Category: Opinion

Posts by GKS

HOA management case study – 2022 epilogue

Author’s note:  This commentary is a follow up to my Dec. 2021 – Feb. 2022 “mgmt case study” posts relating to an Arizona HOA. Its board has continued its path with a few suggestions on open meetings and videotaping the board meetings.  The series starts by entering “case study” in the Search box in the left panel. This is a reorientation and educational process, but the board is not yet amenable to hear the whole truth about HOAs.

Resource: Towe Lifestyle article: SCG community is a business

“[The board of directors]  bring an extraordinary level of imagination and management expertise to bear on the very complex problems of running a sophisticated and demanding business. No sugar coating either. The men and women serving you on the BOD represent you and your interests with a sincere desire to make Grand the very best place it can be.[1]

I beg to differ with this statement on several issues that I see as PR and more BOD propaganda.[2]

First, SCG is not a business!  Did you sign a commercial UCC contract or residential  real estate contract? Enough said! From whence  does this mistaken belief  arise.  In my many years of research I found it to be from long term indoctrination and acceptance of the teachings of the CAI School of HOA Governance[3], my categorization, of CAI’s special interest agenda. There is strong evidence supporting the view that CAI dominates SCG policy.[4]

In 2015 the board claimed in its IRS tax-exempt application that SCG was a nonprofit social welfare organization and was not applying for exemption as an HOA.  There are no grounds, no authority in the governing documents, then and now, to make such an assertion. In the application, the president informed the IRS that SCG provides services “benefitting both the Sun City Grand community and the surrounding community.” You will not find that “and surrounding community” claim anywhere else but on the IRS application.

Second, the article contains a number of vague and confusing assertions not supported by the facts,  and contradict such attitudes found in other BOD publications by other SCG officials. One gets a sense of Who’s in charge? Additionally, it raises the question of board competence, which can be found in recent actions and decisions by the BOD[5]. Puffing can be found in the article:

  • “an extraordinary level of imagination and management expertise”
  • “to make Grand the very best” contradicts the Vision statement that proclaims SCG is already the best, “Grand is the premiere age-restricted adult association.”
  •  “sophisticated and demanding,” which is undoubtedly demanding but a sophisticated” business?  Are the demands on the board of directors beyond its pay grade? Does the public view town managers, SCG equivalent to CAM, viewed as a business? Does the public view town councils, the equivalent of the SCG board, viewed as a business?

Finally, “[Directors] on the BOD represent you and your interests” is misleading and contradicts the law and SCG policy that the board owes its obligations to the HOA “person.”  The 2021 Candidates Package paragraph “9a”,  makes my point. “Directors work first and foremost for the best interests of the Association.”  This authoritarian tone is contrary to our democratic values. This attitude reflects its policy to run SCG as a business, and at times a for-profit business.  

I’m left with who and what is SCG?  The governing documents, like the US Constitution make that clear; yet the board hasn’t seemed to accept this foundation for its authority to act on behalf of the members, and that’s not to be a business.  It has failed to address two top level management concerns of boards of directors: What is our business and what should it be?

As I detail in “CAI dominates SCG” (see link below), the board has a duty of care and a fiduciary responsibility to the members. Unless the BOD does an about face in regard to its CAI legal advisors, members can expect more of the same in dealing with several serious legal matters that are on the horizon.

Notes

[1] Robert Towe,  Board Director, “Our Great Community”, Lifestyles, Oct. 2022.

[2] “Propaganda” is false statements, half-truths, omission of facts, and misrepresentations designed to produce a favorable attitude and mindset in the targets.”  The BOD provides illusions of happiness and approval, and are supported by the majority of their members; its messages use propaganda statements — disinformation consisting of false, misleading, half-truths, omitting facts, and fear.

[3] CAI School of HOA Governance: The foundation and principles of the School can be traced back to CAI’s Public Policies, The CAI Manifesto (its 2016 “white paper”), its numerous seminars and conferences, its Factbooks and surveys, its amicus briefs to the courts, and its advisories, letters, emails, newsletters, blogs etc. I have designated these foundations and principles collectively as the CAI School of HOA Governance.

[4] Read the domination argument paper at:   CAI Dominates SCG.

[5] See Wizard of SCG.

HOAs: the modern instance of the medieval feudal system

A little bit of history is good for the soul; it puts a perspective on why things are the way they are.  Let’s go back before modern times and the creation of the modern HOAs as outlined in the 1964 The Homes Association Handbook.

Who controls and owns the land? Well, it was he who conquered it and took it from some other governing person or body. In 1077 William the Conqueror from Normandy took control of England from the Saxons, who earlier took it from the Anglos (Anglo-Saxons).

The social/economic system was known as feudalism in which serfs or peasants called vassals, were given  some land called fiefs by the owner, known as the Lord (of the manor). The vassal was to work the land and paid for the grant from the Lord in terms of produce,  services, and money. (It also included serving in the army to defend his Lordship).

In short, William as the “high” Lord gave land to his Nobles who became his vassals. The vassals, in time, “sublet” their lands and created another level of Lord-Vassal relationships, each subservient to the original grant, and so on.

“The consequence of the feudal system was the creation of very localised groups of communities which owed loyalty to a specific local lord who exercised absolute authority in his domain. As fiefs were often hereditary, a permanent class divide was established between those who had land and those who rented it.” (Feudalism – World History Encyclopedia).

By this time the parallels can be easily identified.  Follow along with the modernization of feudalism that required changes and additions to real estate property laws and the doctrine of CC&Rs was invoked. As a necessity, the doctrine known as ”equitable servitudes” and was made part of the CC&Rs. Laid out in the Handbook, equitable servitudes replaced the grant from the Lord to his Vassal in such a way as to bind all future owners.   In other words, the CC&Rs enabled perpetual control over the land or subdivision of today. Homebuyers are forced to be bound to this original CC&Rs, as validly amended.

Now to the legality that the owners never signed the CC&Rs created by the developer at the time of initial purchase.  However, the servitudes were hampered by the doctrine of “running with the land” found in your CC&Rs, which proclaimed that the CC&Rs, in order to be binding on subsequent owners, had to be in place at first sale—to the developer. Consequently, from the get-go, homeowners bought into an adhesion contract that did not permit a give and take bargaining  between seller and the new buyer —  you  — as required under contract law 101. I call it a huge GOTCHA!

So, here we are!

The unspoken Alliance: no HOA negatives

In 2010 I raised the question: Are the media and local supporting governments part of “an unspoken alliance of  no negatives about HOAs?”  I avoided using the word “conspiracy” because all it takes is a nod or wink that everybody understands. No written or verbal statement was necessary.

In 2012 I wrote,

It is interesting that the media always fails to mention this affiliation with CAI, as many of these attorneys lecture on how to live happily in an HOA. And they are supported by your local town government through seminars and conferences like the HOA Academy and Leadership Centre programs. 

How about your Attorney General? Your consumer protection agencies? Your real estate department? The Realtors? Heard or read anything of substance  from them against HOAs? Gee, maybe I’m delusional and there are no serious issues of substance after all.

In 2013 when a homeowner filed suit against the AZ legislature challenging the constitutionality of  an HOA bill (HB 1454), not a word or peep from the media or those self-promoting think tanks like The Goldwater Institute, Institute for Justice, and ACLU. And today, not a word or peep from the media or the think tank constitutionalists, about the landmark protected free speech law (HB 2158; AZ law Ch 125 (2022)) concerning HOA governing issues.

It is an unexplainable bias in favor of the HOA model of governance by those in a position to understand and to know better. Sort of a mass group think conduct nationwide. Some may call it a cult where opposing thoughts and information are rejected, ignored, and denied, and the “messengers” are attacked. The silence is so contrary to human behavior — the normal curve — to conclude forces are at work.

A major exception did occur in 2016 when the conscientious reporter, Judy Thomas of the KC Star (KC Star: problem with HOA? Don’t go to CAI ), tried to do what’s right, but ran into the corporate bias wall. It was a unique exposure, standing all alone but nothing was accomplished.

HOA defect: volunteers & boards of directors

There is a serious defect in the HOA model of local governance based on a private contract that requires a board of directors to manage the association through the use of unpaid volunteers. It seems as though the framers ignored the old truism: you get what you paid for. Now don’t get me wrong, there are qualified directors and those with an honest belief in volunteering and pitching in to make their HOA a better place. But the legal structure to often prevents them having any real impact. A topic to be addressed elsewhere at another time.

The framers of the model were well aware that to ask homeowner/members to fork up assessments that included director/officer salaries or compensation would never fly. It would not even fly today. Recourse then was made to the utopian concept, the private commune, where everybody chipped in and did what they were capable for the benefit of the commune. And that required individuals who believed in the model to volunteer their time. Without this above and beyond call for volunteers the mass merchandising of HOAs would have failed.

In order to explain my opinion, I must take members back to 1964 and the framing of The Homes Association Handbook that became the HOA declaration of CC&Rs “bible.”  All HOA declarations flow from this Handbook and constitute the vast boilerplate found in all CC&Rs over the past 58 years.

This topic was addressed in the Handbook. And since the growth in size of HOAs led to incorporation of the associations, the need for a board of directors was mandatory and a solid and necessary requirement. The answer was solved, they thought, by unpaid volunteerism. Further reaching out in order to make the HOA legal scheme work, the demand for involvement in the affairs of the HOA, especially for directors, ran against the national data on citizen involvement in government. (Just check the number of voters in presidential elections as a percent, not of registered voters, but of voter age people, shows on average a 35% turnout.)

As it has become apparent, many HOAs have resorted to “conscripting” members just to sit on the board to meet the statutory and governing document requirements. They are generally YES men, going along with the power clique or president’s wishes. This has led to anyone, qualified or not, to get him on the board.

Undue influence of CAI on HOA

I posted this in reply to a simplistic Nextdoor post that wrote that HOAs are governments:

Yes, HOAs and SCG are not simply nonprofits, charities, or for-profit entities. They are, in a complete description, a contractual, private government allowed to function outside constitutional protections under the guise that the members openly and with full knowledge agreed to surrenders and waivers of their rights under the US and state Constitutions.

I suggest concerned people seeking the truth read my simple pamphlet, “HOA Common Sense: rejecting private governments” as a starter. We can then have a meaningful discussion of the issues. It’s on Amazon for just $3.00 Kindle edition.

Or go to https://pvtgov.wordpress.com and search on Common Sense. A preface can be read here Preface to HOA Common Sense. SHALL WE MOVE AHEAD IN A MEANINGFUL MANNER?