Tag: constitution

Statement to NC Select HOA Committee

January 17, 2012

Mr. Ed Stiles
Committee Assistant
NC House Select Committee on HOAs
 
email statement

Statement to the NC House Select Committee on HOAs

January 23, 2012 Meeting

Dear Committee Members,

I am submitting this email statement for inclusion into the record for the January 23, 2012 hearing on homeowners associations. I am a nationally recognized homeowner rights advocate who believes in “supporting principles of democratic government.”

Over my 13 years of involvement in HOA reform legislation across this country, I have witnessed a slow, but steady, change in the perception of homeowner associations from “the next best thing to Mom’s apple pie” to the realization of that there are “worts” all over the HOA legal concept and statutes. The reason for this has been the extensive use of the internet by advocates, and the inability of the pro-HOA forces and national lobbyists in every state to stifle their voices. For over 48 years, since the introduction of the “HOA “bible”, the Homes Association Handbook, these forces held sway and shaped the attitudes of the public, the media, the policy makers, and state legislators. They exclaimed the virtues and benefits of the HOA scheme, and hid the worts, the serious defects, among the most egregious being the denial that HOAs are authoritarian, private, de facto governments that function as independent principalities. As such, HOAs are illegitimate local governments.

I am not rejecting the freedom of choice, if indeed that is a fact, in selecting the perceived benefits of a planned community by buyers, but the mass merchandising of these HOAs under highly questionable sales and advertising methods – misrepresentation, fraud, half-truths, false truths. As an example, no state has adopted anything close to the “Truth in HOAs Disclosure Agreement” that serves as a notice and warning of what HOA life is really about. (See, Appendix A, Model Consent to be Governed Disclosure Bill). I am not objecting to that real estate “package” of benefits, but to the form and nature of the governing body of the subdivision, commonly known as the Homeowners Association, and the adhesive CC&Rs “contract” that denies constitutional protections of due process and the equal application of the law.

HOAs are unaccountable to the state government. The statutes are unconstitutional special laws for special organizations, that reject contract law and constitutional law for the common law of equitable servitudes. As long-time advocate Evan McKenzie wrote in Privatopia (1994),

In a variety of ways, these private governments are illiberal and undemocratic. Most significantly boards of directors operate outside constitutional restrictions because the law views them as business entities rather than governments. . . . [They] are inconsistent not only with political theories of legitimacy but with the normal process by which governments are created. . . . Thus these ‘private governments’ may violate the equal protection clause of the Fourteenth Amendment. (Chapter 6).

There is no justification for the non-application of the laws of the land, and the denial of fundamental rights, freedoms, privileges and immunities for homeowners with such weak arguments as: “better landscapes make better communities,” or the shifting of residential development costs from the local municipality to the homeowners, or “they agreed to be bound.” The last of which is a mockery of justice and our system of government as it allows the waiver and surrender of rights and freedoms by the mere posting of a Declaration of CC&RS to the county clerk, sight unseen by those who will be bound by the CC&Rs, by a profit seeking developer adhesion contract.

This Committee has the opportunity to begin to set things right, to restore this country to “one nation, under God, indivisible, with liberty and justice for all,” and to remove this second form of local government that has seceded from and rejects the Constitution. The Committee will hear from HOA supporters and from self-interest groups who should, by this time, understand that they, too, are rejecting the Constitution and the principles of democratic government. And more importantly, it will hear “petitions for redress” from homeowners. Do not fail the citizens of North Carolina. Do not cause them to have to say, “Our repeated petitions have been answered only by repeated injury.”

I ask that the Committee to do justice by paying heed to those petitions by homeowners and taking on the long overdue HOA reforms being asked.

My HOA profile, Appendix B, is provided for your convenience.

Respectfully submitted,

George K. Staropoli
President
 

HOA debate: illegitimate government and invalid CC&Rs contract

A very important and lengthy exchange on substantive matters regarding the HOA legal structure and concept can be found on Evan McKenzie’s The Privatopia Papers blog. The topics of discussion are the legitimacy of private HOA government and the validity of CC&Rs as contracts.

Participants, as of this writing, including McKenzie, are Tyler Berding, a California attorney, and homeowner rights advocates Fred Pilot, Fred Fischer and yours truly. The discussion is under the heading, “Do owners believe CC&Rs are contracts?” in the January 2012 postings. The debate was triggered by Pilot’s post of December 31, 2011, commenting on a article wherein he states, “That’s because people don’t see HOA covenants — a real property contrivance — as contracts,” and, “In addition, many property owners don’t see HOAs as legitimate governing authorities.” There are an additional 10 comments on this posting as of this writing. 

Follow the debate at The Privatopia Papers.

Thanks to Evan McKenzie, author of Privatopia (1994) and Beyond Privatopia (2011), for publicizing this important debate.

HOA-Land — the failure to democratize

Note: The following is an excerpt from my paper, “Are the American people rejecting democracy at the local level?”

HOA-Land — the failure to democratize

 Will the acceptance of authoritarian private local governments in the US result in a weakening of democracy in America, and destroy “one nation, indivisible, with liberty and justice for all”?  

“Democratization” describes the processes underlying “the emergence, the deepening, and survival of democracy” in a society.  Democratization is also concerned with the forces that affect the sustainability of a democracy.  And that’s the issue before us:  Has the First American Experiment with representative democracy succumbed to the “emergence and acceptance of a quiet innovation in housing,” the Second American Experiment? This New America of HOA-Land?[i] 

In his “Theories of Democratization”,[ii] Christian Welzel presents a case well applicable to HOA societies.  Welzel believes that, “Democratization is sustainable to the extent to which it advances in response to pressures from within a society.”  It appears that HOA-Land dwellers feel no need to pressure for change, just like Mayer discovered with his interviews after WW II.

People power is institutionalized through civic freedoms that entitle people to govern their lives, allowing them to follow their personal preferences in governing their private lives and to make their political preferences count in governing public life.

Since democracy is about people power, it originates in conditions that place resources of power in the hands of wider parts of the populace, such that authorities cannot access these resources without making concessions to their beholders. But when rulers gain access to a source of revenue they can bring under their control without anyone’s consent, they have the means to finance tools of coercion.

 The above amply defines the dynamics of political machines and power cliques that operate, more or less, within all HOAs from benevolent dictatorships to rogue boards. And with respect to voting as the sole indicator of a democracy, it is well known that HOAs are woefully deficient in fair and just elections, with no “fair elections” laws in effect. Welzel goes on to say,

Many new democracies have successfully installed competitive electoral regimes but their elites are corrupt and lack a commitment to the rule of law that is needed to enforce the civic freedoms that define democracy. These deficiencies render democracy ineffective. The installation of electoral democracy can be triggered by external forces and incentives. But whether electoral democracy becomes effective in respecting and protecting people’s civic freedoms depends on domestic factors. Democracies have become effective only where the masses put the elites under pressure to respect their freedoms.

 Once again we are told that there’s a need for pressure from within, from those living in HOAs, to uphold their Constitutional protections.  Even if state governments decide to enforce constitutional protections and the equal application of state laws, it remains with the HOA-Land residents to defend our system of government.  Welzel reaffirms this essential requirement, “It is only when people come to find appeal in the freedoms that define democracy that they begin to consider dictatorial powers as illegitimate.”

 Welzel offers a path to victory to stop this erosion of democracy within America that is highly applicable to the social movement for HOA reforms.

 As social movement research has shown, powerful mass movements do not simply emerge from growing resources among the population. Social movements must be inspired by a common cause that motivates their supporters to take costly and risky actions. This requires ideological ‘frames’ that create meaning and grant legitimacy to a common cause so that people follow it with inner conviction.

This is why values are important. To advance democracy, people have not only to be capable to struggle for its advancement; they also have to be willing to do so. And for this to happen, they must value the freedoms that define democracy. This is not always a given, and is subject to changes in the process of value transformation.

 And what about our elected officials?

 However, although Welzel writes that “elites [those in power, the cliques] concede democracy even in the absence of mass pressures”, it is only “when these elites depend on the will of external powers and when these powers are pushing for democracy.”   But, with respect to HOA regimes, Americans cannot accept this state of affairs by state legislatures, especially not with respect to these fundamental issues of democratic governance — the very soul of this country.  The absence of legislative support, sua sponte (on their own), for HOA reforms throughout the country is inexcusable! 

 

[i]Understanding the New America of HOA-Land, George K. Staropoli (StarMan Publishing 2010).

[ii] “Theories of Democratization”, Christian Welzel, Democratization, Christian W. Haerpfer, ed.  (Oxford University Press USA 2009).

 

Would FDR call HOAs fascist?

In his message to Congress on “The Concentration of Economic Power” on April 29, 1938, President Roosevelt said,

The liberty of a democracy is not safe if the people tolerate the growth of private power to the point where it becomes stronger than the democratic state itself. That in its essence is fascism – ownership of government by an individual, by a group or any controlling private power. ”  President Franklin Delano Roosevelt.

It is quite clear that President Roosevelt could have been speaking about homeowner associations, HOAs, right here in America — those private governments created for the benefit of the developers who “toss” certain benefits to  local public governments, the realtors, and the buyers.

What has happened to America?  What has happened to those cherished values of demoncracy, of justice, and of liberty for all?   Today, some would have you believe that public government is to be run like any other private business. America has been  infiltrated and overthrown from within!

Years from now, when Europeans come here to ask, How could this happen in America,  they will hear the same answers as given by the average German after WW II.  Americans had gone to Germany after WW II to understand how could the German people allow the Nazis to come to power. They discovered that the people accepted the benefits brought by the fascists, and they gave lame excuses as to their acceptance of the oppressive Nazi rule. (See the paperback, They Thought They Were Free, Milton Mayer, 1955 and Can substantive HOA reform legislation happen?).

Our  “Constitution has been turned on its head“, as a leading public interest organization wrote.  And it continues every day with the spread of the HOA legal scheme.

Can substantive HOA reform legislation happen?

The intrinsic, systemic defects of the HOA legal scheme and concept severely put a dent in any attempt to obtain a just and fair HOA government. A legitimate HOA government — “legitimacy” with respect to governance — requires fair and just laws, and the fair and just enforcement of those laws. Today, the laws are unjust and pro-HOA, and the Declaration of CC&Rs is an unconscionable adhesion contract by any standard.

As Prof. McKenzie made quite clear in Privatopia (1994), “Taken as a whole, these [HOA] powers permit the regulation of a wider range of behavior than any within the purview of a public local government.” (P. 129). So much for the argument made by homeowners in HOAs and pro-HOA supporters that they are against government interference. Apparently, more regulation and interference by HOA regimes unaccountable to state laws and state constitutions is a better deal than public government protections. I’m confused!

Please step back a moment and understand the advocate irrationality at work here. Advocates are going before the state legislatures and asking for public government protections, but claiming aloud that they do not want government interference! Am I missing something, or is this “interference” another irrational fear promoted by CAI and others? It is only the actions by your public government, under its police powers to insure domestic tranquility and to promote the general welfare, that can bring justice to homeowners in HOAs. The alternative is REVOLUTION!

Since 1992, when CAI decided to become a lobbying organization and oppose HOA reforms, CAI has controlled the playing field, yet advocates managed to achieved “token” changes from time to time. I do not say that these reforms were meaningless, but for the most part were, and are, hampered by the lack of enforcement, proper due process, fair elections statutes, etc. The structure remains oppressive.

I’ve pointed out that the Founding Fathers gave up on trying to patchwork fix the Articles of Confederation, and decided to create the entirely new Constitution of the United States of America. At least they were all basically for the new “contract,” even with the usual bickering here and there. Today, we have state legislators and a powerful national lobbying trade organization, CAI, opposed to any changes of substance to the HOA legal scheme.

I’ve also pointed out that at a meeting where the British Raj was offering token handouts for government reforms, Gandhi was adamantly opposed. The British informed Gandhi that, “India belongs to the British Empire,” to which Gandhi replied, “India belongs to the Indians.” Your homes and private property rights belong to you, the homeowner, and not to a private HOA government formed and permitted to function outside the US Constitution, making the HOA a second form of political government within this country.

There are many reasons for this state of affairs — this failure to achieve reforms of substance — that have been discussed by others elsewhere. There is the frequent attitude of advocates whose objective is actually, “Fix my HOA,” with little concern for the problems affecting all homeowners in all HOAs. Aside from these advocates, I discovered some time ago that one primary factor, and an important factor when going before state legislatures seeking reform legislation, was the belief by many that the HOA legal concept could be patchwork fixed; that almost all of the advocates and homeowners wanted their HOA to protect property values, and that they rejected hardline approaches that, through fears instilled by the opposition, they felt would “do away with” HOAs.

Prof. Fatovic wrote about homeowner acceptance of HOA restrictions in 2005,

Many home owners also insist that it is imperative to control the activities of their neighbors to maintain high property values. . . . It is also claimed that strict enforcement of the rules fosters a stable and predictable environment, which is an attractive feature to many prospective buyers seeking greater control over their environments.

In addition to these appeals to material self-interest and well-being . . . the strict enforcement of rules that curtail individual freedom is legitimate because 1) HOAs are voluntary associations formed by the consent of individuals 2) who want to maintain a particular way of life in a communal setting 3) that maximizes opportunities for participation and democratic self-government. (P. 12).

(Restricted Area: A Tocquevillean Critique of Homeowners Associations).

When going before state legislatures, most advocates in all states will continue the 20-year failed expectation that asking for token reforms will solve the problems with HOA governance. That they can “have their cake and eat it.” Time to get with it! Prof. Fatovic raised the following issues clarifying this acceptance of HOAs,

However, the history and current practice of CIDs belie this Panglossian [“all is for the best in the best of all possible worlds”] view of home owners associations. As noted above, the CC&Rs are not created by prospective homeowners in a contemporary state of nature, but by builders interested in protecting their own investments and minimizing their own costs. . . . Those who will actually reside in CIDs rarely, if ever, have an opportunity to participate in the formulation of the rules that will govern their lives. The deed restrictions are non-negotiable, take-it-or-leave-it offers. . . . There is also considerable evidence that many prospective homeowners are uninformed about the specific regulations. . . . [to which] they are “consenting.” The length of CC&Rs often deters residents from reading documents that may restrict their constitutional rights. (P. 15).

This reality, over the years, sadly, has failed to arouse state legislatures to fulfill the objectives and promises of the Declaration of Independence and US Constitution: to protect individual liberties, freedoms, privileges and immunities from government oppressions. State legislatures have ignored “one nation, with liberty and justice for all” in favor of special laws for special organizations that permit private governments to ignore and reject the US Constitution!

The very structure of the Declaration of CC&Rs and the HOA-protective laws prevent substantive reform legislation from happening! The very structure of the HOA concept must be changed with a loud outcry from homeowners. As I pointed out in the past, there are existing statutes dealing with special taxing districts that can be used, with some minor changes, to subject the HOA to the Constitution while retaining the benefits of the subdivision “real estate package” of special laws, special taxes, and special amenities for those living within the taxing district — the current HOA.  (See A proposal for the “Muni-zation” of HOAs; Stop developers from granting private government charters).

Until advocates stop being “bought off” by token reforms and come to accept the need for substantive HOA reform legislation, we can expect another 20 years of re-occurring HOA problems and increased dissatisfaction.  Advocates should keep in mind that the opposition is “defending the indefensible” and all that they must do is to push hard for substantive reforms.

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