Category: Opinion

In the New America, the soon to be renamed America: The United HOAs of America, evidence continues to demonstrate the extend to which HOA promoters will go to protect these defective, authoritarian regimes.

In this carefully crafted Arizona statute, ARS 33-1805, “disclosure” pertains to membership access to HOA records, and not to the judicial laws or court rules pertaining to subpoenaed disclosure under Ariz. R. Civ. P 26 and 26.1.  [These disclosure rules can be found in almost identical in all states since they follow the federal rules]. It attempts to create an aura of judicial protection, but it cannot without being a constitutional violation of due process protections and the equal application of the laws. 

The application of this statute — unlike judicial laws and rules that do not protect existing corporate records from disclosure — to judicial disclosure is an invalid extension to judicial proceedings.  Once litigation commences, the rules of disclosure prevail.  It is a clever HOA protectionist statute to hide substantive documentation from homeowners, documents to which they would otherwise be entitled to access, that flies in the face of legal doctrine.  

It was neither the intent of the legislators to extend this unjust statute to the courts, nor to permit the statute to shield the HOA from “crime-fraud” litigation.  Must the member go to court under a legal action to determine from his independent analysis of the corporate records that a crime may have been committed?  This is the Mafia scenario:  no records, no crime.  By the shrewd wording and the omission of “existing” from the statute to avoid recognition of the true application of legal doctrine, 1805 implies that existing records are protected.

ARS 33-1805(B): (my emphasis)    

Books and records kept by or on behalf of the association and board may be withheld from disclosure to the extent that . . .

(1)   Privileged communication between an attorney . . .

(2)   Pending litigation

(3)   [executive] meeting minutes . . .

  Ariz. R. Civ. P. 26 General provisions concerning discovery [my emphasis]

(b)(3) Trial Preparation: Materials

“[A] party may obtain discovery of documents . . . prepared in anticipation of litigation or for trial . . . only upon a showing that the party . . . has a substantial need of the materials in preparation of the party’s case . . . .”

1970 Amendments

“[T] his Rule . . . does not extend the quality of absolute protection  beyond the ‘mental impressions, conclusions, opinions, or legal theories’ of the person who is entitled to the protection.” Zimmerman v. Superior Court, 84 Ariz. 85, 402 P.2d 212 (1965).

Author’s Comments (Arizona Civil Rules Handbook, Thomson -West, 2005)

9.  privileged materials. “The attorney-client privilege applies only to confidential communications with securing and rendering legal advice. State ex rel v. Corbin v. Weaver, 140 Ariz. 123, 680 P.2d 883 (App. 1984).”  See ARS 12-2234.
10. anticipation of litigation.  “Whether this ‘work product’ privilege applies is determined by . . . whether it contains analyses or opinions or purely factual data, and whether it was requested or prepared at the specific instance . . . or in the ordinary course of business.”

The forty-year political and social movement to create a New America populated by independent HOA principalities, which deny homeowners their fundamental liberties, suffered a major setback in Nevada.  Nevada Governor Gibbons vetoed AB396 that contained a provision for the establishment of HOA reserve assessments determined solely by the board, without any homeowner voice.  Governor Gibbons was concerned that the bill raised “the possibility of increased assessments and the possibility of dramatic changes to common areas without an opportunity for homeowners to participate” which far outweighed any other homeowner favorable provision in the bill. 

Across the country homeowner advocates, who have been denouncing HOA private governments for their lack of true democratic principles, saw this measure as an admission of failure of the HOA concept and industry supporters to properly manage and govern the homeowners.  The bill is an admission of the negligence and failure of HOA boards to have established and maintained good business judgment practices by having monies set aside for foreseeable capital improvements.  Consequently, industry supporters saw the urgent need for this bill with its “quick fix” at the expense of the unrepresented homeowner. And it’s an admission of the failure of the national lobbying organization, Community Associations Institute (CAI), to have provided effective educational tools and training for its “professional” HOA managers and board members.

Yet, state legislatures continue to see no evil, hear no evil, and speak no evil about the HOA structural and legal defects amounting to coerced expression and a lack of choice in housing as a result of mandated HOAs for new developments.  At the same time, and wholly inexcusable, failing to protect homeowner rights under the US and state constitutions, and failing to provide proper consumer warnings and notices relating to the implied surrender of unspecified rights by accepting HOA restricted deeds. 

Advocates can only conclude that industry supporters fear that the adoption of democratic institutions would undermine their planned communities in the truest sense of state-controlled territories. Their conclusions have a solid foundation as exemplified by the CAI statement in its amicus brief to the NJ Appellate Court in the Twin Rivers case. CAI states, “the unwise extension of constitutional rights to the use of private property by members” fearing the bona fide judicial protection of homeowner rights, and offering the fallacy that corporate, business governance is a true and faithful expression of a democracy by the people within the HOA. 

Thank you Governor Gibbons for your bold and courageous stand against New America and the tyranny of authoritarian HOAs.

  “Additionally, your use of the email distribution list to inform Cimarrone residents of the Website was in direct violation of the terms of use for the Cimarrone website operated by May Management. Accordingly, we demand that you cease the use of any emails acquired through the use of the e-mail distribution list or the email distribution list itself.”(“Boards fighting NOT-OFFICIAL Websites”, http://ccfj.net/CCFJopCimarrone.htm).  

The attitude expressed above by HOA attorneys in Jan Bergemann’s Opinion — not only here but across the country — is to be expected once you realize that the fictitious person, the nonprofit, membership corporation HOA, is a legally separate entity from the homeowners who are subject to its domination.  The HOA is not at all like your municipal government that is elected to truly represent the interests of it resident-citizens.  

Since it is a corporation, the HOA board owes it fiduciary duties and responsibilities to the HOA, and not to the members.  The board takes its authority expressly from the authoritarian CC&Rs and bylaws that clearly state that the purpose of  the HOA is the maintenance of property values, and is devoid of any protection of homeowner rights or any objective to uphold your fundamental and constitutional rights.  These rights that are  protected by the US Bill of Rights and state constitution’s Declaration of Rights do not apply to the private HOA corporation.   

Essentially, the board functions as “management” and treats its member-owners as “employees”, and creates a division of goals and objectives as we see in typical management-labor disputes. It asserts a false argument that since the homeowner consented to the CC&Rs, it has consented to everything and all  things performed and enacted by the board as the representative of the homeowner.   

What homeowners need, and state legislatures have repeatedly ignored, are laws to protect homeowners as “residents” with bargaining powers and protections beyond the long gone, profit seeking business developer created CC&Rs adhesion contract.  These groups must have state protected bargaining powers equivalent to professional associations like nurses, airline pilots, etc. 

Now, some large, multi-level associations may call their board members from individual constituent associations “representatives”, but their legal obligations are to represent the individual association’s interests and not the interests on the constituent association’s members.  They, too, do not represent homeowners in the same manner as an elected public representative.  HOAs are not democracies because the homeowner is allowed limited voting rights; China and Cuba also allow limited voting rights.

The following is an an excerpt from the Petition: 

And whereas in regard to SB 1340, in consideration of all of the above as a scheme to excessively punish homeowners failing to pay assessments, and to intimidate homeowners into compliance with the HOA government, industry specialists continue to oppose the sale of foreclosed homes at fair market value; and whereas the institution of these private governments with misleading pronouncements of creating productive and vibrant communities fail to act as a good citizen of the state and in a socially responsible manner; and whereas such a requirement serves to benefit the HOA since it is in second position and must pay off the mortgage balance; and whereas the HOA in practice discriminates against those homeowners with substantial equity and do not foreclose on those homeowners with inadequate equity;  

It is Resolved, 

That the Senate pass SB 1340 to right the wrongs perpetrated by the Industry sponsored statutes of the Planned Communities Act of 1996, to treat the citizens of Arizona, who are more and more compelled by misguided municipalities to live in an HOA, with the respect and dignity they rightfully deserve, and to provide a just and an equitable relief to the financial difficulties of these homeowners who are forced into positions whereby they cannot make assessment payments and do not intentionally act to not pay their assessments;

The full Petition can be viewed at Petition.

The following is an an excerpt from the Petition: 

And whereas in regard to SB 1340, in consideration of all of the above as a scheme to excessively punish homeowners failing to pay assessments, and to intimidate homeowners into compliance with the HOA government, industry specialists continue to oppose the sale of foreclosed homes at fair market value; and whereas the institution of these private governments with misleading pronouncements of creating productive and vibrant communities fail to act as a good citizen of the state and in a socially responsible manner; and whereas such a requirement serves to benefit the HOA since it is in second position and must pay off the mortgage balance; and whereas the HOA in practice discriminates against those homeowners with substantial equity and do not foreclose on those homeowners with inadequate equity;  

It is Resolved, 

That the Senate pass SB 1340 to right the wrongs perpetrated by the Industry sponsored statutes of the Planned Communities Act of 1996, to treat the citizens of Arizona, who are more and more compelled by misguided municipalities to live in an HOA, with the respect and dignity they rightfully deserve, and to provide a just and an equitable relief to the financial difficulties of these homeowners who are forced into positions whereby they cannot make assessment payments and do not intentionally act to not pay their assessments;

The full Petition can be viewed at Petition.