Tag: CAI

Will Transparency Act chill HOA survival – no board volunteers?

Community associations were not given one of the twenty-three (23) exemptions under the Corporate Transparency Act (“CTA”).  CTA requires  businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), providing details identifying individuals who are associated with the reporting company.

CAI filed an amicus brief seeking HOA exclusion from reporting under CTA. (CAI Amicus Curiea, National Small Business United v. U.S. Treasury,  No. 24-10736, 11th Cir. (Ala.) 2024.) In sum CAI argued, “Homeowners will no doubt be reluctant to volunteer in light of the potential Orwellian consequences imposed by the CTA.”

In  researching the CAI brief, I do not address the issue of CTA and HOAs; CAI makes that argument.  My analysis addresses 2 aspects of the CAI brief:

  1. CAI’s candor to the tribunal (Code of Professional Ethics, R 42, E.R. 3.3 violation) in regard to misrepresentations as to what CAI is and what it does (Section I), and as to what HOAs are and do.
  • An implied defect in the HOA governance model relating to the need for unhindered, unpaid, volunteer boards of directors without whom HOA governance fails.

CAI  CANDOR

CAI continues to make broad, unsupported, half-truths as to it nature that can be found in many of its amicus briefs.  CAI claims (my emphasis):

“The Community Associations Institute (“CAI”) is an international nonprofit research and education organization formed in 1973 by the Urban Land Institute, the National Association of Home Builders, and the United States Counsel of Mayors to provide the most effective guidance for the creation and operation of  condominiums, cooperatives, and homeowners associations

“an international organization dedicated to providing information, education, resources, and advocacy for community association leaders . . . . CAI is the largest organization of its kind, serving more than 75.5 million homeowners who live in more than 365,000 community associations in the United States.”

“CAI submits that there [sic] experience in representing and supporting community associations . . . and understand the make and needs of the various community associations.”

“The primary role of community associations is to manage the common areas of the community, i.e. fix the roofs, maintain the lawns, shovel the snow, insure the buildings, etc”

Not mentioned is CAI as an IRS 501(c)6 business trade group that does not and cannot have HOAs per se as members, and was formed to combat growing problems with the HOA scheme back in 1973. In 1992 CAI dropped its education tax-exempt status to become a trade group so it could lobby more effectively. See Stable’s Community Associations and McKenzie’s Privatopia on origins of CAI.

HOA SURVIVAL — UNPAID VOLUNTEERS

“CAI submits this amicus brief on behalf of its members who recognize that the sustained health of the community association form of ownership in the United States depends in large part upon the willingness of owners to continue to serve on their associations’ volunteer boards to make their homes and communities better places to live.” 

“Volunteerism is the backbone of every community association. Board

members are not paid for their service. CAI respectfully submits that volunteer homeowners will be less likely to serve in that capacity if they are required to file a beneficial ownership report with the Government.

“Homeowners will no doubt be reluctant to volunteer in light of the

potential Orwellian consequences imposed by the CTA”

The above is a major defect in the HOA scheme based on an unreal requirement for active volunteerism that is not supported by the lack of involvement in public government.  It’s a call to utopian ideals and behavior.

REALITY CHECK

Question:  If CTA applied to HOAs, would you serve on the board?

HOA-Land Organic Laws

Organic Law is “the set of foundational laws or regulations, like those in a constitution or charter, which establish the essential framework of a government.” It is the fundamental basis of a government.

The U.S. Code defines the organic laws of the United States to include the Declaration of Independence, the Articles of Confederation, the Northwest Ordinance, and the U.S. Constitution. (See US Statutes At Large, 1789 –1875, Vol. 18, Part I, Revised Statutes (43rd Congress, 1st session), p. v and vi).

In contrast, The Homes Association Handbook and UCIOA constitute, in my view, the organic law for HOA-Land. Together with their derivatives, as applied to HOA Declarations, they set the HOA’s  political tone and governing policies, which clearly rejects the US Constitution as the law of the land.

National defender of HOA-Land legal structure, Community Associations Institute, CAI, had this to say in its amicus curiae to the NJ appellate court in Twin Rivers (2006).

“In the context of community associations, the unwise extension of constitutional rights to the use of private property by members (as opposed to the public) raises the likelihood that judicial intervention will become the norm, and serve as the preferred mechanism for decision-making, rather than members effectuating change through the democratic process. [p. 19].”

CAI amicus brief: candor to the tribunal

Still think CAI is on your side and can be trusted to act in good faith?  Here’s the latest CAI propaganda bordering on a violation of the Rules of the AZ Supreme Court, R42, E.R. 3.3, (found in Rules in every state):

“Candor Toward the Tribunal: (a) A lawyer shall not knowingly:

(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer;”

(3) offer evidence that the lawyer knows to be false. 

(b) A lawyer who represents a client . . .  and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.”

In CAI’s amicus brief to the AZ Supreme Court in CAO v. PFP Dorsey (Case No: CV-22-0228-PR, 2024), we see repeated half-truths about who CAI represents and what are its purpose and functions.  Some excerpts from “Interest of CAI as Amicus Curiae” (emphasis added),

  • is an international organization dedicated to providing information, education, resources and advocacy for community association leaders, members
  • CAI’s more than 43,000 members include homeowners, board members
  • serving more than 74.1 million homeowners
  • CAI is representing not only itself, but also its tens of thousands of members on this important issue.

CAI misrepresents its position and status.  It’s a miniscule organization and no way close to the estimated AARP’s 66% of 55 plus persons. The shortcomings include:

  • Failure to state it’s a business trade nonprofit, 501(c)6 and not an educational (c)3; (everybody knows does not count)
  • As a business trade entity, it is not allowed to have HOAs, the consumer of CAI’s member services, as members;
  • Not informing the court that “individual volunteers” constitute a minority class of membership, and
  • Failure to inform that the Management of CAI is controlled by a Board of Trustees in which its “volunteers” members are only 13% of the Board that is dominated by the management class;
  • ·         a 15-member Trustee Board supported by 2 groups of 12 representatives and the Homeowners Leadership Council  of only 6 representatives;
  • The current Trustees Board has a president from Dubai and a president-elect from the US, both managers; 6 more managers; 2 “HOA managers,” 2 lawyers and 3 others. (See Board of Trustees).
  • Failure to inform that no HOA board of directors, to my knowledge, has granted CAI the right to represent or speak for the HOA before government tribunals;
  • ·         Exaggerating its scope of influence and alleged representations when its total membership is less than 36% of HOAs or persons living in an HOA.  (Based on 2007 & 2012 data, See HOA homeowner membership in CAI is a mere 36%; Who controls CAI and its 50 state HOA lobbying committees?)
  • ·         As of this writing, CAI claims 45,000 members; 75.5 million residents, and 365,000 HOAs. With an estimated population of some 331 million people, 23% live in an HOA  — .06% of HOA residents are CAI members!

Would you consider the brief being honest and forthwith to the Court?

HOA reform advocates: the enemy is us

Let me start by saying that I have the utmost respect to the handful of persons, advocates, who have actively supported HOA reforms of substance over the years, and have had some success.  To all others I say, the enemy is us.

I well understand the reasons and justifications of people refusing to get actively involved. Personally, talking over the phone and through emails, that most do not have the temperament, want someone to solve their own personal issue with an attempt to expand it nationally, fear retaliation, fear legal issues and the government, and just don’t care about government issues in general.

The numerous social media reform groups, some old but most are new less than 3 years, have not only failed but have  resisted the establishment of a unified,  bona fide and legitimate, national entity; argued as far back by Evan McKenzie when interviewed by Shu Bartholomew, to the best of my recall, sometime before 2004. Today, I must regrettably say some groups make this claim, but they are in name only.

And so, the many Davids believe that they can defeat the mighty Goliath of CAI. The newbie leaders who rise from time to time and disappear a few years later, start by believing that CAI acts in good faith and they can work things out for the protection of homeowner rights. They quickly discover that they have been had, been played with, and realize they are helpless to withstand the entrenched CAI. Today, many who are beginning to be actively involved realize the dominance of CAI over their legislature.

Watch AZ CAI lobbyist at work, 2010, before committee dodge questions, make false statements, and avoid hard questions. Who Controls public streets? HOA or municipality? Part 2 of 3 (youtube.com). (Early quality video).

As the adage goes, as a figural demonstration of one’s commitment to reforms, “put your money where your mouth is.” However, in reality, I have asked people to buy my book, HOA Constitutional Government, as a demonstration of national commitment on a national website, Amazon, but have received token response.

In my announcement I  clearly stated, and still abide by it, that if there were such a legitimate national reform group I would assign all my royalties to that organization.  $15.00 is a trivial show of commitment but will be effective for recognition of national support. BUY NOW! Amazon books.

Taking a positive perspective, I noticed over the past few years a growing trend toward legislation and court decisions in several states affirming constitutional and fundamental rights of HOA members. That’s a good sign that advocate messages and communications are having an effect. 

Now is the time to strike while the iron is hot! Get unified, get organized, get focused, and stop the HOA social media reform groups’ fragmentation of me first, NIMBY policy.

AZ bill returns homestead protection against HOA claims.

We must make the injustice visible. We must provoke until they respond and change the laws.[1]

Arizona alert – strike everything HB 2648 (2024)  returns homestead protections against HOA claims.  

“ARS 33-1807 and 33-1256. “B. THE COMMON EXPENSE ASSESSMENT LIEN PRESCRIBED BY THIS SECTION IS NOT SUBJECT TO THE HOMESTEAD EXEMPTION.”

Let’s go back into the forgotten history of the homestead exemption in Arizona, starting in 2004,[2] 2007[3] and 2023.  The issue was and is the use of statutes to mimic the common boilerplate of the CC&Rs:   Statutory vs consensual lien. “A 12 item list is presented mimicking the CC&Rs, a common tactic to legitimize contractual challenges to the governing documents.”[4]

In 2004, still learning the ropes, I did not follow up on the state actors controversy based on the ARS statutes saying (my emphasis), “‘The association has a lien on a unit for any assessment.” 

“Representative Farnsworth made quite clear that ARS33-1807(A), which opens with, ‘The association has a lien . . . . is a statutory lien and not a consensual lien – the homeowner has no choice in the matter whatsoever.” (emphasis added).”

This can only be interpreted as a mandatory statute making the HOA an arm of the state, acting in place of the state – a state actor.[5] No, and, if, or buts! It is not a consensual lien if mandated by the state!

A second argument raised many times subsequent to 2004 questions the validity of a genuine consensus – “an agreement to be bound.”  In short, the argument raised in Common Sense[6],

“First, the application of contract law to the CC&Rs agreement reveals the many invalid aspects of the CC&Rs as a bona fide contract.  It is obvious from a simple review of contract law.  Yet, courts have held that the CC&Rs are a contract or are to be interpreted as a contract, and have even analyzed the meanings of CC&Rs in the same manner as a contract. But, the courts do not question the validity of the CC&RS contract with respect to contract law.  The courts resort to equitable servitudes law, which simply requires the acceptance of a deed in order to bind the home buyer to the CC&Rs sight unseen.”

On this point alone, HB2468 must be strongly supported. The controversy of statutory vs consensual is avoided to the relief of homeowners.

It is the Achilles heel of CAI’s reason for being  — cruel foreclosure and no homestead exemption as a punishment to coerce obedience.

Notes

[1] Mahatma Gandhi, fighting for India’s independence from British rule, 1948.

[2] HOA Homestead Exemption Exclusion (SB1470) (2023) (A 2004 look back and a comment by Fred F).

[3] See, The constitutionality of legislation: AZ Gov. vetoes homestead exemption bill (2007);

Arizona SB1330 restores lost homestead protection in HOAs (2007).

[4] See, All state “may/shall” statutes imply HOAs as state actors.

[5] See in general, Are HOA state actors created by statutory use of shall/may? (Section 2, paragraphs 5 +). (2019).

[6] HOA Common Sense, No. 4: Consent to be governed