Tag: Arizona

AZ House supports HOA dominance over municipalities

In an unbelievable acquiescence to the secession of legitimate public government control to private government HOAs, this bill, SB 1113, regulating public streets within HOA subdivisions,  was soundly rejected by the House Judicial Committee. Welcome to the New America of HOA-Land brought to you by your elected representatives who take an oath to uphold the Arizona and US Constitutions.  The bill was defeated 2 – 6.

The only worthwhile commentary was from the Chair, Rep. Eddie Farnsworth, who concluded with, “I find it disturbing that this committee rejected this bill because the police says its too difficult to enforce.”  Nationally known Sheriff Joe Arpaio was against the bill.  Farnworth also remarked that the political realities of the 2,000 member exclusion amendment was needed because of the “highly paid lobbyists like the one you see before you,” referring to CAI lobbyist DeMenna.

And still, there are those who truly believe that the Constitution is only about the absolute right of HOAs to write contracts that supersede the Constitution.

I am continually amazed that some legislators still use this as an excuse to stop bills that seek to reign in lawless conduct by HOA boards.   Legislators who do not want to hold boards accountable under the laws of the land are condoning HOAs as above the laws of Arizona, above the Arizona and US Constitutions.  Surely they must realize this.  Surely they do not realize the consequences of this unexplainable position on HOAs.

The failure of the Judiciary Committee to pass this very important bill to prevent private entities from usurping legitimate government functions is very disturbing.  The purpose of a committee is to recommend a bill for the entire body to consider, and not to kill such an important bill and thereby not giving all the elected representatives  their due voice.   This is politics under the influence of special interests.

If the HOA boards and officers refuse to join our democratic society, then they should be allowed to fail!  It is unconscionable to do otherwise!  If this is too much for some people, that their “free ride” is over, well, then they can just move out!

Once, long ago, America had people of character, of integrity and of honor.  Now, it’s just “what’s in it for me” and “how will it affect my legacy” — self-centered concern about themselves and not about their responbilities and duties as public servants for the people.  The people have the right to expect that their elected representatives would protect their rights and freedoms under the Constitution, and not to support the unconstitutional delegation of legislative powers to private entities.

AZ HB 2160, HOA elections reform, provides misdemeanor penalties

One of the most needed bills for enforcement to protect the rights of homeowners in HOAs is Arizona’s HB 2160, which passed the House and goes on to the Senate.  This bill makes “A corporation or other entity that intentionally violates subsection [ ] of this section is guilty of a class 1 misdemeanor.”

In a subculture where legalized extortion goes unpunished, and where recourse to democratic election processes to elect and replace corrupt government “officials” are woefully inadequate, the Arizona Legislature is finally putting its foot down on such acts against public policy. HOAs hide behind the fact that they are private contracts and are not bound by constitutional protections while proclaiming how HOAs are a great town hall democratic institution.

However, the newly elected President-elect of CAI’s College of Community Association Lawyers, Arizona’s Scott Carpenter, protests this bill: “Where is the evidence that voting ballots should have a cloud of criminal prosecution having over it? Criminalizing the counting of homeowners association and condominium association ballots should outrage Arizona’s citizens.” (Criminalization of HOA Elections).

Why should citizens be outraged? While complaining about no justification to hold violators accountable, Carpenter offers know valid reason not to.  Perhaps the newly elected President-Elect doesn’t understand the difference between criminal and civil law. Let me explain.

Civil law is in regard to disputes between two parties, like a contractual dispute. Criminal law, on the other hand, are violations against the state and its laws. Nothing new, nothing different. It is there to “protect society . . . from those forces that most threaten the peace, the harmony . . . and society as a whole.” It is there to deter and to punish.

This bill is an affirmation that the violations of state laws by HOA boards and officers, and their agents, are contrary to the good of the greater society and must cease. The bill says that HOAs are no longer independent principalities doing as they wish without fears of liability for wrongful acts. If this is too much for some people, that their “free ride” is over, well, then they can just move out! But, the American system of government that treats all people equal and applies the law equally, and that now applies to HOAs, cannot continue to tolerate this separation from constitutional government.

It is the gross and prolonged failure of the industry to police itself in the midst of such abuse that has caused the legislature to act. It is the gross and prolonged failure of the “national HOA educator” organization with all their attorney lobbyists to work in support of, and not in opposition to, these bills that protect society as a whole that has caused the legislature to act.

A Class 1 Misdemeanor is an offense that carries up to 6 months in jail (ARS 13-707(A)(1)), and up to $2,500 in fines (ARS 13-802(A)). Neither are mandatory. However, a fine for a misdemeanor committed by an enterprise is up to $20,000 (ARS 13-803(A)), but is not mandatory either.

CA court upholds HOA suit against real estate agents

This important 2012 California case deals with, among other issues, a real estate agent’s duties to buyers in HOAs. The court found the realtors, acting in a dual agency capacity for the developer and builder, had violated their fiduciary duties to buyers by failing to disclose material facts: false budget numbers to induce buyers, failing to disclose material, public reports showing soil issues.

The Calif. appellate court held:

The statute gave ‘associations the standing to sue as real parties in interest in all types of actions for damage to common areas, including breach of implied warranty causes of action.’

The Realtors were dual agents in that they also represented the HOA members as buyers’ agents. Re/Max acted as dual agent in the sale of three parcels in Glen Oaks Estates, and Dilbeck acted as dual agent in the sale of one parcel in Glen Oaks Estates.

In sum, [the statute] does not replace dual agents’ fiduciary obligations to their buyer clients. . . . The Realtors breached their fiduciary duties as buyer’s agents by failing to disclose certain transactional documents, concealing facts . . . .

GLEN OAKS ESTATES HOMEOWNERS ASSOCIATION v. RE/MAX PREMIER PROPERTIES, INC.
As an aside:

In general, the normal real estate transaction, where there’s no dual agency, involves a selling agent representing the seller, and a different buyer’s agent representing the buyer. In Arizona, for example, the agent owes a fiduciary duty to his “client,” which is defined as the person who makes the commission payment to the agent. The agent “shall disclose in writing to all other parties any information the licensee possesses that materially or adversely affects [the sale]”, but the agent must “deal fairly with all parties.”

However, in almost 100% of the sales the buyer’s agent gets paid from the selling agent under a “co-broke” arrangement. The buyer’s agent then, according to R4-28-1101 of the Commissioner’s Rules, would have a fiduciary duty to the seller as that’s where he gets paid. Isn’t that a contradiction in the laws that creates a conflict of interest in the buyer’s agent? (Of course, the powers that be don’t see it that way – would confuse the issue). So, who’s really looking after the buyer’s interests? It appears dual agency does.

Furthermore, can a licensed agent who is required to take courses in agency, contract and real estate law hide behind the fact that he knows nothing, and therefore doesn’t have material HOA information in his possession? Would that be a reason for the media and government agencies and officials apparent role in an “unspoken alliance of nothing negative about HOAs”? If so, something is rotten in Denmark!

HOA bills and the legislative “system”

I thought it a good time to summarize how your state legislature works. I’ve referred to the need for a champion, which implies, if not opposition, but having to deal with the legislative “system.” And there is a System. I will use Arizona as a model, understanding that other states will vary somewhat. For example, the Texas Legislature meets every 2 years. They do not use Committee of the Whole (COW) as the first Floor vote, but “second read.” California has sessions lasting for 2 years. Check your legislative website for your state’s process.

 

The System – the power of the majority party

The majority power rules and control the System. The President of the Senate and Speaker of the House determine the committees, what bills are heard where, who the Chair will be, and who are the members.

The committee chair determine whether or not his committee will hear a bill referred to it. I believe he can be overruled by a vote of the members, but that would be like going over the head of your boss, a No-No. At the request of a bill’s sponsor, he can hold the bill until the next meeting because the sponsor doesn’t have the votes. The sponsor can also “give up the ghost” and kill his bill.

Next step may be a Rules committee, a perfunctory committee supposedly passing on constitutionality, but just another place where the Chair can prevent a bill from proceeding to a floor vote.

(The Caucus vote, if passed out of Rules, is a nonbinding “courtesy” discussion meeting of the separate parties.)

Next we have what is called the Calendar, or Calendars for COW and Third Read. They are “ files” under the President’s or Speaker’s control who decide if and when the bill moves to the COW/second read vote. If passed at this point, these leaders can then decide, again, if the bill will proceed to a third read/ final vote of the House or Senate.

If passed out of the first branch, the process starts all over again in the second house.

Your champion must get support of all these players, or not run into serious opposition from the power players. He/she needs your emails and voice sent to the committee members and even to all the legislators if HOA reform bills are to succeed — especially the controversial bills. Over the years I’ve seen bills die at every one of the above stages. I have seen HOA bills held for weeks by the Speaker or President, who finally succumbed to public outcry and allowed the members to vote the issue, all of which passed with flying colors. The System is political, understanding that the majority party members also voted overwhelming to pass the bill.

At this early stage in Arizona, of the 16 HOA bills, 1 was Held, and 1 is sitting in the COW waiting for a floor vote. It had passed the committee by a 5 – 2 vote, but was objected to for a direct floor vote, which does not allow discussion. It has been sitting on the COW calendar for 3 weeks, waiting at the pleasure of the President of the Senate for a Floor vote. The bill would impose treble damages to HOA boards if the court found the lawsuit to be selective in nature against the homeowner. (Is that any worse that the right to take away one’s home for $50 after 1 year?)  Yes, discussion is important, but it must be allowed to occur if the democratic process is to work.

Yes, Virginia, there is a Legislative System.

Does civil government rule or does it submit to private HOA groups?

Dear Arizona Senators,

I continually am amazed at the opposition to this bill and the mistaken belief that any private contract can supersede legitimate local government. We all know that there is no absolute right to private contracts! HOAs are ignoring their role in a democratic society to obey the rules, as they like to say about homeowners in HOAs. They should follow the rules of this society and go to the planning board for a variance. Like they repeatedly say, “Homeowners can go to the courts, to agencies, to get a fair deal, etc.” but that’s not for the HOA that insists on making their own rules. It is simply a power play as to who rules the municipality.

The legislature has no choice but to uphold public government authority. If problems exist or changes are desired, since the HOA does not own the public roadway, the HOA can do what all citizens are entitled to do, go to their planning board and ask for a variance. The fact that the initial planning board approved these private roadways speaks to the retention of public government authority, otherwise it could have required private streets.

Please bear in mind, since CAI loves constitutional challenges as it fought over the proper delegation of authority to DFBLS, the court ruling in McLoughlin v. Pima that held,

However, it is a well established theory that a legislature may not delegate its authority to private persons over whom the legislature has no supervision or control

and

The legislature cannot abdicate its functions or subject citizens and their interests to any but lawful public agencies, and a delegation of any sovereign power of government to private citizens cannot be sustained nor their assumption of it justified, (Emmett McLoughlin Realty v. Pima County, 58 P.3d 39 (Ariz. App. Div. 2 2002), ¶ 7).

HOAs have usurped and assumed public government functions! And we all know accountability to and proper supervision by state the does not exist with HOAs to meet this constitutional requirement. They cannot have their cake and eat it, too! They cannot demand special consideration not to be held accountable and then do as they please.

Please make it clear to all persons that we are one state, indivisible with liberty and justice for all.  Please pass this important bill.

Note:  This bill, SB 1113 and its House duplicate, HB 2030, simple reassert public government control over public streets within an HOA subdivision.  HOAs have fined homeowners for any car parked in front of their homes.