Tag: CAI

The role of the HOA apathy affliction in circumventing public policy

In my prior Commentary, See The HOA apathy affliction: a political dynamic, I wrote about the HOA attorney driven recourse to complete rewrites of the CC&Rs that works because of the apathy affliction that is thriving in HOA-Land.  I would like to now add that this approach, in general, is an intentional violation of your state’s public policy.

Public policy is expressed in many ways by the actions or inactions, and statements or non-statements by government officials in the executive, judiciary and legislative branches. What bills are made law or not passed, and the intention of the legislature, when and if explicitly stated, makes public policy. 

In Arizona, for instance, HB 2441 (2011 session) was submitted and aggressively supported by the CAI chapter. It contained, among other things, a provision for the minority control of the CC&Rs amendment process by allowing as low as 33% of the all members to approve an amendment. While the Apache Wells rewrite contains a very vague and loose requirement for amending the CC&RS in contrast to the detail by-laws amendment process, it lacks homeowner protections.  There are no requirements for notice, meeting at which the voting is to take place, no approval requirement, etc.  (The prior 1987 CC&Rs required a majority approval of all the members).  The 50% vote is misleading as to homeowner protections without all of the above in place, as has occurred in the Fourth Amendment rewrite with respect to the minority approval of special assessments (See below and the prior Commentary link)..

10.4. Amendments. At any time this Declaration may be amended by an instrument in writing, executed by the then Lot Owners of more than fifty percent (50%) of the Lots in the Project.  Any amendment approved pursuant to this Section 10.4 of this Declaration shall be signed by the President of the Association and shall become effective upon recordation of the same with the County Recorder of Maricopa County, Arizona. Any such amendment shall certify that the amendment has been approved as required by this Section 10.4.

 

But, when it comes to approving special assessments (Section 7.5 of the CC&Rs), which could be almost any amount like the assessments to pay off an $8.5 million loan for a suspect administrative building in 2007, the rewrite allows for a 25% approval of any special assessment. (The prior 1987 CC&Rs required a majority ratification of the special assessment by all the members).  The point that I wish to make is that the special assessment rewrite is only one example of how minority control fails to protect the homeowner.

Another example is the attorney self-interest covenant, 10.2, Administrative Law Proceedings, which states in part,

In the event the Association is required to incur any expense, including attorneys’ fees and costs, as a result of the direct or indirect actions of any Owner, the Association shall be entitled to recover all such expenses incurred, including all attorneys’ fees and costs, against the applicable Owner, regardless of whether formal proceedings are actually filed, pursued or awarded . . . .

 The public policy of the State of Arizona was made clear in 2006 when ALJs were permitted to hear HOA disputes, and no attorney fees were allowed to be awarded in these hearings. The CAI attorneys managed to have the law declared unconstitutional, which resulted in a reaffirmation of the legislative intent in 2011 to provide for ALJ adjudication without attorney fee.  The intent of the legislature was explicitly stated in the new bill.

 The inclusion of section 10.2 in the Apache Wells CC&Rs rewrite can only be viewed as another intentional slap at Arizona public policy, and one in the best interests of the HOA hired-hand attorney.  The covenant for minority approval of special assessments, given the history of special assessments at Apache Wells, is another act of bad faith and disregard for public policy. 

 The recourse to CC&R amendment rewrites with the reality of the apathy affliction so prevalent in HOA-Land is a devise to circumvent public policy in order to achieve goals and objectives not in the best interests of the homeowner.  The Restatement of Property: Servitudes, Section 3.1, Validity of Servitudes,    “A servitude [covenant running with the land] . . . is valid unless it is illegal or unconstitutional or violates public policy.”  It is only the acts and actions of the people within HOAs that can return them to the American way of life.

 Read the related Commentary, Why do people harm others in HOAs?

The HOA apathy affliction: a political dynamic

Everyone is unhappy with the pronounced apathy among those living in HOA-Land, where the lack of homeowner protections works for the power-elite, the board and its attorney.  CAI has complained many times about apathy when homeowners complain about the conduct of their boards.  CAI also complains how it can’t make “necessary” changes to the CC&Rs to bring them current with the laws.

Because of this apathy, homeowner advocates who are aware of the inequities of their HOA predicament cannot get their good neighbors — those who pay their dues and obey the rules — to support them in their efforts to obtain justice for all members. 

A recent approach being used by CAI in Arizona is to call for the complete rewrite of the CC&Rs to make the HOA a better place, the ostentatious reason, while including even more oppressive covenants and covenants that are highly favorable to the HOA attorney and its income stream.  In order to accomplish this, recourse is made to playing loosey-goosey with the strict Arizona laws for amending the CC&Rs. 

The law requires a written explanation of each and every change being made, which can be cumbersome, but the law is there to protect the homeowners. It’s a cost of making sweeping amendments all at once.  But the homeowners say and do nothing except to sign away their rights as good team players.

The political impact of these sweeping changes is made real by the apathy of the majority of the homeowners to agree to whatever the board proposes with the blessings of the HOA attorney, who wrote the revised CC&RS.  They can affect your pocketbook, your property rights, and your already weak voting rights.

A common change, minority control, was defeated in the 2011 legislative session that permitted minority control of the amendment process, thereby giving the political machine in power basically complete control of the HOA and over its apathetic members.  This political tactic relies on homeowner apathy to succeed.  It removes a vote of all the members and the long held doctrine of a supermajority vote, usually 67%, and replaces it with a majority vote of only those voting. 

Even with a 50% quorum as little as a 25% approval can affect the rights of ALL members, whether they agree or not.  And with the pro-HOA laws and unconscionable adhesion CC&Rs contract, the members will be just pawns in the hands of the board – just pay your dues and shut up, or else!

Homeowner apathy is a serious affliction in HOA-Land.  Under the current environment, it is the homeowner who must stand up and fight for his rights, in the HOA and at the legislature to change the laws.

Read about the Fourth Amendment to the Apache Wells CC&Rs, one real example. Just scroll down.

Beware the folly of eliminating supermajority voting for amending the HOA CC&Rs

The latest drive by pro-HOA attorneys and lobbyists has been to seek legislation to do away with supermajority amendments to the CC&Rs.  If approved, the very foundation of majority rule in a democracy, and our long standing requirement that fundamental documents must have supermajority voting in order to be amended,  would be destroyed.  The argument is, Gee, because of the apathy, we can’t make important amendments to the CC&R.  

In the 2011 Arizona legislative session, HB 2441 was defeated at the last moment.  It would have allowed for minority – as low as 1/3 of the members — to amend the CC&Rs.  The CAI lobbyists fought hard for this bill, even telling the committee that although  it was governmental intrusion, the legislature always did that. 

Think for a moment.  If a minority can control the amendment process, it can control the HOA by enacting amendments that further strengthen the powers of the incumbent board.  Given the fact that the rogue boards are dominated by their HOA attorneys, minority control solidifies the political machines as the power elite. 

Think about it!  Under a political machine minority vote regime, the regime can eliminate all and every need for member approval, except, of course, voting for directors.  And, all future amendments will have this acceptable ground for the amendment — the apathy of the membership demands minority control.  Nobody cares, so what!

However, in spite of this persuasive argument, the infinite wisdom of the California legislature shines brightly when it enacted laws in the Davis-Stirling act permitting just such amendments as valid. Section 1356 addresses minority control of an HOA.  This section 1356 is an oxymoron and is an unreasonable and illogical intrusion on the private contract and to our fundamental belief in majority rule in a democracy.

Section 1356 allows for less than supermajorities where the governing documents require more to amend the governing documents.  So a 60% voting requirement would allow for minority control.  There is no restriction in the law on the lower limit for approval except to appeal to the judge that “this ain’t right.”  In other words, like the failed Arizona bill, 1/3 can be acceptable, and even a 20% requirement would be acceptable.

The lunacy of this law is that a majority voted amendment to reduce supermajority voting requirement is valid, if approved by a judge.  Go figure!  The law has circumvented the CC&Rs private contract putting the cart before the horse!  That the members have spoken is the basis for this requirement, in spite of evidence of psychological indoctrination to obey and legal pressures of financial harm for not obeying. (See Why do people harm others in HOAs?)

But if a supermajority was needed, as currently required by the CC&Rs, the amendment to amend before the court would fail. I mean, isn’t that why the HOA is before the court?  They can’t get anything done with a supermajority! 

How to get a supermajority vote?  It’s done every day, everywhere.  The content and need for the amendment must be conveyed to the membership in an open forum, an open meeting, and be debated before the membership.  And not in some one-on-one private meetings or phone calls. 

There is no requirement in the law to hold an open meeting of the membership to debate the amendment before approving the elimination of supermajority voting.  A requirement that is found in all legislative and state agency rule-making procedures – public input.

 

In the recent court opinion (Quail Lakes Owners Assn. v. Kozina (2012) 204 Cal.App.4th 1132), the homeowner does not challenge the validity of this law, but advances procedural arguments under the law.  That was a big mistake (he lost), as I’ve repeated argued, of not seeing the ugly forest through the trees. The mandatory requirement under § 1356(c)(5), that “the amendment is reasonable” was never argued as I’ve argued above.  In fact, my arguments above were made loudly and clearly in defeating Arizona’s HB2144, and that defeat went to the very last vote.

This decision is another example of bad law becoming a detrimental precedent against homeowners.  If you think you have problems now, wait until your HOA blindly obeys the board and allows for  a minority controlled HOA.

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Media still sees HOAs only in monetary terms

My comments to the investigative reporter from KTHR.TV in Indianapolis, IN.

I congratulate you on your very detailed report on what HOAs are all about (13 Investigates: HOAs). Your article joins the newly emerging HOA Enlightenment Movement that looks beyond the special interest, national lobbying trade entity, CAI, propaganda. For more detailed info on HOAs, beyond my short comments, please visit my links below.

Take maintaining property values covenant, the very basis of the pro HOA argument. Show me where the CC&Rs warrant or guarantee property values? Don’t look too hard as you will not find any. In short, the buyer gives up his rights and freedoms, offers his home as collateral for the survival of the HOA, and agrees to pay the assessments no matter what, even if there’s a dispute with the HOA, for an empty promise. Some deal!

In general

The HOA legal scheme is seriously defective in regard protecting people who are citizens of their state and the US, but who are now under a private regime not accountable to the state. The CC&Rs “contract” is based on equitable servitudes and not constitutional or contract law, making these de facto HOAs independent principalities. But, you only see the money side of HOAs that can be viewed as a con job.

For example, the HOA is very much like a closely held business with restricted exit opportunities, and where the members are jointly and severally liable for the debts of the HOA – if a member can’t pay, his “share” can come from the other members’ pockets. Did you know that? Wasn’t that explained to you?

Did you know that the buyer does not have to even read the CC&RS to be held to the binding agreement? All that is necessary is to file the CC&Rs with the county clerk’s office and the buyer is bound by simply accepting his deed, sight unseen and unsigned. Why isn’t the buyer told before he signs the purchase contract? Isn’t this misrepresentation?

Let’s jump to “Steps to Take Now.”

In general, although Indiana has a very limited HOA statutes, the CC&RS are an adhesion contract — take it or leave it in favor of the HOA – that contain provisions that a municipal government could not impose on its citizens. And don’t forget the misrepresentation mentioned above when you hear arguments that “they agreed to and signed” the contract.

See The Truth in HOAs Disclosure Agreement.

Your discussion of “Homeowner Rights” is woefully deficient!

You speak only of the “laws” of the HOA and its CC&RS “constitution.” Do you really believe that the buyers willingly and openly agreed to waive and surrender explicitly stated and implied rights when they took their deed? In a manner that would pass judicial scrutiny? For example, “fines” and the “notice of a hearing” as commonly found in the top-down CC&Rs mock the Constitution. And, the absence of fair elections protections makes political machines a reality.

See the Declare your US and State Citizenship for the legislature.

I hope you will make a serious effort to read these materials, backed by evidence, court decisions, statutes and the statements made by the pro-HOA special interests. And publish your review and summary.

And the HOA Enlightenment Movement grows . . .

A few more enlightenment articles (see the age of HOA enlightenment is coming?) by the legal-academic aristocrats have appeared in the media and on the internet. Among these modern pretenders to Philosopher-Kings, the Adams-Kessler (Calif.) blog warns about HOA managers engaging in the unauthorized practice of law, Managers Practicing Law.  Then there’s the past president of CAI “Central,” Ellen Hirsch de Haan, at the infamous Florida lobbyist law firm of Becker & Poliakoff on the need for neighborhood watch group oversight. Guard yourself from lawsuits against your HOA.

And more websites and bloggers are adding to the coverage of the Real Stories of HOA-Land, like with, Think Twice Before Placing Blame on Owners.   Congratulations!   The media has also been providing increasing attention to the real happenings in HOA-Land rather than just mouthing the pro-HOA “party line.”    

And so must all those homeowner rights advocate websites join in the Enlightenment Movement today!  At least post these enlightenment articles.  Let your followers know that these legal-academics didn’t wake up a few days ago and say, My God!  Look what’s going on in HOA-Land!   That they have been deceived all these years!