Tag: 14th amendment

Supreme Court finds taking excess foreclosure funds unconstitutional

The Supreme Court landmark decision in Tyler v. Hennepin County (No. 22-166, May 23, 2023), addressed an appeal by a  non-HOA homeowner in Minnesota who was foreclosed on by the state.  She brought “claims under the Takings Clause of the Fifth Amendment and the Excessive Fines Clause of the Eighth Amendment.” It has an immense impact on the constitutionality of HOA foreclosures. The Takings Clause is applicable to the action of states by means of the 14th Amendment.

(These claims of unconstitutional foreclosures and excess fines as a punished were argued in my 2013 pamphlet, HOA Common Sense: rejecting private government, No. 8, “Draconian punishment and intimidation.”)

In Tyler, the Court maintained that while states have imposed property  taxes,

“Such taxes are not themselves a taking, but are a mandated “contribution from individuals . . . for the support of the government . . . for which they receive compensation in the protection which government affords.”

And it posed, “The question is whether that remaining value is property under the Takings Clause, protected from uncompensated appropriation by the State.”  The Court answered,  “Our precedents have also recognized the principle that a taxpayer is entitled to the surplus in excess of the debt owed.” 

The Court’s reasoning extended the Takings Clause to other arenas beyond taxes,

“Finally, Minnesota law itself recognizes that in other contexts a property owner is entitled to the surplus in excess of her debt. Under state law, a private creditor may enforce a judgment against a debtor by selling her real property, but “[n)o more shall be sold than is sufficient to satisfy” the debt, and the creditor may receive only “so much [of the proceeds) as will satisfy” the debt. . . . Likewise, if a bank forecloses on a home because the homeowner fails to pay the mortgage, the homeowner is entitled to the surplus from the sale.”

The Supreme Cout concluded,

“Because we find that Tyler has plausibly alleged a taking under the Fifth Amendment, and she agrees that relief under “the Takings Clause would fully remedy [her] harm,” we need not decide whether she has also alleged an excessive fine under the Eighth Amendment.”

In a broad, extended view of this decision, one can say that any state law that does not allow excess funds from foreclosure to belong to the debtor, by public or by private foreclosures, would be deemed unconstitutional.  And that goes for HOA foreclosures!  No longer need we address the opposition that HOAs are private contracts and the Constitution and laws of the land do not apply.  This momentous Supreme Court decision has knocked down the doors for homeowners in HIOAs.  

NC reform bills need your support

Three very material and important bills seeking meaningful HOA reforms are before the North Carolina General Assembly (legislature): H311, S312, and H542.  (See ‘There is no oversight’ Proposed bills call for changes to HOAs in North Carolina). These bills address the two categories of reform legislation as I have defined them: constitutional and operational.

It has been my experience over some 23 years that reform legislation falls into two categorical levels: constitutional seeking to change the systemic HOA scheme, and operational seeking to apply the existing day-to-day laws and governing documents in a fair and just manner.

The average homeowner does not quite understand the broader constitutional issues but well feels the effects of the current day-to-day conditions. AN example of operational reform would be to change the time frame or approval percentage of an existing covenant. It’s a procedural change.

H311,

An act to establish a community association oversight division in the office of the attorney general.  In short, the AG is authorized to investigate HOA wrongdoing and to take remedial action including legal action, if so determined. The division is a rulemaking body —  adopt and change rules —  to carry out its authority. It is a constitutional 14th Amendment due process and equal protection of the laws bill.

S312,

An act that requires notice of liens and the ability to foreclose. A lengthy bill to inform the homeowner that a lien has been placed on his property and the right to work out a repayment plan. While the right to foreclose is removed, the HOA can proceed with legal action to obtain payment of the debt, like garnishment, etc. It has a constitutional aspect in removing the right to foreclose – seen as a special law for a special entity, the HOA – and an operational aspect with respect to the procedures to follow in attempting to collect the unpaid assessments.

H542,

An act placing a limit on foreclosure and notice of a lien. The lien notice is similar to S312. The bill also sets a $2,500 minimum, or 1 year of unpaid assessments not paid within 30 days. It is an operational bill dealing with everyday procedures.

I prefer S312 over H542 since HOA foreclosure rights are unreasonable, against good public policy, and whose purpose is to serve as a punishment.  What right does a private entity, that has not advanced any hard cash like a bank, have to receive foreclosure payments far in excess of the HOA assessment debt that also includes exorbitant attorney payments not found in the public sector?

[Please feel free to repost with proper credit].

CAI: your friend or your foe?

Author’s note:  I’d like to thank the ever-alert Deborah Goonan of IAC for this important tip.

Unbelievably, the CAI Washington chapter spills the beans  on CAI’s mission and objectives.  As a tax-exempt 501(c)6 business trade nonprofit the oxymoron statements below admit to working for business entities and at the same time, serving the consumers of these services, the HOAs.  “to advocate on behalf of community associations.” 

CAI is not permitted to have HOAs as members, so it recruits the boards of directors as individual volunteers creating conflict of interest conditions. I offer this statement by the chapter to set the tone for my criticism of the following article.[1] Note it skips over serving its members, the attorneys and managers who are vendors to HOAs.

“Our Vision: “To be recognized as the leading resource for Community Associations and Business Partners.

“Our Mission: “Optimize the operations of Community Associations and foster value for our Business Partners.

“What We Do: 1. Advocacy – establish and enhance/maintain relationships with legislators and government officials and to advocate on behalf of community associations; 2. Member Development – boost membership and participation through enhanced outreach; 3. Education – provide a World-Class Education Curriculum for Stakeholders; 4. Member Services – maximize value provided to our current members, including Business Partners (events, conferences, materials, etc.).

“Who We Serve: “Community Association Leaders, Business Partners, CAI National, Community Association Members, Developers/Builders, Financial Institutions, Government Agencies, Insurers, Legislators, Managers, Media, Realtors, Sister Associations.

* * * *

Quorum Magazine article Based on the above stated mission and purpose of CAI, the Washington chapter’s magazine recounts a superficial, misleading whitewash portrayal of the history of HOAs in America[2]; it serves as good CAI propaganda and portrays an unprofessional social media illusion that  all’s well in HOA-Land. It is all real estate development oriented sold as a desired and well accepted housing alternative by uninformed individuals.

The article is devoid of constitutional and democratic concerns and validity centering on the HOA as another form of local government —  a contractual, private government.  These issues affecting the rights and freedoms of HOA members can be found in detail in the listed texts and selected quotes. Note the title of the texts, which says a lot.

  • Prof. Dilger wrote in Neighborhood Politics (1992)[3],

“For example, most of those who advocate the formation of RCAs [HOAs] assume that RCAs  . . . incorporate all the rights and privileges embodied in the US Constitution, including . . . the rights of due process and equal protection under the law found in the Fourteenth Amendment.”

  • Prof. McKenzie wrote in his landmark Privatopia (1994)[4],

“T]he property rights of the developer, and later the board of directors, swallow up the rights of the people, and public government is left as a bystander. . . . [Consequently,] this often leads to people becoming angry at board meetings claiming that their ‘rights’ have been violated – rights that they wrongly believe they have in a [HOA]. 

“CIDS [HOAs] currently engage in many activities that would be prohibited  if they were viewed  by the courts as the equivalent of local governments.” 

  • Steven Seigel wrote in his WM & Mary journal (1998)[5],

“Because of the traditional view, RCAs [HOAs] rarely have been deemed state actors subject to the requirements of the Constitution. As private entities, RCAs regulate behavior in a way that is anathema to traditional constitutional strictures;”

  • CAI-ULI funded publication Community Associations (2005)[6].

“[HOAs are] a consumer product sold by profit-seeking firm, a legal device, a corporation reliant on both coercive powers and voluntary cooperation, a democracy, and a lifestyle.  With this plan, TB50 [The Holmes Association Handbook] set out the plan that would be taken in forming the CAI.”

  • Franzese and Seigel argued in their Rutgers journal article (2008)[7]

“The laissez-fare approach to CIC [common interest communities]  regulation is reflected in the statutory law, which affords exceedingly few rights and protections to homeowners association residents.”

It can be safely concluded that CAI is not your friend, and any HOA in bed with CAI is representing its interests and not yours.

Notes

[1] Washington Metropolitan Chapter, CAI (Oct.18, 2022).

[2] “Community Associations – A Historical Perspective,” Quorum Magazine, CAI (August 2016, reprinted Oct. 2022).  

[3]  Roger Jay Dilger, Neighborhood Politics: Residential Community Associations in American Governance, p. 160, New York Univ. Press (1992). Formerly WVU Prof. Political Science and Director of Political Affairs.

[4] Evan McKenzie, Privatopia: Homeowner Associations and the Rise of Residential Private Government,  Yale Univ. Press (1994).

[5] Steven Siegel, “The Constitution and Private Government: Toward the Recognition of Constitutional Rights in Private Residential Communities Fifty years After Marsh v. Alabama,” Wm & Mary Bill of Rights J., Vol. 6, Issue 2 (1998).

[6] Donald R. Stabile, Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing, p. 144 (2000). Funded by CAI and ULI.

[7] Paula A. Franzese and Steven Siegel, “The Twin Rivers Case: Of Homeowners Associations, Free Speech Rights And Privatized Mini-Governments,” 5 RUTGERS J.L. & PUB. POL’Y 630 (2008).

Restructuring HOAs: “CAI School and member benefits” pt. 2

Mentoring: “CAI School of HOA Governance”

Part 2 addresses the heavy influence of the CAI and its affiliated, shill, organizations functioning as supporters of HOAs and the questionable claim of also supporting homeowners.

CAI heavy influence

Several HOA attorneys have maintained that the expression of the common interest of all the members is found 1) in the Declaration that they all agreed to be bound by and 2) because the members still remain a resident and a member of the HOA. It is through the Declaration itself that provides their benefits and the BOD is not derelict in its duties and obligations to the members. And that’s all there is to it!

However, herein and in my intents and purposes paper[1] I argued that the BOD’s mission statement, vision and values are one-sided and heavily influenced by the mindset created by the CAI School of HOA Governance[2] that neglects constitutional protections for the members. The alleged benefits for the members as contained in the CC&Rs do very little to provide the benefits of a democratic government. In fact, they restrict or deny the application of constitutional rights and freedoms, and the privileges and immunities of citizens of this country and their state.[3]

“The policy makers have failed to understand that the HOA CC&Rs have crossed over the line between purely property restrictions to establishing unregulated and authoritarian private governments.”

In order to correct these serious defects in the HOA legal model the HOA must be restructured to conform to and be subject to the Constitution and laws of the land. It must begin with a declaration of citizenship to be made a covenant in all declarations, charters, bylaws and other governing HOA documents. State laws and CC&Rs must be amended according as proposed in my HOA Member Declaration shown in part below:

Therefore, the members of the association, having not waived or surrendered their rights, freedoms, privileges and immunities as citizens of the United States under Section 1 of the Fourteenth Amendment, and as citizens of the state within which they reside, the CC&Rs or Declaration for any planned community, condominium or homeowners association shall state that, or be amended to comply . . . .”[4]

In order for this revision to become a reality the BOD and HOA members must be reoriented away from the teachings of the CAI School and toward the forgotten and neglected principles and values of democratic America. The CAI School needs to be replaced with a qualified program of education and training on municipal government: its structure, objectives and mission, functions and operations.

CAI support of HOAs

Why does CAI oppose holding HOAs subject to the Constitution? How can CAI take this stance and still assert that it’s supportive of the homeowners? It seems by adopting the WW II Fascist philosophy of Italy’s Il Duce, Benito Mussolini, who proclaimed, “All within the state, nothing outside the state, nothing against the state.”[5] And who described Fascism a being “for the State; and it is for the individual in so far as he coincides with the State ”[6] Just substitute “HOA” for “state” and it all makes sense. Essentially, this is CAI’s true position on HOA governments.

While there is much to support and justify the need to remove the heavy influence by CAI over HOA-Land, a few instances are provided.

“In the context of community associations, the unwise extension of constitutional rights to the use of private property by members . . . raises the likelihood that judicial intervention will become the norm.”[7] (NJ).

In other words, CAI doesn’t want our constitutional judicial system to be applied to HOAs. They can rule themselves without judicial oversight. All other forms of local government, including the most liberal of self-government charters under the home rule doctrine are subject to the Constitution.

AGAINST

[CAI] Kathe Barnes, Self(02/10/2020); Jason Barraza, AZ ASSN OF COMMUNITY MANAGERS (AACM)(02/10/2020); Terry Carstens, Self(02/23/2020); Quinten Cupps, Self(02/06/2020); [CAI, AACM] Mary Jo Edel, Self(02/06/2020); Alexis Glascock, COMMUNITY ASSOCIATIONS INSTITUTE(02/09/2020); [CAI attorney] Lynn Krupnik, Self(02/06/2020); [AACM] Linda Lang, Self(02/10/2020); Mark Logan, Self(02/10/2020); Dave Norton, Self(02/06/2020); Jeff Sandquist, AZ ASSN OF COMMUNITY MANAGERS (AACM)(02/10/2020); Vicki Sears, Self(02/06/2020); [AACM] Mark Wade, Self(02/06/2020); Donna Wood, Self(02/06/2020); [AZ]

The above quote represents the persons and/or organizations against Arizona Senate bill SB 1412 (2020). The bill would bring homeowner protections for HOA political activity and free speech rights. Note the absence of any identification of several persons who are members of one or the other mentioned organizations, CAI and AACM (AACM is a spin-off from CAI in 2003). That’s 8 out of 14 persons in opposition. Please also note that none of these persons have identified themselves with any HOA. Where are the HOA directors or presidents?

California’s SB 323 (2019) introduced fair elections procedures for HOAs that protect homeowner voting rights. It addressed one of my 6 substantive defects in the HOA legal scheme.[8]   It has become California law. Long time California lawyer Adrian Adams is heavily involved in CAI policy and management at the HQ and chapter levels. He writes:

Last year, the Center for California Homeowner Association Law (CCHAL), an organization hostile to community associations . . . The train wreck legislation . . . The bill also forces members . . . In another hostile move against associations . . . The California Legislative Action Committee (CLAC) is a volunteer organization consisting of homeowners and professionals serving homeowner associations by monitoring legislation, educating lawmakers, and protecting the interests of those living in community associations.[9]

CAI’s California LAC:[10]

The California Legislative Action Committee (CLAC) is a committee of Community Associations Institute (CAI), a national not-for-profit educational and resource organization dedicated to fostering vibrant, competent, harmonious community associations. CLAC consists of homeowners and professionals serving community associations.

We worked hard to defeat SB 323 and we came very close, especially on the Assembly Floor where the bill passed and was sent to the Governor. . . . Let’s work closely together to make sure legislators understand the negative consequences SB 323 potentially will have on community associations.

It should be obvious by now that CAI is not a friend of the homeowner in spite of its lofty, high sounding pronouncements, policies and Best Practices. The acts of its members both in CAI HQ and in the numerous state chapters speak an entirely contradictory message. CAI is there to support the HOA and the BOD that is the real person representative of the HOA association. It is obvious that granting and admitting individual rights and freedoms to the homeowners presents an obstacle to its personal agenda; CAI is a business trade tax-exempt nonprofit entity to make money for its members, the attorneys and managers for the most part, the

After consideration of the above and earlier posts under Restructuring HOAs, I ask and answer: Does the Declaration provide covenants that implement and accomplish the intents and purposes of the HOA that serve the interests of the members? My answer is NO. It raises the question of why BODs accept the HOA model of local government and resist revisions in order to bring the HOA within the Constitution for the protection of its members?

Notes

[1] See “Restructuring HOAs – intents and purposes,” George K. Staropoli, HOA Constitutional Government (Feb 2020).

[2] The basis for a definition can be found in “CAI claims Factbook 2018 at home with Democracy in America.”, in HOA Constitutional Government, footnote 9.

[3] See “Would the HOA legal scheme collapse under a democratic form of government?” in HOA Constitutional Government (2014); “HOA-Land and the decline in democratic institutions” in HOA Constitutional Government (2019).

[4] See “HOA member Declaration of US and State citizenship” in HOA Constitutional Government (2012).

[5] See Benito Mussolini: What is Fascism, 1932.

[6] “Fundamental Ideas of Fascism,” Benito Mussolini, Souciant, Inc. (2016).

[7] CAI amicus curiae brief in CBTR v. Twin Rivers, 890 A.2d 947 (NJ Super. App. Div. 2006).

[8] See HOA Common Sense: rejecting private government, Democratic elections, No. 5. (2019).

[9] Adams Stirling Newsletter, Adrian Adams, Esq. (Feb. 24, 2019). Adams is a member of CAI’s Community Association Research Foundation, CAI chapter director and CLAC delegate.

[10] CAI-CLAC Feb. (2020).

 

 

 

Toward a democratic HOA subject to the Constitution

The news is good lately as several state legislatures have and are dealing with substantive HOA reform legislation that confronts the HOA legal structure as un-American. California’s SB 323 passed into law last year amid the hostility of CAI; Florida’s HB 623 is in the legislative process of becoming law; and Arizona’s SB 1412 is just starting out in the legislature.

The substantive amendments to state laws are:

SB 323 (CA) — seeks to introduce fair elections procedures for HOAs, addressing one of my 6 substantive defects in the HOA legal scheme.  Deborah Goonan’s excellent discussion of this bill[1] brought to my attention a second defect in the HOA legal scheme, the lack of enforcement of the law.

“A member of an association may bring a civil action for declaratory or equitable relief for a violation of this article by the association. . . . “A member who prevails in a civil action to enforce the member’s rights . . . the court may impose a civil penalty of up to five hundred dollars ($500) for each violation.”

HB 623 (FL) —

“This provision will amend 718 F.S. so any bylaws, or reasonable rules or regulations of the association which diminish or infringe upon any right protected under the Fourteenth Amendment[2] to the United States Constitution or Art. 384 II of the State Constitution and would be void and unenforceable without further action of the association. However, the provision states that the association may record a notice in the public records of the county in which the condominium is located evidencing its intention to not enforce such provision, it would foolhardy for them to do so. This has been overdue in our quest for achieving equal rights.”[3]

Much to my surprise Eric Glazer, of FL HOA & Condo Blog and host of HOA Condo Craze, warns of danger if HB 623 is made law.[4]

To simplify, the 14th Amendment made The Bill of Rights (The first ten amendments to the Constitution) applicable to the states.  So, this law basically says no provision of your governing documents can infringe upon the rights you have under the Bill of Rights.  All of you know several of these rights such as the right to free speech, freedom of assembly, and freedom of religion.

There is plenty of law out there that says when you move into an association, you may give up some of the rights you may ordinarily have in your private home. You do this by agreeing to be bound by the governing documents.

SB 1412 (AZ) — seeks to prohibit HOAs and condos from restricting political free speech. Members are permitted to associate, meet, discuss, show signs regarding political activity.

“NOTWITHSTANDING ANY PROVISION IN THE CONDOMINIUM DOCUMENTS, AN ASSOCIATION MAY NOT PROHIBIT OR UNREASONABLY RESTRICT A UNIT OWNER’S ABILITY TO PEACEFULLY ASSEMBLE AND USE PRIVATE OR COMMON ELEMENTS OF THE CONDOMINIUM IF DONE IN COMPLIANCE WITH REASONABLE RESTRICTIONS FOR THE USE OF THAT PROPERTY ADOPTED BY THE BOARD OF DIRECTORS. AN INDIVIDUAL MEMBER OR GROUP OF MEMBERS MAY ORGANIZE TO DISCUSS OR ADDRESS PLANNED COMMUNITY BUSINESS, INCLUDING BOARD ELECTIONS OR RECALLS, POTENTIAL OR ACTUAL BALLOT ISSUES . . . .”

I cannot emphasize that these bills have a very large umbrella covering many issues found at fault in HOAs. They provide the legal authority supporting many, many complaints, even those where the homeowner is just not happy with the way the HOA is run. In these cases, the HOA hasn’t really violated any law of the governing documents per se. The complaints should their focus on the lack of fair elections to remove wayward boards, or due process and equal protection of the law violations. The 14th Amendment applies!

What is needed is the strong support for the champions of these bills, Sen. Bob Wieckowski in CA, Senator D. Farnsworth in Arizona, and Representative Jason Shoaf in Florida. The California bill made law was achieved, in my opinion, with the help of the strong support of Marjorie Murray of CCHAL.[5] They fought and are fighting the system — state legislatures do not favor HOA reforms.

References

[1] “California HOA elections bill update (March 2019)”, Deborah Goonan, Independent American Communities.

[2] The 14th Amendment. Section 1 state prohibitions against laws denying due process of law and the equal protection of the laws, and abridging the privileges and immunities of citizens.

[3] Comment number 6, CCFJ.net, Milena Macias, Esq. (Feb. 4, 2020).

[4] “A PROPOSED AMENDMENT TO THE LAW THAT HAS DANGER WRITTEN ALL OVER IT”, Florida HOA & Condo Blog, Eric Glazer, Esq. (Feb. 3, 2020)

[5] Center for California Homeowner Association Law.