Category: Opinion

Posts by GKS

HOAs undermine principles of democratic America

The immediate reaction to the title of this editorial comment from the vast majority of readers, is as I suspect,

Unbelievable, wild statement; No way; I love my HOA; the volunteers work for the community; the board of directors has my interests at heart; I can vote for the directors and on other matters, And anyway, I really don’t care, I’m happy with the amenities, facilities, and protection of my property value.

This blindness toward compliance with the US Constitution and the laws of the land can be traced to the culture of the HOA-Land Nation as I presented in Part 1 of The HOA-Land Nation Within America. As for the false argument that because members can vote for a board of directors makes the HOA democratic, ignores the reality of Cuba, China, Russia, North Korea and other countries where people can also vote for their leaders.  Voting alone does not make a democracy.

Other aspects of the HOA model of government that illustrate departures from public government, the Constitution and laws of the land can be found in the HOA-Land Nation publication: lack of oversight protections and the absence of a separation of powers, especially there is no independent judicial function for fair hearings; an absence of meaningful  penalties against acts of the Board amounting to absolute immunity; and inadequate fair election procedures as found in public elections.

In all practicality, the HOA private government is based on a business model and not a municipality model, and whoever described a business as being democratic?  As such, following the business model, the HOA is a one-party government; the party of the incumbents who control the selection of candidates, who can vote, and the election procedures designed to keep the establishment in power.

Here’s what Gandhi had to say about one-party governments and democracy. With the independence of India from British control in 1947, Mahatma Gandhi reflected on the dominance of the Indian National Congress Party over the newly formed government.

“[Gandhi] realized that a one-party system could actually be a no-party system, for when the government and party are one, the party is a rubber stamp and leads only to a fictitious existence.

‘Without free criticism and potent opposition, democracy dies.

‘Without political criticism and opposition, a nation’s intellect, culture and public morality stagnate; big men are purged and small men become kowtowing pygmies. The leaders surround themselves with cowards, sycophants and groveling yes-men whose automatic approval is misread as a tribute to greatness.’”

(The Life of Mahatma Gandhi, Louis Fischer, The Eaton Press, collector’s edition (1988, initially 1950).

The common culture within the HOA-Land Nation treats any criticism, any opposition, any independent thought not supported or approved by the board of directors as subversive. The members are inculcated into adopting and supporting this attitude and treat such views as harmful to the peace and harmony of the community.  Committees of members — opposing political parties – are attacked and treated with hostility. Free political speech and dissent is not tolerated.  

With 23% plus Americans living in HOA-Land, the HOA culture has had its effect on national, state and local politics; ignoring the Constitution and laws of the land are easily acceptable and do not constitute a problem for HOA members. 

HOA bankruptcy and member liabilities

This Foxwood Hills HOA (SC)  bankruptcy event is every important for all to understand what’s going on.  I am offering my views based on the article and my knowledge of the bankruptcy procedure, which I have some familiarity.  The article also shows first-hand the liability attached to your HOA membership that comes under the heading of “joint and several liability” (J&S), mentioned several times in my materials.

Basically, the phrase applies to all members of a sued party in  a lawsuit whereby the total monetary damages can be collected from any one or all the members of the party. It’s like  a partnership where the debt can be collected from the partners who can pay to pay for all total debt when others cannot make the payment. 

Here, as I read the article,  we have the HOA unable to collect assessments from its members to cover its budgeted expenses, and so decided to apply a J&S policy and “tax” only the members who have not abandoned  or disowned their property — those who could pay. The plaintiff, Busbee, filed suit and said this isn’t right. Foxwood didn’t amend its CC&Rs to permit such unequal treatment of its members. There is no covenant for the HOA to do this.  In HOA-Land it would require a court order or member approval – yeah, right!

A bankruptcy is usually filed because revenues are less than monetary payouts and the prospect is dim in making the finances balance.  Under Chapter 11, as Foxwood filed, it submits a plan to make payments on its debt and is obviously a give and take negotiations between the creditors and Foxwood as the debtor. Detailed financials are submitted including who are the creditors and what money is owed the HOA, which is essentially the assessments not being paid by the members.

Here, as I see it, the HOA filed bankruptcy in anticipation of the outstanding lawsuit which could require not the payments from the members, but for Foxwood to pay back the alleged excessive dues collected by Foxwood.  The decision by the bankruptcy court rests on the outcome of the lawsuit as it needs a precise and legal statement of Foxwood’s financial status.

See restoring HOA Constitution Plan FAQ

The existing legal structure and state laws need to be dramatically altered to remove 40-plus years of problems. His long-term plan is to apply organizational development (OD) principles and methodology to correct this long standing affront to the US Constitution.

Go here to learn more about the Plan to restore constitutional protections. http://starman.com/mgmt

A lesson in professional conduct for HOA attorneys

While there are many anecdotal claims of attorneys for HOAs acting unprofessionally and unethically, there are sufficient instances documenting such conduct.  I have encountered and witnessed some myself. Few have been charged to my knowledge. 

The most common, in my experience,  is a violation of civil court procedure where the attorney churns the account, seeks many continuances, and raises dubious claims based on the extension of commonly accepted legal doctrine and terminology.  Fortunately, I am not an attorney and need not concern myself with extending “professional courtesies” to my opponents.

The questionable conduct I am addressing can be found in federal rules and in various state 1) supreme court Rules of Professional Conduct, usually under Rule 42, E. R. 1.13, Organization as a Client, and 2) under Rules of Civil Procedure, Rule 11(b), Signing pleadings . . . Representations to the Court.

Rule 11(b) states (emphasis added), in short,

“By signing a pleading . . . the attorney or party certifies that to the best of the person’s knowledge, information, and belief formed after reasonable inquiry:

“[I]t is not being presented for any improper purpose . . . or needlessly increase the cost of litigation . . . and other legal contentions are warranted by existing law or by a nonfrivolous argument . . .  the factual contentions have evidentiary support  . . . the denials of factual contentions are warranted on the evidence.”

Rule E.R. 1.13 states (emphasis added), in short,

“(a) A lawyer employed or retained by an organization [HOA] represents the organization acting through its duly authorized constituents [the BOD].

“(b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action. . . that is a violation of a legal obligation to the organization [directors duties for example], or a violation of law . . . the lawyer shall refer the matter to higher authority in the organization.”

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I am quite pleased with the opinion by the Arizona Appellate Court in Arizona Biltmore Hotels Condo Assn v. Conlon (CACV 18-0709, June 23, 2020). This involved case of over 10 years, multiple parties, and 3 lawsuits dealt with a conflict of interest by the association’s president. He also owned several properties (a dual role conflict) subject to claims of who would get parking lot rental income.

My point of interest lies in the Court’s inclusion of a statement by the attorney for the association president in  the 2013 lawsuit and used as evidence in the current case.  Here we find a highly regarded law firm standing by its obligations under professional conduct and certification to the court, as above.

The president hired Cheifetz, Iannitelli & Marcolini, CIM,  (now Iannitelli Marconi) on behalf of the association.   “CIM soon raised concerns about the merits of the Association’s lawsuit and shared those concerns in a letter to [the president]” who did not pass the concerns to the board.   As required, if CIM believed that there were serious concerns, it brought their concerns to the board a year later.

Now removed as president and still a director and still owner of the TCG firm in conflict, the Courted quoted CIM’s position in this president gone wrong case.

“CIM became frustrated with [the president/director] strategy and told him:

“Our duty is not to [TCG], it is to our client, the Villas Association, and the [condominium] community as a whole. As a member of the Board you have fiduciary duties. Given these fiduciary duties, we are at a complete loss to understand upon what basis you deem it appropriate to intentionally seek to sabotage the Board’s efforts to attempt to resolve the pending lawsuit with . . . . ”

The 2013 Court found the director guilty. It held “that [he] both breached his fiduciary duties and negligently misrepresented facts to the Association . . . controlled the information and did not make full and necessary disclosures.”

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FYI — The “Cheifetz” above is none other than Steve Cheifetz, former CIM manager now retired, with whom I’ve had the pleasure of knowing and exchanging views on HOA law and cases.  He worked closely with Jonathan Dessaules, another outstanding Arizona attorney taking on homeowner cases.

Lost HOA Constitution webinar complete videos

This post allows access to 3 webinar videos on Restoring the Constitution to HOA-Land. The quality improves as I go on — it’s the content, the material, that’s important to learn and understand.

For best viewing press the ‘expand’ icon (lower right) for full screen viewing. Place cursor over video to select menu.