Tag: CC&Rs

When can a homeowner withhold HOA assessments?

In January the Illinois Supreme Court agreed to hear the condominium case, Spanish Court Two Condominium Association v. Lisa Carlson, No. 115342, that breaks with the commonly held legal doctrine that HOA members are not permitted to withhold paying assessments, even when the HOA has failed to make necessary structural repairs to the condominium. Courts have held that HOAs are subject to servitudes law foremost, and that the common good required for the survival of the HOA is paramount.  Therefore, payments must not be withheld in spite of any outstanding controversy.

 In Spanish Court the appellate court held that a HOA condominium owner could withhold paying assessments because the relationship between the owner and HOA was similar to that of a tenant and landlord.  The contract in both situations involved mutual promises of making payments in return for HOA services to maintain and repair the property.  The court held that under contract law the withholding of payments was permitted. This decision broke with precedent, bringing justice to homeowners against special laws for HOAs.

 The courts in other cases and in other states have held that the declaration of Covenants, Conditions and Restrictions (CC&Rs) are a contract to be interpreted as a contract, but then apply servitude law over contract law, and even over constitutional law.  (See the Restatement Servitudes, § 3.1, comment h and§ 6.13, comment a).

 For example, this holding stands in contrast to the January 2013 Illinois Supreme Court ruling in Poris v. Lake Holiday POA (No. 113907) that allowed HOA security personnel to stop and detain drivers who are violating HOA rules, and not municipality ordinances. Here, servitude law prevailed over constitutional law.  And, in 2007 the Twin Rivers HOA (NJ) free speech case (CBTW v. Twin Rivers, 929 A.2d 1060) held that the business judgment rule would protect homeowner rights, and that there may be some instances where constitutional concerns could come into play.

 The Illinois appellate court admitted to the fact that its opinion stood alone in favor of the homeowner and contract law when HOAs are involved.  If the preponderance of the cases is to control, then homeowners can expect an Illinois Supreme Court reversal of the appellate decision as it did in Poris. Homeowners and justice should not be too enthusiastic about the right to withhold assessments in HOAs.

The FEDS must restore law and order in secessionist HOA governments

The following is my comment to a post by Evan McKenzie on his Privatopia Papers blog, Las Vegas HOA corruption probe continues.  In his post, Prof. McKenzie raised the question of federal congressional hearings on HOAs.

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I think it is not only time for federal intervention, but well past the time.  There are a number of reasons.  First, as I wrote on my blog, people living in HOAs are still citizens of the US and of their respective states, not having waived or surrendered their citizenship. State legislatures have ignored not only the US Constitution and Bill of Rights, but their own Declaration of Rights as found in their state constitutions.  They have abdicated their responsibilities to their citizens.

Second, each state has its own set of laws governing HOA private governments creating a confusing and conflicting state of affairs as to what is law and what is not law. It depends on the state you are living in.  Only the federal government — and not a national lobbying organization nor a uniform laws commission that have been devoid of any homeowner representation —  can legitimately set a single, comprehensive set of laws governing the rights, freedoms, privileges and immunities of citizens. 

Third, a decision to settle the issue of  HOAs as state actors or as de facto government entities must be made, and that can only come from a decision by the US Supreme Court upon a complaint filed by the DOJ.  Can HOAs exist as a government entity?  Why not?  If not, then what? 

Understand, and do not be confused by the blurring of definitions, that the homeowners association is the governing body over a subdivision subject to a Declaration of Covenants, Conditions and Restrictions (CC&Rs).  The planned community development is the subdivision’s real estate “package” setting the amenities, housing, landscaping, common elements, and infrastructure that also mandates an HOA form of private governance. 

Fourth, it is an issue affecting some 20% of the US population, a percentage greater than the percentage either for the Hispanic or the Black minorities.

It’s time to bring unity to this country and end subdivision governance by HOAs that create independent principalities.  The planned community development can remain under a democratic form of government subject to the Constitution.  And that must come from Washington.  It can start with hearings to air those constitutional issues that have been avoided by every state and court for far too many years.

Creating dysfunctional communities through HOAs

The current (Feb. 18, 2013) slogan on the Arizona CAI chapter website reads, “Creating Better Communities Through HOA’s”.  I find this statement to be entirely incredulous!  It dismisses the reality of an authoritarian regime that denies due process and the equal protection of the laws to homeowners. It asserts that kangaroo courts; the absence of fair elections processes; and a consent to the waiver and surrender of rights by the by simple filing of CC&Rs with the county without explicit, written agreement by homeowners all create better communities.

Such an attitude by pro-HOA lobbyist organizations is the primary cause that creates not better communities, but dysfunctional communities.  And from attorneys who proclaim to be experts on HOAs, but who clearly are ignorant of constitutional law.  (A leader of the AZ chapter is now president of CAI’s “best and brightest” lawyers group, CCAL). With the rapid growth of HOAs across the country, supported and encouraged by the state legislatures in all states, the HOA legal structure reflects values of the greater dysfunctional society that is becoming The New America of HOA-Land. 

The values, philosophies and standards of democracy set forth in America’s organic law — the Constitution, the Bill of Rights, the Articles of Confederation and The Northwest Ordinance of 1787 — are rapidly becoming a myth, but are still being taught in our public schools and misleading the people of America. 

Our elected representatives must restore our communities and society to those fundamental principles supporting our democratic system.  And that can be now with those HOA reforms bills now before your state legislature.

Evan McKenzie on HOA consent, disclosure and realtors

“The typical homeowner has no idea what he is getting into — or what kind of HOA leadership he will be dealing with — when he signs a binding contract to move into an HOA-governed subdivision.”

So spoke internationally recognized and outspoken advocate for HOA reforms, Professor Evan McKenzie (author of Privatopia: Homeowners Associations and the Rise of Residential Private Government (1994) and Beyond Privatopia (2012)) in an interview for the Evansville Courier and Press (“Woman says HOA demanded microchip in her dog”).  And with respect to consent and the inadequacy of state mandated disclosure documents, McKenzie calls them “hopelessly inadequate.”  He is quoted as saying, “If (realtors) cared about this, which they don’t, they would be establishing policies.”

I’ve written on the topic of why people choose to live under HOA regimes and who remain silent. As a sample, there is the  oppressive structure of the HOA (Why do people harm others in HOAs?), the “unspoken alliance of no negatives about HOAs” (Good night and very good luck – the unspoken media HOA alliance, CA court upholds HOA suit against real estate agents), and the failure of state legislatures to uphold constitutional rights (Proposed “consent to be governed” statute, the “Truth in HOAs” bill).  One can conclude that the HOA institution is basically corrupt (as defined: impairment of integrity, virtue, or moral principle; perversion of integrity).

I have repeatedly argued for the education — the enlightenment — of the public, the media and state legislators as to the truth of the matter, understanding that the unspoken alliance is still at work.  Where there is a lack of understanding, actual or pretended, then educate as to the truth. Help others to understand.  And this enlightenment requires that advocates challenge, confront and expose the non-truths being continuously aired by pro-HOA special interests (Path to Victory at the Legislature).

Thank you Evan for your effort to enlighten others as to the reality of the HOA concept and its defects.

 

Read this highly informative article at CourierPress.com.

Why Homeowners Associations (HOAs) should and must be made political subdivisions

Simply stated, the following questions remain unanswered by state legislatures or HOA special interests:

1.      Can a legislature delegate its functions, not government services but functions, to private entities without oversight or compliance with the Constitution, as required of all government entities?

 2.      Can private parties enter into contractual arrangements using adhesion contracts and a constructive notice consent, which serve to regulate and control the people within a territory (an HOA), to circumvent the application of the Constitution?

Failing to address these fundamental questions has permitted HOAs to exist as de facto governments functioning as a second form of political government within the US. HOAs reject the US Constitution by their actions — forget the words.  Consider the following:

1.      “A rose by any other name is a rose.”  Taxes are HOA assessments; ordinances are rules and regulations; board is the legislature/city council; government agency is architectural control committee (ACC); citizens are members; judiciary is board/ACC; constitution is the CC&Rs; laws are the by-laws; etc.

2.      State legislatures have not enacted laws that delegate their legislative functions to the HOA private entities with oversight or constitutional compliance, as required by long standing legal doctrine. 

 [i]t is a well established theory that a legislature may not delegate its authority to private persons over whom the legislature has no supervision or control. . . .The legislature cannot abdicate its functions or subject citizens and their interests to any but lawful public agencies, and a delegation of any sovereign power of government to private citizens cannot be sustained nor their assumption of it justified.[i]

 3.      Furthermore, “Agreements violating constitutional provisions, county codes, and municipal ordinances are illegal to the same extent as agreements violating statutory enactments.”[ii]

4.      For those states with “home rule” laws that permit a wide range of independent law-making at the local level, the governing body remains subject to the constitution and laws of the state. 

5.      Attempts to enumerate the specific functions of an entity, which are unique to political governments and make them a government and not something else, like the archaic public functions test of 1946,[iii] fail as being contrary to constitutional law.  Compare these questionable definitive “public” functions to the legal requirements set forth in the laws of each state applicable to municipal governments.

6.      The unique factor that determines the broad concept of “government” is simply:  any governing body that controls and regulates the people within a territory is a de facto government. Take Cuba for instance, a de facto yet unrecognized government. Sadly, HOAs are not recognized either.

Modern states are territorial, their governments exercise control over persons and things within their frontiers. . . . A state should not be confused with the whole community of persons living on its territory [such as churches or corporations].[iv] 

7.      Several political scientists believe that HOAs should be declared as sui generis (one of a kind) private governments.  However, evidence based on existing HOA state laws have made HOAs an “arm of the government” (state actors) according to the US Supreme Court criteria:[v]   state protective statutes reflecting a cooperation with HOAs, through state support or coercion; by a symbiotic relationship, close nexus, or an entwinement between the state and the HOA.

In general, every special or private law which directly proposes to destroy or affect individual rights, or does the same thing by restricting the privileges of certain classes of citizens and not of others, when there is no public necessity for such discrimination, is unconstitutional and void.[vi]

8.      Defining HOAs as a sui generis entity without the requirement that HOAs are indeed bodies politic or state entities rejects the US Constitution. HOAs have seceded from the Union by virtue of their private contracts that do not hold the HOA governing body subject to the laws of the land. 

9.      CC&Rs are created by private parties, none being an actual member or resident of the subdivision at the time of formation, who enter into contractual arrangements that have been described by the courts as the HOA’s “constitution.”  The CC&Rs serve to regulate and control the people within a territory (an HOA), thereby circumventing the application of the Constitution and, specifically, the 14th Amendment equal application of the laws and due process protections. 

A statute infringes the constitutional guarantee of equal protection if it singles out for discriminatory legislation particular individuals not forming an appropriate class and imposes on them burdens or obligations or subjects them to rules from which others are exempt.[vii]

In order for a waiver of a constitutional right to be valid, it must be made voluntarily, intelligently, and knowingly and with sufficient awareness of the relevant circumstances and likely consequences.[viii]

 10.  The persistent and profuse arguments, by the HOA special interests, that HOAs are not governments can easily be seen as attempts to avoid HOAs being subject to constitutional conditions and restrictions that protect the people.  “In the context of community associations, the unwise extension of constitutional rights to the use of private property by members . . . .”[ix]

 

Further readings

Commentaries:                               

1.       The Legitimacy of HOA Governance

2.       AARP Amicus Curiae brief in Twin Rivers NJ constitutionality suit

3.       The Constitutionality of state protected homeowners associations

4.       Why haven’t the 1983 HOA problems of America II been resolved?

5.       HOA Case History: state actors or mini/quasi government

 

General reading:

1.       Beyond Privatopia: Rethinking Residential Private Government, Evan McKenzie, Urban Institute Press, 2011.

2.       Establishing the New America of Independent HOA Principalities, George K. Staropoli, Starman Publishing, 2008 (ISBN 978-0-9744488-3-1).

3.       Neighbors AT War! The Creepy Case Against Your Homeowners Association, Ward Lucas, Hogback Publishing, 2012.

4.       Privatopia: Homeowners Associations and the Rise of Residential Private Governments, Evan McKenzie, Yale Univ. Press, 1994.

5.       Villa Appalling! Destroying the Myth of Affordable Community Living, Donie Vanitzian, Villa Appalling Publishing, 2002.

                                               

Legal Authority Notes:

[i]    Emmett McLoughlin Realty v. Pima County, 58 P.3d 39 (2002).

[ii]   17A Corpus Juris Secundum Contracts § 213.

[iii]  Marsh v. Alabama, 326 US 501 (1946); Shelly v. Kraemer, 334 US 1 (1948).

[iv]  “State,” Black’s Law Dictionary, 7th Ed.

[v]    Brentwood v. Tennessee School, 531 US 288 (2001).

[vi] 16B American Jurisprudence 2d Constitutional Law § 874.

[vii]  16B American Jurisprudence 2d Constitutional Law § 871.

[viii]  16 Corpus Juris Secundum Constitutional Law § 82.

[ix]   Community Associations Institute (CAI) amicus curiae to NJ Appellate Court in CBTR v. Twin Rivers HOA, 890 A.2d 947 (2004).