Tag: CAI

AZ judicial conduct comm. on hidden HOA attorney case: who let the cat out of the bag?

In my June 10th post, Judicial misconduct complaint filed for sealing records in AZ case against HOA attorney, I brought to your attention the fact that the records on a case involving a CAI member attorney sued for aiding and abetting and disgorgement could not be found on the court’s public access website.   Not even a notice that the case was sealed.  The complaint alleged that the “disappearance” of the records from public view was a violation of the Code of Judicial Conduct, Rule 123(d).

A response was received from the Commission on Judicial Conduct Staff Attorney who was more concerned with “shooting the messenger” rather than with taking a few minutes, like I did, and verify from the court records themselves the truth of my allegations.  Not even mentioned in her response.

My reply to the Staff Attorney, in part, reads,

The tone of the letter gives the impression of another angry person filing wild and unsupported accusations against a judge. It is condescending, insulting and attacks the messenger without any reference to conducting a duty bound investigation into the easily verifiable facts — the court records themselves.

The information that I provided is more than sufficient for a bona fide investigation of the facts by the Staff Attorney.  Just 10- 20  minutes on the Internet Pinal County case public information web page, followed by a call to the Pinal County Superior Court Clerk, as I undertook, would quickly and  independently verify the complaint (Exhibit B) that the court records were sealed in violation of Rule 123(d) – public access has been denied and denied without notice. 

The entire reply can be read here . . .

 

HOA foreclosure: an unconstitutional punishment

Writing on the Hindman-Sanchez blog (Colorado) in 2011, attorney Sanchez asks, “Is Foreclosure the Right Option?”  She offers 3 options: 1) just lien the property and wait, 2) get a money judgment on the debt owed and garnish money source, and 3) foreclose. Sanchez answers that option 1 is not quick; option 2 will not work if there is no cash available; so that leaves option 3, foreclose on the house.

However, working on behalf of the HOA and its supposed survival concerns, Sanchez fails to address the practical matter of 1) not enough equity in the home to for the HOA to collect its debt after the mortgage is paid off, or assumed, and 2) the moral and ethical question of a discriminatory, unethical, and inequitable option that amounts to a cruel and unusual punishment. It affects only those who have paid their mortgage and assessments obligations over many years. 

And remember, the HOA has not advanced any hard cash as a bank or lender to warrant a special foreclosure law, but is functioning as a state entity collecting on the failure to pay taxes.  Nor has it performed any services to warrant special treatment under a mechanics lien analogy.  Its services have been performed on behalf of the fictional but legal and separate person, the HOA.

From a broader aspect on the nature of the “contract” between the homeowner and the HOA, the homeowner was not told that buying into the HOA corporation is like buying into a closely held business that has limited marketability (ease of selling out, which amounts to selling his home), and whose source of additional funds is very, very limited – increased assessments, special assessments, and obtaining a bank loan if possible.  That’s the bargain the homeowner made when he bought his home.  That is the hidden downside of HOA corporations kept hidden by the HOA, the developer, the real estate agent and the consumer protection agency, if any. 

The use of foreclosure focuses the members’ attention to the other guy and not on the nature of the contract.  It is an irrational attempt by an HOA attorney to “get blood from a turnip,” which after all, is just what one would expect when dealing with “deadbeats.”  It serves to intimidate and punish homeowners by taking away the homeowner’s home, leaving him nothing. 

Sanchez ignores the reality of the present economic situation, which she admits to. She speaks, however, of foreclosure as a “necessary tool” to punish and to intimidate.

While associations have other options available, foreclosure is a powerful and necessary tool in the association’s collection efforts arsenal. People take notice when there [sic] property is being foreclosed. Foreclosure may motivate those who have not been making assessments to bring their account current. More often than not once a delinquent homeowner gets notice of a pending foreclosure on their property, they make some type of payment arrangement or refinance.

If HOA covenants and statutes that allow the HOA to take a member’s home or money based on an HOA fine was held to be an unconstitutional punishment or penalty[i], so must foreclosure statutes be held as an unconstitutional preemption of government power.  The argument that foreclosure is just a legal collection method and not a punishment falsely states reality.

(Loura Sanchez and Hindman are Colorado attorney members of CAI  and members of its College of Community Associations Lawyers (CCAL)). 

[i]In  Unit Owners Association v. Gilman, 292 S.E.2d 378 (1982), the Virginia Supreme Court heldthat a fine was  “A pecuniary punishment imposed by lawful tribunal upon person convicted of crime or misdemeanor. A pecuniary penalty. It may include a forfeiture . . .” and that “The imposition of a fine is a governmental power. The sovereign cannot be preempted of this power, and the power cannot be delegated or exercised other than in accordance with the provisions of the Constitutions of the United States and of Virginia. Neither can a fine be imposed disguised as an assessment.”  

As word of manager UPL conduct spreads, where were the HOA attorneys?

Adrian Adams, a California CAI member attorney has spread the word about HOA manager  UPL activities.  And the word will continue to be spread to all states since they all has UPL rules. This blog entry follows just a week after my Commentary, Final Order: HOA management firm engaged in unauthorized practice of law, was published.

In the June 24, 2012 of the Davis-Stirling.com eNewsletter, “Managers Practicing Law.”  Adams offers the following advice to HOA boards,

Directors will have difficulty convincing a jury that seeking legal advice from a manager was prudent. . . . When asked for legal advice, a manager should always recommend that the board seek legal counsel. Doing so protects both the manager and the board.

Let’s step outside the box!    UPL supreme court rules have been around for many, many years in all states.  During all this time, where were and what were the CAI self-proclaimed HOA legal experts doing?   Did these experts not know about state supreme court rules on UPL?  Well, that’s no excuse, if true. 

If homeowners can be held accountable under CC&Rs that need only be recorded at the county clerk’s office, sight unseen and without an explicit buyer signature, why should these attorneys escape accountability for negligence to their HOA clients? 

CAI is the national lobbying entity, whose members have repeatedly gone before state legislatures to propose statutes governing HOAs on behalf of all the HOAs and homeowners. (CAI has a miniscule number of homeowners as members, at most 30,000 of some 25,000,000 HOA families).  And CAI attorneys often take the word of the HOA manager with respect to the validity of legal action, without the independent review required by civil court rules that the action is based on facts and the law (Rule 11(a), Signing of Pleadings).

The CAI attorney silence is disgraceful and violates the rules of civil procedure and professional code of conduct. Ethical rule 3.1, Organization as Client, of the code of professional conduct, specifically relates to the attorney’s awareness of illegal conduct by the client or “other person associated with the organization,” and 2.1, Advisor, whereby candid advice on moral and ethical issues may be rendered to the client.

I wonder what the reaction is from those 9 states that use CAI to license managers: Alaska, California, Connecticut, District of Columbia, Florida, Georgia, Illinois, Nevada, and Virginia.  Or from those towns, like in Arizona, who sponsor CAI seminars on good governance.

This egregious conduct is another solid example of the true nature of CAI’s involvement in the HOA governance industry.  It is unquestionably in the self-interest of its members, both its attorney and its management firm members. 

Local government copies HOA government

In the June 23, 2012 NY Times article by David Segal, “A Georgia Town Takes the People’s Business Private,”  Segal asks and answers, “What is local government for? For years, one answer, at least implicitly, was ‘to provide steady jobs with good wages.’”   It reduces public government to just providing for the maintenance of the community, following the lead of the other form of local government, the private HOA regime whose purpose is to just “maintain property values.”

While the answer is in keeping with the theme of the article regarding the privatization of government services, it ignores the unique functions that distinguish a public government entity from a business, or more importantly, a membership nonprofit business.  Just what are those unique functions?

Are governments just a business?  Are businesses just a government?  Are HOAs just a business?  Are HOAs just a local government?  In his April 2, 2008 CAI Ungated blog entry, CEO Skiba writes: “Community associations are not governments . . . .  Yet they are clearly democratic in their operations.”  Skiba continues further with, “The solution to that problem is not to replace democracy with tyranny, royalty, or some other form of government, but to work to make the democratic process better and to hold those elected accountable. . . .”  He seems to be pleading that whatever aspect of democracy there is in HOAs, we must make serious improvements. Note his use of “some other form government” is an admission that HOAs are political governments.

I find it hard to accept the above assertion by Skiba that CAI supports making HOAs more democratic. Rather, CAI supports the top-down imposition of UCIOA laws that blatantly contradict its other pronouncements that HOAs are the town hall ideal of democratic governance.  And it contradicts CAI’s documented positions before the courts and state legislatures opposing constitutional protections for homeowners in HOAs.

Political scientists (among them Wayne Hyatt, Evan McKenzie, and Steven Siegel) have accepted a compromise position that HOAs are a sui generis entity, a unique combination of business and public government functions that require a new set of laws to establish a just and fair governance of people living in an HOA controlled community.  Yet, since Siegel’s seminal paper of 1998 (Wm & Mary Bill of Rights Jnl), the laws remain pro-HOA without HOA accountability to the state, and without the equal protection of laws that apply to all other citizens except those living under HOA regimes.

A detailed discussion of the de facto status of HOAs as state actor governments can be found in The Foundations of Homeowners Associations and the New America, “Part III, American Political Governments.”

 

Is CAI’s ‘lack of candor to the tribunal’ intentional?

In my recent complaint letter to the NJ Supreme Court (Complaint filed with NJ Supreme Court for CAI lack of “candor to the tribunal”) arguing that CAI lacked “candor to the tribunal” — a violation of attorney professional conduct, RPC 3.3 —  I also charged that the misrepresentation was not accidental or simply an oversight, but was intentional.  “This failure is intentional as evidenced that both the CAI-NJ and CAI ‘Central’ websites do not refer to 501(c)6 status at all.”   

Evidence was provided from several web pages from both CAI-NJ and CAI “Central” that clearly show a co-mingling of representations, an implication that CAI is an educational organization with HOA membership,  and a failure to clearly state that CAI is a 501(c)6 trade organization.

Furthermore, the very fact that CAI-NJ found it necessary to prepare a standard form to justify the validity for HOAs to pay CAI membership fees shows an awareness by CAI of a possible conflict of interest.  It shows CAI advocating for its own agenda and for its HOA clients to breach their fiduciary duties to their members under the law and governing documents.

Further evidence of intentional misrepresentation and a complete disregard of the truth can be found in a 2008 amicus curiae brief to the Colorado appellate court in Booth Creek Townhouse v. Bassick (No. 07 CA 2531)[1].   Here, 3 years after dropping HOA membership in 2005 and 16 years after becoming a business trade group, CAI repeats its boilerplate certification of interest and justification to assist the court.

CAI is a national educational organization . . . . Nationally, members include . . . homeowners associations and condominium associations . . . .” and “CAI is uniquely situated to provide information to this court because all parties within this industry are represented by this organization. 

It would have been entirely acceptable if CAI had just indicated that it promoted and supported the Colorado version of UCIOA, CCIOA (effective 1992) and its subsequent amendments, and let the statutes speak for themselves.  But, this alone would indicate a bias toward protecting HOAs.

No, the evidence is quite clear and convincing that CAI’s repeated misrepresentations were not just a slip of the mind.  These persons are not just Joe Schmoes, but self-proclaimed community associations experts and who provide seminars to the uninformed public.

[1] While a search of Colorado court cases fails to show a record of this case, CAI nevertheless did prepare and file this brief.  “CAI Files Amicus Brief on Behalf of Homeowner in $550,000 Judgment (10/08)”  (Link found on http://www.caionline.org/govt/news/Pages/CAIHeads-UpArchive.aspx June 21, 2012).  (The homeowner charged HOA for failing to perform its maintenance duties. CAI believed that the HOA’s failure to maintain the property was “egregious,” and the “association was so blatantly . . . and unwilling to perform its required duties.”)