Category: Opinion

In 2007 I analyzed CAI’s Factbook at that time and found that CAI was a miniscule minority (See CAI miniscule minority dominates public policy).  I found that .03% of the people living in HOAs are CAI members as compared to some 50% +/- of seniors are AARP members.  Also, that .07% of HOA units have a CAI member.

Since that was 10 years ago, I’ve updated my statistical analysis using the CAI Statistical Review 2016, Factbook Part 4, adding additional explanations.  A number of concerns are raised.

MY FINDINGS:

HOAs, units, residents

1. The percent HOA units to total US units rose from 16.9% in 2000 to just 19.1% in 2016.
2. The percent people (residents) in HOA to total US people in homes rose from 16.1% in 2000 to 21.4% in 2016.
3. People per HOA unit was fairly consist at about 2.5, in line with US Census data for people in units.
4. Unexpectedly, the average number of people per HOA was also fairly consistent about 200 people, +/- 3.
5. Similarly, the average number of units in an HOA was fairly consistent at about 80 units per HOA.
6. As a check on (4) above, I choose data from 6 states[1] provided in the Factbook state summary, both large and small, as a comparison.  The number of people per HOA in these 6 states came to about the same 200.

CAI membership stats

1. Being concerned about the frequency of fixed ratios found in (A), I came across data from the CAI Indiana chapter for 2015 and 2016.[2] The percent ‘volunteers’ per HOA for both years was 32.7% and 32.8%, respectively. Very consistent.
2. Of the 69 M people in HOAs, CAI membership, at most, consists of a miniscule .05% (.00048).
3. Of the 33,000 CAI members, a minority of some 10,800 are ‘volunteers’ and not attorneys or managers.
4. ‘Volunteers’ (CAVL) represent a miniscule .016% (.00016) of HOA members.

CONCLUSIONS:

We can safely say that, assuming some 342,000 HOAs,

1. if each CAI member came from a different HOA, then 9.6% of the HOAs contain a CAI member,
2. and a mere 3.2% of HOAs contain an HOA ‘volunteer’;
3. at most then, CAI ‘volunteers’ have a presence in a mere 3.2% of HOAs across the country;
4. CAI’s claims to speak for members and even HOAs with its less than a 10% presence is highly misleading.

 

Factbook issues

The following discussion uses the Excel charts found in Exhibit 1.

What I found disturbing in A4 and A5 above were the fixed ratios of residents and units to the number of HOAs; namely roughly 200 and 80, respectively.  Note that these 2 numbers have a fixed ratio of about 2.5.  This did not seem natural to me or a result of freely occurring human behavior. The same ‘200’ ratio appears in the 6 individual states in the CAI state factbook, which does not have “units” data for comparison.

CAI’s Residents and “Units” figures have a fixed 2.5 ratio, reflecting the long-standing US Census ratio of the number of residents to the number of units in general for all housing. Consequently, once either of the units or residents are known, the other statistic is just a mathematical calculation. As for the missing “units” figures for the individual state stats, they can easily be calculated by dividing the residents number by 2.5.  It’s as simple as that.

Notice the natural, expected variation in data found in the Indiana chart (Exhibit 1, p. 2) for both CAVL and total members.  This variation also shows in the “communities” column for the six states on page 1 of the Exhibit, but is absent from the main CAI historical summary page for “communities.”  The other data on the summary page flow from the fixed ratios mentioned above.

It can now be asked: How reliable is the data for CAI’s “Communities” figures?  As shown in the chart on p. 1 of the Exhibit, the HOA growth is a steady 15,000 annual increase over 17 years, from and including 2000 to 2016. I don’t feel comfortable with this constant rate of growth; it’s not natural or to be expected.  But, it may well be.  Who knows?

 

References

[1] Arizona, California, Colorado, Florida, Illinois and Texas.

[2] CAI Indiana chapter document.

 

EXHIBIT  1

page 1

page 2

 

 

ADRE HOA Coordinator

Dan,

I am encouraged by your reply of Aug. 18^th stating that, while aware that OAH does not deal with corporate law, ADRE does “believe that the headings clearly indicate that Title 10 is part of the larger context of available resources and related laws and statutes.” This is a step forward in attitude considering that for years ADRE has had a hands-off, defensive posture: ADRE does not regulate HOAs.  In other words, my words, not my job.

However, showing this resource that has been used by CAI trade group –whose members represent HOAs and that is strongly opposed to OAH due process — for HOA lawsuits and defenses against homeowner complaints is grossly unfair and unjust, as homeowners cannot make use of OAH for a fair and just HOA due process.  It is not clear to the average homeowner that Title 10 won’t help him, but helps the HOA unless he chooses to file a civil suit, which is a failure of the OAH statutes.  ADRE’s enlargement of its responsibilities to the general public is commendable, but Title 10 does not belong under OAH Due Process, but under full disclosure.

In addition, I raise the question of including other legal resources that ADRE failed to include as a resource relating to HOA laws, also not handled by the OAH statutes.  This comes under the heading of common law.  The entire Chapter 6, Common-Interest Communities (268 pages), of the Restatement 3^rd Property: Servitudes (2000) is devoted to HOA common law.  Section 3.1, Validity of Servitudes (CC&Rs for our purposes), and 3.6, Unconscionability, are highly relevant to justice and fair play not for HOAs, but for the homeowner. Also, not mentioned or handled by ADRE.

And just as important, ADRE makes no reference Tort law (generally relating to socially unreasonable behavior) that pertains to abuse, defamation, assault, misrepresentation, nuisance, negligence, bad faith, etc.  You know, all those behaviors by the HOA regularly complained about by homeowners.

I hope ADRE will seriously reconsider its position on listing corporate law as a resource.  In all fairness to the general public it should remove corporate law, or add HOA common law and Tort law.

George K. Staropoli

The following is a copy of my follow up correspondence with ADRE Commissioner Lowe regarding ADRE’s failure to protect the interests of the general public by 1) not removing CAI and AACM from its lists of resources and 2) misinforming the public that OAH will address corporate law disputes.  The two referenced messages can be found at AZ Case Reviews.

 

August 16, 2017

Commissioner Lowe, ADRE

Re Message Id: 230332, incorrect listing of corporation law

Dear Commissioner Lowe,

I have not received a response to my correspondence of July 28^th regarding the misleading mention on ADRE’s web page that Arizona corporation law applies to OAH dispute process. Your quick reply of the 28^th simply provided the canned we are looking into it response.

I do not understand this 19-day failure to correct a black and white incorrect implication that OAH has authority to hear corporation law HOA disputes.  I even provided the exact statute for your convenience.    What “adjusting” does it take beyond the removal of a one-line entry on the web page?

When can the general public see this error on the part of ADRE corrected?

While I have your attention, when can the general public see the removal of the two private organizations who opposed OAH due process and the application of constitutional protections for homeowners members?  I provided details as to why CAI and AACM should be removed from your recommendations as resources.  I also asked, in my correspondence of August 8^th, why other private entity websites by homeowner rights advocates – that provided documented and authoritative information – were not included in ADRE’s list of resources.  I suggested that they be added in all fairness and in keeping with ADRE’s mission to protect the general interest.

When can the general public see an unbiased list of resources for HOA home buyers on ADRE’s website?

 

Respectfully,

George K. Staropoli, Citizens for Constitutional Local Government

Yes, Arizona’s statutes 33-1258 and 33-1805 dealing with HOA record inspections were repealed way back in 1999 by HB2357 (AZ. Sess. L. CH 23). Yet, they were still later amended in the same session by HB 2237 (AZ. Sess. L. CH 297).  Go figure! Both became AZ laws.

Looking to inform the Arizona pubic on the origins of its HOA laws, I discovered a puzzling discrepancy relating to the repeal and sudden re-appearance of ARS 32-1258 and 33-1805.  I cannot find an intervening bill that restored these statutes. The later bill, HB 2237, did not; it just amended them as if had nothing occurred.

(The source of the following information was ALIS, the Arizona Legislative Info System with public access, and the AZ Secretary of State who is responsible for updating ARS.)

In the beginning, Chapter 310 of the AZ Session laws of 1994 created the condo and planned community statutes (chapters 9 and 16, respectively), and created 33-1905 (now 33-1805 in a renumbering of ARS).  In 1996, Ch 236, amended both 32-1258 and the renumbered 33-1805.  This revision stated that Title 10 nonprofit, member corporation law under 10-2325 would also apply to nonprofit HOAs.  I found no 10-2325 in ARS for 1999 nor any bill adding 10-2325.  A mystery, itself.

In 1999, we come to the mystery in question regarding these two statutes.  Sec. 4 of AZ Session Law Ch. 23 (HB 2357) repealed these two statutes.  “Sections 33-1258 and 33-1805, Arizona Revised Statutes, are repealed.”  Yet, it amended ARS 10-11602 that required members of HOAs get special permission from the board in order to inspect HOA records.  The bill was signed by the Governor on April 18, 1999.

However, now comes HB 2237, a bill “relating to business entities” with extensive amendments that included amending 32-1258 and 33-1805.  It was signed by the Governor on May 18, using the “senate engrossed” version, and became law under Ch. 297.  It did not reinstate these 2 statutes, but deleted the mysterious 10-2325 and applied Title 10 requirements for records under ARS 10-11620 and 11621. It also allowed 10-11602 to remain valid law.   So, it appears that all 3 Title 10 statutes now applied to HOAs:  11602, 11620 and 11621.

A mystery exists as to what happened.  Did both the repeal and the amendment bills have effect and CH 297 “wiped out” the repeal?  How could a repealed bill be modified, even in the same session without reference to the bill that contained the repeal?

(In a more complex situation in a later session, several bills modified the same statute in different manners resulting in 3 versions of the statute to exist on record.  They were time dependent, where at a subsequent dates the earlier applicable statute ceased being effective and the second version became effective.)

However, this mystery disappeared and is mute; ARS 10-11602 has been subsequently amended and Ch. 23 Title 10 applicability has been replaced with subsection 10-11602(G) nullifying the applicability of Tile 10 to record inspections?  (Your elected representatives hard at work!)

But, CAI has been arguing Title 10 applicability at ADRE’s OAH due process hearings, and in civil court.

Finally, a strong HOA enforcement bill, HB 1237, has come law in Florida this July 1, 2017.  Penalties and fraud charges against the HOA, its directors and offices, and HOA managers became real. Sadly, the bill only pertains to condominiums.

In short, among other things, the new law allows for:

1. Fraud charges for misuse of association credit cards;
2. Civil and criminal penalties for director, officer and manager ‘kickbacks’;
3. Civil penalties for destroying or failing to maintain records;
4. Not allowing officers and directors charged with criminal acts to hold office or be elected, and the removal from office directors and officers charged with certain crimes;

While the bill is some 51 pages, you need only read the underlined — parts added to the statute and the strike-outs – parts deleted.  By law, the entire section must be included in the bill if any part is modified.

According to the Miami Herald (as reported by Florida’s advocacy group, CyberCitizens for Justice), this bill originated with investigative stories by two newspapers, el Nuevo Herald and Univision 23:

“The proposal came one year after el Nuevo Herald and Univision 23 published a series of investigative stories on condo abuses in South Florida, like electoral fraud, falsification of signatures, conflicts of interest, embezzlement and cases of fraudulent bidding.

“The series also exposed the lack of enforcement by authorities, from local police departments who refused to investigate allegations of fraud, to widespread negligence at the state agency in charge of enforcing condo laws and regulations and investigating complaints.”

The investigative reporting and publishing of HOA problems by these news media must be emulated by the media in all states. Rather than treating news stories as simply local neighborhood problems, the deep, insidious HOA social, legal and constitutional issues would also be addressed by state legislatures as in Florida this year.

As it stands, the media is cooperating in the public deception of serious HOA abuse by ignoring and treating the abuse superficially.

 

I take my hat off to el Nuevo Herald, Univison 23, the Miami Herald, CyberCitizens and the sponsors and supporters of HB 1237.