Category: Opinion

 

[As a result of construction defects].  A provision of the Homeowners Association’s CC&R’s required that all disputes between it and Intergulf be decided by a general judicial reference  pursuant to Code of Civil Procedure section 638.1 [Essentially a judgment by a court appointed referee, which precludes a trial by jury. See excerpt from Court records, below.]  Intergulf moved for an order submitting the case to a judicial referee. Association opposed the order, arguing that the provision of its CC&R’s cited by Intergulf was not a contract as required by section 638 and that if it was, it was unconscionable and unenforceable.  [This is the HOA arguing against a contractual interpretation].

 

 

The court noted that “even those jurisdictions permitting predispute waiver of the right to jury trial do not uncritically endorse unregulated freedom of contract; rather, they seek to protect the constitutional right to jury trial with a number of safeguards not typical of commercial law, including  . . . restrictions on the type of contracts that may contain jury waivers, presumptions against a finding of voluntariness, inquires regarding the parties’ representation by counsel as well as relative bargaining power and sophistication, and consideration of font size and placement of waiver clause within the contract.”

 

 

Complete commentary . . .

Treo HOA v. Intergulf  opinion:  Jury trial.

 

 

Last night, the Presidential Candidates spoke at the National Service Forum at Columbia Univ. in New York. Volunteerism by citizens in private groups was mentioned as the answer to more government services.  My point here is to call attention to such statements as myths about an America fading into the sunset, and the failure of our national leadership to understand what is happening here in America.  How will they learn about the real America if advocates do not educate them.  No one else will.

 

One of the Hosts specifically referred to Robert D. Putnam’s book, Bowling Alone* that records a decline in volunteerism and civic virtue. Obama’s “mutual responsibility” comes close to this concept of civic virtue.  Putnam describes social capital as,

 

The core idea of social capital theory is that social networks have value. … Social capital refers to connections among individuals – social networks and norms of reciprocity and trustworthiness that arises from them. … ‘Social capital’ calls attention to the fact that civic virtue is most powerful when embodied in a dense network of reciprocal social relations. A society of many virtuous but isolated individuals is not necessarily rich in social capital.

 

I wrote about Putnam’s concept of “social capital” in my June 2006 commentary, “The Effect of Planned Communities on Social Capital.”**  In my commentary I compare this view of voluneerism in American not with the propaganda about HOAs building harmony and vibrant communities, but with what is really occurring in HOAs.  I make use of a number of studies contained in the Barton & Silverman book, Common Interest Communities***, that hold true today as demonstrated by the continuing news releases concerning the actions of HOA boards.  HOAs are founded on a social relationship of a distrust of neighbors —  they will destroy MY property value and must be watched, but not me, I’m good —  and the HOA attorneys are only too happy to instigate this divineness of “us against them”.  And with the strong arm of financial ruin and loss of one’s home, in an undemocratic society, people are naturally fearful and see much harm in speaking out.

 

Our national leaders must deal with reality, and not with myth.  As the data shows, 20% of Americans live in HOA-land under authoritarian regimes.

 

 

Notes

 

*       Bowling Alone: the Collapse and Revival of American Society, Robert D. Putnam (Simon & Schuster 2000).

**     http://pvtgov.org/pvtgov/downloads/social_capital.pdf.

***  Common Interest Communities, , Stephen E. Barton & Carol J. Silverman, eds. (Institute of Government Studies Press, Univ. of Calif., Berkeley 1994).

 

Last year, the NJ Supreme Court ruled on the free speech issues presented in a homeowners’ suit against the Twin Rivers HOA[i].  This month, law professors Paula A. Franzese and Steven Siegel addressed the court’s opinion in their joint Rutgers Law Journal article[ii] and their concerns regarding the legal constitutional status and public policy toward homeowners associations.  Important legal doctrines, laws, arguments, issues and concepts are explored in this important article. This commentary presents certain issues raised by the authors in their article.

 

Citing the Court’s opinion,

 

Our holding does not suggest, however, that residents of a homeowners association may never successfully seek constitutional redress against a governing association that unreasonably infringes their free speech rights.[iii]

 

the authors argue

 

[T]he Court’s resolution places it . . .  providing a framework for a new constitutional approach to free speech in the context of homeowners associations, while also making clear that traditional private law concepts remain fully applicable to homeowners associations. . . . [T]he Court’s opinion reveals that the Court did indeed announce the framework of a new constitutional approach to CICs [common interest communities] . . . .[iv]

 

The Court held that a homeowners association’s regulations are not subject exclusively to the private law doctrines of contract and property. Rather, aggrieved residents may also seek constitutional redress.  The Twin Rivers decision is not a model of clarity.[v]

 

[T]hat determination [the rejection of the Coalition case precedent] could be understood to mean that an aggrieved homeowner’s sole remedy against an association’s speech-infringing regulations lies exclusively in the private-law doctrines of contract and property.[vi]

 

 

The New Jersey Coalition precedent spoke of a “historical path of free speech”,  moving from parks, squares, the “commons”, to downtown business districts and shopping malls.  The authors raise the issue, “Similarly, in Twin Rivers, the relevant constitutional question was whether the ‘historical path of free speech’ has moved from public municipalities to private homeowners associations.[vii]“

 

Furthermore, the Court equated “residential” with inherently “private”- a determination made without explanation, and one that is inconsistent with the long held notion that streets held open to the public serve a vitally important function in connection with the rights of free expression and assembly.[viii]

 

[H]omeowners associations are the inheritors of the realm of open public discourse that once was exclusively undertaken in town halls and on public streets. Today, that discourse often occurs in private “community centers” and on streets that are open to the and maintained by the public with taxpayer dollars, yet nominally under the ownership of homeowners associations.[ix]

 

The Court’s opinion seems to adhere to the common law “standard reference”, the Restatement of Property, which supports the deference to private property law over constitutional law, “The question whether a servitude unreasonably burdens a fundamental constitutional right is determined as a matter of property law, and not constitutional law^[x].”  Here we have a definite statement that the US Constitution is not the supreme law of the land, that it shares authority with private property law advanced by the real estate special interest, and apparently agreed to by the NJ Supreme Court.  Welcome to New America!

 

The authors feel that the constitutional question was not satisfactorily delineated.

 

[T]he Twin Rivers decision is unsatisfactory in many respects, because it lacks clarity and a firm underpinning in settled constitutional doctrine.  The Court’s failure to anchor its decision in established constitutional doctrine is particularly unfortunate, because there is substantial precedent available and adaptable to the homeowners association paradigm [legal concept or model].[xi]

 

Furthermore, the authors also raise the question of  the proper standard of judicial review.  Simply stated, based on certain factors, the burden that the government must meet to restrict a constitutional right can be any legitimate government interest to a narrowly tailored and strictly defined government necessity that has no alternatives but to restrict the constitutional right.  Which applies to private government HOA restrictions?  It appears the Court rejected traditional constitutional doctrine for some vague new standard.

 

For example, under settled First Amendment doctrine, government regulation of speech in traditional public forums is subject to heightened judicial scrutiny. In that context, government may enforce such reasonable time, place, and manner restrictions only if the restrictions are content-neutral, are narrowly tailored to serve a significant government interest and leave open ample alternative channels of communication. [emphasis added].[xii]

 

The necessary implication is that the Court in Twin Rivers determined that homeowners associations play an important role in the civic life of New Jersey, and thereby warrant a new standard a constitutional standard that reflects the special status of associations. The Court left for another day the delineation of that standard. [emphasis added].[xiii]

 

 

Now, no matter how one feels about homeowners associations, it cannot be argued that the acceptance and preference of homeowners associations by homebuyers, government officials, the courts, and by the various state legislatures is creating a New America inconsistent and contrary to the America of our Founding Fathers.  For more reading on Establishing the New America of independent HOA principalities see PVTGOV.

 

 

Notes

The current issue of the Rutgers Journal of Law and Public Policy is all about HOAs.  See http://www.rutgerspolicyjournal.org/journal/vol5no4/JLPP_5-4.pdf 

 

Rutgers Journal of Law & Public Policy
VOLUME 5 SPRING 2008 ISSUE 4

CONTENTS
INTRODUCTION TO SYMPOSIUM EDITION ON HOMEOWNER ASSOCIATIONS: A DISCUSSION OF THE PROBLEMS AND SOLUTIONS…………………………………………………………630
TRANSCRIPT OF THE CONFERENCE…………………………..631
HOMEOWNER ASSOCIATION PROBLEMS AND SOLUTIONS…………………………………………………………699
Edward R. Hannaman, Esq.
THE TWIN RIVERS CASE: OF HOMEOWNERS ASSOCIATIONS, FREE SPEECH RIGHTS AND PRIVATIZED MINI-GOVERNMENTS……………………………………………………729
Paula A. Franzese and Steven Siegel

 

 

Homeowner Associations: Problems and Solutions, 5 RUTGERS J.L. & PUB. POL’Y 630 (2008).

 

Excerpts:

 

Now, we’ve learned from society’s experience with various policy issues that impact a significant number of people that the path to dealing adequately with the problems begins with talking openly about the problem, confronting reality, and not ignoring it.  (Renee Steinhagen, Moderator, p. 631).

 

 

 

Those trends [public space converted into private space and the privatization of public government functions] lead inexorably to the conclusion that CICs play an increasingly central role in the daily life of New Jersey residents. New Jersey law, however, has continued to regard CICs as wholly private organizations that are largely exempt from any form of regulation or oversight. The laissez-fare approach to CIC regulation is reflected in the statutory law, which affords exceedingly few rights and protections to homeowners association residents, and in the common-law principles applied by New Jersey courts when resolving disputes arising over CIC governance.  (THE TWIN RIVERS1 CASE: OF HOMEOWNERS ASSOCIATIONS, FREE SPEECH RIGHTS AND PRIVATIZED MINI-GOVERNMENTS, Paula A. Franzese and Steven Siegel, p.729)

 

 

One cannot propose solutions without adequately understanding the problems. If society’s intention in setting up associations is to encourage the formation of undemocratic Gulags ruled by unaccountable boards and for the enrichment of those who profit from owner ignorance or impotency- we have succeeded completely. (Ed Hannaman, public input, p. 699).

 

As a result of the efforts of two homeowners, Bill Brown and Walt Kearns, Arizona HOA case statistics for the first two years (22 months) have been developed based on 59 cases, of which 42 were decided by the Administrative Law Judges ( 4 split decisions were ignored). In spite of some minor differences in views, the analysis showed some 43% of the cases were won by the petitioner, the homeowner. (18 decisions for the homeowner; 24 for the HOA).

This result is consistent with the results found in September 2007 by this writer based on the first-year cases (32 decisions), which showed a 42% win percentage by homeowners. (See http://azhoaoah.wordpress.com/2007/09/24/first-year-oah-statistics-on-hoa-cases/).

In Arizona in 2005, a bill to permit Justice of the Peace Courts to hear HOA disputes was defeated by claims by CAI attorney lobbyists of a huge flood of complaints that would destroy the effectiveness of the JP courts. This was a dramatic and marked reversal of the CAI position, maintained for years, that only 5% of the HOAs were bad, so why make new laws. It appears that CAI, Community Associations Institute, that national lobbying trade group proclaimed as the experts on homeowner associations matters, got it all wrong. What else are the CAI attorneys telling the legislators that’s has no basis in fact?

In 2006, the bill to authorize OAH resolution of HOA disputes had a tough battle — Chairmen of both the Senate and House Rules committees attempted to not hear the bill, based on their rights as Chairman of the Rules committee. They failed and the bill was overwhelmingly passed by the Arizona Senate and House.

Just this past week, Senator Obama stated the problem with the American political system quite succinctly. Referring to current political attitudes as “You’re on your own“, he said,

Ours is a promise that says government cannot solve all our problems, but what it should do is that which we cannot do for ourselves – protect us from harm . . . . Our government should work for us, not against us. It should help us, not hurt us.

There are more necessary reforms to the OAH procedures. The CAI attorneys have challenged the constitutional rights for OAH to adjudicate HOA disputes. They have attempted to turn OAH into a civil court with its strict Rules of Civil Procedure. The OAH cannot hear disputes raising questions of constitutional issues, but more importantly, it is restricted by the enabling act from applying the Restatement (Third) of Laws, Property: Servitudes to these disputes. Yet, HOAs owe their power and oppression based on this common law source. For example, Chapter 3 deals with the Validity of Covenants, and Chapter 6 deals with HOA structure, functions, etc.

When will the legislators, the courts, the media, and the various public interest nonprofits going to wake up and face the reality before them?