Category: Opinion

The RA-CAI-RE Triangle, Part 2[1]

Part 1 of this series confined itself to the historical relationship between NAR, CAI and ULI.[2]  Part 2 addresses the 2015 NAR magazine article[3] acknowledging that HOA buyers are largely uninformed and lack general knowledge of HOA affairs and issues.

The author informs NAR readers that, among other things,

Many owners do not recognize that the benefits of shared ownership involve relinquishing some of the independence of sole ownership. That’s the root of so many of the HOA horror stories we’ve all heard. . . . Truly, persons who want a home that is their castle and theirs alone should not live in HOAs. . . . Many owners in HOA communities consider the documents unimportant, treating them as if they were an appliance owner’s manual.

The financial health of an HOA community also impacts owners. To keep monthly assessments low, some HOA boards will not accumulate sufficient funds in a reserve account to offset ongoing deterioration of common elements. . . . HOAs will need major special assessments or bank loans when big building components need replacement.

The author concludes with, “But in order to ensure that every owner gets the most out of their HOA, they must be educated about them. That, of course, starts with a knowledgeable real estate professional.”

Bravo you say for calling this serious question of the lack of full disclosure to NAR and its agent members!  Bravo!  But wait, the author, Kelly G. Richardson, according to his bio “clip,” is a lawyer and active Realtor[4] in California.   What is not revealed, I discovered, is that Richardson is also an active CAI member in California’s CAI chapters (Calif. has several CAI chapters).

Being thus alerted, I had to examine any underlying, real message contained in this article. My first thought was: Who’s going to offer these classes? RAs offer many real estate classes in every state, but who will educate the RA educators? Obviously, following in the footsteps of several states on HOA manager licensing, let CAI do it!

As I see it, although the article called attention to homeowner dissatisfaction, it was addressed to Realtors and not the general public.  If pursued by NAR, it would be another channel for CAI to further indoctrinate uninformed agents and real estate departments into the CAI HOA School of Thought that advances its special interest agenda, but not truth, the whole truth, and nothing but the truth.  The whole truth would still be missing.

Furthermore, there is no call for full disclosure by agents who, supposedly now, have come into the light and can spread their knowledge to the uninformed HOA buyers.  A very important omission for NAR that advertises its agent members, known as Realtors, as friends of home buyers.  Full disclosure is a state requirement under agency and real estate law.

Part 3 will examine disclosure, its legal basis, who wants what to be disclosed, and the required forms, if any.

 

References

[1] I use the following notation in this series.  “RA” is the collection of the national and state chartered Realtor associations.  “CAI” is the Community Associations Institute.  “RE” is the collection of state real estate departments.  Specific organizations will be identified as such: “NAR” is the National Assn of Relators; “AAR” is the Arizona Assn of Realtors; “ADRE’ is the Arizona real estate department.

[2] See The Realtor association and HOA-Land.

[3] A Note of Caution About HOAs, RealtorMag, Official Magazine of the National Association of Realtors, February 2015. See also my Commentary, Realtor magazine publishes HOA socialism by CAI Trustee.

[4] “Realtor” is a registered trademark of NAR.

The Lone Ranger remembers.   

Back in my college days I had a history professor who liked to do “surprise quizzes” (remember those college grads?) based on the reading assignment for that day.  There usually was a question based on a footnote or picture caption. He made his point and we began paying attention to these items in our text.

I’d like to mention to my followers and readers that endnotes, footnotes, references, and links contain important material related to the topic of the post.  They amplify and clarify issues.  Please read them to better understand the message at hand.

The RA-CAI-RE Triangle, Part 1

(I use the following notation in this series.  “RA” is the collection of the national and state chartered Realtor associations.  “CAI” is the Community Associations Institute.  “RE” is the collection of state real estate departments.  Specific organizations will be identified as such.)

The very powerful National Association of Realtors (NAR) played an important role in the development of HOAs when it split off its research function to form ULI (Urban Land Institute) in 1936.  ULI then spent a lot of time and energy over the years resulting in the publication of the HOA-Land “bible,” The Homes Association Handbook in 1964.

According to Ron Stabile, author of the 2000 self-congratulatory book paid for by ULI and CAI (emphasis added),

The innovators of CAs were entrepreneurs . . .. The dilemma [as far back as the 1930s] was how to ensure their widespread acceptance among government agencies, builders and developers, and prospective home buyers.[1]

Furthermore, parallel to ULI’s activities, the FHA set up its own land planning and usage division in 1938. NAREB (National Association of Real Estate Boards, now NAR) ‘had a large influence on the formation of FHA.’ In 1963, Byron Hanke, an FHA employee on loan from FHA, was the Handbook’s Study Director and Land Planner.  (He later became the primary founder and promoter for the creation of CAI in 1973.)

In 2016, CAI released its White Paper,[2] or as I call it, the CAI Manifesto.[3]  These papers contain, among other things, CAI’s attempts to influence other dominant organizations like AARP and NAR (National Assoc. of Realtors).[4] Furthermore, CAI calls for not only influencing legislatures, but the judges, too.[5]

For the most part the Arizona Realtor trade group (AAR) has been low-key, but active behind the scenes.  In 2013, Rep. Ugenti boasted to the AZ GOV committee, stating (emphasis added).

[W]orking through a stakeholder process and allowing the stakeholder process to filter the proposed legislation   . . . representing a consensus from the AZ realtors, and AACM (AZ Association of Community Managers, the beneficiary of this bill).[6]

This bill granted unlicensed HOA property managers the right to represent HOA in small claims court, a right not enjoyed by certified paralegals, known as a AZ Certified Legal Document Preparers. AAR supported this bill. Homeowners were not included as part of the “stakeholder” group in this back-office meeting. “Stakeholder” as commandeered by the pro-HOA forces means the special interest vendors feeding off the HOA consumers.

How else has AAR been working behind the scenes?

 

References

[1] Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing, p. 68, Donald R. Stabile (Greenwood Press 2000).

[2] See Community Next: 2020 and Beyond (May 5, 2016).

[3] CAI manifesto: CAI’s plan for HOA-Land in America.  “A manifesto is a public declaration of intentions, opinions, objectives, or motives, as one issued by a government, sovereign, or organization.”  “A white paper is an authoritative report or guide that informs readers concisely about a complex issue and presents the issuing body’s philosophy on the matter. It is meant to help readers understand an issue, solve a problem, or make a decision.”

[4] Supra n. 2, p 4-5.

[5] Supra n. 2, p. 13-14.

[6] See my Commentary, AZ HB 2371 allows unlicensed managers to represent HOAs in disputes.

The Arizona real estate department (ADRE) took the high ground and did what was right and just:  it removed the HOA special interest vendors, AACM and CAI, from its list of Resources (under HOA Due Process).  To those familiar with CAI’s opposition to OAH adjudication of HOA disputes, this was the only acceptable decision.   (See Is AZ ADRE violating 1st Amendment free speech on HOA public issues?)  I congratulate Commissioner Lowe and Deputy Commissioner Dettorre for protecting the consumer, the HOA homeowner.

I am told that ADRE believed it was helping homeowners to better resolve HOA disputes.  When presented with the facts on the conduct of these vendor special interests ADRE reacted accordingly.  The department can play a significant role in restoring homeowner protections that were denied under the adhesion CC&Rs “contract” and under pro-HOA state laws. (More to come.) The defenders of the status quo, and that includes CIA and AACM, invoked the misguided argument that the homeowner agreed to be bound.

ADRE has authority to act under the statutes specifically regarding HOA disputes, and in general under real estate statutes. However, the department must be on guard not to fall into the clutches of the wolf as it appears to have done with respect to the resource issue.

Perhaps it was influenced by the Arizona HOA Coalition that claims to speak for the people.  It is a closed group run by a strong personality, as I’m told, that has no qualms working with the Evil Empire to bring about justice for homeowners.  It is a de facto lobbying group and not an educational group.  AZHOC, as it is known, is following a failed approach that was used by another so-called group in the 2000 – 2oo5 period.

AZHOC has already submitted proposed legislation to CAI, and others, as part of ADRE’s stakeholder group.  Obviously seeking CAI’s blessing before obtaining legislator sponsorship.  Yet, the public HOA member is not privy to this proposed legislation and cannot provide valid feedback.  But, CAI and others can.

I will not participate in the stakeholder meetings as a matter of principle, because CAI and AACM are usurpers of homeowner rights, freedoms, privileges and immunities.  What is important to keep in mind about these meetings is the failure of AZHOC to advance substantive issues for HOA reforms, while arguing for changes in the law relating to the daily operation of HOAs.  I don’t think CAI would support these substantive reforms nor even allow them.

HOA operational reforms are commendable, but falls far short of effecting meaningful change like supporting effective enforcement of HOA board violations as a detriment, fair elections procedures, reform of the laws regarding OAH dispute handling, requiring the HOA to swear allegiance to the Constitution as all other local governments, challenging the sales process that is ripe with misrepresentation, etc.

I have not been consulted by AZHOC, although I’ve volunteered as such last year, nor have I received any copies of its proposed legislation.  That alone speaks for itself.

ADRE must continue its good work. However, ADRE must not fall into the clutches of the wolf.

In my last Commentary, The Lone Ranger has never stopped fighting for HOA truth and justice, CAI Editor Durso mentioned my 2006 “‘open e-mail questionnaire to CAI’ containing four questions.”  Below is a copy of those questions initially addressed to the AZ Legislature a year earlier.  I never had any answer, either from the Legislature or CAI, nor any debate on the issues.

———————————————————-

Dear Mr. Durso,

As I wrote to the legislators, I now address these questions to CAI, as a public interest organization that repeatedly lobbies every state legislature, and ask that it respond to these important issues in its upcoming article —

Replacing democratic local governments with authoritarian private governments: Is this good public policy?

At the heart of the matter is the continued replacement of democratic local government, governments subject to the U.S. Constitution and 14th Amendment prohibitions, with contractual, authoritarian private governments that are not subject to the prohibitions of the 14th Amendment.  The two broad prohibitions within this amendment are the equal application of the law and the due process clauses that are not applicable to private agreements. Or are they?

I ask the legislators, the public interest organizations and policy makers to consider the following questions:

1. Is it proper for the state to create, permit, encourage, support or defend a form of local government of a community of people, whether that form of government is established as a municipal corporation or as a private organization that is not compatible with our American system of government?

2. Is it proper for the state to permit the existence of private quasi-governments with contractual “constitutions” that regulate and control the behavior of citizens without the same due process and equal protection clauses of the 14th Amendment; that do not conform to the state’s municipal charter or incorporation requirements; or do not provide for the same compliance with the state’s Constitution, statutes or administrative code as required by public local government entities?

3. When did “whatever the people privately contract” dominate the protections of the US Constitution? The New Jersey Appeals Court didn’t think so. Does “constructive notice”, the “nailing to the wall”, the medieval method of notice, measure to the requisite level of notice and informed consent to permit the loss of Constitutional protections?

4. Please state what, if any, are the government’s interests in supporting HOAs that deny the people their constitutional rights?

George K. Staropoli, Pres.
Citizens for Constitutional Local Government
March 16, 2006