Category: Opinion

The members of the Arizona Terravita CA voted about 1000 to 100 to accept the extensive amendments to their CC&Rs. (See   HOA ethics: vigorous performance or collusion?)  In response to a member’s concern about any affects of this vote, I answered as follows.

I am sure that you are aware of the expression: “You are identified by the people you associate with.”  That expression holds true for the community in which you live, the Terravita community, whose actions and failures to act set the character of the community, and of the people who live in Terravita.  The Terravita mindset is: In the name of “maintaining property values”, the HOA is beyond reproach and can do no wrong. 

From my years working to bring the American democratic system of government to HOAs, I have encountered HOA “true believers” who adhere to the ideology that “my HOA can do no wrong”, and who refuse to look at the facts. They are primarily concerned with a narrow self-interest: how will it affect my finances and my property value? The 1000 to 100 vote in favor of the extensive amendments clearly demonstrates that Terravita is infected with this malady.

HOA members do not want to hear that they live under an undemocratic government whose legal objective is to maintain property values, and not concerned with protecting the individual’s rights and freedoms. It’s a commune environment where your property rights are not under your control, but under the control of a board and your neighbors — now under the control of a minority of your neighbors — in a corporate form of government where a member has less rights than those not living in an HOA. Do you really want your home to be collateral to a regime that is authoritarian, and not having your best interest in mind? Under law, the HOA board has it allegiance to the HOA corporation, which is NOT the same as to the membership.

The one-sided vote reflects a mindset in Terravita that the board can do no wrong, and the attorneys advising the board have the best interests of the members in mind, and not a personal agenda to protect and defend the un-American HOA government that serves to feed their revenues. Attorneys who play loose with the laws and judicial system, ignoring irregularities in order to get their way.

HOA members need to reevaluate their value systems and to understand the character of their community. Do the members stand up for ethical and moral values, for the equal application of the laws and adherence to the Constitution? Or does only property value have any meaning, any importance?

Here’s my review of Rediscovering Values, Jim Wallis, Simon & Schuster, 2010. Mr. Wallis a preacher who has appeared on numerous TV discussion panels. And many people see no wrongs. Wallis wrote:

There are some things that we all should get angry about. First, we were told a lie. Second, the rules of the game failed. Third, our good was supposed to trickle down.

Do we want [property] values to prevail everywhere and in all things? Are there some areas of life where [property] values should not determine what is most important — personal and family relationships, ethics and religion, community and public service and social justice? Are there certain things degraded when [property values] are allowed to be the ultimate measure? Are there certain social values and practices that are higher than market values?

I have written about the inequities of adhesion contracts, of the surrender of rights and privileges by virtue of the “no need to see” constructive notice doctrine[i], of HOA foreclosure rights, of transfer fee demands on sellers, not new owners,  and of the mockery of due process with the empty requirements of only “an opportunity to be heard” by the HOA accusers.  In this writing, I call your attention to the “pay until you die” public policy in support of HOA survival.  No breaks for old age, retirement, medical bills and illness, or the common law right of offset arising out of a difference with the HOA regime.

For the complete commentary see Pay or die.

 

Let us be clear – sanctions for violations of the automatic stay are not always imposed and they do require more than just a technical violation. . . . A willful violation is an intentional act done with knowledge of the bankruptcy filing. The “willfulness” element goes to the deliberateness of the act  that violated the stay – not the intent to violate the automatic stay. . . . Avoiding any violation of the automatic stay – technical or not – is highly recommended.

The “take-away” point here is that when you are informed of a bankruptcy, whether by personal interaction or mail, action must be taken. Not only will certain action allow an association the best chance of recovery of the pre-bankruptcy debt, but it will also ensure an association does not become liable to the debtor  for sanctions.

The following four Commentaries, taken from the HOA Private Government website, update the Foundations eBook with additional historical materials relating to the intent of the creators of the HOA model, and the motivations and rationale of the Community Associations Institute (CAI).   They can be found in the eBook Supplement to Foundations of HOAs.

Timeline

1964 —  ULI publishes The Homes Association Handbook, the HOA “bible

1967 —  U. CAL publishes Public Affairs Report critique of the Handbook.

1973 —  CAI is formed to deal with HOA problems.

1978 —  David Wolfe, a CAI founder, likes HOAs as government competitor.

1983 —  America II is published, a view of the societal changes by HOAs.

1989 — US Advisory Comm. answers for public officials

1994 —  Privatopia, the seminal critique of HOAs as private governments.

2000 —  The ULI – CAI funded Community Associations  view of HOAs.

2008 —  Establishing the New America appears — an advocate’s recount of HOA foundations.

2008 — Rutgers Law Journal critique of Twin Rivers decision

My reading of David B. Wolfe’s (a CAI founder who is not an attorney), Condominiums and Homeowners Associations That Work[i], was very disappointing with respect to his treatment of HOAs as mini-governments.   Only the four-plus pages of Chapter 1, out of the 136-page, nine chapters, discuss the mini-government controversy. The remaining pages of this “handbook” are devoted to the paperwork to set up and operate an HOA:  the CC&Rs, the bylaws and the Rules & Regulations, including sample forms.  My attention, consequently, immediately turned to an attempt to understand the out-of-context purpose of Chapter 1, which was titled:  “An Introductory Question”, but was ignored throughout the remaining pages of the handbook.

Wolfe’s opening comment on government reflects the impact of HOAs on the American scene:

The Community association is coming more and more to resemble a new, more local form of government.  As such, it has the potential of noticeably altering the structure of American life.  

He quotes Lewis Mumford (a utopian community idealist) faultfinding of the Constitution: “The greatest defect of the United States Constitution was its failure . . . to make this democratic local unit [the New England town meeting] the basic cell of our whole system of government.”  A sort of a “bottoms-up” approach of individual small communities independently doing their “thing”.  Perhaps his quote of a 1978 mayor’s comment sheds some light on Wolfe’s motive:  “traditional local government is finding, for the first time, a major competitor in the delivery of public services.” 

It seems, from a reading of this chapter, that Wolfe, as the owner of a property management firm, was taken with the thought replacing and “out-doing” local municipal governments, at least in the services arena.   Wolfe raises the question of constitutional requirements and protections by quoting Wayne Hyatt’s (1975) reference to Marsh v. Alabama’s[ii]  “company town” decision (1946): [that] “makes compelling the conclusion that the association’s action’s are ‘public’ in a constitutional sense.”  However, he refutes this view and makes his pitch that maybe, you know, HOAs are governments, but a special private, corporate form of government to be treated differently from public government, evening acknowledging the social contract theory of governance.  Wolfe grabs onto this social contract theory and argues that that’s just what HOAs are all about:

Through a formal compact, diverse owners of properties within a defined area [read, ‘a territory’] assure protection of each other’s interests by reciprocal obligations imposed upon and subscribed to by all owners.

This quote ignores the background of HOA formation and consent, which is not at all a group of informed buyers, themselves, defining the “compact” to which they will be bound.  The buyers in the real world are not the utopian true believers as suggested by the quote.  And, apparently, Wolfe, and CAI, sees this compact as one purely in terms of services, and not in terms of usurping bona fide functions of government — legislative and judicial due process under the Constitution.

This is the chief failing of CAI’s arguments, then and now, that HOAs are not governments, but maybe, entities that require special treatment because they are corporate, not constitutional,  “animals”.  It ignores questions of the Constitution as the supreme law of the land, and implies, falsely, that the HOA will abide by the constitutional requirements as pertaining to public entities, with its restrictions on government and protection of member-citizen rights.  This appeal for “special treatment” and the fact that HOAs are private contracts permit the HOA to escape constitutional obligations, and explains why homeowners have for these 46 years been attempting to restore lost freedoms and liberties.

The reader should ask himself, “Is this the real motivation behind the rejection of the Constitution?”  What is the purpose of the national social contract, the Constitution, if local groups can draw up their own “formal social compacts” and claim separation from constitutional obligations and responsibilities?  Did the Founding Fathers intend that private contractual obligations permit secession from the Union?

See also,

In 1978, CAI was concerned about HOAs as mini-governments.

Government is defined by a “social contract”; HOAs by the new social contract, the CC&Rs.

Notes

[i] Condominiums and Homeowner Associations That Work on Paper and Action, David B. Wolfe (ULI & CAI, 1978).

[ii] Marsh v. Alabama, 326 U.S. 501 (1946).