Tag: CC&Rs

North Carolina: second battleground for people’s rights in HOAs

North Carolina is proud that it was the first state to vote for independence from Great Britain (Halifax Resolves, 1775).  Today, some 238 years later, another battle for independence from oppressive government has commenced in the NC General Assembly.  This time, it is the people subjected to authoritarian, oppressive private HOA governments who seek equal justice with regard to safeguarding their homes against HOA foreclosure.  This time, it is the citizens of North Carolina who seek a redress of their grievances against the NC General Assembly that has supported, and continues to support, special laws for special groups.

In every stage of these oppressions we have petitioned for redress in the most humble terms; our repeated petitions have only been answered by repeated injury. (Decl. of Indep.).

Today, the NC assembly has two HOA bills before it, HB 175 and HB 331:  one seeks to impose harsher terms for HOA foreclosure rights, HB 331, and the other seeks to remove the unconscionable right of HOAs to foreclose, HB 175.  While NC currently allows unconscionable nonjudicial foreclosure, HB 331 would now put the HOA in the same position of a Trustee holding a deed of trust with the “power of sale,” which amounts to an auction sale without having to go to court. This amounts to putting the HOA in the same position not only as the mortgage holder, but as the trustee as well.

The bill further proscribes new foreclosure procedures that supersede the general NC foreclosure statutes, just for HOA foreclosures. There is nothing in the detailed procedures contained in 4 pages of the bill that addresses any procedures for the homeowner to contest the amount of debt being foreclosed by the HOA.   What does the simple phrase, as used in the bill, “if not contested” mean?

On the other side of the battle-line, HB 175 does away with special foreclosure rights just for HOAs. And rightfully so!  The right to foreclose has been argued on the basis of the need to collect assessments – read HOA “taxes” — so the HOA can survive.  Well, this argument could apply to any nonprofit that seeks to foreclose in order to survive.  But, there are no such laws protecting these nonprofits from failure, is there? And these nonprofit, charitable, and educational corporations can argue that they provide a public service, while the HOA provides services to a private group of people, only its members.

Other arguments against HOA foreclosure rights include:

  1. The HOA has not advanced any hard funds like a bank, yet it is treated as a public entity with the right to foreclose on the nonpayment of “taxes.”  But, the Assembly does not feel the need for checks and balances on the HOA board for this grant of special powers.
  2. The US Supreme Court has held that punitive damages, which the foreclosure essentially amounts to, in excess of 10 times the actual damages, violated the 8th amendment’s prohibition on the infliction of cruel and unusual punishments.  For example:  Foreclosing on a $2,000 debt, of which $500 is the actual assessment debt, on a home valued at $140,000 amounts to a whopping 70 times the debt.
  3. Foreclosure discriminates and is essential an intimidation and punitive measure that is effective only on certain members and not others – only those who have paid their mortgage over the years so that the HOA can collect funds in excess of the existing mortgage.  Is it fair for the good people who have paid and paid not only their mortgage but their HOA dues over the years to lose their home?  I think not!  But, on the other hand we hear their self-righteous chant that it’s “unfair for others to pay for deadbeats” who are behind in their assessments.  There seems to be a huge disconnect here.

I cannot entirely blame the members for this attitude, because they have been deceived. They have never been told the facts about the possible adverse financial conditions that could lead to holding them legally obligated for the debts of others.  HOA membership is like buying into a small, privately held business that has limited ability to exit or to raise additional funds if needed.  Also, the HOA is similar to a partnership where each member is jointly and severally obligated for the debts of the HOA. 

If some members cannot meet their “fair share,” any deficiency will be made up from those who can afford to pay.  These additional funds, like now being needed by many HOAs, can only come from existing members, which can be imposed upon them through the courts.

Also, I cannot reconcile this obsession by members against letting the deadbeats get away with not paying their HOA debts that often amount to less than $2,000, but who say nothing when their HOA spends $5,000 – $100,000 in attorney fees  pursuing trivial lawsuits against minor and questionable violations of rules.  We see these cases in the media quite frequently.  Something is wrong with the attitudes of members in HOAs, definitely wrong!  The attitude of the HOA members themselves is discriminatory and unconscionable.

Which direction will the General Assembly take?  For the people by ending the unconscionable and discriminatory HOA rights to foreclose, or for the  defective HOA legal structure that denies homeowner protections?

Arizona bill tells HOAs that they do not control public streets

[Please note that a previous post on this bill, SB 1278, was posted in error, referring to restrictions on mandating HOAs in new subdivisions.  An Arizona bill, SB 2292, that would have made this a law has been stalled in the Legislature and will die there.]

Arizona Session Law Ch. 103 (2013), SB 1278,  reaffirms local municipality control of public streets within an HOA.  It is a groundbreaking bill because it relegates HOA private governments to a rightful secondary status and subject to public government laws.  In a disgraceful rejection of the Constitution, courts see no problem with upholding the common law Restatement of Property (Servitudes) as controlling over Constitutional and contract law.

It’s a simply worded bill:

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 33, chapter 16, article 1, Arizona Revised Statutes, is amended by adding section 33-1818, to read:

33-1818. Community authority over public roadways: Applicability

A. NOTWITHSTANDING ANY PROVISION IN THE COMMUNITY DOCUMENTS, AFTER THE PERIOD OF DECLARANT CONTROL, AN ASSOCIATION HAS NO AUTHORITY OVER AND SHALL NOT REGULATE ANY ROADWAY FOR WHICH THE OWNERSHIP HAS BEEN DEDICATED TO OR IS OTHERWISE HELD BY A GOVERNMENTAL ENTITY.

B. THIS SECTION APPLIES ONLY TO THOSE PLANNED COMMUNITIES FOR WHICH  THE DECLARATION IS RECORDED AFTER DECEMBER 31, 2014.

While homeowners must wait until 2015, this bill is a giant step forward to curtail the unconsitutional reach of private regimes where homeowners are outside the protections of the US and Arizona Constitutions.  It speaks to putting a clamp on The New America of HOA-Land. The bill took 5 years of dedicated effort by HOA champion and State Senator Nancy Barto before it became law.

HOAs had raised feeble arguments that could and still can  be easily addressed by seeking ordinance variances.  The HOAs and their hired-hand venders have refused to avail themselves of this avenue of redress, which is available to all citizens.  No, this 4 year long battle was a battle for power and control.  Which form of government controls your public streets,  the municipality of the HOA regime?

 

CAI files amicus brief in Illinois Supreme Court claiming HOA is like a government

I just read the Illinois CAI chapter’s amicus curiae brief in the IL Supreme Court appeal of the groundbreaking Spanish Court v. Carlson decision. The court held the HOA liable for violating contractual obligations to repair and maintain common areas, and homeowners could withhold assessments.

 Speaking about the need for timely payment of assessment to keep the HOA going, CAI argues,

The very real impact of the Second District’s decision is peculiarly analogous to our government’s need to collect taxes free from objection by individual taxpayers. Surely, if people could refuse to pay taxes and then defend against their collection based upon a claim that the government had been negligent in the maintenance of public spaces and providing services, the government would find itself in dire financial straits and unable to fulfill its obligations.

The other decision in this 2012 case prevented the HOA from using the draconian measure of “forcible entry” – occupy the unit — to get the member to pay right away.  CAI’s argument for the HOA was that forcible entry was a valid tenant-landlord action, but the court had held that not paying rent was also a valid landlord-tenant action.

The major selling argument for CAI’s being “a friend of the court” is its repeated claims to speak not only for the HOA, but for the members, too. CAI offers the same ol’ impression that it is an educational organization and not a business trade group that lobbies for the business interests of its members.  And as such, why is it defending the consumers of its services, the HOA?  We know why?  Does the Illinois Supreme Court know why?

The Institute’s [CAI] mission is to serve as a national voice for those involved in community associations, including homeowners, governing boards, service providers, and vendors. (My emphasis).

The Illinois Chapter’s mission is to provide education and resources to Illinois residential condominium, cooperative, and homeowners associations, as well as represent their interests and the interests of Illinois community association members on issues of legal importance. (My emphasis).

However, the brief is full of arguments supporting the HOA and it right to use the draconian measure of forcible entry, while denying the contractual right to withhold payments when the HOA defaults on its obligations.

See Court decisions: HOA Enlightenment Movement vs. the Dark Ages; CAI amicus brief

AZ HB 2371 allows unlicensed managers to represent HOAs in disputes

This video covers the Arizona Senate GE committee hearing on a bill that would allow unlicensed HOA managers to represent HOAs.  It shows the AZ legislature abdicating and supporting HOA-Land rule over democratic rule, and over the Constitution. It shows a banana republic, “I see no problems,” mentality.

See Arizona’s HB 2371 empowers unlicensed HOA property managers to avoid UPL.


Here are my comments at several points in the video.

My opening statement

Hi, I’m George Staropoli, also known on the internet as HOAGOV.   I am once again, reluctantly, before the camera with another HOA legislative documentary. My material comes from events at the Arizona Legislature, and from the legislators themselves.

Viewers will be alerted to the following comments at appropriate points in the video. They are provided to assist you in understanding of what’s really going on.  With this in mind, I strongly recommend that you take time to read my HB 2371 Commentary (on this date) on my website before continuing — the link is now being shown.

This video will also be posted to my HOA Constitutional Government website along with my detailed comments — the link is on the screen.

Let’s view the hearing . . .

Opening comments by Ugenti:

You just witnessed the sponsor’s “opening statement.”  Note her motive for the bill: Let me quote her, “Every year there is a plethora (many, many) of personal HOA legislation . . . as well as industry HOA legislation.”  She stated that she combined all those bills “working through a stakeholder process and allowing the stakeholder process to filter the proposed legislation   . . . representing a consensus from the AZ realtors, and AACM (AZ Association of Community Managers, the beneficiary of this bill).”  She further added “to spare the members from the agony of voting up or down on personal pieces of legislation.”

Now, what was she saying?  First the “personal” bills come from homeowners while the other legislation is “HOA industry legislation.”  She put the bills through a stakeholder process and used the process to filter the bills. She failed to say, however, that no homeowner advocates participated in this stakeholder filtering process, which was brought to light in her House GOV testimony, and not denied.

Ugenti said nothing  about fixing HOA problems and making HOAs better for everyone, especially the real stakeholders — the homeowners.  Not even entertaining an amendment to address issues of substance relating to constitutionality, fair and just laws, and of other homeowner concerns as emailed to her.

Now let me explain that in her earlier statement to the House GOV committee, she also said that she wanted to avoid any controversial bills.  But, think about it.  If there is serious opposition, based on authoritative sources, wouldn’t that that create a controversy?  So, her choice was to deny any opposing views, and only pick the special interest agenda – the stakeholder agenda.  Isn’t Ugenti failing to understand that these problems are not singular or personal to just one homeowner?  I mean, after hearing more of the same from others and the media, you would think she could take a hint!  Apparently not!

Homeowners appear to have been given short rift, and have been placed “at the bottom of the food chain,” defenseless and being gobbled up by everyone else.  And here I thought our representatives are supposed to represent the people, not the moneyed special interests.

Art. II, Sect. 2, of the AZ Constitution states, “Governments . . . are established to protect and maintain individual rights.”  Did I miss something?

Furthermore, in an outright act of favoritism toward the special interests, as shown in the video, Ugenti asked for questions that she or the stakeholders can answer.

Let’s return to the video . . . .

Homeowner email:

Please understand what has happened in this staged scenario with this constituent email, which the legislators viewed as having a “personal issue” with her association  —  homeowner owners only bring personal problems while the special interests deal with non-personal agendas.

With the several email dealing with issues and problems of substance, why was the single email chosen for airing before the committee?  Why? Because it serves to reinforce the sponsor’s false argument that homeowners only deal in personal issues, which justifies her leaving out the homeowners from serious, authoritative HOA industry specialists! There was no mention of the non-personal, substantive constitutional issues brought to the attention of the legislators in my emails and commentary, or in two other homeowner advocate emails that I have personal knowledge.  Nothing! Silence!  Not a word!

The legislators “hear no evil, see no evil, and speak no evil.”

Let’s return to the video . . .

 

Conclusion

You have now witnessed another episode of “the unspoken alliance of no negatives about HOAs.”  Did you hear any of the objections that were emailed to the committee? NO!   You did not hear that the bill would allow unlicensed HOA property managers to represent HOAs in small claims court, or before an administrative law judge at the Office of Administrative Hearings?   Did you know that even licensed paralegals are not allowed to represent others?  Did you know that the current law applies to all hearings from all agencies before OAH?

Don’t tell me that the legislators, AACM, CAI, or the sponsor of  HB 2371 don’t know about the 2012 AZ Supreme Court opinion on HOA managers  engaged in the unauthorized practice of law, and the decision against for numerous UPL violations against one CAI/AACM member?  C’mon!  The legislators were sent copies of these decisions.  The viewers of the hearing video would not think any such events against unlicensed mangers had occurred.  In court, hiding exculpatory evidence (evidence in favor of the defendant) is a crime!  But, apparently it’s OK in the legislature.

And rather than do what is just, fair and reasonable, and that is to require proper licensing for managers if they are being allowed to represent HOAs, HB2371 is silent on education!

What we have here is a special law for special private entities, without even a whisper of any legitimate justification.  The bill is an unconstitutional special law violating the AZ Constitution, ART II, section 13, which states, “No law shall be enacted granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which, upon the same terms, shall not equally belong to all citizens or corporations.”  In other words, no special laws for special people are permitted.

Section 32 states, “The provisions of this Constitution are mandatory, unless by express words they are declared to be otherwise.”   Where are the “express words” in this bill to override the Constitution?

What you have witnessed is the homeowner, the real stakeholder, has been cut out from the legislative process. What we have here is legislative support, cooperation, entwinement, and a symbiotic relationship between the state and the HOA, thereby making good cause for HOAs to be declared arms of the state, or state actors, subject to the 14TH Amendment protections.

It must still pass the Rules committee and the final vote of the entire Senate before becoming law.  Passing this bill into law would be unconscionable!  

WELCOME TO THE NEW ARIZONA OF HOA-LAND

 

Case study on how ‘stakeholders’ create dysfunctional HOA communities

Please read this unfolding case study of how the “stakeholders,” those who have put forth HB 2371, dominate the members of an upscale HOA in Scottsdale, AZ. HB 2371 calls for unlicensed HOA managers to represent HOAs in small claims court and creates an exception to state UPL laws.

In the Terravita Community Association, a vote was held this past Tuesday to amend the CC&Rs to permit the HOA to assess attorney fees against losing homeowners in an administrative hearing. (See HOA democracy at work:  dysfunctional adoption of amendments by minority vote). The unusual wording only permits the petitioner who filed the complaint to be awarded attorney fees if the prevailing party. But, the administrative hearings do not award attorney fees by law, and attorneys are not required. Yet Terravita sees the need to use an attorney and use member fees for this unnecessary expense.

Furthermore, as called to the attention of the Terravita board, the wording of the amendment would strip the existing contractual agreement that attorney fees be awarded in civil court, a more expensive procedure and subjecting the HOA to increased litigation costs.

In other words, state law be damned! The members have declared that they have agreed to ignore the law and to charge attorney fees as stated. And for only a few administrative petitions that have been filed. There was no debate, no discussion, no opposing views presented to the members. Just, “Here’s the ballot. Vote YES and return it.” And the members, like Colonel Potter in MASH who signed anything Radar put in front of him, voted in favor.

It should be noted that the CC&Rs amendment was passed by a minority of the members, only 571 members out of 1380 voted, a minority of 41%, and the amendment passed with just 514 votes or 37% of the membership. Minority voting was approved by the members in 2010, making this mockery of democratic principles possible. In 2011, the legislature had voted down a statute, proposed by the “stakeholders”, that would allow all HOAs to implement minority control of the amendment process — an unthinkable procedure allowing minority adoption of amendments to constitutions and charters.

Well, what does that say about that unassailable, inviolate “contract” that the special interests, those “stakeholders,” have been shouting?  It is meaningless when others can amend your agreement with changes that reasonable persons would not anticipate or expect.  And now in Terravita, by a minority vote. Apparently, it’s not an issue with the members of Terravita.

Tearravita Community Association is an upscale “resort” type HOA in Scottsdale, AZ, with a golf course, community center, and a security guard entrance. It has 1380 members, has a CAI/AACM management company, and a CAI attorney.