HOA Constitutional Government

Over 100 years ago, at the turn of the 20^th century, the unregulated abuses of corporate America became the focus of the Progressive Movement.  Essentially, government intervention was found to be necessary to protect Americans from corporate excesses – sweat shops, health concerns in meat processing plants, child labor laws, etc.  Without regulation, corporate America was acting as Adam Smith said it would: in their own self- interests. 

Today, with respect to planned community and homeowner association abuse, including the loss of constitutional protections, the cry of the special interest corporate America of “no government interference” is a misplaced ideological argument to avoid the same necessary reforms that created the Progressive Movement.  Current public policy and state laws are biased to protect the legal structure of HOAs that deprive Americans of their constitutional protections against such abuse.  The most glaring being the refusal to subject HOAs to the same restrictions as are all other municipalities, including subjecting HOA directors and officers to the same laws that govern our public officials.  None of these private constitutions, the CC&Rs, have ever included a provision that the HOA was subject to the 14^th Amendment of the US Constitution, or included a Bill of Rights. 

Some examples:  the current state of affairs permit substantial financial penalties against homeowners who violate the CC&Rs, yet are silent when it comes to violations by HOA directors and officers, and their agents, the management firms.  The punishment with respect to foreclosure is equivalent to excessive punishment in violation of the US Constitution.  And, the acceptance of ex post facto HOA “laws”, amendments to CC&Rs, that render the initial CC&Rs a meaningless protection for homeowners.

Where are the reformers today?  Sen. McCain, in an address before The Federalist Society, said:  “that government should do only those things individuals cannot do for themselves, and do them efficiently.”  Since political correctness is in vogue lately, is it not politically correct to seek government intervention where it is necessary and warranted?   Or, is it morally and ethically correct for our government to protect those who are abused by the powerful corporate special interests?

Where are the progressive reformers?

 Like local governments, community associations have the power to make rules governing some behavior within the community, and the power to enforce them with fines and other penalties.  They also have the power to enforce the servitudes through judicial action .

Purchasers may notice provisions granting rulemaking powers to associations, but may not anticipate that these powers may be used, for example, to deprive them of their right to own pets or occupy their homes with a roommate, to dilute their voting rights, or to change their share of the common expenses .

Restatement Third, Property (Servitudes)

For complete editorial, see Ex Post Facto

The following article was deemed inappropriate for publication on Wikipedia, by its President, Jimmy Wales:

 Hi, I reverted your edits to Homeowners Association. Simply pasting in a book review is not proper encyclopedic writing. You need to write something neutral. Wikipedia should never make claims like “shockingly absent” and so on.–Jimbo Wales 16:54, 22 February 2007 (UTC)

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The following is based on a review.^[6] of the Handbook (TB#50) , and from sections of Privatopia, and Community Associations.^[7], a book funded in part by ULI and CAI. The origins of how this came to be here in America, the bastion of democracy, can be traced back to the Urban Land Institute’s (ULI), Technical Bulletin #50, The Homes Association Handbook (1964) that was prepared and supported by the real estate special interests, and aided by federal agencies. Those agencies included the Federal Housing Administration, US Public Health Service, Office of Civil Defense, and Urban Renewal Administration. ULI was formed in 1936 as a research division of what is now known as the National Realtor Association).

For the complete entry, see Homes

The new Arizona experiment in HOA justice by means of the administrative judge resolution of disputes has been hailed as a leveling of the playing field. Homeowners now have a relatively inexpensive and less formal procedure to obtain justice against an HOA board’s disregard of the laws and governing documents.

ALJ decisions can now have a financial impact on HOAs if they lose cases that involved the collection of fines and other charges against the homeowner, and were found to be in violation of the law or governing documents. In case 07F-H067004-BFS, not yet decided, the homeowner petitioner asked for punitive damages and restitution. The ALJ ruled that punitive damages were out, but restitution was permitted, depending on the facts. This ruling was based on a 1993 Arizona Appeals Court opinion (Cactus Wren v. The Department of Building, Fire and Safety, 869 P.2d 1212) affirming the decision by the administrative hearing officer.

Of the twenty-two complaints filed against HOAs to date, six have been decided: HOAs won 3 cases, the homeowner 1 case, and 2 cases were “split decisions” going to one and the other on the separate case complaints. The cases are being heard before the Office of Administrative Hearings (OAH)where HOA attorneys do not automatically get fees paid if they win, and where the Administrative Law Judge may penalize the HOA up to $500. This should make HOA boards think twice about filing suits urged on by the attorney, and attempt to reach an agreement with the alleged violator.

No longer can HOA boards file suits or frivolous fines without being subject to financial penalties. The HOA boards are now being held accountable for their actions by the state. This will have an impact on homeowners not involved in the case when such actions by their boards cause them to reach into their pocketbooks to foot the bill. Now, perhaps the homeowners, usually denoted as “apathetic homeowners”, will feel the need to watch over their boards.

I’ve written many times about the mass merchandising — the large-scale promotion and selling — of HOAs to the public. I’ve commented on the bible for this program, the Urban Land Institute’s Technical Bulletin #50, The Homes Association Handbook of 1964, funded by the special interests and your federal government. (See Part I in, Handbook).

It is clear that the creators of this housing model,

1) desired the mass acceptance of HOAs across the country,

2) realized that they must tie HOAs strongly to equitable servitudes with the favorable protections it offered the developer as the creator of the CC&Rs,

3) that constructive notice rather than a signed contract, was the strong mechanism to allow for the mass selling to average Americans,

4) that other forms or model of housing development — the business entity known as the housing cooperative where people buy shares in the co-op that owns the real estate — that relied on contract law would not protect the developers’ interests,

5) the obsession for uniformity and conformity to developer created “laws”, the covenants running with the land, in order to maintain their obsession as to what makes a beautiful landscape (Levittown with curved roads),

6) that an authoritarian regime, the business corporate form of governance, was necessary, with lip service to democracy, to maintain the developer’s plan for larg-scale acceptance of HOAs, and

7) that a different sales pitch was prepared for the different parties: carefree living and property value protection to buyers; profit protection for lenders and developers (forecosure and equitable servitudes); and affordable housing subdivisions at no-cost to the municipality.

A review of the complaints and problems with HOAs can be traced back to one or more items in the above statement. Ask yourself,

1. Why is there an obsession with one set of CC&RS and the acceptance of ex post facto laws, when the US Constitution prohibits them?

2. Why is there the need to foreclose on nonpayment of fines and assessments, if not to punish the homeowner and to preserve the HOA that has very little at risk? In this manner, they could mass sell “protection” to developers and lenders.

3. Why have the special interests, and the leading national lobbyist, CAI, strongly opposed recognition of HOAs as a government, and their insistence on HOAs as a business?

4. Why were no bill of rights included?

5. Why is there a focus on “community” rather than on “business”?

6. On equitable servitudes and not contract law?

7. Do I own, in reality, my home as my private property when my neighbors can control my rights without my approval?

8. Why are the courts still defining what my rights are under the CC&RS, long after I thought I had a “sealed” agreement?

Mass merchandising, like selling appliances, required a nonnegotiable acceptance of terms and conditions that are common in the world of commerce, but has no place when it comes to a person’s home and the surrender of civil and constitutional rights. With a person’s home, the CC&Rs must be viewed as an adhesion contract that is unconscionable and against public policy.