Category: Opinion

Posts by GKS

When Will HOA Boards Learn that the HOA is NOT a Social Club?

In September 2006, a new Arizona statute gave homeowners the right to file a complaint against their HOA through the Office of Administrative Hearings, a state entity under the Administrative Procedures Act (APA). The rules of civil procedure do not apply, and the conduct of the hearings are less formal than required in the courts giving the homeowner a more level playing field in order to obtain justice.

One of the first cases, OAH # 07F-H067007-BFS, exposed the functioning of the HOA board as a social club, in spite of the board’s use of a CAI attorney and member of its College of Community Associations Lawyers to review the marked amendment to its 1983 CC&Rs. By “social club”, I mean the board’s overt behavior that reflected an ignorance and intentional disregard of the laws,of the governing documents, and of its legal, contractual and fiduciary duties and obligations. I have witnessed this lack of accountability and arrogance by many HOA boards, many times.

At the hearing, the board member repeatedly used such phrases as, “we didn’t think”, “we always did it this way”, “we couldn’t find any law”, “we wanted to”, etc. This is shocking when it comes to transfer of property to the HOA via an amendment rather than by signed deed. By the “fiat” of an amendment, the board appropriated the sidewalks of homeowners as part of the common area. No homeonwner signed over his property by any deed.

In regard to a request for the results of a member survey of changes, the board felt that they were not HOA records but were confidential statements, and it didn’t feel it necessary to comply with ARS 33-1803 pertaining to providing HOA records to homeowner requests. An open meeting of members to debate the changes never took place before the vote.

In her closing statement, the board member said that they felt the survey was confidential and that they wanted a court or judge to tell them that they had violated the law. Another board member saw no problems with the amendment. A third board member was asked, “Do you feel that you own your sidewalk”, since the board maintains the landscaping?

If it were not for the OAH law, this important case would not be heard and the HOA would continue to abuse its authority with apparent attorney approval.

Homeowner’s NJ Supreme Court Brief for Twin Rivers

WHEN EXERCISING DOMINION OVER PERSONS RESIDING WITHIN ITS BORDERS, THE TWIN RIVERS HOMEOWNERS ASSOCIATION/COMMUNITY TRUST MUST RESPECT FUNDAMENTAL RIGHTS GUARANTEED BY THE NEW JERSEY CONSTITUTION

Twin Rivers Homeowners Do Not Waive Their Constitutional Rights by Signing Contracts Containing Non-Negotiable Deed Restrictions

The complete Plaintiff brief is available here (82 pages, 4.1 MB, PDF).

An abbreviated version containing only the issues for the NJ Supreme Court to consider is available, also (3-page TOC).

This brief was provided courtesy of the Rutgers Constitutional Litigation Clinic.

Homeowner's NJ Supreme Court Brief for Twin Rivers

WHEN EXERCISING DOMINION OVER PERSONS RESIDING WITHIN ITS BORDERS, THE TWIN RIVERS HOMEOWNERS ASSOCIATION/COMMUNITY TRUST MUST RESPECT FUNDAMENTAL RIGHTS GUARANTEED BY THE NEW JERSEY CONSTITUTION

Twin Rivers Homeowners Do Not Waive Their Constitutional Rights by Signing Contracts Containing Non-Negotiable Deed Restrictions

The complete Plaintiff brief is available here (82 pages, 4.1 MB, PDF).

An abbreviated version containing only the issues for the NJ Supreme Court to consider is available, also (3-page TOC).

This brief was provided courtesy of the Rutgers Constitutional Litigation Clinic.

Twin Rivers HOA Legal Action: short history

In 2000, nine complaints were filed against the Twin Rivers HOA (Complaints):

1. Political signs
2. Access to HOA community room
3. Access to HOA newsletter
4. Taping of HOA meetings
5. Access to financial information
6. Unconstitutionality challenge to HOA ruling (discipling of members)
7. Access voting lists
8. ADR
9. Denial of equal voting (not property based).

In 2004, the trial court ruled in favor of the homeowners on counts (complaints) 2, 6 and 7 and for the HOA on the other counts (Decision). Each party appealed their adverse decisions: the homeowners appealed on counts 1, 2 (in part), 3, 5, 8, 9 and the HOA appealed on 2 (in part), 6 and 7.

In February 2006, the Appellate Court rendered its opinion (Opinion). It affirmed the decision for the homeowners, and for the HOA on counts 5, 8 and 9. It remanded to the courts for further determination in view of its opinion that TRHA [HOA] was not subject to limitations imposed by the New Jersey Constitution and that the business judgment rule and contractual standards applied.”

“We disagree with the trial court’s determination that TRHA is not subject to constitutional limitations such as those imposed on public sector actors. The basis for the trial court’s ruling was that no governmental entity had delegated governmental powers to TRHA, and that TRHA performed no inherently governmental functions. In arriving at our conclusion that this ruling was erroneous, we eschew the use of the term “quasi-municipal” because, in the context of the issues before us, it tends to beg the question and adds nothing to the necessary inquiries.”

“We reverse the general ruling in respect of the fundamental rights exercises implicated that TRHA was not subject to limitations imposed by the New Jersey Constitution and that the business judgment rule and contractual standards applied. We remand plaintiffs’ claims in counts one, two, and three of the complaint for reconsideration under the proper standard.”

The appeal to the NJ Supreme Court contests the opinion of the Appellate Court, and the remand to the trial court is held in obeyance pending the Supreme Court’s opinion. If the Court supports the Appeals Court, then the remanded items are open for further decision by the trial court in light of the bold statement quoted above.

On January 4, 2007, oral qargments were heard before the NJ Supreme Court, and a ruling is pending.

Do state HOA Statutes Establish HOAs as State Actors?

Do state laws coerce homeowners and support HOAs? Are UCIOA and other HOA statutes establishing state actors?

The New Jersey Supreme Court appears to headed for a decision soon on constitutional issues for homeowner rights — the Twin Rivers case. Steven Siegel, whose very important paper on constitutionality and private governments is referenced in Note 1, has also co-authored the Twin Rivers AARP amicus curiae brief for the homeowners.

The US Supreme Court has stated criteria for state actors/actions beyond the antiquated “public functions” test based on the 1946 company town model. In my view, many state statutes easily satisfy one or more of these criteria and clearly establish HOAs as state actors.

 

Our cases have identified a host of facts that can bear on the fairness of such an attribution. We have, for example, held that a challenged activity may be state action when it results from the State’s exercise of “coercive power,” Blum, 457 U.S., at 1004, 102 S.Ct. 2777, when the State provides “significant encouragement, either overt or covert,” ibid., or when a private actor operates as a “willful participant in joint activity with the State or its agents,” Lugar, supra, at 941, 102 S.Ct. 2744 (internal quotation marks omitted). We have treated a nominally private entity as a state actor when it is controlled by an “agency of the State,” Pennsylvania v. Board of Directors of City Trusts of Philadelphia, 353 U.S. 230, 231, 77 S.Ct. 806, 1 L.Ed.2d 792 (1957) (per curiam), when it has been delegated a public function by the State, cf., e.g., West v. Atkins, supra, at 56, 108 S.Ct. 2250; Edmonson v. Leesville Concrete Co., 500 U.S. 614, 627-628, 111 S.Ct. 2077, 114 L.Ed.2d 660 (1991), when it is “entwined with governmental policies,” or when government is “entwined in [its] management or control,” Evans v. Newton, 382 U.S. 296, 299, 301, 86 S.Ct. 486, 15 L.Ed.2d 373 (1966). (See note 1).

I believe that many elements of state laws can be shown to create HOAs state actors. Many phrases in law are simple pro-active statements, such as the words “constitute” or “create”, as in “acceptance of the deed constitutes acceptance of the CC&Rs” or “creates a lien on the property as of the date the assessment is due”. In other phrases we run into the issue of state mandates. For example, the word “shall” in statutes is interpreted to mean “must”, and the word “may” does not constitute a command or order, but a just an option. Therefore, it has been argued, a statute is not a legislative mandate if it contains the word “may” rather than “shall”, as many HOA statutes contain.

But, let’s examine this a little more closely. The state has the right under its police powers to regulate our activities, but it must justify its interference as a legitimate government interest. And the tests for “legitimate government interest” become more severe as the state attempts to take away our fundamental rights. For example, the state restriction on our rights must not be one of convenience for them, but of necessity because the state’s objective could not otherwise be accomplished. I have not seen any such justifications in any state HOA Acts or statutes, not even in the various UCIOAs.

If the law is silent on an issue, the legality of the issue is open for a decision. If the law says “shall” or makes what I referred to as a “simple pro-active statement”, then the answer has been given quite clearly. If the statute says “may not”, then it is also quite clear. Now, if it says “may”, isn’t this a legalization of the act and a permission for a person to act in such a manner? While it is not the same as a mandate by the state, isn’t it a legalization of the act? And as such, isn’t the state “sanctioning” the act, which can be viewed as state support for the action, such as fining a homeowner without providing proper due process protections by independent tribunals? Otherwise, if the state disapproved or did not support the action, the statute would have read “may not”. But, it said. “may”.

I argue that all these “mays” are a clear indication of state support, encouragement and coercion in favor of HOAs that deny homeowners their fundamental rights, and make HOAs state actors.

1. Brentwood Academy v. Tennessee Secondary School Athletic Ass’n, 531 U.S. 288 296 (2001). (See generally, Steven Siegel, The Constitution and Private Government: Toward the Recognition of Constitutional Rights in Private Residential Communities Fifty years After Marsh v. Alabama, Wm & Mary Bill of Rights J., Vol. 6, Issue 2 (1998)).