine witnesses for the opposition
The right to present evidence and call witnesses
The right to be represented by counsel

The effect on HOA due process, and on other issues of private rights, is to signal to rogue HOA boards that they can do as they please so long as it supports HOA-Land according to the CAI School of HOA Governance. It says to the HOA boards, the government is behind you and will ignore the Constitutional and Bill of Rights as it pleases.

Who can stop it? No one but a strong turnout by the people, who still believe in America as a democracy, in the upcoming elections.

 

Note

[i] How Democracies Die, Steven Levitsky & Daniel Ziblatt, Crown Publishing, 2018. Based on their research into democracies, internationally and historically, the authors make the case that the long-term decline in democratic norms and institutions has given rise to demagogic leadership.

Flat Top Lake HOA v. US (868 F.2d 108)  was a 1989 federal circuit court case on whether or not the WV HOA qualified as a social welfare nonprofit entitled to receive federal tax breaks. The IRS permits tax exempt status for HOAs as a social welfare entity under its 501(c)4 classification if certain requirements are met. In general, the HOA must primarily provide community benefits to the greater community rather than to its members only.

So much for history. Today, Sun City Grand (Surprise, AZ), a $20 +/- million operation with over 9,000 homes, has been functioning as a social welfare entity since 2015. As best determined, it claims that just being there is sufficient to be granted a tax exemption as a social welfare nonprofit and receive tax benefits.

But, a puzzlement! Why is the board seeking member approval of programs to be made available to the general public after 3 years have gone by?  Furthermore, the governing documents do not grant the board any such powers to change the nature of the subdivision without an amendment to the CC&RS. What is going on?

The Flat Top Court held that,

The homeowner’s association must serve a community [subdivision] which bears a reasonably, recognizable relationship to an area ordinarily identified as a governmental subdivision or unit. Congress recognized that a true “community” functions within a broader national fabric.

When a group of citizens elects . . .  to separate themselves from society and to establish an entity that solely advances their own private interests, no potential for general social advancement [benefit] is implicated.  Wholly private activity, however meritorious, confers no such benefit which would render a compensatory exemption [ tax break] appropriate.

So, from the dawn of HOA history it has been vehemently argued that HOAs are private entities and therefore hands off, we now have an about face just to claim tax benefits.   In other words, the HOA by its very nature withdrew from the greater society and cannot claim a tax benefit from it.

In dissenting from the majority holding, a judge maintained that “The Association performs [community benefits], as the majority recognized, ‘tasks of quasi-governmental nature’ for the Association members and others. . . and performs activities which the taxpayers otherwise would have to pay for.”   The judge did not address the question of double taxation as a result of reduced municipality services – paying HOA assessments and also paying taxes for services no longer provided by the municipality.

 

 

Shortly I will be submitting to the Arizona Legislature a revised version of my 2015 Model Regulatory Agency Bill that creates an independent Department of Homeowners Associations.  It is an agency of the homeowners, by the homeowners, for the homeowners.

It is not an intrusion into private contracts, but the fulfillment of the State’s obligations under the Arizona Constitution, Article 2, Declaration of Rights, as summarized by Section 2,  “All political power is inherent in the people, and . . . their just powers . . . are established to protect and maintain individual rights.” 

To better assist readers in understanding the intents and purposes of this bill I have put words in the mouth of the Legislature, using the following excerpt from the proposed bill.

 

Sec. 20. [Proposed] Legislative findings and intent: creation of independent agency to protect the interests of homeowners in HOAs

1. It is the intent of the legislature to find, determine and clarify all of the following after a careful consideration of the long history of the legal structure and scheme of HOAs, raising significant questions of constitutional violations of due process and the equal protection of the law:

2. The legislature determines and finds that over the years owners in condominiums and planned communities are frequently subjected to inconsistent, unreasonable and often unlawful enforcement and application of the declarations, rules and bylaws that govern their communities; that their managers and their boards of directors, and owners are often unable to afford the cost of formally litigating their disputes in the superior court;

3. The legislature further determines and finds that existing statutes fail to protect the homeowner against the defects in the HOA legal structure and scheme that deny the homeowner the privileges, immunities, and rights and freedoms guaranteed to all citizens of Arizona;

4. The legislature further determines and finds that, similar to the purposes and functions of the National Labor Relations Board, a Department of Homeowners Associations is necessary to protect homeowners from reprisals, social ostracization, harassment, slander, and assault by HOA boards and management companies; and to guarantee homeowners the right to form entities and to join together to address HOA related issues; to bargain collectively to improve terms and conditions of the governing documents;

5. The legislature further finds the necessity of creating an independent state agency whose function is to provide important consumer protection for owners in and prospective buyers of condominiums and planned communities; a state agency that will efficiently and effectively provide for resolution of these common interest community disputes without the expense, formality and difficulty of requiring a trial in the superior court in every instance, while still maintaining the ability and right to recourse in the superior court, and without threat to the core functions of the judiciary.