HOA Constitutional Government

Why can’t homeowners withhold assessments until their dispute is resolved?

Looking at the larger picture that withholding assessments is attempting to solve, there is no “remedy in event of default by HOA” provision in any CC&Rs that I’ve seen. Some might have such a contractual CYA provision, but just for the HOA. It’s here where the unconscionable adhesion contract once again works against homeowners.

In my opinion, shouting for a “fix”, like “no proxy voting”, is not the way to go. Only when you place the fix into its proper place in attaining justice, will you succeed. You must argue unconscionable adhesion contract. You can argue due process concerns only if you argue that there is an imbalance of power as a result of the adhesion CC&Rs.

To offset the legalized extortion of HOA boards, there are no remedies in the CC&Rs that specify the right of the homeowner to escrow payments, or some other similar method, as is the norm with any creditor/debtor issue. Simply shouting “escrow the money” does not present a justification to the politicians, the legislators, to take up the cause.

Advocates must link this requirement to fair play and a balance of powers between the HOA and the homeowner.

“Community Associations”, a term still in use by CAI, originated in the first half of the 20th century and reflected a land use/planning policy of a managed community, a planned community, above and beyond simply laying out streets, utilities and homes. The term of choice was the concept of “community” since,

The innovators of CAs were entrepreneurs . . . . The dilemma [as far back as the 1930s] was how to ensure their widespread acceptance among government agencies, builders and developers, and prospective home buyers.¹

The initial trade organization behind HOAs was the National Assn of Real Estate Boards (now the National Assn of Realtors) that in 1936 split off its research function to the now known Urban Land Institute, to promote the better planning and development of urban areas. In 1944 it create a Community Builders Council to promote CAs. The Council published its first views on the need for homeowners associations in its 1945 Technical Bulletin #1 a mistake made by the Council’s chair with respect to his initial development of a community. That started the momentum for the institution of authoritarian private governments: a concern for profits that resulted in the necessity to create a corporate form of governance without concern for the protection of constitutional and civil liberties of the homeowners.

Just one year later ULI began urging developers to put HOAs in place with restrictive covenants attached to the subdivision. Next year came ULI’s comprehensive manual for HOAs, The Community Builders Handbook, which contained detailed and specific requirements and that the covenants run with the land. The authoritarian aspect of HOA governance was urged by including provisions for “The enforcement of covenants . . . or else covenants may become ineffective through nonobservance and violation. “² But no Homeowners Bill of Rights was required simply because ULI was a business trade group and not a governmental agency, and there were no homeowner voice to protect constitutional rights.

Parallel to ULI’s activities, the FHA set up its own land planning and usage division in 1938. NAREB (NAR) “had a large influence on the formation of FHA.” In 1963, Byron Hanke, an FHA employee later to be the primary founder and promoter for the creation of CAI in 1973 as a result of problems with accepting HOAs, participated in a Brookings Institute study funded by ULI. Part of this study was released at the National Association of Home Builders (NAHB) convention. This brochure, Planned Unit Development with a Homes Association, described “a cluster of subdivisions . . . combined with effective common land use.” Stable writes, “Using CC&Rs to organize an automatic [read mandatory] membership association, developers could meet competition from older forms of housing . . . .” ³ In order to get FHA insurance, the brochure specified the needs for automatic membership and a homes association, and the only acknowledgment of a voice, not necessarily a democratic voice, was a requirement to have a voting membership.

In 1966, this brochure was expanded to the infamous, Homes Association Handbook, Technical Bulletin #50, published by ULI, from which all else follows.

For more information, see History.

Other sources are: Privatopia: Homeowners Associations and the Rise of residential Private Government, Evan McKenzie (1994); Neighborhood Politics: Residential Communitiey Associations in American Governance, Robert Jay Dilger (1992),

Notes:
1. Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing, p. 68, Donald R. Stabile (Greenwood Press 2000). (A book partially funded by ULI and CAI).
2. Supra, p. 77
3. Supra, p. 90

Dear Arizona Republic Editor,

I’m amazed at the rose colored look at the hopeful benefits claimed by planned community supporters that HOAs help shape better communities. In “Neighborhood groups fight apathy”, there’s the failure to understand that, in spite of the special interest group’s promotion, HOAs have not been about better communities, but about better property values. And to attain that goal, arbitrary and profit-motivated rules and restrictions are instituted and imposed on homeowners under the guise of fully informed consent.

This wishful thinking is reflected in statements, such as quoted, “a unique opportunity to become a close-knit community” and “to have pride in the cooperative relationship they have with their HOA.” These are want-it-to-be statements, and are based on unrealistic human behavior. Apathy results when a certain behavior pattern is demanded in order to make the HOA work, but the members do not agree with the demands and feel helpless to change them. They really bought a home and not an active participation in the government of a society that demands behavior inconsistent with human behavior patterns.

If the state should stop mandating homeowner associations and ramming these unworkable demands on people, then the problems with homeowner associations will improve.

After a heated discussion at my annual HOA meeting relating to the board’s failure to setup CC&R mandated reserves, a board member said to me,

“George, lighten up. This is a small social gathering of friendly neighbors seeking to maintain property values.”

I replied,

“So long as the HOA has a right to take my house, or to impose financial difficulties for me and my family, supported by state laws that do not allow me proper due process if I disagree with the HOA, there can be no social gathering of friendly neighbors. This is a contractual arrangement that is one-sided against me, and all other individual homeowners. If you want a friendly social gathering of neighbors, throw away the threat of financial distress, the state supported CC&Rs, and we can then act like good, friendly neighbors.”

Homeowner association problems continue year to year in each and every state as a result of the creation of laws, and the repeated refusal to correct their errors of judgment, by state legislatures that “sanction” and “bless” the unconscionable adhesion CC&Rs contracts.

The arguments made in this 2003 publication, The Case Against State Protection of Homeowner Associations, sadly, remain valid in the Arizona legislature and in the legislatures of others states, including California, Texas, Florida, New Jersey and Nevada. The problem can be stated in simple terms as had just occurred in regard to my small HOA in Arizona.

Excerpts from:

Community Associations Institute: Dominating the Emergence and Acceptance in America of a Quiet Political Revolution in Authoritarian, Contractual Private Local Government.

What has happened to America? How did this sad state of affairs come to be, here in America? The answer can be found in the words of a Texas real estate attorney proposing a new HOA act, TUPCA, before the Texas House Business & Industry hearing on March 31, 2006, which met to examine what should be done with HOA statutes. In answer to questions about the provisions and protections of the HOA, she replied, “There’s really an entwined relationship between HOAs and cities. They do that to protect the finances of the association. That was considered a progressive thing 25 years ago.”

CAI Founder, Byron Hanke, wrote in 1992 of his concerns for the change in direction of CAI, stating that CAI’s funding was based on it being “a research and education institute, not a lobbying/political organization, trade association or professional society with a narrow focus.” Today, CAI requires:

Every dollar of the mandatory $15 Advocacy Support fee goes directly to states with Legislative Action Committees and supports the efforts of CAI to represent and protect our members on state legislative and regulatory efforts.

Viewers to its web site are told,

CAI also advocates for legislative and regulatory policies that support responsible governance and effective management. We represent the interests of our members before the U.S. Congress, federal agencies, and other policy-setting bodies on issues such as taxes, insurance, bankruptcy reform and fair housing. In addition, state Legislative Action Committees represent CAI members before state legislatures and agencies on issues such as assessment collection, foreclosure, and construction defects. Moreover, in undertaking such review, state governments are urged to consider and give favorable treatment to one or more of the Uniform Community Association Acts.

In short, CAI has been setting itself up as the national private authority, a sort of Board of National HOA Governors, on local community governance through the adoption of uniform planned community acts that perpetuate the current anti-American HOA governments. In effect, the super, privatized agency to replace the US Constitutional system of government.

The complete 14-page paper can be read at Nationwide Lobbyist for Principalities.