democracy – Page 17 – HOA Constitutional Government

Columbia Association: the iconic HOA private government ploy to circumvent the Constitution

In the ExploreHoward.com letter to the editor, CA should not be exempted from Homeowners Association Act, the reader is told that this master, master HOA is seeking legislation to have it declared not to be an HOA. The writer strenuously objects, saying,

The purpose of the proposed legislation is to immediately exempt CA [Columbia Association] from some of the protections afforded Columbia residents by the Consumer Protection Act, and to exempt CA from all future amendments to the HOAA [HOA act]. . . . The real purpose of CA’s attempted subversion of the residents’ protections is based on CA’s refusal to disclose the annual compensation of all of its employees, as required by the Consumer Protection Act.

The CA attorney’s defense is, according to the letter, “that CA has enough protection for residents in its bylaws and other documents so that statutory protections are unnecessary.” Didn’t we hear that in Twin Rivers where the NJ Supreme Court said homeowners were protected by the business judgment rule, so no need to get all riled about the loss of constitutional protections?

What is CA all about? Howard County, MD contains the city of Columbia with its Columbia Association, a mega, mega, master association that resembles a large city rather than a subsection. Its Pubic Information Guide refers to CA as

A nonprofit public benefit corporation” — which has no legal definition or standing — with “nine villages and Town Center are organized into 10 village community associations . . . . Each of Columbia’s nine villages and Town Center has a community association, which is an independent, incorporated, nonprofit civic association.

The Articles of Incorporation, along with the Covenants of the nine villages, provide CA with all of the rights, powers and authority it needs to carry out its purposes. The two documents empower CA to collect the annual charge and promulgate rules governing the use of facilities, the integrity of architecture and aesthetics, and so forth. The documents themselves can be consulted for further information. (Part II, How CA is Organized and How It Works).

CA has a 2012 budget of over $67 million.

The way this private government works is that the HOAs are mandatory HOAs with covenants running with the land. In their “Covenants,” CC&Rs for everybody else, there is the tie-in wording granting the non-profit corporation, CA, control over the HOA communities. The HOAs elect representatives to the CA board. It is similar to other master private governments.

Since all entities are private contractual arrangements, Columbia Association is an independent principality on the scale of the charter organizations of the 1600s through 1800s. You may recall two of the most notable enterprises: The British East India Company (operating mainly in India) and the Dutch East India Company (controlled what is now known as Indonesia).

Here and now, CA makes use of the various subdivision HOA covenants running with the land, the CC&Rs, to entrap homeowners into bondage under their de facto but unrecognized private government. And it has to resort to newspeak by referring to them as “villages” and the CC&Rs as “covenants.”

Beware the folly of eliminating supermajority voting for amending the HOA CC&Rs

The latest drive by pro-HOA attorneys and lobbyists has been to seek legislation to do away with supermajority amendments to the CC&Rs. If approved, the very foundation of majority rule in a democracy, and our long standing requirement that fundamental documents must have supermajority voting in order to be amended, would be destroyed. The argument is, Gee, because of the apathy, we can’t make important amendments to the CC&R.

In the 2011 Arizona legislative session, HB 2441 was defeated at the last moment. It would have allowed for minority – as low as 1/3 of the members — to amend the CC&Rs. The CAI lobbyists fought hard for this bill, even telling the committee that although it was governmental intrusion, the legislature always did that.

Think for a moment. If a minority can control the amendment process, it can control the HOA by enacting amendments that further strengthen the powers of the incumbent board. Given the fact that the rogue boards are dominated by their HOA attorneys, minority control solidifies the political machines as the power elite.

Think about it! Under a political machine minority vote regime, the regime can eliminate all and every need for member approval, except, of course, voting for directors. And, all future amendments will have this acceptable ground for the amendment — the apathy of the membership demands minority control. Nobody cares, so what!

However, in spite of this persuasive argument, the infinite wisdom of the California legislature shines brightly when it enacted laws in the Davis-Stirling act permitting just such amendments as valid. Section 1356 addresses minority control of an HOA. This section 1356 is an oxymoron and is an unreasonable and illogical intrusion on the private contract and to our fundamental belief in majority rule in a democracy.

Section 1356 allows for less than supermajorities where the governing documents require more to amend the governing documents. So a 60% voting requirement would allow for minority control. There is no restriction in the law on the lower limit for approval except to appeal to the judge that “this ain’t right.” In other words, like the failed Arizona bill, 1/3 can be acceptable, and even a 20% requirement would be acceptable.

The lunacy of this law is that a majority voted amendment to reduce supermajority voting requirement is valid, if approved by a judge. Go figure! The law has circumvented the CC&Rs private contract putting the cart before the horse! That the members have spoken is the basis for this requirement, in spite of evidence of psychological indoctrination to obey and legal pressures of financial harm for not obeying. (See Why do people harm others in HOAs?)

But if a supermajority was needed, as currently required by the CC&Rs, the amendment to amend before the court would fail. I mean, isn’t that why the HOA is before the court? They can’t get anything done with a supermajority!

How to get a supermajority vote? It’s done every day, everywhere. The content and need for the amendment must be conveyed to the membership in an open forum, an open meeting, and be debated before the membership. And not in some one-on-one private meetings or phone calls.

There is no requirement in the law to hold an open meeting of the membership to debate the amendment before approving the elimination of supermajority voting. A requirement that is found in all legislative and state agency rule-making procedures – public input.

In the recent court opinion (Quail Lakes Owners Assn. v. Kozina (2012) 204 Cal.App.4th 1132), the homeowner does not challenge the validity of this law, but advances procedural arguments under the law. That was a big mistake (he lost), as I’ve repeated argued, of not seeing the ugly forest through the trees. The mandatory requirement under § 1356(c)(5), that “the amendment is reasonable” was never argued as I’ve argued above. In fact, my arguments above were made loudly and clearly in defeating Arizona’s HB2144, and that defeat went to the very last vote.

This decision is another example of bad law becoming a detrimental precedent against homeowners. If you think you have problems now, wait until your HOA blindly obeys the board and allows for a minority controlled HOA.

This work by George K. Staropoli is licensed
under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Attribution must be made to George K. Staropoli as author.

Media still sees HOAs only in monetary terms

My comments to the investigative reporter from KTHR.TV in Indianapolis, IN.

I congratulate you on your very detailed report on what HOAs are all about (13 Investigates: HOAs). Your article joins the newly emerging HOA Enlightenment Movement that looks beyond the special interest, national lobbying trade entity, CAI, propaganda. For more detailed info on HOAs, beyond my short comments, please visit my links below.

Take maintaining property values covenant, the very basis of the pro HOA argument. Show me where the CC&Rs warrant or guarantee property values? Don’t look too hard as you will not find any. In short, the buyer gives up his rights and freedoms, offers his home as collateral for the survival of the HOA, and agrees to pay the assessments no matter what, even if there’s a dispute with the HOA, for an empty promise. Some deal!

In general

The HOA legal scheme is seriously defective in regard protecting people who are citizens of their state and the US, but who are now under a private regime not accountable to the state. The CC&Rs “contract” is based on equitable servitudes and not constitutional or contract law, making these de facto HOAs independent principalities. But, you only see the money side of HOAs that can be viewed as a con job.

For example, the HOA is very much like a closely held business with restricted exit opportunities, and where the members are jointly and severally liable for the debts of the HOA – if a member can’t pay, his “share” can come from the other members’ pockets. Did you know that? Wasn’t that explained to you?

Did you know that the buyer does not have to even read the CC&RS to be held to the binding agreement? All that is necessary is to file the CC&Rs with the county clerk’s office and the buyer is bound by simply accepting his deed, sight unseen and unsigned. Why isn’t the buyer told before he signs the purchase contract? Isn’t this misrepresentation?

Let’s jump to “Steps to Take Now.”

In general, although Indiana has a very limited HOA statutes, the CC&RS are an adhesion contract — take it or leave it in favor of the HOA – that contain provisions that a municipal government could not impose on its citizens. And don’t forget the misrepresentation mentioned above when you hear arguments that “they agreed to and signed” the contract.

See The Truth in HOAs Disclosure Agreement.

Your discussion of “Homeowner Rights” is woefully deficient!

You speak only of the “laws” of the HOA and its CC&RS “constitution.” Do you really believe that the buyers willingly and openly agreed to waive and surrender explicitly stated and implied rights when they took their deed? In a manner that would pass judicial scrutiny? For example, “fines” and the “notice of a hearing” as commonly found in the top-down CC&Rs mock the Constitution. And, the absence of fair elections protections makes political machines a reality.

See the Declare your US and State Citizenship for the legislature.

I hope you will make a serious effort to read these materials, backed by evidence, court decisions, statutes and the statements made by the pro-HOA special interests. And publish your review and summary.

Restoring American principles and way of life in HOA regimes

This is another HOA Enlightenment Movement article on speaking frankly and openly about HOA abuse, about common sense and reasonableness, about the rejection of the HOA attorney insistence on CC&Rs enforcement uber alles, and about legal decisions concerning the rights, freedoms, privileges and immunities of those living in HOAs who have not surrendered their US citizenship. The fact that the media are publishing more and more about “the Truth in HOAs” signals the twilight of the unspoken alliance of “No Negatives About HOAs.” It’s about time!

I congratulate the author, Eve Samples, for spreading the word about this event where it cost an HOA $250,000 in legal fees over a homeowner’s screen doors. I congratulate Martin County, FL Judge Roberts for her perspective that returns America to the people and not defend these usurper HOA private governments. I congratulate TCPalm for publishing this return to sanity incident.

Judge Roberts held that the HOA was

championing the letter over the spirit, evasion over the truth and quibbling over common sense. . . . The truth, despite evasive answers to the contrary, is that he [the homeowner] was never going to get approval, and rather than deal with that issue directly, the petitioner [HOA] chose subterfuge to create the impossibility.

The HOA president, a True Believer, said she would not change her attitude. “[I would change] Nothing, to be honest with you, because the violation was there.” The new president, a Reformer, believes that,

it might be reasonable to ask residents to vote on legal action that exceeds a certain dollar amount. . . . to have litigation reviewed by experts other than the association’s attorneys, to ‘see if the association’s position really is well founded.’

(This is a direct reference to the rules of civil court, generally R 11(a) requiring the attorney to make a reasonable inquiry into the facts.)

Those seeking justice and fair play in their HOA should spread this Commentary to all other interested parties to help them see the light. We all are Americans living under the US Constitution, and must be subject to the equal application of the laws, not to special real estate laws.

Local government copies HOA government

In the June 23, 2012 NY Times article by David Segal, “A Georgia Town Takes the People’s Business Private,” Segal asks and answers, “What is local government for? For years, one answer, at least implicitly, was ‘to provide steady jobs with good wages.’” It reduces public government to just providing for the maintenance of the community, following the lead of the other form of local government, the private HOA regime whose purpose is to just “maintain property values.”

While the answer is in keeping with the theme of the article regarding the privatization of government services, it ignores the unique functions that distinguish a public government entity from a business, or more importantly, a membership nonprofit business. Just what are those unique functions?

Are governments just a business? Are businesses just a government? Are HOAs just a business? Are HOAs just a local government? In his April 2, 2008 CAI Ungated blog entry, CEO Skiba writes: “Community associations are not governments . . . . Yet they are clearly democratic in their operations.” Skiba continues further with, “The solution to that problem is not to replace democracy with tyranny, royalty, or some other form of government, but to work to make the democratic process better and to hold those elected accountable. . . .” He seems to be pleading that whatever aspect of democracy there is in HOAs, we must make serious improvements. Note his use of “some other form government” is an admission that HOAs are political governments.

I find it hard to accept the above assertion by Skiba that CAI supports making HOAs more democratic. Rather, CAI supports the top-down imposition of UCIOA laws that blatantly contradict its other pronouncements that HOAs are the town hall ideal of democratic governance. And it contradicts CAI’s documented positions before the courts and state legislatures opposing constitutional protections for homeowners in HOAs.

Political scientists (among them Wayne Hyatt, Evan McKenzie, and Steven Siegel) have accepted a compromise position that HOAs are a sui generis entity, a unique combination of business and public government functions that require a new set of laws to establish a just and fair governance of people living in an HOA controlled community. Yet, since Siegel’s seminal paper of 1998 (Wm & Mary Bill of Rights Jnl), the laws remain pro-HOA without HOA accountability to the state, and without the equal protection of laws that apply to all other citizens except those living under HOA regimes.

A detailed discussion of the de facto status of HOAs as state actor governments can be found in The Foundations of Homeowners Associations and the New America, “Part III, American Political Governments.”