HOA Constitutional Government

The opponents to SB1330 give the false impression that the HOA foreclosure right operates fairly against all homeowners with unpaid assessments. It does not!  The opponents imply that all homeowners with unpaid assessments will be foreclosed on.  This is untrue! Only those with sufficient equity will be foreclosed on. The homestead exemption restores a more equitable treatment of homeowners. 

In 2004 CAI falsely told legislative committees that foreclosing at near fair market values would hurt the HOA. Just this month, CAI attorney lobbyist Ekmark informed Republic readers as to how the HOA gets its money from foreclosures, with the obvious realization that: 

1) contrary to its 2004 argument, the higher the sale price, the more the equity available to the HOAs’ junior lien, and

2) the HOA can only get money when the equity from the sale exceeds any mortgage.

As a matter of good public policy, the imposition — the  mandating — of the  statutory lien created by ARS 33-1807(A)  (“The association has a lien . . .”), acts against the good, hard working people of Arizona who have over the years paid their debts and created substantial equity in their homes.  Who are they? The elderly and seniors are among them.

Those who have large mortgages to pay off, either because of a recent home purchase or a refinancing of their mortgage, escape the application of ARS 33-1807 and will not be foreclosed on. Why? It’s quite simple: there’s probably no equity for the HOA to collect its debt.  So, the state imposed lien operates selectively against only a specific class of good people in Arizona  — those who have a substantial stake in their homes. 

This is not good public policy!

However, the intent and purpose of the Homestead Exemption Act was, and is, to protect these good people from a loss of their homes.  The right of the HOA to foreclose operates unfairly against homeowners and must not be allowed to circumvent the homestead protection.  The claim of a “consensual lien” is arguable, given the status of the laws, and the manner in which material information has been withheld from the homebuyer both in the sales transaction and by the failure of agencies of the states to protect the consumer, as charged by their enabling acts.

The Legislature must remove the public policy that operates unjustly in practice, and that allows HOAs to unfairly foreclose on selective homes.  PASS  SB1330!

As of April 1, 2007, this past Monday, the Arizona filing fee for a single count HOA complaint returns to $550 again; multiple counts remains $2,000.   I just discovered this change today, without any feedback or notice from DFBLS, just a posting on its web site. 

 THIS IS A WIN FOR US!

As I wrote relating to homeowners filing numerous counts for unrelated violations, just file 1 very narrow complaint like a failure to act in good faith, or a violation of a particular statute or declaration provision.  Later, you can file a second or a third complaint on different violations — and don’t forget to ask for fees paid and penalties against intential violations by the HOA.  That could easily be $$1,100 or $1,650 in penalties agains tthe HOA.

Of course, the response to my review request is still open, but I expect the question to be moot for now.  See,

http://www.dfbls.az.gov/OA/Downloads/HOA%20Package04012007.pdf

DEPARTMENT OF FIRE, BUILDING AND LIFE SAFETY

April 1, 2007 In 2006, the Arizona 47^{th Legislature passed legislation that provides the people of Arizona a venue to homeowners and condominium and planned community associations (HOA) to resolving disputes. These administrative procedures do not limit the rights of the parties to pursue matters in the legal system, but provides an alternative. This legislation became law on September 21, 2006.}

PLEASE NOTE THE FOLLOWING CHANGES EFFECTIVE APRIL 1, 2007:

• The filing fee for a single count is $550.

• Multiple counts are $2,000.

Data

17,000 people, of the 29,000 CAI members, from 57,000,000 people living in 286,000 HOAs containing 23,100,000 units (CAI stats from caiservices@caionline.org, Apr 3, 2007, and its webpage, http://caionline.org/about/facts.cfm, Apr 3, 2007).  

Assume no CAI member is in the same unit or HOA; there are 2.5 people in a unit (US Census gives 2.6 people).

Statistics

59% CAI membership is from HOA residents (17k/29k) —  there are no HOAs as members any longer

At most, 5.9% of HOAs have a resident member in CAI, (17k/286k) and that does not mean that the HOA is represented by CAI.

At most, .03% of all people living in HOAs are CAI members (17k/57M)

At most, .07% of all HOA units are a CAI member.

CAI minority dominates public policy

Yet, CAI as a national lobbying organization for over 34 years has been able to overwhelmingly dominate and influence public policy to the detriment of homeowners who are member-owners of the HOA, and deny them their fundamental rights and freedoms.

When will our state legislatures and government officials begin to realize that their pro-HOA legislation and regulation  does not have the support of a majority of the homeowners in HOAs, but a minority of individuals with a personal agenda. That their legislation supports special interest interference with the fundamental rights and freedoms of the people in violation of the US Constitution.

The March 30, 2007 issue of the Arizona Capitol Times contained the following story:

It now costs $2,000 for members of homeowners associations to file a complaint with the Department of Fire, Building and Life Safety in the Office of Administrative Hearings. The fee used to be $550.

“The intent of H2824 was to give homeowners an affordable way to file against an HOA without the costs of going to Superior Court. This increase completely defeats what the Legislature tried to do,” Staropoli said.

The intent according to Cliff J. Vanell, director of the Office of Administrative Hearings, was to “streamline the process to make it more accessible to homeowners, and make the hearing process work in a timelier manner.”“

The problem lies in that there is no state money appropriated to pay for HOA cases heard by an administrative law judge. The program was supposed to be self-sustaining and not cost taxpayers anything, but the $550 filing fee just wasn’t covering the man hours each case was averaging,”

“I feel real bad about the increase (in the filing fee), but the bottom line was I had to do something, and it is within the powers of the director to raise the filing fee and so that is what I did,” Barger [Director of DFBLS] said.

Facts:

1. The authority granted the Director by the enabling statute simply said, “[P]ay a nonrefundable filing fee in an amount to be established by the director.”
2. The requirement for cost-effectiveness to be determined by the Director is not contained in any statute, but the Joint Legislative Budget Committee was to review the fee within a year with the guideline of the new adjudication to be self-supporting. Section 12 of the law states, “The joint legislative budget committee shall recommend a level of filing fee appropriate to ensure the hearing officer program is fiscally sound and self-supporting.”
   
3. At the Nov. 15, 2006 JLBC meeting, the committee recommended the fee remain at $550 for 2007 pending the development of meaningful cost data.
4. Under Arizona’s APA, fee setting is subject to rulemaking statutes that require public notice and input, neither of which occurred.

 In short, while the statute gave the Director the right to set the fee, which could be easily interpreted to mean only the initial fee, since JLBC was to review the costs, APA rulemaking statutes tells the Director how, which he violated. 

Statistics:  

1. Over 78% of OAH cases do not pay a fee!  HOA complaints would amount to a mere 1.7% of all complaints.  Only 24 complaints were submitted before the fee was increased; last year, there were 7,360 OAH complaints filed.
2. The average cost per case last year, for all OAH cases was only $158.41, far below what 78% paid and below the initial $550 HOA fee.
3. The pre-increase submission ratio was 1.1 complaints per week; the post-increase ratio is .6.
4. With 13 decisions rendered to date, homeowners won 6, the HOA 5, and two were split This result rebuts the special interest claims that HOAs are doing a great job, and its only a handful or troublemakers who don’t know how to get along who are causing these handful of problems.  Is this the reason for the outrageous fee increase, to bury the truth?

Why are homeowners in HOAs being denied their due process rights and being clearly subject to separate and unequal laws?   For more information see additional editorials:   

 

In a split vote, the Arizona House Homeland Security and Property Rights (HSPR) committee voted on March 26, 2007 to kill a bill aimed at preventing HOAs from regulating parking on public streets.  By doing so, it saw no problem with the abuse of constitutional due process when HOAs fine a homeowner for a stranger’s car parked out in front: a fine that is allowed to be a lien against an innocent homeowner. The failure to restrict the regulation of public streets for parking opens the door to the further private HOA government regulation of public streets, an unconstitutional delegation of police powers to a private organization.

 

Even the mention of “bills of attainder” by a HOA president fell on death ears, apparently neither the HOA president nor the committee members understood what a bill of attainder is, and that it’s prohibited by the US Constitution.  Neither, apparently, did the lobbyist for the national HOA trade group, the Community Associations Institute (CAI), who opposed the bill because it somehow stood in the face of the voice local government.  Say what?  HOAs are not public governments; they are private contractual governments operating outside the Bill of Rights and 14^th Amendment restrictions on state actions.  CAI’s position on this bill echoes its amicus curiae brief warning of an “unwise extension” to the NJ appellate court in the Twin Rivers HOA constitutionality suit when it wrote, “In the context of community associations, the unwise extension of constitutional rights to the use of private property by members ….”

 

Read the complete editorial at homeland.