Has Calif. CLRC supported HOA industry in Davis-Stirling rewrite?

Excerpts from my letter to CLRC regarding its defense against claims of a pro-HOA bias.
 
 
Your email (see Appendix A) to Ms Vanitzian of December 12th has come to my attention.  Her complaint focused on the domination of  CLRC by real estate lawyers and the national business trade lobbying group, Community Associations Institute (CAI) in the presence of its California state chapter, the California Legislative Action Committee (a joint committee of eight CAI state chapters).  And that homeowner advocates have been excluded from any meaningful consideration of this Davis-Stirling rewrite that affects them, personally.
 
I must agree with Ms Vanitzian that there appears to be a bias in favor of these outsider attorney interlopers, these legal-academic aristocrats, claiming to represent the interests of the CID homeowners, and supported by the CAI national trade group that does not have any HOA membership category, just HOA management members. 
 
It is interesting to note that on March 24, 2008 Ms Vanitzian’s Letter to the Editor appeared in the Central Valley Business Times, in which she not only criticized AB 1921, but CLRC as well (see Appendix B).  On April 11th I emailed CLRC my criticisms of AB 1921 and CLRC’s failure to address Chapter 2, Member Bill of Rights, which was just an empty placeholder in the bill. 
 

CLRC apparently wrestled with what to do about a bill of rights and presented a perplexed state of mind to the public: 

 

However, a bill of rights would probably go beyond the substantive rights

that are currently provided in the law. What might those additional rights be? . . .

How would these rights apply in a CID context, where the governing body is

a private association rather than the state?  CLRC MM05-03.

 
And yet, CLRC sees no need for a Members Bill of Rights.  It has fallen right in line with the proponents of a New America of top-down special laws for the governance of a segment of the population living in HOAs.  Special laws that ignore the US Constitution with its concern for individual freedoms and liberties, for justice, and for protections against government abuse, whether public or private. 
 
 
Read the complete letter at CLRC.
 
 

Supreme Law of the Land: HOA servitudes or the Constitution?

In my Commentary this past September (Year 2 AZ OAH statistics on HOA cases — homeowners still win 43% of the cases!) I wrote,  “What else are the CAI attorneys telling the legislators that has no basis in fact?  When will the legislators, the courts, the media, and the various public interest nonprofits going to wake up and face the reality before them?”

 

 I have observed a recurrent behavior by CAI attorneys who say one thing to state legislators and government officials, and another when before the courts representing their client, the HOA (not the homeowners or any member of a nonprofit membership organization).   Before the courts and administrative tribunals, one easily sees these attorneys defending their client HOA with a win-at-all-costs attitude as they proclaim is their duty to their client HOA, even contradicting statements made to the general public or, as above, to legislative committees.  (Understanding that under the various state Codes of Professional Conduct (Rule 42, E.R. 1.13, in Arizona) the client is the fictitious person, the HOA, not the member-owners).

 

With respect to the fiduciary duties question, CAI, that self-proclaimed national HOA educational organization since 1973, has released several publicly available documents, including its policy statement document, that says:

 

Homeowner Rights & Responsibilities, Community Leaders Have the Responsibility To :

1. Fulfill their fiduciary duties to the community and exercise discretion in a manner they reasonably believe to be in the best interests of the community.

  

GAP Report #20:

Conflicts of Interest, by Tonia C. Sellers, ESQ. and Jay S. Lazega, ESQ. Published by Community Associations Institute. Provides standards for both boards and managers. Highlights areas of activity in which actual or potential conflict may arise and suggests actions to take when a conflict does arise. Covered are fiduciary duty obligations, conduct of the directors, managerial conflicts, ethics policies, board conflicts, and a host of other topics. Also contains sample policies, resolutions, code of ethics, and cases.

 

CAI Public Policies, Community Association Members’ & Community Associations’Rights and Responsibilities, Association Responsible For (p.24)

Diligently ensuring each board member fulfills his or her fiduciary duties.

 

 

It doesn’t take a stretch of the imagination to understand that the “community” is the homeowner-members — the owners of the HOA — and not the fictitious person.  (The Restatement Third, Property: Servitudes, § 6.13, comment “a”, rejects this argument out of hand). But, how can CAI build vibrant, harmonious communities, as it advertises, if just speaking about the fictitious HOA corporation, per se, and not the people?  I cannot find where CAI clarifies that it is equating “community” and “best interests of the community” to the HOA corporation, and not to the homeowner.  The impression, obviously, is that CAI is speaking about the homeowners themselves.

 

A particularly disturbing incident came to my attention regarding the fiduciary duties, if any, that a board member, and the board as a whole, has to the membership.   In an Arizona Superior Court (CV 2008-027251, Maricopa County) filing against the unreasonable interpretation of a quorum covenant by the HOA board, the HOA attorney and member of the CAI College of Community Associations Lawyers, wrote in its Motion to Dismiss,

 

In addition, Arizona law does not recognize a claim for breach of fiduciary duty for Associations (p. 2).  Plaintiffs’ breach of fiduciary claim should be dismissed. Because neither the association nor its Board of Directors owes the Association’s members a fiduciary duty plaintiffs have not stated a claim upon which relief can be granted (p. 4).

 

Why shouldn’t HOA directors, and the HOA, not have a fiduciary duty to the member-owners?  The HOA and directors are not even held accountable under state laws for violations of the law or of their governing documents.  Yet, homeowners have statutes that impose the possible loss of finances and their homes for violations of the governing documents.

 

The CAI attorney then cites the Restatement, sections 6.13 and 6.14, that do not mention the term “fiduciary duty” at all. It mentions other legal concepts such as good faith, prudent person, ordinary care, act reasonably, and deal fairly.  The Restatement also takes the position in favor of the superiority of servitude property law over corporate law (sec. 6.14), and over constitutional law (sec. 3.1, comment “a”) as well.   CAI “Central” apparently agreed with this superiority of servitudes over the Constitution when, in its amicus brief, it warned the NJ Appellate Court (CBTW v. Twin Rivers, 2007) against, “the unwise extension of constitutional rights to the use of private property by members” (p.19).

 

What, then, does CAI stand for when you put aside its promotional propaganda and take a hard look at the actions of its members?  Surely, it does not stand behind the values, principles and beliefs of the American system of government.  And yet, our legislators across the country see no evil, no harm to America, and continue to impose top-down special laws for homeowners associations without constitutional protections for the people, the homeowners.

 

All legislators and government officials, as well as the media, should ask these special interest groups supporting pro-HOA legislation where they stand with respect to,

 

  1. the Constitution as the supreme law of the land, and
  2. that the Restatement Third, Property: Servitudes is dead wrong with its pronouncements that servitude law is the supreme law of the land.

The HOA experiment in privatized government is alive and well, and growing

HOA ideology supporting local government secession 

Goldwater Institute’s Policy Report of 100 ideas for 2009[i] contains some disturbing ideas that directly affect local government, homeowners associations and the future  of American society.  In particular, the following two “ideas” (emphasis added) are most disturbing for constitutional local government, because they carry the thought of expanded, privately “contracted” local governments not subject to the Constitution with its protections of individual rights. 

 

22.  Afford citizens enhanced protection against local government overreaches by enacting local constitutions.

 

41.  Give cities and counties the power to replace centralized and bureaucratic zoning and land use regulation with decentralized and privately-enforced restrictive covenants.

 

I cannot help but notice the choice of the word “constitutions” in Idea 22 above, rather than “charter”.  Cities and towns have charters, not constitutions, subject to votes of the citizens and approvals according to Arizona’s statutes.   Homeowners associations have governing documents quite often referred to as constitutions.  Absent  from these constitutions are any obedience or compliance with the their state constitutions, thereby placing them on a more or less equal footing.  Where is the Institute going with the image of a “constitution” rather than a state approved charter?

Read the complete commentary . . .

[i] “100 Ideas for 100 Days”,  http://goldwaterinstitute.org/Common/Img/100%20Ideas%20(2)%20with%20links.pdf.

HOAs as a "failed experiment"?

“Failed experiment” was discussed on OnTheCommons internet talk radio show (http://onthecommons.us) with Evan McKenzie and Shu Bartholomew, its Host.  I’m happy to see that they recognize the HOA legal scheme of privatized government as an experiment.  Unfortunately, after 40 years it has proven to be a successful experiment and a well entrenched American institution, at the expense of the Constitution and our individual rights and freedoms.  And, sadly, pronouncements in support of private property rights and contract sanctity by the public interest organizations fail to recognize the denial of individual liberties by HOAs. (See The impact of ideology on the HOA legal scheme).
 
For a discussion of my Second American Experiment Commentary of July 21, 2008, see Homeowners Associations: the Second American Experiment.  Below is an excerpt from my new book, Establishing the New America (see http://starman.com/starpub for more information). 
 
 
1.1  The fall of the American Experiment 
Historians have referred to the American Revolution as the “American Experiment”, because it introduced a modern, as of that time, form of a democratic republic.  Would such a government based on the principles, beliefs and values of our Founding fathers survive the passage of time?  
. . . .
However, over the past century there has been a slow but steady erosion of the American Experiment.  We have witnessed the Supreme Court view the Constitution, that contract between the people and the federal government, as a “living document” subject to its interpretations, such as adding “privacy’ as a new fundamental right, ignoring the Ninth Amendment, and redefining the meaning of “public use” to mean “public purpose”.  This slippery slope is creating a land not of law, but of men. Witness the many battles to place the “right” men as Supreme Court Justices.
. . . .
In California, a rewrite of its HOA laws contains an empty chapter for a homeowners’ bill of rights.  In New Jersey, its Supreme Court believes that the business judgment rule is sufficient to protect homeowners’ fundamental rights.  In Arizona, the only two important HOA reform bills that would provide substantive due process protections were either killed or delayed by the actions of the Rules Committee chairmen.
 

HOAs as a “failed experiment”?

“Failed experiment” was discussed on OnTheCommons internet talk radio show (http://onthecommons.us) with Evan McKenzie and Shu Bartholomew, its Host.  I’m happy to see that they recognize the HOA legal scheme of privatized government as an experiment.  Unfortunately, after 40 years it has proven to be a successful experiment and a well entrenched American institution, at the expense of the Constitution and our individual rights and freedoms.  And, sadly, pronouncements in support of private property rights and contract sanctity by the public interest organizations fail to recognize the denial of individual liberties by HOAs. (See The impact of ideology on the HOA legal scheme).
 
For a discussion of my Second American Experiment Commentary of July 21, 2008, see Homeowners Associations: the Second American Experiment.  Below is an excerpt from my new book, Establishing the New America (see http://starman.com/starpub for more information). 
 
 
1.1  The fall of the American Experiment 
Historians have referred to the American Revolution as the “American Experiment”, because it introduced a modern, as of that time, form of a democratic republic.  Would such a government based on the principles, beliefs and values of our Founding fathers survive the passage of time?  
. . . .
However, over the past century there has been a slow but steady erosion of the American Experiment.  We have witnessed the Supreme Court view the Constitution, that contract between the people and the federal government, as a “living document” subject to its interpretations, such as adding “privacy’ as a new fundamental right, ignoring the Ninth Amendment, and redefining the meaning of “public use” to mean “public purpose”.  This slippery slope is creating a land not of law, but of men. Witness the many battles to place the “right” men as Supreme Court Justices.
. . . .
In California, a rewrite of its HOA laws contains an empty chapter for a homeowners’ bill of rights.  In New Jersey, its Supreme Court believes that the business judgment rule is sufficient to protect homeowners’ fundamental rights.  In Arizona, the only two important HOA reform bills that would provide substantive due process protections were either killed or delayed by the actions of the Rules Committee chairmen.