HOA Constitutional Government

I’d like to thank the Phoenix ABC15 Investigative Reporter and Producer  for this well-done video on HOA problems.  ABC15 presented the other side of HOAs that state and city/town officials, and the so-called educational organization, CAI, have hidden from the public.  At this writing, the video is available at http://www.abc15.com/mediacenter/local.aspx#top.

The introduction by the news anchors did raise the question of controlling out of control HOAs.  The reporter told of receiving stacks of complaints about HOAs.  Mentioning homeowner complaints, “HOA board members are unregulated and power hungry”.

A panel of 5 homeowners presented their HOA issues.  Scenes of a highly disruptive HOA board meeting, that was secretly taped, was presented.  Scenes of a poorly kept HOA property were shown while the homeowner asked, “Where’s our money going?”

Homeowner attorney Steve Cheifetz was interviewed and made the following points:

**   HOAs are quasi-governments, but lack the checks and balances in our government.

** HOAs can do things our public government are not allowed to do

** The only help available to homeowners is to find a lawyer.

** If you upset a board member, it can easily lead to a personal vendetta — boards are unregulated.

This nationally known advocate was able to mention that HOA boards are not penalized for violating the law, so why would they listen to homeowners?  Reporter Abbie did make reference to the state agency, the Office of Administrative Hearings or OAH, as an option for homeowners to file complaints against their HOAs.

However, this important piece had its shortcomings.  Somehow, CAI, the vigorous national proponent of New America, introduced not as a business trade group but as an educational group, was able to make an appearance to speak for whom???   CAI spokesman Lerch said that “things would probably be worse if it weren’t for HOAs” , and “do you really think government can do a better job, I don’t”.   “There are some bad apples” was heard once again from CAI, but no reference to the more than 50% victories for homeowners who have filed OAH complaints.

And furthermore, the tough issues as to the causes of the continued HOAs problems and state government resistance to help homeowners was avoided.  It was obvious that the bias still remains favoring CAI, since somehow it was asked to appear and to speak in general defense of this trouble plagued industry. Yet, this advocate was told that they did not want to appear biased when he wrote urging ABC15 to ask these hard questions, and to get answers, about CAI’s opposition to HOA reforms.   

This is an industry affecting over 50 million homeowners across the country, some 19% of the nation’s population, where CAI has very a strong influence on state legislatures and public officials, and these important questions go unasked. CAI has publicly stated its opposition “to the extension of constitutional protections to homeowners” in HOAs, and to the AARP Homeowners Bill of Rights. It is not asked, “WHY?”  The proper functioning of a democratic government requires an educated public and an open press.

Perhaps next time an interview is conducted we will have these importance questions of causation asked, and maybe answered.

In the article, Condo owners, boards clash over control, we once again see the national lobbying organization, CAI, urging the adoption of UCIOA in NJ that will create the New America under authoritarian, privately chartered governments under the guise of state law by NJ bill, S-805.

UCIOA never had a bill of rights at any time. CAI does not believe in constitutional rights for homeowners in planned communities. As stated in its amicus curiae brief to the NJ appellate court in the Twin Rivers case, CAI warns of  “the unwise extension of constitutional rights to the use of private property by members” in the false belief that HOAs are a democratically constituted form of government. This statement reflects CAI’s fear of the judicial application of the Bill of Rights to HOAs. WHY?

CAI sees itself as “the voice of homeowner associations”, but has no HOA membership category any longer. Why? CAI also claims that planned communities represent the voice of the local community that has chosen HOAs, disregarding all those mandatory HOA requirements for new development across the country. Yet, CAI has been active across the country to impose a national law, UCIOA, that in reality replaces the US and state Constitutions as the supreme law of the land.

Section 3.1 of the Restatement Third, Property: Servitudes,, states that servitudes that are unconstitutional are invalid, and that servitudes that violate public policy by placing an unreasonable burden on constitutional rights are also invalid. Yet, in comment (h) in clarification of this section we see an about face with respect to constitutional rights and which right prevails (p. 359): “The question whether a servitude unreasonably burdens a fundamental constitutional right is determined as a matter of property law, not of constitutional law.” CAI’s amicus statement reflects its agreement with the preeminence of property law as the supreme law of the land.

NJ legislators really have no choice in this matter of HOA reforms, but to defeat S-805 and to support S-1608 sponsored by Senators Rice and Turner. The NJ appellate court has already ruled that HOAs are constitutional actors subject to the NJ constitution. As such, UCIOA would be seen as unconstitutional. 
For more on this topic, see “10 Myths About HOAs” and “The Truth About HOA Acceptance”.

   Remember SB1330, the bill that included for sale sign, solar panels and homestead protection amendments?  Remember Governor Napolitano’s far-fetched constitutionality argument of May 16th to veto this bill:

“Today I vetoed Senate Bill 1330, which dealt with a variety of unrelated subjects. This bill violates the single subject rule. The provisions relating to the homestead exemption have nothing to do with the provisions regarding displays of for sale signs and are equally unrelated to provisions regarding solar energy. Even if those subjects could somehow be considered related . . . . As such, the bill is unconstitutional in its current form.”

In a flurry of activity on July 2nd, some 30 bills were signed into law, including SB1254 and SB 1062 dealing with solar panels and for sales signs, respectively.  SB1330 was not put to a vote to override the veto. It’s  interesting to note in light of the Governor’s veto above, that SB1062 is titled, “Relating to Condominiums and Planned Communities”, which has the ring of too many topics. Restoring the homestead exemption to homeowners living in HOAs was not put into law.

I wrote on May 18th  (see Veto),

“But in view of the historical intent and purpose of such a restriction [one topic per bill], the decision by the Governor to veto SB1330 is highly unreasonable and out of order.  The Governor needs to provide her real reason for her veto of this bill that attempts to correct an unconstitutional interference in private contracts, and an unequal application of the laws, by industry sponsored legislation in 1996.”

On July 2nd,  Governor Napolitano revealed her real reason for opposing the will of the people and vetoing SB1330 — she fell prey to the pressures of the HOA special interests who vehemently fought against this reform for the past several years

   Remember SB1330, the bill that included for sale sign, solar panels and homestead protection amendments?  Remember Governor Napolitano’s far-fetched constitutionality argument of May 16th to veto this bill:

“Today I vetoed Senate Bill 1330, which dealt with a variety of unrelated subjects. This bill violates the single subject rule. The provisions relating to the homestead exemption have nothing to do with the provisions regarding displays of for sale signs and are equally unrelated to provisions regarding solar energy. Even if those subjects could somehow be considered related . . . . As such, the bill is unconstitutional in its current form.”

In a flurry of activity on July 2nd, some 30 bills were signed into law, including SB1254 and SB 1062 dealing with solar panels and for sales signs, respectively.  SB1330 was not put to a vote to override the veto. It’s  interesting to note in light of the Governor’s veto above, that SB1062 is titled, “Relating to Condominiums and Planned Communities”, which has the ring of too many topics. Restoring the homestead exemption to homeowners living in HOAs was not put into law.

I wrote on May 18th  (see Veto),

“But in view of the historical intent and purpose of such a restriction [one topic per bill], the decision by the Governor to veto SB1330 is highly unreasonable and out of order.  The Governor needs to provide her real reason for her veto of this bill that attempts to correct an unconstitutional interference in private contracts, and an unequal application of the laws, by industry sponsored legislation in 1996.”

On July 2nd,  Governor Napolitano revealed her real reason for opposing the will of the people and vetoing SB1330 — she fell prey to the pressures of the HOA special interests who vehemently fought against this reform for the past several years

In the New America, the soon to be renamed America: The United HOAs of America, evidence continues to demonstrate the extend to which HOA promoters will go to protect these defective, authoritarian regimes.

In this carefully crafted Arizona statute, ARS 33-1805, “disclosure” pertains to membership access to HOA records, and not to the judicial laws or court rules pertaining to subpoenaed disclosure under Ariz. R. Civ. P 26 and 26.1.  [These disclosure rules can be found in almost identical in all states since they follow the federal rules]. It attempts to create an aura of judicial protection, but it cannot without being a constitutional violation of due process protections and the equal application of the laws. 

The application of this statute — unlike judicial laws and rules that do not protect existing corporate records from disclosure — to judicial disclosure is an invalid extension to judicial proceedings.  Once litigation commences, the rules of disclosure prevail.  It is a clever HOA protectionist statute to hide substantive documentation from homeowners, documents to which they would otherwise be entitled to access, that flies in the face of legal doctrine.  

It was neither the intent of the legislators to extend this unjust statute to the courts, nor to permit the statute to shield the HOA from “crime-fraud” litigation.  Must the member go to court under a legal action to determine from his independent analysis of the corporate records that a crime may have been committed?  This is the Mafia scenario:  no records, no crime.  By the shrewd wording and the omission of “existing” from the statute to avoid recognition of the true application of legal doctrine, 1805 implies that existing records are protected.

ARS 33-1805(B): (my emphasis)    

Books and records kept by or on behalf of the association and board may be withheld from disclosure to the extent that . . .

(1)   Privileged communication between an attorney . . .

(2)   Pending litigation

(3)   [executive] meeting minutes . . .

  Ariz. R. Civ. P. 26 General provisions concerning discovery [my emphasis]

(b)(3) Trial Preparation: Materials

“[A] party may obtain discovery of documents . . . prepared in anticipation of litigation or for trial . . . only upon a showing that the party . . . has a substantial need of the materials in preparation of the party’s case . . . .”

1970 Amendments

“[T] his Rule . . . does not extend the quality of absolute protection  beyond the ‘mental impressions, conclusions, opinions, or legal theories’ of the person who is entitled to the protection.” Zimmerman v. Superior Court, 84 Ariz. 85, 402 P.2d 212 (1965).

Author’s Comments (Arizona Civil Rules Handbook, Thomson -West, 2005)

9.  privileged materials. “The attorney-client privilege applies only to confidential communications with securing and rendering legal advice. State ex rel v. Corbin v. Weaver, 140 Ariz. 123, 680 P.2d 883 (App. 1984).”  See ARS 12-2234.
10. anticipation of litigation.  “Whether this ‘work product’ privilege applies is determined by . . . whether it contains analyses or opinions or purely factual data, and whether it was requested or prepared at the specific instance . . . or in the ordinary course of business.”