Tag: constitution

Letter criticizes CLRC rewrite of Davis-Stirling (HOA) statutes

Below are excerpts from my January 30th  4-page letter to CLRC.

“I read Ms. Vanitzian’s LA Times column of December 29, 2013, Attempt to Simplify California Condo Laws Ends in Confusion and your response contained in MM14-09. As you may be aware I commented on her article in two parts. . . .  If you are looking for facts, allow me to introduce a few.  I recall Susan French’s study in 2000 (H-850), at the request of CLRC, that started the ball rolling ‘to clarify the law [and] establish a clear, consistent, and unified policy with regard to formation and management of these developments.’ 

“Still, much of her report aside from the need for clarity, Part II, sections C and D, called for protections of homeowner rights and a bill of rights statute in the rewrite of Davis-Stirling. . . .  Whatever happened to the proposed ‘Chapter 2, Members Rights, Article 1, Bill of Rights,’ (MM06-25)?

“There was my letter (MM05-25s1) arguing for the need for this equal rights chapter, to which you answered with, ‘Beyond the scope of this project’ even though French had recommended protecting homeowner rights. . . . It is obvious that this rework by stakeholders without meaningful homeowner input easily leads to clarifications and simplifications as interpreted solely by this group, from its perspective, which would not protect the homeowner. The new D-S cannot be seen as the result of an unbiased effort and with integrity.

“The approach used by CLRC has the smell of corporatism, the rule by a handful of corporations.  It is a form of government that flows from fascism as defined by its founder, Italy’s Benito Mussolini, Il Duce.  ‘Fascism combats the whole complex system of democratic ideology, and repudiates it . . . . Thus understood, Fascism is totalitarian, and the Fascist State . . . interprets, develops, and potentiates the whole life of a people.’

“CLRC responded with, ‘However, a bill of rights would probably go beyond the substantive rights that are currently provided in the law’ (MM05-03), but in the next sentence dismissed the US Bill of Rights as non-existent substantive law. The obvious answer – as there were a number of published books, papers and journals from nationally recognized researchers and political scientists relating to this issue – was to recognize that indeed HOAs were de facto governments and to subject them to the Constitution.”

****

The cry “no government interference” while accepting HOA private government interference is irrational.  This acceptance of undemocratic, authoritarian HOA government with less protection of individual rights and freedoms than public government is a rejection of the Constitution, the Declaration of Independence, and the Bill of Rights. These people have lost their common sense!

Neither CLRC nor CAI will go down in history as Heroes of the American Republic, but perhaps may be remembered as Heroes of HOA-Land. 

The complete critical letter can be found at MM14-09s1.

It’s time for others to act for HOA reforms

After 13 years as an activist for HOA reforms across the country I am withdrawing my active involvement in HOA issues. However, I will remain an observer of events, commenting from time to time on the broader constitutional issues. 

Over these years I have provided a wealth of information and legal authorities as a source of materials for HOA reform legislation and in dealing with state legislatures.   A summary of the issues that I consider critical at this turning point in HOA reform advocacy can be found in the PDF file, HOA Common Sense: rejecting private government.  One point that I make is why are HOAs allowed to escape constitutional compliance when even every state’s home rule laws require compliance?

A final comment:  When these broad constitutional issues are ignored as justification for reform, then advocates have accepted the legitimacy of the HOA scheme and pro-HOA laws.  This acceptance of the “robber barons” reduces the debate to a wrongful equality of rights argument, to a “we must treat both sides fairly.”  As history has shown, the advocate generally loses.

HOA Common Sense, No. 9: HOA governments in fact

HOA Governments in fact, No. 9

I believe all HOAs should be required to have a sign at the main entrances to the subdivision that clearly states: “You are now leaving the American Zone.”[1]

De facto governments.

Is the HOA a mini or quasi government?  Is it a state actor? Or is it just another business with special privileges?  I believe we all can agree that the status of HOAs is that they are de facto – they exist — governments, not recognized by the state under municipality statutes just as Cuba is a de facto government not recognized by the US. 

What is the uniquely defining attribute of a government that distinguishes it from a business or non-profit charity?  Understand that all the functions that the CAI lawyers claim to make the HOA a business can also be used to claim that businesses are governments. Think about it.  Yes, they share the same functions – taxes/assessments, fines/penalties, courts/hearings, ordinance/rules and regs, etc. But the basic criterion is that “modern states are territorial, their governing body exercise control over the persons and things within their frontiers.[2]  This alone singles distinguishes a government from a business or charity.

Black’s Law[3] attempts to clarify what is commonly accepted as a political government: A government is “The principles and rules determining how a state is regulated.”  A nation is “a community of people inhabiting a defined territory and organized under an independent government; a sovereign political state.” And politics is “The science of the organization and administration of the state.” The general understanding uses the terms ‘people,’ ‘territory’, ‘regulation,’ and ‘state/nation’. 

Now, I know the above may be confusing, but the skilled HOA attorneys will do their parsing and word game analysis (depends on what the meaning of ‘is,’ is) of these definitions seeking to create reasonable doubt as to what the people know to mean as “government.”  You know, such as the argumentative asinine statement that, is the owner of a football stadium that regulates the people in the stadium a government?  

I prefer the simpler, down to earth answer given by Justice Stewart regarding what is pornography,

“I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description [hard-core pornography]; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it . . . .”[4]

It is interesting to note that David Wolfe, a founder of CAI back in 1973, had the following to say in 1978 when CAI debated the status of HOAs as a government.

One legal opinion offered in support of construing CAs [HOAs] as a government noted that the Supreme Court had required constitutional procedures in a ‘company town’ and with ‘political parties’; from this view CA actions were ‘public’ in a constitutional sense. . . . Wolfe concluded that a new definition of a CA as a government was needed to bring about Lewis Mumford’s vision of a democracy.[5]

And long ago in 1994 Prof. McKenzie wrote, “HOAs currently engage in many activities that would be prohibited if they were viewed by the courts as the equivalent of local governments.[6]

The defective legal scheme

Please understand that all substantive (as opposed to changes to laws affecting HOA operating methods and procedures) reform legislation is an attempt to restore your rights, freedoms, privileges and immunities as citizens.  They were taken away by the HOA biased laws that granted the HOA power to deny or did not prohibit the HOA from denying your constitutional rights.  Yet, even the most independent local control over people found in a state’s home rule statutes requires allegiance to the US and state constitutions.[7]  Why do HOAs get special laws?  Why are they exempt from the Constitution?  It doesn’t add up!

You may ask, What for?  The answer is obvious: for the survival and acceptance of a defective legal scheme that seeks to impose authoritarian governments on unsuspecting people. If boards and officers are to be held accountable, who would volunteer?  Well, why not pay them a salary so accountability can be demanded?  WHAT!!!  If they are going to be paid and held accountable, then members have a right to demand qualified board members and not any ole body who would like to be on the board.

Wait!  Wait! I can see readers recoiling in horror.  “The horror . . . the horror . . .” (from the movie Apocalypse Now!).   So, boards are generally not paid and are volunteers, without any special training.  At least the legislature and city councils have tradition and long established rules and procedures with staff to assist the law makers, but HOAs are “on the fly” – on the job,  decide as you go.  No wonder we have all these problems with capable governance.  And the volunteers and the special interests lament, “but we are volunteers helping to make a better community. You can’t hold us responsible and accountable. We need a free reign.”  Yeah!  Right!  Free to create havoc!

All because the mass merchandising of the HOA concept could not be sold under such conditions that demanded prudent accountability.

And, the concept could not fly without mandatory members and compulsory dues.  The founders of the HOA scheme who wrote the HOA “bible” in 1964 well knew this. And in order for the HOA to legally bind subsequent home owners the founders had to resort to servitudes running with the land, or equitable servitudes/covenants.[8]  

But, the equitable servitudes doctrine brought a host of ills detrimental to the US Constitution and the Bill of Rights, which very disappointedly the courts have held superior to the supreme law of the land.[9]  They have allowed for the establishment of the New America of HOA-Land with communities governed by de facto authoritarian, private government regimes known as HOAs.

HOA member Declaration of US and State citizenship

All that is needed to have HOAs rejoin the Union is for state legislatures to pass a bill that states:

Notwithstanding anything to the contrary in the governing documents, or other laws to the contrary,

Wherefore, the members of the association, having not waived or surrendered their rights, freedoms, privileges and immunities as citizens of the United States under Section 1 of the Fourteenth Amendment, and as citizens of the state within which they reside, the CC&Rs or Declaration for any planned community, condominium association or homeowners association shall state, or be amended to comply, that, “The association hereby waives and surrenders any rights or claims it may have under law and herewith unconditionally and irrevocably agrees 1) to be bound by the US and State Constitutions, and laws of the State within which it is located as if it were a subdivision of the state and a local public government entity, and 2) that constitutional law shall prevail as the supreme law of the land including over conflicting laws and legal doctrines of equitable servitudes.

PS.  I apologize for the intrusion by WordPress to have added underlines to certain words.

References

[1] As contained on the On The Commons website, Shu Bartholomew, Producer and Host (http://onthecommons.us).

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

[3] Id.

[4] Jacobellis v. Ohio, 378 US 184 (1964).

[5] Quoted in Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing, Donald R. Stabile (Greenwood Press, 2000), pp. 164 -167. Lewis Mumford was a 1920s utopian community promoter.

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

[7] A legislature’s grant of autonomy for local government to act without legislative approval on acceptance of certain terms (Blacks’ Law Dictionary, 7th Ed.); “as long as they obey the state and federal constitutions” (Home Rule, Wikipedia (http://tinyurl.com/nyqpd2a).

[8] The Homes Association Handbook, Urban Land Institute Technical Bulletin #50 (1964); See my analysis at Analysis of The Homes Association Handbook.

[9] Most notable are: Inwood v. Harris, 736 S.W.2d 632 (Tex. 1987) (Texas Constitution overridden by covenants running with the land); Villa de Las Palmas v. Terifaj, 90 P.3d 1223 (CAL. 2004) (amended restrictions are binding on all in violation of ex post facto prohibition doctrine); Committee for a Better Twin Rivers v. Twin Rivers, 929 A.2d 1060 (NJ 2007) (fundamental rights denied and business judgment rule is sufficient protection of homeowner rights).

 

 

 

HOA Common Sense, No. 8: Draconian punishment and intimidation

Draconian punishment and intimidation, No. 8

The Tennessee appellate court in Brooks found “that the foreclosure sale price shocked the conscience of the court.[i] A home valued at over $321,000 was foreclosed for just $12,800 of which $6,734, more than half, went directly into the attorney’s hands.[ii]  That’s more than 25 times the “damages” to the HOA. The Charleston Regional Business Review reported that the average foreclosure debt was about $4,500 and the average home value foreclosed was about $160,000, or 36 times the debt.

An award of more than the 10 times for punitive damages was held by the US Supreme Court in State Farm v. Campbell[iii]  to be a cruel and unusual punishment in violation of the 8th Amendment.  This right to foreclose in unjust and draconian, taking away a person’s home and leaving him with nothing!   It is unconscionable and discriminatory as explained below. Furthermore, HOAs assessments are considered a consensual lien and are exempt from homestead protections. (See paper No.4 above, speaking about your legitimate consent to be bound.)

With respect to HOA foreclosures, we once again discover that HOA assessments are being treated the same as public government taxes and property assessments — must be paid and your property can be foreclosed for non-payment. Both taxes and HOA assessments are not related to hard cash payments for which the lender is entitled to foreclosure to protect his loan, nor are they based on any specific transactions, like payments for garbage collection, for electricity, or for police protection, etc. 

Why should the HOA be given this right when other entities do not have foreclosure rights, and when there are other available collection methods — garnishment, sale of other property, etc. — to collect on bad debts?  Other entities, both public and private, must face the possibility of failure or bankruptcy – there are no guarantees in life.  A standard accounting procedure, and used by CAI Central in its financial statements, is what is called “Bad debts reserve” or “Reserves for bad debts,” which is an annual estimate of uncollected assessments.

Using common sense, we can understand the value to the HOA to “evict” the non-payer and to replace him with a new owner who will make timely assessment payments.  That’s logical. There is very little opportunity to raise additional funds for expenses except by means of increased assessments on other members, the “it’s not fair” argument. While the end of the foreclosure action has a rational value, the means is highly suspect. 

In addition to the arguments of special rights as enjoyed by public entities and an unconscionable punishment, HOA foreclosures are discriminatory.  The following quote is from an Arizona CAI attorney:

Assuming foreclosure eligibility requirements are met, whether foreclosure is a viable option depends largely on what other liens, interests, and encumbrances burden the subject property. . . .If the property is not subject to a mortgage or there is a minimal first mortgage, foreclosure is a viable option as there is likely equity in the property. . . . Even if the property is subject to a recorded first mortgage and there is no equity in the property, foreclosure still may be a viable option. Sometimes the threat of foreclosure alone is enough to get a delinquent owner’s attention. . . . the owner will often pay the association in order to keep his/her home.[iv]

This is an admission of the discriminatory nature of the foreclosure process — works only if the homeowner was an upstanding citizen who had paid his mortgage and assessments for many years, and had created all that equity that the HOA now seeks. It is also an admission of the punitive and intimidation motives of the HOA — “the owner will often pay the association in order to keep his/her home” — without facing the reality that “you can’t get blood from a turnip”! The HOA attorneys promote the view that the non-payers are scofflaws and deadbeats who are seeking to stick it to the good, assessment paying members. “It isn’t fair!” goes the cry.

What the foreclosure process does do, and is not mentioned by the CAI attorney, is that the attorney can claim fees many times in excess of the amounts owed the HOA. So, who really benefits? Certainly not the homeowner who loses everything with this draconian punishment. And there are other methods available to collect bad debts, and if not viable, well, then that’s the cost of doing business.

Is this good public policy to treat homeowners facing hardship not of their doing — take away their home and leave them with nothing?  Legislation must be put into place to protect against intimidation and wrongful foreclosure, and to ensure a strict enforcement of the foreclosure process, especially requiring documentation and an exact specification of the undisputed debt owed.  If the state legislatures truly believe that HOAs are the next best thing to Mom’s apple pie, they should be ready to ante up and financially support HOAs facing financial difficulties.  Perhaps in this way homeowners will get the accountability to the state and the requisite oversight of HOAs.

As to the broader solution, there is a just and compassionate legal solution to this state of affairs that can be put into place quickly and effectively. Allow the homestead exemption for HOA assessments!  If a state has no homestead protection, simply enact one ASAP!  This is a fair, compassionate, and sensible solution.  I anticipate strong opposition to this proposal, but I remind the opponents to be prepared to address the unclean hands of the HOA as summarized in this Common Sense series of papers.

PS.  I apologize for the intrusion by WordPress to have added underlines to certain words.

References

HOA Common Sense, No. 7: boards can do no wrong

HOA Boards can do no wrong, No. 7

In shocking contrast to our common sense and all that has been said about the need to protect the people from government, state legislators see no need for effective and meaningful enforcement that average people are transformed into angels when they become board members.  James Madison must be in a rage, wherever he may be, at this slap at his advice that, “If men were angels there would be no need for government.”

State legislators have said that the complaining HOA member signed a contract and is now trying to get out of it because he now thinks it’s a bad contract, and that he will not support any such legislation. Furthermore, anyone who didn’t read the contract or get a lawyer is not too smart and that he, the legislator, would have never done that.  What do you think of that attitude in light of the above papers 3 – 6?  And don’t forget that you are being held to have agreed to be treated in such a demeaning way by your elected officials.

Where are the fair and just laws argued for in paper No. 4?  They are not there!  Instead, we have special laws for special entities, the HOA, without a necessary and compelling government interest to deprive citizens of the rights and freedoms.[i]  What a travesty of our American way of life! 

You may ask, What for?  The answer is obvious: for the survival and acceptance of a defective legal scheme that seeks to impose authoritarian governments on unsuspecting people. If boards and offers are to be held accountable, who would volunteer?  Well, why not pay them a salary so accountability can be demanded?  WHAT!!!  If they are going to be held be paid and held accountable, then members have a right to demand qualified board members and not any ole body who would like to be on the board.

Wait!  Wait! I can see readers recoiling in horror.  The horror . . . the horror . . . (from the movie Apocalypse Now!).  Consequently we are told that we must accept the lunacy that all volunteers can do no wrong and if they do, well, that’s your fault for electing them!  And let’s not forget that the board has hired hands to protect them – the attorney and manager.  At your expense.  The homeowners pay for the board’s wrongful acts.  

So, why aren’t the members more involved in watching over the acts of the board?  Well, maybe it would help if the laws backed the members up with effective and practical means to enforce HOA wrongful acts; otherwise it’s just an exercise in futility.  The game is rigged in favor of these independent principalities!

But those living in HOAs must share the blame for this state of affairs. They have repeatedly failed to unite in an organized common cause to produce intelligent legislation that addresses these fundamental HOA defects.[ii]  CAI in Arizona made that clear when it told the legislature that only the stakeholders produce meaningful bills; the homeowners just raise a multitude of personal issue bills.[iii]

And so, in all practicality considering this state of affairs, the board can do no wrong.  Get used to it!

“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.” (Alexander Hamilton, Federalist #15)