Tag: California

Looking for justice in an HOA? Look here first!

In the recent California case, Sui v. Price, the plaintiff owned a van for 12 years, and parked it in their reserved parking space. For the past 4 years, the van was inoperable due to a damaged engine, but remained locked in the parking space.

In 2006 Price, the HOA president, caused an amendment to the Rules prohibiting inoperable cars to be approved, and had the van towed. Where have we heard this before? A $1,700 fine was levied on Sui, which affected his credit rating and ability to refinance his home. The homeowner sued for breach of contract and several tort claims, based on an intent to harm the plaintiff, and sought $58,000 in punitive damages. Another case of the effects of ex post facto amendments, when the doctrine of estoppel by laches would be very applicable in favor of the homeowner.

There is no statement of ”an unsightly intrusion” caused by the van with a damaged engine — no fact of a beat-up body, or no tires, etc. California law allows the removal of a vehicle in violation, presumably after 96 hours of notice. The complaint was dismissed. The court dismissed the fact that Sui was just one individual with an inoperable vehicle, and that the CC&Rs prohibit rules that discriminate against member.  Forget about the holding that the CC&Rs supesede the Rules.

The court only looked to the the reasonableness of a covenant, relying on,

Simply put, there is nothing unreasonable about prohibiting the open, long-term parking of disabled vehicles. The association was perfectly reasonable in prohibiting this unsightly intrusion upon the aesthetics of their common interest development. (emphasis added).

 

And that is the danger of the “general interest or general purpose” doctrine – almost anything can be rationalized and justified when isolated and only considered by itself. So the court chose – it was a validly passed amendment, and those other, unaffected members, could undo the amendment. Is this communalism or socialism?

We see no reason to apply a different test for reasonableness of an association’s operating rules, especially since a rule adopted by the association’s board may be reversed by majority vote of the homeowners at a meeting called on petition of only 5 percent of the separate interests in the association. (emphasis added).

Here again the court diminishes individual rights for a perceived common good of the community in what many would call socialism.  It’s disturbing that the homeowner in these cases is not compensated for a loss in benefits by being a member of the community, while others are held to benefit. Another overlooked requirement for upholding valid amendments.

In the public arena, the homeowner would have received compensation for this “taking.”

What is an HOA’s duty of care liability to its members and to all others?

State laws, in general, hold that the duty HOA board of directors is one of good faith, and as a fiduciary or prudent person with respect to the members, where “members” does not mean an individual member.  This is based on the nonprofit, membership corporation and HOA/condo Acts that can be found in almost every state.

But, what about tortious or wrongful acts under tort law negligence, or agency law, or real estate law on an owner liability for injuries to others on his property?  And there is also the charitable volunteer laws shielding all but grossly negligent acts by volunteers.   These laws apply although you can’t find them in your CC&Rs or in the HOA/condo statutory Acts, and the average board member probably has very little, if any, awareness of their applicability to HOAs.

I write as a lay person, because no one else is writing and the national lobbying organization is not likely to tell it like it is — nothing bad about HOAs.  Not even any of your state consumer protection agencies.  With respect to the Trayvon murder incident, I wrote about some of these HOA liability issues in, “What is the HOA liability for wrongful acts by its security officers?”   Information has come forth in the media that the Retreat at Twin Lakes, the HOA, either “hired” Zimmerman or at least had knowledge, or should have had knowledge, of Zimmerman’s history.

My initial research into the question of HOA duty of care under tort law of negligent acts revealed a few court cases that shed some light on this question.  The most recent case (The Landings v. Williams, No. A10A1956, GA App. 2011) is the mauling by an alligator of an 83 year old woman on the common property of the HOA in Georgia.  The woman was visiting her family and is an “invitee” (legal term pertaining to a third-party on property held out to the public), and the appellate court denied a motion for reconsideration and upheld the HOA to have a duty of care and was negligent in this instance.

In California, several related cases have been reported by attorney Jeffrey A. Barnett in “Aberrant Behavior in Associations.”  He references the California Supreme Court holding that,

the owner’s duty to provide protection from foreseeable third party crime has always been determined in part by balancing the foresee ability of the harm against the burden of the duty to be imposed . . . . The board can be liable for failure to take reasonable steps to prevent injuries from foreseeable criminal activity.  (Isaac’s v. Huntington Memorial Hospital,38 Cal 30 112 (1985)).

The Court further held (Frances T. v. Village Green Owners Assn., 42 Cal 3d. 490 (1986), “that a homeowners association has a duty to exercise due care for the safety of residents in those areas under the association’s control.”  And that,

the property owner’s duty includes exercising reasonable care to discover whether criminal acts are being, or are likely to be, committed upon the owner’s land. If an investigation would in all probability lead to the discovery of prior similar incidents to the occurrence giving rise to an injury, constructive knowledge of such incidents is imparted to the property owner, and the owner may be liable for the damage resulting from the criminal activity.  (Phillips v. Perils of Pauline Food Production, Inc., 35 Cal.App. 4th 1510 (1995).

The HOA board cannot be allowed to justify negligence of this magnitude in the Trayvon slaying by claiming that they are just poor unpaid volunteers working for the community.  No!  HOA boards must be held accountable like all other government officials and entities.  Our public officials and entities are not given absolute immunity, and neither should that be given to HOA boards.

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!

The ‘voice of the people’ must muster against the Constitution – including HOAs

The Ninth Circuit Court of Appeals (CA plus) rejection of the voice of the people, Proposition 8, same sex marriage, demonstrates that acts and votes by the people must stand muster against the Constitution. And that was a majority voice. “By using their initiative power to target a minority group and withdraw a right that it possessed, without a legitimate reason for doing so, the People of California violated the Equal Protection Clause,” [Judge] Reinhardt said.

CAI— the national, pro-HOA lobbying trade group — and other pro-HOA stalwarts have repeatedly argued that the voice of the people, the members of an HOA, under a private agreement, expressing the alleged voice of the people because they live there, should prevail regardless of the Constitution. Their rationalization is, “better landscaping makes a better America.”

In effect, they ignore and reject the Constitution. In effect they argue for, encourage, promote and incite sedition against the lawful and legitimate government of this country and the states.

The government cannot meet the strict judicial scrutiny for the surrender of private property rights in order to allow current statutes to remain.  Our government cannot claim, “I didn’t know.”  There is no legitimate justification for the denial of the equal application of the laws and due process protections for citizens living in an HOA. Unless, of course, for national security reasons to protect against terrorism.

“and justice for all” not available by HOA due process clause

The Dec. 1, 2011 Condo Issues.com blog by Tyler Berding has, as it title, the long hoped for condition sought by homeowners: “And Justice for All.”  Except the author, Steve Weil, fails to make the case that such is the condition in HOAs with their disgraceful, commonly found  due process clause: “after notice and an opportunity to be heard.” Period. Citing almost identical California law only supports the legislature’s pro-HOA authoritarian regime and its denial of fundamental protections of individual rights and liberties. Apparently he never saw the 1979 Al Pacino movie by the same title.

Weil goes on to make his “expert” legal view by citing the Aliusi v Fort Washington Golf Club case, which is not a private government HOA dispute. He speaks of 1) revealing the name of the accuser, 2) the submission of evidence, and 3) makes a good point on the details required by a proper notice, or “indictment,” of wrong-doing. He buries the principles of “and justice for all” in his discussion of issues 1 and 2 above, but, reading between the lines, agrees with the right to confront witnesses and to see and challenge the evidence. Weil concludes with, “the reason for “due process” is to give one who is the target of a hearing a fair chance to defend him/herself.”

However, he makes the pro-HOA assumption, an ipse dixit, that the board, the “jury”, is indeed interested in justice, for if it truly were, it would establish an independent tribunal for hearings. “Giving the owner this opportunity helps reveal the real and relevant facts and thus also aids the board’s decision-making process.”

Finally, the author well understands the moral and ethical aspect of legitimate government and laws. He ends with the need for homeowner acceptance of HOA justice with, “an owner who feels they were given a “fair shake” is much more likely to agree with the board’s disciplinary decision and comply with the governing documents.” It is a long established doctrine, going back to the Greek philosophers, that the legitimacy of government depends on fair and just laws, and the fair and just enforcement of these laws. It is well established that HOA private governments are unjust and authoritarian in structure with a façade of democracy — just because a member can vote does not make an entity a democracy.

There are no due process protections for homeowners in HOAs that would pass judicial scrutiny. Arguments that buyers agreed to be bound to the CC&Rs and bylaws is a mockery of the facts, as the selling process is ripe with misrepresentation — false statements, half-truths, and “no negatives.” See Truth in HOAs disclosure poll — please vote your conscience.