HOA Constitutional Government

One of the first complaints, OAH # 07F-H067007-BFS (2007), heard before an administrative law judge in Arizona’s new experiment in bringing justice to HOA disputes involved a homeowner who filed a complaint about the taking of his sidewalk property of some 20 years – among other things. The HOA amended the CC&Rs and appropriated homeowner sidewalks since, it was argued by the HOA, the HOA was already maintaining them as required by the CC&Rs. There were no deeds signed by any homeowner, just an amendment deemed valid since it met all the requirements of the CC&R amendment procedure.

The decision failed to acknowledge that the homeowner at his hearing raised the question of the validity of portions of the lengthy amendment to the CC&Rs. The ALJ did not address the purpose and validity of the amendment in his decision, which stated that the homeowner failed to “present any substantive evidence” and that,

“[S]uch concerns [by Petitioner] are ultimately irrelevant to the determination of this matter, which involves not the substance of the amendments but the manner in which those amendments were adopted”.

See complete analysis at Sidewalk.

Should the business judgment rule (herein “BJR”) rather than the alternative, reasonableness test for decision-making be the standard for HOA board actions? The courts grant HOA boards broad rights over homeowners by currently holding that the board is the best decider of what’s good for the HOA, not the courts, regardless of any test of the reasonableness of actions. We believe that the rational for this position was reached by faulty analysis and a bias toward treating the HOA government as the best arbiter of “the stability of the common living arrangement.”

We believe this holding deprives homeowners of their due process rights, especially when board the decisions relate to rules and regulations regarding use of private property and the conduct of the homeowner.

Read more at Judgment.

CAI’s lament about “10 Things They Hate About You” (Jan-Feb 2007 Common Ground) in reference to the poor performance of HOA boards. This follows CAI’s 12 part, year-long effort on Skiba’s blog, “Pearls of Wisdom“. These communications are in direct conflict with CAI’s propaganda surveys on how happy homeowners are in HOAs.

What are these 10 complaints? Read and judge for yourself on the relevance of the complaints. Comments are in square brackets.

1. When you don’t share financial information. [Even when required by law].

2. When the rules are shrouded in mystery. [The rules are made up on-the-fly, without notice to homeowners].

3. “People are strange”. [Surprise, surprise that people within a community will differ. Board is incapable or unwilling to be responsive to homeowner concerns].

4. Inconsistent rule enforcement. [This reflects an uniformed board concerning its duties and obligations under the law and the governing documents, and the fact the board holds draconian measures to enforce compliance to whims – foreclosure].

5. Not allowing homeowners to vote on financial or other important matters. [In spite of CAI’s proclamations that HOAs are ideal direct democracies].

6. Meeting in secrecy [Public, democratic governments are subject to true blue sky requirements — open meetings].

7. Failing to appreciate professional management. [What professional management? Listen to the complaints and management is often the culprit guiding the volunteer boards].

8. Don’t seek professional advice. [True, but sometimes attorneys, the only professionals involved in HOAs, forget their neutral role and act in collusion with the board’s wrongful actions].

9. “Tight fisted”. [Is this number 9?].

10. Running for the board with an axe to grind. [Well, if the director was not conscripted into service, they all have an axe to grind, even those who seek to reform the board that isn’t doing what they think it should be doing.]

It’s about time that the industry special interests admit that the 40 plus year experiment in planned communities and homeowners associations is a dismal failure. How can a money-driven constitution, without a bill of rights, written by a commercial enterprise that leaves the community in a very short time, outperform the 220 year-old US Constitution?

CAI’s lament about “10 Things They Hate About You” (Jan-Feb 2007 Common Ground) in reference to the poor performance of HOA boards. This follows CAI’s 12 part, year-long effort on Skiba’s blog, “Pearls of Wisdom“. These communications are in direct conflict with CAI’s propaganda surveys on how happy homeowners are in HOAs.

What are these 10 complaints? Read and judge for yourself on the relevance of the complaints. Comments are in square brackets.

1. When you don’t share financial information. [Even when required by law].

2. When the rules are shrouded in mystery. [The rules are made up on-the-fly, without notice to homeowners].

3. “People are strange”. [Surprise, surprise that people within a community will differ. Board is incapable or unwilling to be responsive to homeowner concerns].

4. Inconsistent rule enforcement. [This reflects an uniformed board concerning its duties and obligations under the law and the governing documents, and the fact the board holds draconian measures to enforce compliance to whims – foreclosure].

5. Not allowing homeowners to vote on financial or other important matters. [In spite of CAI’s proclamations that HOAs are ideal direct democracies].

6. Meeting in secrecy [Public, democratic governments are subject to true blue sky requirements — open meetings].

7. Failing to appreciate professional management. [What professional management? Listen to the complaints and management is often the culprit guiding the volunteer boards].

8. Don’t seek professional advice. [True, but sometimes attorneys, the only professionals involved in HOAs, forget their neutral role and act in collusion with the board’s wrongful actions].

9. “Tight fisted”. [Is this number 9?].

10. Running for the board with an axe to grind. [Well, if the director was not conscripted into service, they all have an axe to grind, even those who seek to reform the board that isn’t doing what they think it should be doing.]

It’s about time that the industry special interests admit that the 40 plus year experiment in planned communities and homeowners associations is a dismal failure. How can a money-driven constitution, without a bill of rights, written by a commercial enterprise that leaves the community in a very short time, outperform the 220 year-old US Constitution?

In September 2006, a new Arizona statute gave homeowners the right to file a complaint against their HOA through the Office of Administrative Hearings, a state entity under the Administrative Procedures Act (APA). The rules of civil procedure do not apply, and the conduct of the hearings are less formal than required in the courts giving the homeowner a more level playing field in order to obtain justice.

One of the first cases, OAH # 07F-H067007-BFS, exposed the functioning of the HOA board as a social club, in spite of the board’s use of a CAI attorney and member of its College of Community Associations Lawyers to review the marked amendment to its 1983 CC&Rs. By “social club”, I mean the board’s overt behavior that reflected an ignorance and intentional disregard of the laws,of the governing documents, and of its legal, contractual and fiduciary duties and obligations. I have witnessed this lack of accountability and arrogance by many HOA boards, many times.

At the hearing, the board member repeatedly used such phrases as, “we didn’t think”, “we always did it this way”, “we couldn’t find any law”, “we wanted to”, etc. This is shocking when it comes to transfer of property to the HOA via an amendment rather than by signed deed. By the “fiat” of an amendment, the board appropriated the sidewalks of homeowners as part of the common area. No homeonwner signed over his property by any deed.

In regard to a request for the results of a member survey of changes, the board felt that they were not HOA records but were confidential statements, and it didn’t feel it necessary to comply with ARS 33-1803 pertaining to providing HOA records to homeowner requests. An open meeting of members to debate the changes never took place before the vote.

In her closing statement, the board member said that they felt the survey was confidential and that they wanted a court or judge to tell them that they had violated the law. Another board member saw no problems with the amendment. A third board member was asked, “Do you feel that you own your sidewalk”, since the board maintains the landscaping?

If it were not for the OAH law, this important case would not be heard and the HOA would continue to abuse its authority with apparent attorney approval.