The Arizona Supreme Court will decide on April 19th whether or not it will hear the appeal on the unconstitutionality of the adjudication of HOA disputes by an administrative agency.
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Tag: Arizona
Violating HOA due process would be oppression
“That though the will of the majority is in all cases to prevail, that will to be rightful must be reasonable; that the minority possesses their equal rights, which equal law is to protect, and to violate would be oppression.” (Thomas Jefferson, 1801).
The Arizona bill, SB 1148 passed out of committee on March 1st, to restore the Office of Administrative Hearings adjudication of HOA disputes appears to be stalled, once again as in 2006, by the House Rules Committee. Once more it is not on the House Rules agenda. Failure to address the objections of the appellate court opinion in Gelb will heighten the likelihood that the Arizona Supreme Court will now have to decide the issue, and other matters raised in my amicus curiae brief. See Gelb v. DFBLS, CV 10-0371-PR.
The supreme court has yet to decide to hear this important case, waiting, as expected, to see if the Legislature would pass SB 1148 to render the constitutionality issue moot – no longer a controversy. If not handled by the Legislature, then the Court cannot avoid addressing the following plea in my brief:
It is quite evident that an Arizona homeowner living within an HOA governed subdivision cannot look to the Attorney General, the Legislature, DFBLS, or ADRE for due process protections and the equal application of the laws. Even the lower courts are suspect. With all due respect, it remains to this Court to stand behind the promises and covenants between our system of government and the people as set forth in the U.S. and state Constitutions.
In deciding the constitutionality issue, the Court will need to address the real issue at hand, the separation of powers issue, where the Legislature remained silent and did not file a defense of their HOA due process statute. However, the Legislature felt compelled to intervene in the controversial DOJ challenge to the immigration law statute, SB 1070. Is this selective support for certain laws and parts of the Constitution over others?
Senate President Pearce, author of SB 1070, said, “I want to make sure everyone knows, we, in the Senate, will govern from the bottom up, not from the top down” and I believe in the rule of law, I’ve always believed in the rule of law, Weare a nation of laws.” Yet it appears that top-down, special interest “push” pressures still prevail with respect to HOAs (See prior commentaries with respect to HB 2441).
It is a well established doctrine that the legitimacy of a democratic government rests on fair and just laws.
“That though the will of the majority is in all cases to prevail, that will to be rightful must be reasonable; that the minority possesses their equal rights, which equal law is to protect, and to violate would be oppression.” (Thomas Jefferson, 1801).
It would seem that the best course of action is to quickly pass SB 1148
CAI asks why the government won’t let HOAs do as they please
Under the slow awakening of state legislators across the country, Community Associations Institute (CAI) finds it necessary to remind the faithful followers and public policy makers of the grand and immense contributions that HOAs make toward our society and system of government[1]. So it claims in its “Why HOAs?” article.
In article’s second paragraph the writer recites the history of the “master” land owner who sets forth the use and control over the land forever in what we know as covenants running with the land, or CC&Rs. He then speaks of the value of such CC&Rs, in his next paragraph, bypassing any mention of duly elected government of the homeowners and democratic functions of the HOA. No, you get the HOA constitution from the profit-seeking developer and his attorney written, almost boiler-plate, CC&Rs. So much for a democratic government.
Holmgren, the writer, continues to properly inform the reader that local governments like this – a privatization of government services onto you, the homeowner. But, there is one major problem not mentioned. He does not mention that the protections of your rights and freedoms under the Constitution does not apply to these private contractual HOAs. No, it’s definitely not mentioned, not even hinted.
In an abrupt about face, Holmgren then speaks of “why government is so rarely a friend to homeowners associations,” and “they [government] believe homeowners associations are an untoward restriction on individual freedom.” The issue is one of power – the writer, following CAI policy, firmly believes that HOAs are indeed independent principalities not to be regulated as any other entity, especially as a private government. He plays to the simplistic dogma that the people can do anything they like, and regulation to protect one faction against the evils of another doesn’t apply to these principalities.
The writer then directly attacks the legislatures across the country that have over the years enacted pro-HOA laws. Holmgren blames the government as being opposed to HOAs. Did he fall off a turnip truck and hit his head? In Arizona where he performs, and as reflected in the pro-HOAs laws enacted in other states, my data over the past 8 years show only three substantive bills (foreclosure, due process, control of public streets, etc) out of thirteen that were put into law, and one was declared unconstitutional in a suit brought by the Carpenter Hazlewood law firm.
While CAI argues before the legislatures about freedom of local control and the rule of the majority, it seeks top-down imposition of laws upon the HOA homeowners, without their consent and to their detriment. It has now admitted that HOAs are mini-governments, so now it’s OK to interfere with a government contract. And that the right of a minority to change the HOA “constitution”, the CC&Rs, is consistent with democratic government.[2] It appears to be an effort to control the HOA board cliques with their “expert” advice.
In spite of its alleged argument with the legislature (carefully called “government”), CAI figures that these draconian undemocratic propositions will be accepted by the legislators in view of their alleged necessity and compelling justification to protect HOAs. Propositions denying homeowners the equal protection of the laws and due process protections. I guess CAI, a third-party interloper that seeks to alter the private contract between the HOA and the homeowner, are feeling the threat of a loss of their ability to show a value to HOAs. And to protect their income stream.
This is a sad case of “the tail wagging the dog.” It is sad because there exists an alternative legal scheme for those individuals who seek the benefits of planned communities and condos, who with full knowledge of all the factors relating to HOA lifestyles and without duress, so freely choose. This alternative, existing in all states today[3], can provide these benefits along with the protections of their rights, freedoms, privileges and immunities under the 14th Amendment and every state’s Declaration of Rights, which do not exist under the HOA authoritarian regime.
References
- CAI Carpenter Hazlewood Delgado & Wood enewsletter of 3/11/11, Why HOAS?, Mark Holmgren.
- See video of CAI lobbyist’s statement before the Arizona House Government Committee meeting of 2/15/11 on HB 2441. (http://azleg.granicus.com/ViewPublisher.php?view_id=13, scroll down to entry link).
- See A proposal for the “Muni-zation” of HOAs; Stop developers from granting private government charters.
AZ bill to allow 1/3 vote to change CC&Rs violates your private property rights
If HB 2441 were to become law it would be challenged as an unconstitutional taking of private property rights by means of a contractual interference without a necessary and compelling government interest; and as creating HOAs as state actors under the US Supreme Court holdings of state actors: cooperation with, the coercion of homeowners, and the entwinement with the HOAs daily operations of HOAs among others.
The bill is lengthy, vague at times, and contradictory at other times. It must be read carefully with close attention as to what is not said and the meaning of the words.
1. Majority rule — HB 2441 strikes to the heart of majority rule and rule by the will of the people. It imposes by fiat, by statute, a minority control of changes the CC&RS, which are seen as the community’s constitution or charter. The modification of this type of document is never made for light and transient reasons, but by super majority vote. CAI lobbyist misrepresented the impact of the heart of this bill (subsection B) with his emphasis on two-thirds and 50% numbers, carefully not stating that it is 2/3 of those voting and not the entire membership. With the 50% quorum (buried within subsection (C)(3) and not part of subsection B, where it ought to be) allows half of the 2/3s, or one-third, of the members to alter the “contract” agreed to by a homeowner at purchase, without his consent, or the consent of the majority.
2. Access to the courts – The original version of this bill (subsections J of 33-1227 and I of 12-1817) had an explicit unconstitutional provision that denied court challenges to any CC&Rs amendment, the very same issue now before the AZ Supreme Court – constitutional due process by the Office of Administrative Hearings that permits appeals to the civil courts. In the amended version, this stark unconstitutional denial has been replaced with a much softer wording that still favors the HOA over any homeowner challenge. It makes the simple, but immensely expansive legal doctrine, that any CC&R amendment has the presumption of validity. It copies the “presumption of constitutionality” doctrine regarding statutes, but is even broader in scope as it would preclude two other factors delineated by the Restatement of Servitudes: unreasonableness and contrary to public policy. (See § 3.1, Validity of Covenants in the Restatement).
The second sentence of this subsection gives the illusion to not prevent any challenges to any amendment. It speaks of “does not limit the right”, which contradicts the first sentence that the amendment is presumed valid. Under this wording, the burden, as if the HOA were a state legislature, falls to the homeowner challenger to prove the invalidity of the amendment without stating the appropriate grounds as contained in the Restatement. A fair and just bill would be silent on this issue, as the Restatement should suffice, and not invoke public entity attributes. If CAI wishes to ascribe public entity attributes to the HOA, then the legislators must insist on the full panoply of protections of the 14th Amendment be applicable to the HOA. The bill is silent on these protections of homeowner rights.
3. Illusion of court protection – Subsections I of 33-1227 and H of 33-1817 claim that the court can still decide validity and enforceability issues, giving the illusion of constitutional protections. However, these subsections refer back to the subsections listing the 13 exceptions to the application of the voting procedure and not at all to the content of any amendment — “Subsection G of this section shall not be construed to affect the court’s ability . . . .” These are empty, meaningless subsections provided to mislead the reader.
4. Stakeholders — Speaker Pro Tem Montenegro spoke of meeting with all the stakeholders who are in agreement with his floor amendment. The word “stakeholder” is CAI newspeak, a redefinition of its common meaning, and accepted by the sponsor. “Stakeholder” includes the homeowner, and all stakeholders are not equal. Surely, the homeowner and his private property rights comes first and foremost above and beyond those who make a living from his membership in an HOA. But, apparently no one speaking for the homeowners were present at the sponsor’s meeting of allegedly all the stakeholders.
5. CAI lobbyists misleads legislators – Among the numerous misstatements, misrepresentations and spin in reference to this bill, and to the HOA environment, made before the House GOV committee on HB 2441, I’d simple like to draw to your attention the following, as they are continually being made before legislative committees. Mr. DeMenna, the CAI lobbyist, opened his remarks with: “This [CAI] is the organization that represents homeowners associations throughout Arizona. We are the association’s and board’s duly elected . . . [trailing off, intentionally not saying elected as what] and what have you.” CAI is not permitted, at risk of losing its tax-exempt status, to have HOAs as members as it is a business trade group, not an educational group, and cannot claim any such representation. or for homeowners either.
Neither have I ever heard of any board acting to give any attorney the right to speak for it before public bodies, nor have I ever heard of any vote of the members granting authority to the CAI lobbyist to speak on any of the issues before legislative committees. But, Mr. DeMenna persists in making this falsehood. CAI is simply a third-party interloper interfering with the private contract between the HOA and the homeowner.
Furthermore, the lobbyist once again makes an erroneous statement that the homeowner signed his CC&RS. No such thing occurs in Arizona! Even if he is required to sign the CC&RS, it would not matter as the common law of servitudes binds the homeowner as soon as he takes possession of his deed, sight unseen. It’s called constructive notice. Contract law and constitutional law have been replaced by the pro-HOA servitudes laws. See Calif. opinion: CC&Rs and surrender of constitutional rights.
See HOAGOV YouTube Channel for 9 min excerpt of the CAI lobbyist’s arguments for minority control.
6. Please note that this bill was written by Scott Carpenter, a CAI member attorney, principal in Carpenter Hazlewood Delgado & Wood who brought the challenge to OAH adjudication of HOA disputes, now awaiting a decision by the AZ Supreme Court whether or not to hear the case. Mr. Carpenter is also on record for his assertion that he will defend local control of the community. This bill contradicts this public display of “for the people” as it imposes state law without the vote or consent of the local community, which Carpenter claims to be defending.
HB 2441 must be emphatically rejected! It would be a blot on this Legislature to enact such an abominable statute.
“The founders understood that the principal mission of government was to secure people in their natural rights — to protect them against the lawless private thugs as well as of ill-intentioned legislators.”
Machiavelli and America, Hadley Arkes, p. 145, The Prince (Yale University Press, 1999).
Calif. opinion: CC&Rs and surrender of constitutional rights
This is an important Calif. case on CC&Rs and the extent to which your “agreement” to be bound satisfies the waiver of your constitutional rights. Arizona’s HB 2441 – written by CAI — proposes a waiver of access to the courts by homeowners. CAI wants it in law rather than by contract to avoid a similar ruling. As I said before, they have an answer or “out” for anything that they propose, which always leads to the courts and $$$$ for them. And, Arizona’s HB 2717 had a restriction on incentives for HOA attorneys to run to the courts on every little thing — cut the fee awards to the them — rather than the HOA and homeowner trying to work it out first. It has been removed by the sponsor.
Here’s a few quotes from the California opinion, emphasis added.
Treating CC&R’s as a contract such that they are sufficient to waive the right to trial by jury does not comport with the importance of the right waived. CC&R’s are notoriously lengthy, are adhesive in nature, are written by developers perhaps years before many owners buy, and often, as here with regard to the waiver of trial by jury, cannot be modified by the association. Further, the document is not signed by the parties.” (Treo, supra, 166 Cal.App.4th at pp. 1066–1067.)
CC&R’s are generally, as here, adhesive and unilateral and those bound by their terms may only have constructive notice of those terms and no contractual relationship with the developer who drafted the CC&R’s.
(This case focuses on the narrower question of waiver of jury trial).
Source: Villa Vicenza v. Nobel Court Dev., 191 Cal. App. 4Th 963 (Cal. App. 4th Dist. Jan. 1, 2011).
HOA Constitutional Government 