Tag: coercive power

HOA attorneys support coercive HOA laws over member justice

Yesterday, June 24, I attended a ZOOM meeting with a number of attorneys from across the country who were debating 1) whether or not new HOA laws should be applied retroactively to all HOAs even those that were formed prior to the effective date of the new law, and 2) should draft versions of the HOA minutes, from member and board  meetings, be made available to the members and when. 

The general attitude was that new  laws should be made retroactive for the “comfort” of judges and BODs — too many old laws was a pain. But America has existed for over 234 years  with restrictions on ex post facto laws, and more generally, restrictions on civil retroactive laws. While the consensus would allow for individual pre-law HOAs  formed prior to the effective date to opt-out of retroactive application, failure to do so would automatically subject the HOA to the new version of the law a few years later, regardless. The rationale was that the HOA had an opportunity to remove itself from the law.  The general consensus was to adopt the retroactive law in spite of the fact that it was coercive in nature.  HOAs were promoted with this privacy aspect and objections to top-down government interference of one size fits all.

Allow me to explain, if an act, either by the HOA or by  member,  was valid at that time a subsequent version of that law would apply.  Applying the new law could make such a pre-law act invalid with potential financial consequences for the member.  For example, putting a then valid storage bin in the backyard is now invalid if over  a specified footage, and must be removed at the member’s expense.  Or forced to paint his home because the new law gave the HOA permission to require new painting for the good of the community. These ex post facto laws, like the ex post facto HOA amendments, make your alleged contract at closing a mere piece of paper and your rights surrendered to the whims and views of your neighbors.  These retroactive laws are coercive and do not serve member justice nor reflect a home rule doctrine where deference is given to the local community.

In regard to draft minute access, concerns centered around practicability and protecting the HOA, even though many states have laws allowing for verbatim videoing of these meetings — a growing trend toward transparency. I called to their attention that making draft versions available served as a check and balance on BOD conduct and that it would make the BOD’s actions more circumspect. I also raised my concern with regard to the timing of draft and approved minutes since delays of over a  month are an obstacle for effective member response – limiting any after the fact opposition.  In general, it was felt that the member should attend these meetings if concerned, which also raised practicality issues.  There was substantial support  for draft availability.

Overall, the attitude was toward protecting the HOA over BOD transparency.

Why aren’t HOAs held as state actors based on USSC criteria?

Allow me to congratulate Deborah Goonan on her fine article, “USSC rules in favor of property rights — how will this affect HOAs?”[1], on constitutionality as applied to HOA-Land.  I also congratulate her for venturing in into the long standing, highly controversial and muddied waters of state actor legal doctrine.

State actor doctrine is too deep and complex to be fully addressed in a blog. I have followed this is for over 15 years having read most of the cases cited by the USSC.  Consequently, I will state some views that I feel will help her subscribers/readers to better understand a broader picture of this doctrine.

First,  the 2 fairly recent USSC cases, Knick and Manhattan, mentioned in Deborah Goonan’s post well illustrate the loss of homeowner constitutional and fundamental rights resulting from the fact that HOAs are not subject to the Constitution as are all other governmental entities; and that state legislatures have refused to make it so.

Second, the rationale for the public policy lack of vigorous pursuit of state actor doctrine in the case of the well documented and pervasive conduct of HOA boards is a slippery-slope fear factor.  This fear is stated by the USSC in Manhattan as:

Consistent with the text of the Constitution, the state-action doctrine enforces a critical boundary between the government and the individual, and thereby protects a robust sphere of individual liberty. Expanding the state-action doctrine beyond its traditional boundaries would expand governmental control while restricting individual liberty and private enterprise. We decline to do so in this case.

And so, interfering and applying state action to HOAs appears to be avoided to protect your individual freedoms.  I’m somewhat confused. Are you?  Adopting this state policy with respect to HOAs is highly misguided!

Third, although Goonan quotes the USSC use of 3 requirements for state action, the Court did reference the 2001 Brentwood v. Tennessee Secondary School[2] opinion that contained a summary of the criteria the USSC set for determining state action.  Omitting the obvious “exercising exclusive government functions” that requires no further discussion I listed these state actor criteria:

    1. From the State’s exercise of “coercive power,”
    2. when the State provides “significant encouragement, either overt or covert,”
    3. when a private actor operates as a “willful participant in joint activity with the State or its agents
    4. when it is controlled by an “agency of the State,”
    5. when it has been delegated a public function by the State
    6. when it is “entwined with governmental policies,” or
    7. when government is “entwined in [its] management or control.”

In regard to the institutionalization of HOAs, or as I refer to it, HOA-Land, the above tests 1 – 3, and 5 -6 would provide clear and convincing evidence that the policies of state legislatures, as demonstrated by the enacted pro-HOA laws, have created HOAs as state actors who willingly undertake state actions

Fourth, As you can see, there is plenty of “ammunition” to argue that HOAs are state actors.  By the simple use of the word “may” in the statutes raises the highly controversial question of: Are HOAs state actors? “May” is commonly found as “the board may set the time of the annual meeting,” or “may charge . . . .”  The overlooked impact and consequence of this word is to legalize activities and actions that were all-to-fore not legal rights granted to the HOA.  They are now made a legal activity, if your BOD so chooses.[3]

That’s easily “supportive”, “cooperating,” “encouraging,” and “entwined” in both public policy – more taxes from high value properties – and in the “management and control” of the HOA as we see how state laws mimic the governing documents, thereby legalizing them.

Fifth, HOAs have been described as sui generis – one of a kind.[4]  Sui generis presents a view of HOAs as private government principalities supported by your state legislature and is used to justify special laws for a special organization, the HOA. Existing constitutional law is inadequate to support this model of local governance and so, in violation of US and state constitutions,  we see all those HOA/PUD/condo “Acts” in almost every state.  These Acts constitute a parallel supreme law of the land with sharp contrasts to the US Constitution.

 

Finally, state actor doctrine can be a very powerful tool in the hands of HOA reformers, but the public policy of a feared slippery-slope defense must be overcome. It can be overcome IF advocates make a strong case that this public policy as applied to HOA-Land is misguided; and the failure of the courts to apply state actor doctrine harms the people living in HOAs.

In the name of justice, a serious look into this doctrine with regard to HOAs must be undertaken by independent think tank political scientists under the auspices of a Congressional mandate. Like setting up and independent counsel to conduct the investigation into HOA-Land.

 

References

[1] “USSC rules in favor of property rights — how will this affect HOAs?”, Deborah Goonan,  IAC, July 15, 2019. Contains links to the 2 USSC cases.

[2] Brentwood Academy v. Tennessee Secondary School Athletic Ass’n, 531 U.S. 288 (2001). I have made frequent reference to Brentwood in my Commentaries in HOA Constitutional Government.

[3] “Are HOA state actors created by statutory use of shall/may?,” George K. Staropoli, HOA Constitutional Government (April 2019).

[4] A non-inclusive list: Tyler P. Berding, “The failure of the HOA to protect against obsolescence”; Steven Seigel, attorney who analyzed Twin Rivers NJ decision, Wm & Mary Bill of Rights Jnl 1998.

Do state HOA Statutes Establish HOAs as State Actors?

Do state laws coerce homeowners and support HOAs? Are UCIOA and other HOA statutes establishing state actors?

The New Jersey Supreme Court appears to headed for a decision soon on constitutional issues for homeowner rights — the Twin Rivers case. Steven Siegel, whose very important paper on constitutionality and private governments is referenced in Note 1, has also co-authored the Twin Rivers AARP amicus curiae brief for the homeowners.

The US Supreme Court has stated criteria for state actors/actions beyond the antiquated “public functions” test based on the 1946 company town model. In my view, many state statutes easily satisfy one or more of these criteria and clearly establish HOAs as state actors.

 

Our cases have identified a host of facts that can bear on the fairness of such an attribution. We have, for example, held that a challenged activity may be state action when it results from the State’s exercise of “coercive power,” Blum, 457 U.S., at 1004, 102 S.Ct. 2777, when the State provides “significant encouragement, either overt or covert,” ibid., or when a private actor operates as a “willful participant in joint activity with the State or its agents,” Lugar, supra, at 941, 102 S.Ct. 2744 (internal quotation marks omitted). We have treated a nominally private entity as a state actor when it is controlled by an “agency of the State,” Pennsylvania v. Board of Directors of City Trusts of Philadelphia, 353 U.S. 230, 231, 77 S.Ct. 806, 1 L.Ed.2d 792 (1957) (per curiam), when it has been delegated a public function by the State, cf., e.g., West v. Atkins, supra, at 56, 108 S.Ct. 2250; Edmonson v. Leesville Concrete Co., 500 U.S. 614, 627-628, 111 S.Ct. 2077, 114 L.Ed.2d 660 (1991), when it is “entwined with governmental policies,” or when government is “entwined in [its] management or control,” Evans v. Newton, 382 U.S. 296, 299, 301, 86 S.Ct. 486, 15 L.Ed.2d 373 (1966). (See note 1).

I believe that many elements of state laws can be shown to create HOAs state actors. Many phrases in law are simple pro-active statements, such as the words “constitute” or “create”, as in “acceptance of the deed constitutes acceptance of the CC&Rs” or “creates a lien on the property as of the date the assessment is due”. In other phrases we run into the issue of state mandates. For example, the word “shall” in statutes is interpreted to mean “must”, and the word “may” does not constitute a command or order, but a just an option. Therefore, it has been argued, a statute is not a legislative mandate if it contains the word “may” rather than “shall”, as many HOA statutes contain.

But, let’s examine this a little more closely. The state has the right under its police powers to regulate our activities, but it must justify its interference as a legitimate government interest. And the tests for “legitimate government interest” become more severe as the state attempts to take away our fundamental rights. For example, the state restriction on our rights must not be one of convenience for them, but of necessity because the state’s objective could not otherwise be accomplished. I have not seen any such justifications in any state HOA Acts or statutes, not even in the various UCIOAs.

If the law is silent on an issue, the legality of the issue is open for a decision. If the law says “shall” or makes what I referred to as a “simple pro-active statement”, then the answer has been given quite clearly. If the statute says “may not”, then it is also quite clear. Now, if it says “may”, isn’t this a legalization of the act and a permission for a person to act in such a manner? While it is not the same as a mandate by the state, isn’t it a legalization of the act? And as such, isn’t the state “sanctioning” the act, which can be viewed as state support for the action, such as fining a homeowner without providing proper due process protections by independent tribunals? Otherwise, if the state disapproved or did not support the action, the statute would have read “may not”. But, it said. “may”.

I argue that all these “mays” are a clear indication of state support, encouragement and coercion in favor of HOAs that deny homeowners their fundamental rights, and make HOAs state actors.

1. Brentwood Academy v. Tennessee Secondary School Athletic Ass’n, 531 U.S. 288 296 (2001). (See generally, Steven Siegel, The Constitution and Private Government: Toward the Recognition of Constitutional Rights in Private Residential Communities Fifty years After Marsh v. Alabama, Wm & Mary Bill of Rights J., Vol. 6, Issue 2 (1998)).