HOA Constitutional Government

I’m coming closer to the realization that the “battle” has been, and will continue to be, centered on the decay and erosion of private property rights versus the communal objective to maintain property values in homeowners associations. The above reflects public policy and the decision that maintaining property values outweighs your private property rights.

The industry lobbyists have succeeded in convincing the public that planned communities are the only way to go and that the undemocratic, corporate form of HOA governance is necessary to achieve that goal. They are right, because HOAs would not be able to get away with their present actions if they came under the municipal government laws! This has been said by others more qualified that I — McKenzie, Dilger, Barton & Silverman, to name a few. Any genuine democratic governance with its protections of homeowner rights would not allow for arbitrary and capricious decisions of HOA boards or for the circumvention of constitutional protections that trespass on those values that made America great.

“Communal” is the correct term – for the greater glory of the state, or community in our case. And with the equivalent of “state laws” that promote property values over our unalienable rights and freedoms, comes the inclusion of the neighborhood “thought police” enforcers who report back to the communal government about the rotten or nonconforming attitudes of homeowners, who are then subjected to scorn, ridicule and harassment by the HOA government press – the letters from the president and the association newsletters.

I wrote a few months ago about the myth of private property rights in an HOA. They have been emasculated by those nonnegotiable restrictive covenants to become almost meaningless. Today, and upheld many times in the courts under covenants running with the land, written by short-term profit seeking developers, the communal interest rises above your unalienable rights.

The public must take a good look at the meaning of private property rights. When the courts, through their rulings, make it clear that the homeowner just about surrenders most of those cherished rights that permit the classification of “private property”. Prof. Askin, of the Rutgers University Constitutional Law Clinic, in his appeal of the Twin Rivers (NJ) HOA decision, argues against this view that holds common law over constitutional law,

“Twin Rivers must be recognized as a constitutional actor under the state Constitution required to accommodate the rights of its residents/members to exercise the fundamental prerogatives of citizenship in the operation and governance of the community. Twin Rivers homeowners do not waive their constitutional rights by signing contracts containing non-negotiable deed restrictions. This argument [that homeowners voluntarily waived their constitutional rights] ignores the doctrine of ‘constitutional conditions’, which forbids a constitutional actor such as Twin Rivers from conditioning a right to own property on a waiver of constitutional rights.”

There can be peace in the valley. Planned communities with their private “ordinances” and private amenities for “members only” can exist within the framework of special taxing districts. These districts can easily come into existence by reclassifying, in furtherance of legitimate government ends, existing associations and holding them to be municipal entities under the existing state laws. As we proudly proclaim ourselves to be a nation of laws, all communities will now be subject to the same laws of the land and these private ”constitutions” will be eliminated.

The voice of homeowner rights advocates is growing

The year 2004 saw the major exposure of the issues regarding the loss of constitutional and civil rights; the widespread problems and abuses with planned association management across the country; the growing realization that they have the legal protection, support and creation by state governments that benefit from these undemocratic private governments that lack a bill of rights; and the increasing shock and surprise to discover that it is indeed public policy to support the privatization of government by means of homeowners associations.

Not only in the major problem states of California, Florida, Arizona and Texas, but the media is helping to expose these problems in Idaho, Nevada, Colorado, Illinois, Ohio, Pennsylvania, North Carolina, South Carolina, Georgia, Virginia and New Jersey. Legislation has been introduced in many of these states and have met with varying degrees of limited success. Most notorious is the veto of the foreclosure reform bill by Gov. Schwarzenneger, while Arizona managed to pass a good segment of its foreclosure reform bill. Nevada has an Ombudsman and so does Florida.

Opposition to these reforms remains strong, especially by the national lobbyist trade group, Community Associations Institute (CAI) that mounted very strong lobbying efforts in California and Arizona in order to keep the status quo and to keep its quiet innovation in housing and in the privatization of government still quiet. These lobbyists continue to mislead the public with respect to those who seek to remove this un-American form of government with the real estate package of amenities that define the planned community. The planned community can exist as is today, except that the HOA governing body must be replaced with a body subject to the laws of the land as any other municipal form of government that rules over the people within a territory, whatever its size. Existing legal mechanisms and laws allow for this today and can be found in the statutes of almost every state. (See the August editorial on “Muni-zation”.)

Standing up against the entrenched industry lobbyists is a small band of homeowner rights advocates and activists, as they call themselves, who continue to grow in number and support as more homeowners across the country begin to realize that “something’s wrong in Denmark.” Groups like American Homeowners Resource Center in California, Cyber Citizens for Justice in Florida, Citizens for Constitutional Local Government in Arizona and The Texas Homeowners Advocacy Group to name a few.

More and more information is being made available to the public by means of the Internet, where the money influence of the well-heeled industry lobbyists cannot penetrate. By numerous email lists, live Internet radio like On The Commons in Virginia, web sites and the new BLOG sites. These sources have flourished because the media, in the past, and governmental sites have avoided any negative portrayal of homeowners associations as a result of years of unopposed lobbying by the industry.

But, the year 2004 has demonstrated a strong change in the winds of progress. Soon, homeowner advocates believe that these undemocratic private governments will be gone with the wind because they are constitutionally indefensible. Next year, 2005, will bring continued petitions for reforms to protect average homeowners living in homeowners associations. This growing demand for change will occur — as it is written in the winds.

Why do we see so many court decisions that support the actions of association boards that borders on the absurd and highly unreasonable? For example, the Desert Crest Case in California where retired people in a mobile home association were made to pay for a golf club not owned by the association, that was open to the public and operated as a for-profit club.

My readings of numerous cases at all levels across the country is very depressing. I’ve concluded that it is indeed public policy to encourage, promote and create homeowner associations without any oversight protections of our civil liberties. All this 1) in the name of benefiting the community as a whole through a privatization of government, the HOA itself and not the planned community package; 2) to maintain property “standards” without constitutional protections; 3) the reduction of services to be provided by the municipality ,and 4) the double-taxation benefits to the municipality. All accomplished at the disregard of our constitutional rights and freedoms.

I believe we are failing in the courts because those who are filing these law suits still possess an underlying belief in planned communities and they support the oppressive HOA form of government. The law suits are filed with respect to some particular action by the board and not against the basic principles and legal foundations of the HOA. It should be obvious that the “deck” is stacked against us with these onerous Declarations of CC&Rs.

Filing such law suits is much like a “reform” approach rather than a redo effort, and it should be clear to everyone by now that reforms will not work. The establishment has strongly resisted any infringement on the rights and privileges granted HOAs by our government’s lack of oversight and it will continue to do so.

It’s time homeowners become realistic and face the obstacles before us as the Founding Fathers did at the Constitutional Convention in 1776. Convened to make reforms to the Articles of Confederation, then governing the 13 colonies, they choose to scrap it as unworkable and created the US Constitution in its place. We must do likewise with the planned community concept with its mandatory, private organization government that contains no protections for our civil liberties.

Last year Arizonans finally received some justice with the passage of the watered-down HB2402 modifying ARS 33-1256 and 33-1807, Liens for Assessments. But homeowner injustice remains with the unconstitutional failures of due process protections and the unequal protection of the laws relating to the association’s right to penalize and foreclose.

Under these two statutes and ARS 33-1803, Penalties (planned communities), the association is allowed to penalize homeowners who fail to make assessment payments on time with penalties and interest charges on these debts. It gives the false belief that the association had advanced its own funds to the homeowner and is now seeking a timely repayment. Such is not the case, for these associations do not advance funds nor is their primary business a lending or credit business.

Black’s Law Dictionary defines a penalty as,

“1. Punishment imposed on wrong-doer, esp. in the form of imprisonment or fine.

2. Excessive liquidated damages that a contract [in our case the CC&R contract] purports to impose on a party that breaches.

‘A penalty is a sum which a party … agrees to pay or forfeit in the event of a breach, but which is fixed, not as a pre-estimate of probable actual damages, but as a punishment, the threat of which is designed to prevent the breach …’

Excessive punishments, as in excessive punitive damages, has been found by the US Supreme Court to be an unconstitutional violation of the 14th Amendment’s due process clause and a deprivation of property. (State Farm v. Campbell, 538 US 408 (2003) see note 1 below). Foreclosing on a $200 HOA debt with over $2,000 in attorney fees causing the homeowner to lose his equity in his home that can have a market value of $120,000 or $200,000 or even $1,000,000, representing a 200x to 5,000x ratio of damages to losses, is extremely excessive. The Court offered a 10 to 1 or less ratio as acceptable ratios for punitive damages.

For these reasons, I ask that new legislation be adopted to remove these punishments, such as the right of the HOA to impose daily fines to the extent they become excessive, and the right to foreclosure as a remedy to collect assessments in arrears, as they are excessive punitive damages under the USSC guidelines of State Farm v. Campbell.

Note 1.

The US Supreme Court case of State Farm v. Campbell, 538 US 408 (2003) in which the Court said:

‘”The Due Process Clause of the 14th Amendment’ prohibits the imposition grossly excessive and arbitrary punishments a tortfeaser [worng-doer].”

“[The $145 million award was] neither reasonable nor proportionate to the wrong committed, and it was an irrational and arbitrary deprivation of the property of the defendant”.

East Valley Tribune, Letter to the Editor, Nov 8, 2004

SCOTTSDALE

The recent Tribune article on Arizona Great Communities still emphasizes property values over what really makes a community: the democratic and free exercise of the liberties and freedoms granted to all Americans.

In its criteria for the award, the Arizona Great Communities organization does have some worthy objectives: keeping reserves, informing members of who the officers and directors are and some “institutional” vendor educational requirements related to other board/founder affiliations.

These organizations focus on the status quo and teach current topics on management that have proven ineffective over the years, when used alone and without any courses in government, people relations, statutory obligations of homeowners associations, or an understanding of contract law for directors of HOAs.

These are sorely and desperately needed educational reforms yet to be seen after years of bringing these major deficiencies of HOA management to public awareness.

And why aren’t these topics covered? Because the special interests don’t want the public to know any serious problems with the loss of homeowners’ rights or the overwhelming powers granted to the board with little protections for the homeowners.

It’s time that these community oriented/HOA organizations deal with the reality before them.

GEORGE K. STAROPOLI