Category: Opinion

Posts by GKS

Exercises in futility – demanding the HOA to comply

Over the years I’ve heard many, many stories that were, unfortunately, exercises in futility. These stories followed the same basic pattern, except the names and places changed. A homeowner in a dispute with his HOA exchanges emails/letters/calls with the board or HOA attorney or manager, one or all, citing blatant violations of the governing documents and/or state laws.

The responses from the board or its hired hands repeatedly deny any wrongdoing or failure to comply with its legal obligations. The HOA responses often include extreme positions and interpretations of its obligations, and ludicrous defenses of its position. Further exchanges only serve to increase the anger and frustration of the homeowner with a good possibility of additional attorney fees for answering his emails.

The bottom line is that the homeowner must sue to get the HOA to meet its obligations under the law – no state agency is going to get involved. These exchanges only serve as evidence of the board’s bad faith actions and flagrant violations of its obligations. And that’s all they are good for. Showing them to the media, and if they air the story, has no legal effect on the HOA. Showing them to your fellow neighbors gets you nowhere as many have discovered.

Unless these exchanges are geared to possible and eventual legal action, they are otherwise exercises in futility.

Possibly, only possibly, can these documented exchanges become useful when sent to your state representative demanding legislation for state enforcement of HOA board violations. Homeowners must demand substantial penalties and fines against the board and individual board members, if warranted.

The continued presumption by state legislatures that the HOA will act in good faith and obey the law and governing documents has been disproven time and time by the HOA’s wanton abuse of the laws. This desired response by the legislature will only happen when a sufficiently large volume of documented complaints are received from many homeowners.

Montana Supreme Court rules CC&Rs may be adhesion contracts

This very important Montana Supreme Court opinion concerns the explicit issue of CC&Rs as adhesion contracts. Sadly, once again, the gentlemen in black fail in their understanding of the true nature and practicality of the effectiveness of those “grandiose” covenants within the CC&Rs. This judicial blindness to reality and the acceptance of the written word as gospel — “so let it be written and so it is done” — is a mockery of justice as one would expect from banana republic courts.

While the Court ruled the CC&Rs in this case were not adhesive, others may argue that CC&Rs are adhesion contracts.  Plaintiff had failed to address all the requirements of an adhesion contract.

I’ve excerpted relevant parts of the opinion below. Read the discussion on “reasonable expectations.” Be sure to read Justice Nelson’s disagreement at the end of the opinion (emphasis added).

¶ 9 The CCRs here are not a contract of adhesion. First, the CCRs are not a standard form contract without negotiable terms. Further, Graziano has the ability to change the terms of the CCRs. Graziano may not have had the ability to negotiate the terms of the original CCRs, but it is within his power to change and amend the CCRs in accordance with the amendment provisions in Section XVII of the CCRs. . . . ;

“[W]e do not foreclose the possibility that a future plaintiff could demonstrate that land use covenants, conditions, and restrictions are adhesive. We simply find that given the facts of this case, the CCRs in question are not adhesive.

<¶ 20 Even if the CCRs did constitute a contract of adhesion, that alone does not make the arbitration clause unenforceable. Assuming a contract of adhesion exists, Graziano must still show the arbitration clause either (1) was not within his reasonable expectations, or (2) was within his reasonable expectations, but when considered in context, is unduly oppressive, unconscionable, or against public policy. Id. Graziano has only argued the first prong; therefore, we limit our analysis to whether or not the arbitration clause was within Graziano’s reasonable expectations.

¶ 22 We conclude, given all the surrounding circumstances, the arbitration clause was within Graziano’s reasonable expectations. First, and significantly, Graziano had notice of the CCRs. While he claims the CCRs were not mentioned in the letter accompanying the original packet of materials sent by Stock Farm, that alone is not dispositive. Both the buysell agreement and the title report indicate the Lot was encumbered by CCRs and easements of record. The buy-sell agreement also states that “Seller has delivered or made available to “Buyer [Graziano] copies of the covenants, conditions, restrictions . . . .” Graziano had actual notice, before finalizing his purchase, that the Lot was encumbered by CCRs. Even if this did not constitute actual notice, Graziano is still charged with ;”>constructive notice< because the CCRs were recorded.

¶ 24 . . . In an affidavit submitted to the District Court, Graziano states that no one explained the CCRs to him, that he did not know the CCRs contained language that would affect his rights, and that he was not represented by counsel. Graziano does not say he did not know of or read the CCRs, only that they were not explained by Stock Farm or the Association. We find Graziano’s affidavit self-serving in light of his extensive business experience and that it constitutes “weak evidence” regarding his understanding of his purchase of the Lot.

¶ 25 After reviewing all the surrounding circumstances, we conclude the CCRs are not a contract of adhesion, and the arbitration provision contained within the CCRs was within Graziano’s reasonable expectations. Therefore, we agree with the District Court’s funding that the arbitration provision is valid and enforceable.

Justice James C. Nelson, specially concurs.

¶ 37 I agree with the result of the Court’s Opinion. I do not necessarily agree that the CCRs here were not adhesive, nor do I agree that, as a general proposition, land use covenants, restrictions and conditions imposed unilaterally by the developer or owner upon a subdivision cannot be adhesive. In my view, upon appropriate proof of the criteria set forth in Woodruff v. Bretz, Inc., 2009 MT 329, ¶ 8, 353 Mont. 6, 218 P.3d 486, a plaintiff could prevail on a claim that land use covenants, restrictions and conditions are adhesive. Imposing and enforcing pre-dispute arbitration requirements in such circumstances is nothing more than a means of depriving landowners of their constitutional rights of access to the courts and to a jury trial under Article II, Sections 16 and 26, respectively, of the Montana Constitution.

¶ 38 That said, in this case I agree that, even assuming that the CCRs were adhesive, the arbitration provisions were within Graziano’s reasonable expectations . . . .

¶ 39 Land use covenants, restrictions and conditions might arguably benefit the land, and the landowner may be granted some illusory—albeit impossible, as a practical matter— method of amending the covenants, restrictions and conditions. Nonetheless, the landowner should not be bound by a pre-dispute arbitration clause imposed by the developer without negotiation on what amounts to be a “take it or leave it”—or, rather, “buy it and you’re stuck with them”—basis. A landowner should retain the right to have disputes over the interpretation and enforcement of land use covenants, restrictions and conditions resolved in court with a jury; forcing mandatory pre-dispute arbitration on landowners should not be a prerequisite to property ownership.

GRAZIANO v. STOCK FARM HOMEOWNERS ASSOCIATION, INC., 2011 MT 194,No. DA 10-0580 (Mont. 2011).

Constitutional intents and purposes: HOAs vs. America

The Preamble to the US Constitution contains the intentions, purposes, and guiding principles of the Constitution.

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence [sic], promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

The constitutions, commonly known as the CC&Rs or Declaration, of the HOA private government regimes, while not standardized, contain the following intents and purposes:

 

  • All contain: To maintain property values
  • Most contain: to enforce the provisions of the CC&Rs (more commonly found in the powers of the HOA or Board of Directors)
  • Some contain: to promote the general welfare and well-being of the community
  • A few even contain: subject to the US Constitution, which is meaningless, as is currently held, the Constitution does not apply to privately contracted governments

 

Since the CC&Rs, the HOA constitution, is held to be contractually binding, sight unseen, we must apply the common meaning of the explicit, written words and avoid applying meanings and intents not explicitly set forth. If there are some vagueness to the meanings of the explicit wordings, then the intent of the drafters of the CC&Rs are investigated in order to obtain some guidance in the intended meanings of these vague wordings. This is the standard judicial procedure for interpreting contracts.

 

It is plainly obvious from the above that the HOA constitutions are lacking in several relevant objectives of substance: establish justice, insure domestic tranquility, and secure the blessings of liberty. Legally, one cannot apply political and governmental intentions that are no where implied in any manner whatsoever, such as these silent objectives.

In other words, there is no legal obligation on HOA boards to be just, to insure domestic tranquility, or to allow for the exercise of your liberties. To demand these non-HOA rights and freedoms carries no weight in the courts, unless, as a result of specific legislation or a court holding, a specific right is restored to homeowners in HOAs. This is the intent of substantive reform legislation — removing second-class citizenship.

 

It is also plainly obvious from the nature of reform legislation, lawsuits, and the public statements and positions of the pro-HOA supporters that the HOA board is not concerned “to insure domestic tranquility,” or “to promote the general welfare,” or to “secure the blessings of liberty.” They are not legally bound to do so, nor can constitutional governments demand such concerns without declaring the HOA regime a state entity subject to the 14th Amendment as required for all government entities.

 

And, as long as the courts and state legislatures stand behind the myth of a valid waiver or surrender of your rights, especially those not implied, or a reasonably expected waiver, or those not even remotely found in the HOA constitutions, good people in HOAs are governed by the independent HOA principality.

 

This is the current state of affairs in America today.  Only the voice of the people, your voice, can bring about change.

Courts will enforce CC&Rs except when . . .

This Alabama appellate decision, Grove Hill HOA v. Rice, sheds light on the reasons CAI insists that the CC&Rs being strictly enforced by the HOA and the courts: the irrational fears of a slippery slope eradication of the HOA. (The HOA was seeking an injunction against the homeowners who had built a driveway not to its liking). One person, the proft-seeking developer, is allowed to set the rules that govern the HOA community for all time to come, regardless of any political consequences with respect to the creation of a private government regime.

 

The trial court held, based on the Willow Lake opinion, emphasis aded,

 

“The Association maintained throughout the proceedings that any violation of a restrictive covenant, if allowed over its objection, necessarily dilutes the power of the restrictive covenants and thereby lessens the value of the subdivision property. We agree. In creating the restrictive covenants, the partnership expressly declared that the purpose of the covenants was `to protect the value and desirability of the Property.’”

 

However, as we are finally beginning to see a proper sense of justice for homeowners, the appellate court attempted to reject the Willow Lake precedent and held, “We do not interpret Willow Lake as requiring that an injunction is due to be granted in every case in which a resident has violated a restrictive covenant. Indeed, this court has applied the doctrine of “undue hardship . . . .” That is, emphasis added,

 

enforcement of covenants running with land `”is governed by equitable principles, and will not be decreed if, under the facts of the particular case, it would be inequitable and unjust”‘; specifically, if `”the restrictive covenant has ceased to have any beneficial or substantial value”‘ or `”the defendant will be subject to great hardship or the consequences would be inequitable,”‘ a court of equity will not enforce the covenant.

 

Unforunately, to complicate matters, “undue hardship” requires “clean hands” on the part of the homeowner in that he had no prior knowledge that his act was in violation of the CC&Rs. The court held that the homeowner had prior knowledge and therefore had “unclean hands,”  stating “that a restrictive covenant should be enforced if the defendant had knowledge of it before constructing an improvement contrary to its provisions, even if the harm is disproportionate.” The homeowner lost and had to undo the driveway at a cost of $15,000 to him.

 

 

Grove Hill HOA v. Rice, No. 2100293 (Ala. Civ. App. July 29, 2011).

Pro Se wins federal HOA discrmination appeal

The federal 7th Circuit Court of Appeals opinion in Mehta v. Beaconridge clarifies what actions constitute a violation of Fair Housing Act (FHA), 42 U.S.C. §§ 3601 et seq. Mehta filed as a Pro Se. He appealed the District Court’s dismissal of his complaint as lacking substance.

Here are relevant excerpts:

 The FHA grants homeowners a cause of action against homeowners’ associations for invidious discrimination or retaliation linked to the terms, conditions, or privileges accompanying their property.

 Under the FHA, a homeowner may sue a homeowners’ association if the association engages in invidious discrimination when failing to provide maintenance services or when limiting the use of privileges, services, or facilities associated with the homeowner’s dwelling.

 With regard to Mehta’s claim of retaliation, the FHA makes it unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of their fair housing rights.

After Mehta complained of this disparate treatment, the association placed his family’s account on delinquent status and barred them from using the subdivision’s pool, club house, and tennis court. The association then performed uncalled-for work on their gate (switching the gate from swinging inward to outward) without providing them notice or obtaining their consent, and billed them for it. When Mehta’s family refused to pay, the association fined them and threatened to place a lien on their home. Apparently fed up with their complaints, one of its employees shouted at him, “you are not moved out yet, you Indian.”

Mehta sued under the Fair Housing Act, see 42 U.S.C. §§ 3604(b), 3617.

Mehta alleged that, after he complained of disparate treatment, the association retaliated against his family by “not allowing [his] family to go to [the] pool” or to facilities such as the “clubhouse, pool, and tennis court.” He pleaded, as well, that the association maliciously designated their account as delinquent and then performed nonsense work on their fence, billed them for it, and later threatened to file a lien on their home. Mehta has, therefore, provided fair notice of his retaliation claim.

With regard to Mehta’s claims of discrimination, he alleged that the association doled out privileges and services to white homeowners, while withholding them from his family. He further alleged that the association failed to maintain their home’s aluminum siding, roof, sump pump, sidewalk and parking space, while providing those services to white homeowners; and the association engaged in preferential treatment when maintaining the grounds of the subdivision. And Mehta alleged that an association employee shouted at him in racial terms, “you are not moved out yet, you Indian.” These allegations suffice to state a plausible claim of discrimination.

In summary, the judgment of the district court is . . . VACATED with regard to the dismissal of the FHA and Illinois law claims of intentional discrimination and retaliation.

Mehta v. Beaconridge Improvement Assn, No. 11-1505 (7th Cir. July 28, 2011).

 

 

Please note that constitutional protections and statute protections exist on an issue by issue basis. That is, if the court did not reaffirm that homeowners in HOAs have this right, then the homeowner must seek legislation to restore that lost right, which is the basis of HOA reform legislation dealing with substantive issues (as opposed to HOA operational issues)