Inequitable public policy supports HOA survival: pay assessments regardless, or else!

I have written about the inequities of adhesion contracts, of the surrender of rights and privileges by virtue of the “no need to see” constructive notice doctrine[i], of HOA foreclosure rights, of transfer fee demands on sellers, not new owners,  and of the mockery of due process with the empty requirements of only “an opportunity to be heard” by the HOA accusers.  In this writing, I call your attention to the “pay until you die” public policy in support of HOA survival.  No breaks for old age, retirement, medical bills and illness, or the common law right of offset arising out of a difference with the HOA regime.

[i] There are numerous instances, like these two cases, whereby the court makes new laws not reflected in the declaration “contract.”  The public has not been made aware of these interpretations and clarifications of additional contractual obligations, many of which are well beyond any reasonable expectations of contractual obligations at the time of purchase. This is a gross miscarriage of justice!

For the complete commentary see Pay or die.


HOA attorney advises getting around bankruptcy stays

In the Feb. 19th Carpenter, Hazlewood, Delgado and Wood (CHDW) enewsletter, “Bankruptcy — So what?”, attorney Miesen focuses on the automatic stay provision when one files for bankruptcy — that period where the debtor is free from creditor demands.   Or, maybe not, as Miesen points out:
 
Let us be clear – sanctions for violations of the automatic stay are not always imposed and they do require more than just a technical violation. . . . A willful violation is an intentional act done with knowledge of the bankruptcy filing. The “willfulness” element goes to the deliberateness of the act  that violated the stay – not the intent to violate the automatic stay. . . . Avoiding any violation of the automatic stay – technical or not – is highly recommended.

The “take-away” point here is that when you are informed of a bankruptcy, whether by personal interaction or mail, action must be taken. Not only will certain action allow an association the best chance of recovery of the pre-bankruptcy debt, but it will also ensure an association does not become liable to the debtor  for sanctions.

 

It is quite plain that the attorney is informing HOA boards of a technical aspect of the automatic stay prohibitions, and that there is a line, perhaps a fine line, that can be walked without incurring any penalties.  Miesen writes, “not only will certain action allow . . . but will insure the association does not become liable . . . for sanctions.”   What is the purposes of writing,

Bankruptcy attorneys throw around the threat of sanctions all the time, but the truth is that only a willful violation of the automatic stay entitles a debtor to damages. 

And then there’s the pitch to give them a call for more information.  Is Miesen walking the ethics line between providing advice about the law and colluding with the client to get around the intent of the law, using technicalities?

  
Miesen works for the Arizona Carpenter Hazlewood law firm that  advertises on its web pages that “Carpenter, Hazlewood, Delgado and Wood is a full service law firm for our community association clients” with a mission “To provide first class legal representation quickly, efficiently and for a fair fee to community associations throughout Arizona.”  CHDW had argued, and won, to remove independent tribunal adjudication of HOA disputes by OAH; has opposed public control of public streets; has favored foreclosure rights against homeowners all the while knowing the limited and discriminatory nature of foreclosure;  has fought for the imposition of unjust transfer fees on outgoing members, placing them under duress, rather than on the incoming new member who will, at least, benefit from the payment of the fee; and has lobbied for other positions before the Arizona Legislature over the years.  CHDW partner Scott Carpenter is, and has been, the CAI chapter Legislative Action Committee Chair.  Carpenter and Hazlewood are members of the CAI College of Community Association Lawyers with its code of ethics “to support the objectives of CAI.”
 
Yet, still, certain towns in Arizona have no problem using CHDW, and other CAI member firms, to educate everyone on HOA matters.  Or that CHDW offers educational programs and seminars to the public, making statements like, “Your education is so important, we made a space for you . . . Our aim is to use the Education Suite as a tool to communicate critical legal issues and trends in our industry.”   Has anyone — has any elected government official or legisaltor — ever wondered just what CHDW is saying to these seminar attendees?   Or, in the interest of a neutral legal position, just what CHDW is not telling the attendees about HOA living? 
 
It should be evident by now that CHDW, and CAI, have a personal agenda to support and defend their HOA clients regardless of any detrimental consequences to the rights and freedoms of the HOA members.  This “us against them” agenda is very reminiscent of the “management vs. employee” antagonisms and hostilities, creating not harmony and positive community relations, but divisiveness and confrontation.
 
 

Supplement to Foundations of HOAs

The following four Commentaries, taken from the HOA Private Government website, update the Foundations eBook with additional historical materials relating to the intent of the creators of the HOA model, and the motivations and rationale of the Community Associations Institute (CAI).   They can be found in the eBook Supplement to Foundations of HOAs.

Timeline

1964 —  ULI publishes The Homes Association Handbook, the HOA “bible

1967 —  U. CAL publishes Public Affairs Report critique of the Handbook.

1973 —  CAI is formed to deal with HOA problems.

1978 —  David Wolfe, a CAI founder, likes HOAs as government competitor.

1983 —  America II is published, a view of the societal changes by HOAs.

1989 — US Advisory Comm. answers for public officials

1994 —  Privatopia, the seminal critique of HOAs as private governments.

2000 —  The ULI – CAI funded Community Associations  view of HOAs.

2008 —  Establishing the New America appears — an advocate’s recount of HOA foundations.

2008 — Rutgers Law Journal critique of Twin Rivers decision

Competitive HOA private governments appealed to CAI founder

My reading of David B. Wolfe’s (a CAI founder who is not an attorney), Condominiums and Homeowners Associations That Work[i], was very disappointing with respect to his treatment of HOAs as mini-governments.   Only the four-plus pages of Chapter 1, out of the 136-page, nine chapters, discuss the mini-government controversy. The remaining pages of this “handbook” are devoted to the paperwork to set up and operate an HOA:  the CC&Rs, the bylaws and the Rules & Regulations, including sample forms.  My attention, consequently, immediately turned to an attempt to understand the out-of-context purpose of Chapter 1, which was titled:  “An Introductory Question”, but was ignored throughout the remaining pages of the handbook.

Wolfe’s opening comment on government reflects the impact of HOAs on the American scene:

The Community association is coming more and more to resemble a new, more local form of government.  As such, it has the potential of noticeably altering the structure of American life.  

He quotes Lewis Mumford (a utopian community idealist) faultfinding of the Constitution: “The greatest defect of the United States Constitution was its failure . . . to make this democratic local unit [the New England town meeting] the basic cell of our whole system of government.”  A sort of a “bottoms-up” approach of individual small communities independently doing their “thing”.  Perhaps his quote of a 1978 mayor’s comment sheds some light on Wolfe’s motive:  “traditional local government is finding, for the first time, a major competitor in the delivery of public services.” 

It seems, from a reading of this chapter, that Wolfe, as the owner of a property management firm, was taken with the thought replacing and “out-doing” local municipal governments, at least in the services arena.   Wolfe raises the question of constitutional requirements and protections by quoting Wayne Hyatt’s (1975) reference to Marsh v. Alabama’s[ii]  “company town” decision (1946): [that] “makes compelling the conclusion that the association’s action’s are ‘public’ in a constitutional sense.”  However, he refutes this view and makes his pitch that maybe, you know, HOAs are governments, but a special private, corporate form of government to be treated differently from public government, evening acknowledging the social contract theory of governance.  Wolfe grabs onto this social contract theory and argues that that’s just what HOAs are all about:

Through a formal compact, diverse owners of properties within a defined area [read, ‘a territory’] assure protection of each other’s interests by reciprocal obligations imposed upon and subscribed to by all owners.

This quote ignores the background of HOA formation and consent, which is not at all a group of informed buyers, themselves, defining the “compact” to which they will be bound.  The buyers in the real world are not the utopian true believers as suggested by the quote.  And, apparently, Wolfe, and CAI, sees this compact as one purely in terms of services, and not in terms of usurping bona fide functions of government — legislative and judicial due process under the Constitution.

This is the chief failing of CAI’s arguments, then and now, that HOAs are not governments, but maybe, entities that require special treatment because they are corporate, not constitutional,  “animals”.  It ignores questions of the Constitution as the supreme law of the land, and implies, falsely, that the HOA will abide by the constitutional requirements as pertaining to public entities, with its restrictions on government and protection of member-citizen rights.  This appeal for “special treatment” and the fact that HOAs are private contracts permit the HOA to escape constitutional obligations, and explains why homeowners have for these 46 years been attempting to restore lost freedoms and liberties.

The reader should ask himself, “Is this the real motivation behind the rejection of the Constitution?”  What is the purpose of the national social contract, the Constitution, if local groups can draw up their own “formal social compacts” and claim separation from constitutional obligations and responsibilities?  Did the Founding Fathers intend that private contractual obligations permit secession from the Union?

See also,

In 1978, CAI was concerned about HOAs as mini-governments.

Government is defined by a “social contract”; HOAs by the new social contract, the CC&Rs.

Notes

[i] Condominiums and Homeowner Associations That Work on Paper and Action, David B. Wolfe (ULI & CAI, 1978).

[ii] Marsh v. Alabama, 326 U.S. 501 (1946).

Why haven't the 1983 HOA problems of America II been resolved?

  Robert Louv is a journalist and contributing editor for several magazines.  His book began as an assignment for the San Diego Union where his job was to cover long-range political and social trends.  He writes,

My emphasis is on the America II social agenda: the growing privatization of public services . . . . America II  is an examination and critique of underlying values and social issues, especially those that threaten traditional democratic values.

 

The America we know is dying, but a second America is rising from the body of the first. This second nation [is] America II. yesAmerica II is the shopping mall, condominiums and large, planned communities, private police forces and sophisticated residential security ystems.

This new nation of mini-governments populating the landscape that he calls America II, I simply call the New America of HOA-land. A nation that continues to beencouraged, supported and defended by a certain element of our society, whom I classified as neo-Americans to distinguish from neo-conservatives and neo-fascists.

 As an educated observer of the scene, Louv notes that, “In a single decade, condominiums and planned communities have given rise to an enormous number of private minigovernments” [sic]. And makes an astonishing announcement: “These minigovernments now outnumber all the other elected local governments (cities, towns counties).”  My research, from 2005 census data and CAI estimates, shows just under 19% of the population now live under the regulation of these mini-governments. 

Speaking of this new concept in housing, which Louv calls “capitalist communes, an inheritor of utopian thinking”, economist and Progressive Movement leader, Robert Ely “described it . . . as representing ideas alien to democracy: ‘It is not the American ideal.  It is  benevolent, well-wishing feudalism, which desires the happiness of the people, but in such a way as to please the authorities.”   

While Louv writes that “These communities bring built-in social structure and private minigovernments”,  buyers did accept the promotional brochures pushing the buying of “a lifestyle”. As one interviewed homeowner said, the HOA “harkens back to the old values of small town America; the idea of local control, of knowing your neighbors“, and “We’re not really involved”. Then there’s the justification that is still with us today: “Community Associations are here to protect our interests, not let the community deteriorate.  That’s not regulation; it’s common sense.”  And there’s the HOA sales director speaking of their “mavericks”:  “Some of these people are against what everyone else is for.  They get in all kinds of arguments about architectural control.”  Sounds familiar, don’t they? 

But, what happened to the dreams, the idealistic promises of a better, more democratic America?  The answer lies in the rationalization, that still exists today, “it’s the people.”  “If only they would follow the rules” and attend those CAI “educators”, now turned lobbyists, educational training seminars. These seminars are sponsored in many areas by local governments and several states’ have hired CAI for manager and director training  programs.  If only!

Other issues of governmental control and regimentation  were either ignored or dismissed by the believers.  At the time of publication of

America II in 1983, some 19 years had past since the 1964 publication of the  homeowner association “bible”, The Homes Association Handbook.  Three years later the Handbook was critiqued by researchers at the University of California in a Public Affairs Report.  Louv’s 27 year-old time capsule shows us that the problems with the HOA model are still with us, and that they were still occurring 10 years after the creation of CAI to solve these problems through education.  Either CAI is incompetent, or the problems are endemic to the HOA model, and reflect basic flaws with authoritarian homeowner association governance.

   

An authoritarian form of government is contrary to the expectations of Americans who have lived all their lives under a democratic government that places the rights and liberties first and foremost.  Louv agrees:

 

Perhaps the most distinctive characteristic of these communities is that they are controlled by private, democratic governments (community associations) that wield the kind of control over  people’s personal lives and tastes that, heretofore, most Americans would never have accepted from any government.    
 
Indeed, the control often reaches into intimate details of resident’s lives in ways that may be infringing on constitutional rights. [p.128].   We need to start asking some serious questions about how this new level of government affects democracy and freedom.
It is not the amenities, the landscaping, or the closeness of homes placed on smaller lots that have  been the serious causes of discontent and dissatisfaction with planned communities.  It has, and still remains, the oppressive, authoritarian HOA government based on corporate law rather than on constitutional law that  is the “root of all evil.”  I believe the failure to solve the problems with HOA living, from the very inception of HOAs to today, is a systemic defect in the HOA legal, social, and political basis, and, as the past 44 years attest, are insolvable.
 
  

There are existing alternatives to the governance of planned communities that do not permit these HOAs, currently operating as “independent principalities”, to secede from the Union; and still retain the local community privacy of amenities and community “ordinances.”

Notes 

1.  America II: The Book That Captures Americans in the Act of Creating the Future, Richard Louv, Penguin Books, 1983.

2.  Richard Theodore Ely (13 April 1854 – 4 October 1943) was an American economist, author, and leader of the progressive Movement who called for more government intervention in order to reform the injustices of capitalism. (Wikipedia).