Category: Opinion

Posts by GKS

CA’s condo-mania: AB 1033 allows ADUs to be 2-person condos

A very disturbing 19-page California bill, AB 1033 (Ch. 752)[1], became law this week that extends HOA-Land with respect to Accessory Dwelling Units (ADU)[2]. The rationale seems to be to support low-income housing given the scarcity of California,  and gain income for retired people as well. It allows the property owner to have a livable unit (ADU) on his property  but requires  the owner to form a two-person condo on what was his single-family property. The accessory unit can then be sold as a condo unit subject to the Davis-Stirling condo laws. Why, I ask???

In order to make this plan work a complicated series of amendments were added. In other words, a planning board, for instance, is given authority to allow this approach to housing, along with changes to building requirements, codes, etc.

The Legislative Digest states,

“This bill would, in addition, authorize a local agency to adopt a local ordinance to allow the separate conveyance of the primary dwelling unit and accessory dwelling unit or units as condominiums, as specified, and would make conforming changes. By imposing new duties on local governments with respect to the approval of accessory dwelling units, the bill would impose a state-mandated local program.”

To me, this seems  like a lot of about nothing, unnecessarily complicating property rights and housing.    BUT, extending the fragmented HOA-Land and further eroding adherence to the Constitution – more individual rulers functioning outside the Constitution. It goes beyond home rule laws and the medieval fiefdoms.[3] There is no oath  of allegiance to support the Constitution as the supreme law of the land. And condos pay minimal taxes as a non-profit.  So, what’s the story??

To paraphrase Jack and the Beanstalk, “Fee-fi-fo-fum, I smell the blood of a CAI man.”  CAI-CLAC is the very powerful and highly active CAI legislative action committee (LAC) representing all CAI California chapters. And then there’s Echo,[4] whose membership structure duplicates the  CAI membership structure.

Who says CAI is not a coercive monopoly?[5] Take a close look at California again. Are their any voices in support of homeowners to compete with CAI?  No, sorry to say, although one group has had some influence on legislation but it does not stand close to the overall impact of CAI on events concerning HOA-Land.

NOTES

[1] Bill Text – AB-1033 California Family Rights Act: parent-in-law: small employer family leave mediation: pilot program.

[2] ADUs come in all shapes and sizes – for example, a converted garage, a small home in the backyard, or, as often seen in San Francisco, an unused portion of the main house.

[3] A fief was a central element in medieval contracts based on feudal law. It consisted of a form of property holding or other rights granted by an overlord to a vassal, who held it in fealty (oath to the lord) or “in fee” in return for a form of feudal allegiance, services, and/or payments. 

[4]  “Educational Community for Homeowners (Echo) is a nonprofit corporation dedicated to assisting California homeowners associations. Members receive guidance through live webinars, Members receive guidance through live webinars, virtual seminars and workshops.

[5] Is CAI a coercive monopoly? Definitely YES!

Do we need a private, parallel government? Why?

The answer to the title question is a resounding, NO!  Here are the reasons why not. In essence, all those state HOA/Condo Acts and statutes establish and permit a parallel system of local government— that regulates and controls the residents within its borders —  to function outside the Constitution.

First, it’s time for state legislatures and the judicial system to acknowledge their   willful blindness[1] that the HOA legal scheme, with its insistence and reliance on  equitable servitudes, that “the HOA CC&Rs have crossed over the line between purely property restrictions to establishing unregulated and authoritarian private governments.”  

Professor Evan McKenzie said it quite clearly some 29 years ago in his 1994 book, Privatopia, “”CIDS [HOAs] currently engage in many activities that would be prohibited  if they were viewed  by the courts as the equivalent of local governments.”[2] It remains true today!

Second, Why are there private HOA governments when there is home rule, charter governments?[3] All the states have a version of home rule that varies in the degree of independence granted to a local governments and under what terms. Under the Home Rule doctrine local communities are permitted a large degree of independence even to the extent that state legislative action is not necessary. What is Home Rule? In simple terms, it is a grant of authority and power — of independence — from the legislature to local communities.

There are no legitimate reasons why HOA governed communities cannot exercise effective and productive self-government while  being subject to constitutional law under home rule statutes.

Third, Just what are the valid reasons for sporting and encouraging private government by the state?  Answer: there’s no legitimate and valid reason for private, local government to exist outside the constitutional framework.  Home rule doctrine existed long before the advent of the HOA legal structure in 1964. That is not to say that it would have solved all problems and be a perfect government, but it would be a government under the Constitution, part of the Union,  like all other forms of local government.  

The constitutionality of statutes is subject to the doctrine of judicial review and scrutiny.[4] I have yet to see any valid government justification in support of the HOA legal scheme that deprives citizens of their constitutional and fundamental rights, which requires meeting the strict scrutiny test. Under strict scrutiny, “the government must prove that the challenged law is both narrowly tailored and the least-restrictive means available to further a compelling governmental interest.”

To argue, as have the states and pro-HOA supporters, that state and local government have an interest in reduced expenditures and the establishment of desirable community living does not carry weight. There are valid arguments that the HOA legal scheme denies fundamental and constitutional rights under the 14th Amendment,[5] which requires the application of strict scrutiny.  It has not been tested!

It is no wonder that state legislatures, CAI, and pro-HOA supporters avoid the issues of HOAs as de facto governments, and questions of judicial review.

The 64-dollar question is: Why do HOAs continue to exist and grow? Could it be, like drugs, there is widespread demand? Or is it because of the collaboration — as a group functioning as a monopoly[6] —   of CAI, the builders/developers, real estate agents, etc. to restrict housing solely subject to private governments? Is housing in HOA-Land equal to public, free-market housing?

Adopting the US Supreme Court’s decision in Brown,[7] “’separate but equal’ has no place. Separate educational facilities are inherently unequal.” Separate HOA/condo housing under private governments is inherently unequal and a violation of the 14th Amendment’s Equal Protection Clause.

The answer will be more discussed in more detail in a subsequent commentary.

NOTES

[1] Willful blindness is a legal concept that describes the state of deliberately ignoring or avoiding facts that would make them liable for a wrongful act. 

[2] Evan McKenzie. Privatopia: Homeowners Associations and the Rise of Private Residential Government, Yale Univ. Press, 1994.

[3] See America’s homeland: HOA law vs. Home rule law.

[4] See Judicial Scrutiny standards judge claims of constitutionality

[5] In general, see Desert Mountain opinion (AZ) constitutionality – part 2,  and Law review on CC&Rs constitutionality – part 1.

[6] A monopoly can be “a company or group having exclusive control over a commodity or service: ‘areas where cable companies operate as monopolies.’”

[7] Brown v. Bd of Education,  347 U.S. 483 (1954).

Judicial Scrutiny standards judge claims of constitutionality

Claims regarding the constitutionality of laws are subject to judicial review. Generally speaking, and simplifying matters considerably, courts use three different standards to adjudicate constitutional claims: (1) rational basis review; (2) intermediate scrutiny; (3) and strict scrutiny. The “standard of scrutiny” applied to a particular claim is of critical legal importance and usually determines whether the claim will succeed.  

The first standard — rational basis review — is the most forgiving.  Under rational basis review, a litigant challenging a law on constitutional grounds “bear[s] the burden of proving that it does not bear a rational relation to any conceivably legitimate governmental purpose—even a hypothetical one.”  With vanishingly few exceptions, nearly all laws satisfy this standard.

The second standard, known as “intermediate scrutiny,” raises the stakes considerably.   Under this . . .  a law “must serve important governmental objectives, and . . . the discriminatory means employed must be substantially related to the achievement of those objectives.”  

The third standard of review, which is the most rigorous, is “strict scrutiny.”  Under strict scrutiny, “the government must prove that the challenged law is both narrowly tailored and the least-restrictive means available to further a compelling governmental interest.”  Strict scrutiny applies in areas such as racial and religious discrimination, and it also applies to many claims involving free speech.

# # # #

I have yet to see any valid government justification in support of the HOA legal scheme that deprives citizens of their constitutional and fundamental rights. Some have argued that it eases the state/county’s financial burden as a legitimate government interest. However, the HOA scheme must be reviewed under strict scrutiny as it damages the members’ rights and freedoms. Furthermore, the claim that the member agreed to the Declaration and surrendered and waived his rights has come under criticism as an invalid surrender in the courts.

Source: Constitutional Standards of Scrutiny (link: Supreme Court of Tennessee Blog)

Landmark FL HOA law imposes criminal conduct

FL Session Law, Ch. 229 (2023), “Homeowners’ Associations  Bill of Rights,” adds the following section imposing misdemeanor charges against certain violations for fraudulent elections.

FL § 720.3065. “Fraudulent voting activities relating to association elections; penalties.—Each of the following acts is a fraudulent voting activity relating to association elections and constitutes a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083”

This is a landmark bill that imposes criminal penalties on the conduct of the HOA and all persons involved in fraudulent HOA elections.  Recent court decisions have held the private government HOAs are public entities with respect issues concerning the governance of the HOA.

Criticism of the board’s conduct is subject to the constitutional protections of free speech. The Nevada Supreme Court opinion in Kosor ((Kosor v. Olympia Companies, NV No, 75669 (Dec. 31, 2020))  held that HOAs are public forums and referenced several California opinions serving as legal precedent.

 “[A] unit owner’s association or a planned community association (association) may not prohibit a unit owner or member (member) from peacefully assembling and using private or common elements of the community . . . legitimate and valid criticisms of your HOA and its president and board are protected from HOA lawsuits of defamation and libel.”

I find it incredible that there are homeowner rights advocates who find it difficult to see how challenges of constitutionality apply to private government HOAs. The 14th Amendment, Section 1, in part, “No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.”

Advocate files AZ supreme court amicus brief fighting unjust laws

We must make the injustice visible.

We must provoke until they respond and change the laws.

(Mahatma Gandhi)

An AZ supreme court amicus brief was filed by Jonathan Dessaules on behalf of the Arizona Homeowners Coalition in CAO v. Dorsey (CA-CV 21-0275) (Waiting for the Court’s decision).  Dessaules argues that the statute in question, ARS 33-1228, conflicts with the Arizona Constitution, Article 2, Section 17, and “a statute cannot circumvent or modify constitutional requirements”.

The intricate legality and constitutionality of private entities—the HOA — taking of another party’s property rights – a homeowners — is discussed in detail.  I frequently quote the brief to ensure accuracy in my review.

ARS 33-1228 “allows condominium associations to force the sale of a nonconsenting owner’s property for someone else’s private use” and is the justification for investors to shut down the HOA. However, “When a state statute conflicts with Arizona’s Constitution, the constitution must prevail.” Furthermore, it is argued that “The legislature may not enact a statute which is in conflict with a provision of the Arizona Constitution.” Consequently, the Legislature lacked the authority to enact 33-1228.

(Stay with it!) The brief goes on to say that ARS 12-1131 provides that “eminent domain may be exercised only if the use of eminent domain is authorized by this state, whether by statute or otherwise, and for a public use as defined in this article.” Public use does not allow for “forcing the sale of a holdout owner’s property to be used by the investor who owners a majority of the other units within the condominium.”

The HOA, Dorsey, counterclaimed that it wasn’t a sovereign and § 1231 doesn’t apply to private organizations, ignoring § 12-1111 that permits individuals the right of eminent domain takings. Consequently, again, it is argued that 12-1228 is invalid.

An additional powerful argument is raised that the Declaration is an adhesion contract. “A declaration is generally a ‘standardized form offered to consumers on essentially a take it or leave it basis.’” And to my long awaited legality, the brief states that “Without the contract even being presented to the purchaser for their signature,” the contract is imposed on the buyer.

Again, we see the  doctrine of “reasonable expectations” as applied to adhesion contracts. “Contracts of adhesion will not be enforced unless they are conscionable and within the reasonable expectations of the parties.” Dessaules maintains that including unconstitutional  statutes in the Condo Act is “substantively unconscionable.” Furthermore, as I have argued many times, “a waiver of a constitutional right is not within reasonable expectations of the parties.”

This is a solid amicus brief by an advocate fighting for HOA reforms to protect members’ rights and privileges.  It does not pretend to accept unjust laws.

* * * *

I would like to thank Dennis Legere, Arizona Homeowners Coalition,  for hiring attorney Jonathan Dessaules to file this important, to the point, excellent amicus brief.