Category: Opinion

Last month I raised the following questions (“Homeowner Associations: ex post facto amendments, consent to be governed, contracts to avoid the Constitution”, HOA Constitutional Government, October 23, 2007):

Can we enter into a private contract to avoid the application of constitutional protections?

Can individuals contract to establish a governing body that controls and regulates the people within a territory, and avoid adherence to the US Constitution, by means of a contract that is contrary to and ignores the state municipality laws?

The NJ Supreme Court answered these questions with a resounding YES in its  Twin Rivers HOA decision, giving support to the establishment of the New America, the United HOAs of America.  Property laws and the business judgment rule are sufficient protections for homeowners in HOAs, and  Constitutional protections need not intrude into these privately contracted governments.  In its rather scant reassurance that constitutional protections are available to homeowners, the Court said,

“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.” P. 32.

View the video clips of the oral arguments made by the industry successfully arguing that HOAs should be left alone since they are the will of the people; and the homeowner arguments relating to the need for constitutional protections and oversight. 

The three 7 minute videos, and supplemental materials, including the complete Court decision, can be found at Twin Rivers under  the Establishing New America NJSC links. 

Recently, a Colorado judge awarded an HOA some $10,000 in libel damages from a homeowner who was quite forward in her criticisms of her board. The Colorado Gazette reporter quotes the homeowner association president,

“She still has rights as an owner,” [he] said. “It’s a legitimate issue. We’ll consider it, as long as she’s civil and doesn’t call people names. We’re not in the punishment business.” [emphasis added].

Say again????

HOAs are in the punishment business 

1.  When it possesses foreclosure rights that usually exceed US Supreme Court opinion on excessive penalties in insurance damage claims (State Farm v. Campbell, 538 U.S. 408 (2003) ) —  the “it’s not fair for good people to pay for deadbeats” slogan used by proponemts of HOAs and supporting state legislators; 

2.  When it issues, not uncommon, $25-$100/day fines for trivial, alleged violations;

3.  When it denies proper due process ( the ‘standard’ CC&R and statute wording only mentions “an opportunity to be heard”), by failing to include with respect to this so-called hearing, “by an impartial tribunal where the homeowner can present and question witnesses” — the recognized standard for proper due process hearings;

4.  And when it operates with homestead exemption laws that exclude homeowners living in HOAs as a special class of citizen from general exemption laws that apply to all the residents of the state.

No, it is quite clear that HOAs seek to punish as a detriment to other homeowners who may insidiously plan, as it appears HOA board thinking goes, to avoid paying HOA debts.  Never mind any factors beyond the control of the homeowner, like death of the bread-winner, loss of employment, market downturns, personal family financial obligations,   such as unexpected doctor and hosital bills, etc.  HOAs seem to ignore the fact that our society operates with a more compassionate view of  “fairness” .

No, the homeowner must pay no matter what, for as long as he lives in the HOA, because his home is collateral for HOA expenses.

Recently, a Colorado judge awarded an HOA some $10,000 in libel damages from a homeowner who was quite forward in her criticisms of her board. The Colorado Gazette reporter quotes the homeowner association president,

“She still has rights as an owner,” [he] said. “It’s a legitimate issue. We’ll consider it, as long as she’s civil and doesn’t call people names. We’re not in the punishment business.” [emphasis added].

Say again????

HOAs are in the punishment business 

1.  When it possesses foreclosure rights that usually exceed US Supreme Court opinion on excessive penalties in insurance damage claims (State Farm v. Campbell, 538 U.S. 408 (2003) ) —  the “it’s not fair for good people to pay for deadbeats” slogan used by proponemts of HOAs and supporting state legislators; 

2.  When it issues, not uncommon, $25-$100/day fines for trivial, alleged violations;

3.  When it denies proper due process ( the ‘standard’ CC&R and statute wording only mentions “an opportunity to be heard”), by failing to include with respect to this so-called hearing, “by an impartial tribunal where the homeowner can present and question witnesses” — the recognized standard for proper due process hearings;

4.  And when it operates with homestead exemption laws that exclude homeowners living in HOAs as a special class of citizen from general exemption laws that apply to all the residents of the state.

No, it is quite clear that HOAs seek to punish as a detriment to other homeowners who may insidiously plan, as it appears HOA board thinking goes, to avoid paying HOA debts.  Never mind any factors beyond the control of the homeowner, like death of the bread-winner, loss of employment, market downturns, personal family financial obligations,   such as unexpected doctor and hosital bills, etc.  HOAs seem to ignore the fact that our society operates with a more compassionate view of  “fairness” .

No, the homeowner must pay no matter what, for as long as he lives in the HOA, because his home is collateral for HOA expenses.

 Excerpts . . .

Can individuals contract to establish a governing body that controls and regulates the people within a territory, and avoid adherence to the US Constitution, by means of a contract that is contrary to and ignores the state municipality laws?

 

How has this state of affairs come to be?  The HOA legal basis for the exclusion from the application of the 14^th Amendment is the use of CC&Rs, the interpretation of CC&Rs as binding contracts — but not contracts of adhesion — and the equitable servitudes doctrine of “constructive notice”.  This legal basis to sidestep the Constitution raises serious questions regarding the unconstitutional surrender of fundamental rights.

 

Supporters of HOAs point to the general consent doctrine as applied to public governments:  if a person lives in the political jurisdiction, then he is assumed to have consented to be governed.  (Pro-HOA supporters apply this same rationale with regard to adhesion contract criticism: no one forced him to buy in HOA-land). If people buy into HOA-land, then, it is argued, they consent to be governed as if the HOA were indeed a public entity and not subject to the restrictions of contract laws.  Yet, HOA governance is not public governance, but contractual private governance.

From Villa de las Palmas opinion, “We conclude that under the plain and unambiguous language of [the California Davis-StirlingAct], use restrictions in amended declarations recorded subsequent to a challenging homeowner’s purchase of a condominium unit are binding on that homeowner . . .  Subjecting owners to use restrictions in amended declarations promotes stability within common interest developments. “

And what about enforceable binding contracts?

read the complete paper . . .

Bob Metcalf wrote a piece on his discovery of an unusual HOA web site, one that declares the HOA as a truly democratic organization (See Kentlands_tragedy).  This Gaithersburg, Maryland HOA calls itself, in its Declaration, “Kentlands Community Charter (Covenants, Conditions & Restrictions)” (See Kentlands site).  It’s homeowner’s guide reads:

“What definitively sets Kentlands apart from other homeowners associations (HOAs), though, is its democratic system of community governance. Because HOAs must, by Maryland law be organized under the laws that regulate business corporations, they are required to be governed by a board of directors (trustees). The typical result is an essentially autocratic system of governance, one to which many homeowners object because of the lack of public participation and absence of checks and balances.”

 “Kentlands has addressed some of the structural defects that are inherent in HOAs by creating a system of governance that is modeled after traditional American public government organizations. There are, in essence, three branches of government: legislative, executive, and quasi-judicial.” 

This was intriguing, a bona fide attempt to establish a democracy under a corporate form of government.  However, the governing documents tell another story, as Bob reports.

Read the complete commentary at Kentland.