Tag: CC&Rs

Is Florida’s SB 596 a good bill? YES! Part 2

This post takes a closer look at some of the provisions of SB 596 with its intent “that the powers and authority granted to homeowners’ associations . . .  conform to a system of checks and balances in order to prevent abuses by these governing authorities.”  At the request of then Rep. Julio Robaina I testified at the Feb. 23, 2008 all-day legislative HOA hearing in Tampa, FL.  Public domain clips from this hearing, several of which can be found at the HOAGOV YouTube website, clearly show why checks and balances are sorely needed.

Aside from the introduction of effective enforcement provisions, the other changes of substance deal with regulating the conduct of what the HOA “can and can’t do.”  They are the payment of assessments, elections and proxies voting, and transfer of declarant control.

These substantive changes take the first 17 pages of the bill and is followed by non-substantive changes to 720.3024 creating the Ombudsman office and election monitoring, and HOA Study Council (720.3025). The other substantial changes include:  Section 720.3085, the “pay or die” section (my words), Section 720.306 dealing with meetings and substantial revisions to the elections and proxy voting processes, and changes to 720.307 relating to the transfer of power from the declarant that takes us to page 40 and the subsequent technical changes.

First, I will look at what I call the “pay or die” statutes regarding the continued payment of assessments even when payments are being disputed (720.3085(9)).  “Pay or die” meaning that if any homeowner doesn’t pay his assessments in a timely manner the HOA will die mentality.  I find this reprehensible, approaching an indentured servitude condition, and demonstrating a “close nexus” and a “symbiotic relationship” between the HOA and state, a “You do for me and I will do for you” relationship.  This statutory requirement to pay or else is sufficient alone to have the HOA declared a state actor!  Especially when the statutes also permit the HOA to deprive is member-residents of their rights, freedoms, privileges and immunities as citizens under the 14th Amendment.

However, the bill at least moves forward with checks on the unilateral foreclosure powers of the HOA.  It forces the HOA to prove the correctness of its claim, allowing the court to issue equity judgments that the HOA can’t add right, had sent the notices to the wrong address, refused to cash checks and/or held them past the deadline before cashing in order to demand late fees, just to name a few of the abusive practices.

Read the new subsection 720.3085(9) carefully.  A dispute of the amount would only require deposits of assessments during the legal action, and not the disputed amounts. The term “disputed” needs to be clarified to include abuse by the HOA as mentioned above and not limited to just amounts.  Of course, the justification for clauses (d) and (e), the HOA will die clauses, can be debated.

There are some issues with proxy voting (720.306), but the changes in the bill will serve the homeowners well. Subsection (9) deals with board elections and restricts members who are in arrears to the HOA cannot run for office.  That’s fair.  If a member cannot vote if he is in arrears, a member in arrears should not be allowed to hold office. Co-owners cannot both serve on the board, which give that unit excessive power.  I find the requirement to certify knowledge of the governing documents 90 after an election as preposterous and pro-HOA.  Want to be on the board?  Get educated first!

In regard to the transfer of power changes added in the bill serve to benefit the homeowner.  While not completely airtight, the term “in the ordinary course of business” would restrict the declarant from sitting on lots in order to retain control.  What is missing, as just occurred in Arizona, is the declarant’s modification of the governing documents before turning over its power to lock him in place for all practical purposes.  The usual introductory phrase, “notwithstanding anything in the governing documents to the contrary” should be added to the bill.

As for my views, the inclusion of effective enforcement authority overwhelming outweighs any concerns that I have mentioned above.

Is Florida’s SB 596 a good bill? YES! Part 1

This post is in response to several comments to Florida SB 596 creates a bona fide state HOA agency as necessary state oversight.   I read the 124 page bill and some general comments are in order. 

First, the bill contains just technical corrections, word changes, and division name changes in the last part, after page 40 or so.  The first part deals with the enforcement powers given to the division on condos and HOAs, and the next part deal with some regulatory changes – how HOAs are to operate. This is not a complete rewrite of Chapter 720 as occurred with California’s Davis-Stirling Act that regulates HOAs.

Second, as to changes in the law, opposing the bill because it does not contain a revision that you feel is necessary is not rational.  If the bill proposes changes that you do not like, try to get the sponsor to see it your way.  Others may not see it your way.  But this condition can be handled in subsequent bills.  However, if you feel that the bill’s “bad” seriously outweighs any “good,” then it is understandable that you may be opposed to the bill.

Third, as to some of the general objections made that the bill is too big and is not properly written legislation, I object.  I’ve read many bills from several states, and like law suit filings, the format and organization of the bills varies according to the existing structure and organization of a state’s statutes or code. 

The substantive changes in SB 596 deal with the new enforcement statutes, and some improved changes to the existing statutes.  They are not overwhelming compared to many pro-HOA bills that have been adopted by states.  I do agree that some changes really need to be fixed if they are to be consistent with the intent to protect homeowners, but not so serious as to oppose the bill. 

Fourth, it should be remembered, as Alexander Hamilton once said, “If there is no penalty [for] disobedience, the resolutions or commands which pretend to be laws will, in fact, amount to nothing more than advice or recommendation“ (Federalist Papers #15).  And that’s the overriding intent of this bill — accountability through enforcement. No more free rides for HOA boards. 

Homeowners should be concerned about a watering down of the enforcement provisions, as has occurred in other states, than with nit-picking other issues.  The enforcement is by the state, as it should be, and not out of the homeowner’s pocket.  Florida cannot say that not punishing violators of the law is good public policy.

And, in contrast to the “sky is falling” clamor, accountability will not do in HOAs.  This country has survived for some 230 years subject to the constraints and restrictions of the US Constitution. So can HOAs, but perhaps those who live off the unjust current state of affairs cannot?

Part 2 will contain some details of this bill.

Florida SB 596 creates a bona fide state HOA agency as necessary state oversight

As an alternate to making HOA governments a state entity, the creation and establishment of a bona fide, legitimate state agency established by an effective and meaningful enabling act will accomplish HOA reforms.  Couple the clear and precise intent to provide for checks and balances – meaning state oversight – with a dedicated head of the agency to carry out the agency’s mission, the independent HOA principalities will now be accountable to the state as they should be. 

Florida’s SB 596, sponsored by Senator Hays, proposes such a state agency over HOAs.  It proposes the following addition, among other things, to FS 720.302(2):

Having provided certain powers and authority to homeowners’ associations and in deed restrictions created by developers of mandated properties in residential communities, the Legislature recognizes that it is necessary to provide regulatory oversight of such associations in order to ensure compliance with federal and state laws and local ordinances. It is the intent of the Legislature to protect the rights of parcel owners by ensuring that the powers and authority granted to homeowners’ associations and in deed restrictions created by developers of mandated properties in residential communities conform to a system of checks and balances in order to prevent abuses by these governing authorities. (emphasis added).

From first glance, this bill creates a typical regulatory agency to make laws, set rules, investigate, handle complaints and enforce the law in courts. Among the provisions in this lengthy 124 page bill are penalties, fines, HOA cease and desist orders, and restitution enforceable in the courts by the agency, FBPR, and not having to be brought by the individual homeowner.  The proposed agency is not a “let’s study the problem” typical political tactic to do nothing by creating just an investigatory agency, which insults homeowners with its “we don’t believe you” attitude.    SB 596 is a very good step short of making HOAs state agencies.

It should be obvious to all that what will be argued as government involvement has been brought about precisely because of the abuse within the industry.  It is the failure of those “stakeholder,” specil interest moneyed vendors to police the industry.  It is the failure of the homeowners themselves to police their boards. And consequently, it falls to state governments to promote the general welfare and protect its citizens against abuse by a stronger faction within the community.

Furthermore, making this bill law will help keep the legislature from hearing HOA reform bills year after year.

In order to establish justice and fair play for all homeowners, it remains to insure that the laws are themselves fair and just. The pro-HOA laws must be amended or revoked.  The misguided doctrine that permits CC&Rs and servitude law to supersede constitutional law and contract law must stop. 

State legislatures and HOAs: When will they ever learn?

It should not come as a surprise to anyone that state legislators have allowed the HOA legal scheme, which they have played a strong hand in supporting, to deny the equal application of the laws for all, and the loss of constitutional protections. 

Free speech, flying the flag, due process, clean elections, etc. have been denied by HOA regimes.  Even noted CAI member attorney, Adrian Adams, speaking about HOAs in the Davis-Stirling online Newsletter article, Animal Sacrifice: “Just as private organizations can restrict free speech, they could conceivably restrict religious practices that negatively impact other members.

The denial is basis on the specious and false argument of a “consent to agree.”  A consent that falls dismally short of meeting Supreme Court judicial scrutiny for constitutionality. All the HOA has to show is an HOA interest for the benefit of the entire community and the courts will find no problem, just as if the HOA were a government entity that has some legitimate interest in the issue.

Furthermore, legislators accept the argument that any validly passed CC&Rs amendment binds everyone including any dissenters, regardless of its relevance, bearing, or reasonable expectancy of the restrictions being imposed on owners.  It’s the “general government interest” approach. It appears that public government attributes are ascribed to the contractual HOA, with the contractual terms are being ignored.  All reform legislation is an attempt to restore those rights wrongfully denied the homeowners, on a case by case, HOA by HOA, state by state basis. 

HOAs are not de jure governments — not state entities.   But, they are de facto governments operating under state legislature protections, but in contrast to all other government entities, without constitutional protections.  HOAs are unrecognized governments as is Cuba, but functioning nevertheless every day.

When will legislatures learn?  When will they undertake an independent study of HOAs with a truly independent “think tank”?  Like the Arizona State’s Morrison Institute for Public Policy.[i]  When?  Perhaps never, since they don’t seem to really want to know, and perhaps because they know what the findings will show.

[i] “Morrison Institute provides public policy research for government agencies, private associations, nonprofit organizations, and communities. In conducting research, analysts draw upon a variety of disciplines and methods: collecting original data through public opinion surveys, interviews, and consultation with experts; and analyzing existing information through review of published research reports, current legislation, and statistical data.”  (See http://morrisoninstitute.asu.edu/about/about-the-morrison-institute).

HOA democracy at work: dysfunctional adoption of amendments by minority vote

 

OPEN LETTER TO  TERRAVITA CA MEMBERS

Understand what a YES vote means for Terravita and your image as a citizen

Summary

The writer provides an example of how HOAs create a dysfunctional, un-American community, using arguments against the adoption of CC&Rs amendments on two occasions by the Terravita CA in Scottsdale, AZ.  In the first instance, amendments that violated Arizona statutes in regard to the content of the ballot were approved in 2010. One non-disclosed amendment made significant reductions in the requirement for adoption of future CC&Rs amendments, from a supermajority vote to a minority vote.  (In 2011, the Legislature defeated a CAI drafted bill that would allow for minority control of HOAs). 

The current amendment reflects an undisguised intent to punish one member for filing Office of Administrative Hearings (OAH) Petitions against Terravita.  Attorneys are not awarded fees at OAH because they are not required, yet the poorly constructed amendment removes attorney fee awards in civil court actions.  As a result of the approval of the non-disclosed “minority control” amendment in 2010, a minority of only 307  out of 1380 votes will be required to adopt this Board approved punitive amendment. 

Without any prior open discussion or debate, the distributed Absentee Ballot is one-sided in favor of the Board without opposing arguments. Adopting these amendments by a minority of members reflects an un-democratic and dysfunctional culture within Terravita.  The objectives of the “corporate state” are primary and individual property rights are secondary. Members are urged to reject the amendments.

Read the full letter here . . .