Tag: due process

Alleged waiver of rights in HOAs are invalid

I congratulate California Senate Majority Leader Ellen M. Corbett for sponsoring SB 561. This bill asserts California’s rightful authority to impose and restore law and order over this second form of political local governments known as HOAs. This is still America, a land under the rule of law. The disintegration and fragmentation of government and society must be stopped before anarchy reigns, right here in America.

 

The law firm of Swedelson & Gottlieb (S & G) argues on its Blog that they know of no one losing their home just because they waiver their rights to have their payments applied first to assessment reduction rather than to collection costs. There are good, equitable and just reasons for paying down the debt first: paying the costs first prolongs the collection agency income stream, not the HOA’s, as the amount of debt goes on forever and may never decrease. Under these circumstances, like “being under water” in today’s housing market, why pay at all?

 

HOAs are required to apply payments to debt reduction, just like your credit card companies. With a straight face S & G states, “We are aware of no homeowners who have ever lost their homes in an association’s foreclosure simply because of unpaid fees and costs of collection.” So, I guess all is well and right with this use of the payment waiver.

 

This attitude, used by other proponents favoring the survival of the HOA and their incomes streams, portrays all members of an HOA as being so enamored with their HOA that they place their well being and financial conditions in the hands of the HOA board. They are portrayed as being true believers seeing no wrong with the HOA, much as one sees with many religious cults. They are portrayed as openly and eagerly waiving their rights in favor of the HOA no matter how disastrous to them. How insulting to all Americans: your obligation to the “state”, the HOA, is to make timely payments, and any rights, freedoms, privileges or immunities are notwithstanding.

 

In its argument for payment plans, created by the HOA’s agent, but “the board dictates the terms of the agreement,” S & G seems to contradict its argument that the “pay costs first” is for the benefit of the HOA, not the collection agency (emphasis added).

 

There is good reason for this– boards know from experience that many homeowners pay the assessment portion of the payment plan agreement but do not pay the costs of collection, knowing full well that the association cannot foreclose for costs of collection only.

 

Say what? The debtors will pay their assessments to the HOA, making the effort for the benefit of the HOA, not the collection agency? Why would a board give up its first claim to $$$ for the benefit of the collection agency? That doesn’t make sense at all, does it? Why are HOA boards allowing their right to first $$$ go to a “hired-hand” vendor, in violation of their duties to the HOA? Why?

 

It makes sense if the whole purpose of S & G’s position is not to benefit the HOA but its own pocketbook. Furthermore, S& G continues to whine about the debt owed to them that the HOA cannot pay since all the money is going to the HOA first. Boo hoo! I guess they know all about “You can’t get blood from a turnip.”

 

Isn’t that a business decision all businesses face? The loss against the cost of collecting? What about contingency collection agency arrangements? Don’t let S & G slip past this point! If they are so good, the HOA should insist on this type of an arrangement rather than the punitive arrangement now commonly used.

 

And when all else fails, we hear the familiar mantra, “But really, is it fair for the paying/current homeowners to have to subsidize delinquent homeowners?” Well, you see, that “contract S & G says binds all homeowners may not be fair to some homeowners, but that’s what the legal structure of an HOA imposes on members. Is it fair not to tell home buyers about this, and about some other waivers and surrenders of rights unbeknownst to them? Take a look at “The Truth in HOAs Disclosure Agreement” for some eye-openers.

 

Cleverly, S & G avoids the question of a violation of public policy, which as stated in the Restatement (3rd) of Property:Servitudes, Sec. 3.1, makes any covenant invalid. The argument against SB 561 is simply: How dare the California Legislature prohibit a homeowner, exercising his write to contract, without any duress, from surrendering his right to the ethical and fair procedure of debt reduction before costs. How dare the legislature!

HOA foreclosure rights — in-depth discussion with CAI’s CEO and Berding

An excellent news feature from CNBC on HOA foreclosures including CAI’s Tom Skiba and attorney Bill Davis, who is the fellow being sued by John Carona’s corporate entities has been posted on Evan McKenizie’s The Privatopia Papers blog.  See The next foreclosure fight, redux…

An amazing 32 comments in two linked threads have been posted by interested persons including, among “anonymouses,” Evan McKenzie, Tom Skiba (CAI CEO), HOA defender Tyler Berding, Fred Pilot, Fred Fischer,  and yours truly, G K. Staropoli (PVTGOV).  Where are you other guys?

The issue of HOA foreclosure rights is covered quite extensively from several points of view.  If you want to be in the “know”, you must read these comments to better understand the lunacy of “they signed an agreement to pay assessments” and “it ain’t fair for good owners to pay for  these people.”

Get your voice heard.  Send this Privatopia link to your state repesentatives today!

 

Where is the justice? AZ court gives HOA a “do over”

In Pinnacle v. Derailed (CA_CV 10-0604, Ariz. App. Div. 1, May 31, 2011) , the HOA objected to a sculpture because the homeowner didn’t get ACC approval. As we’ve seen many times before, the homeowner replies, “Show me where I must get to ACC approval when the governing documents are silent on the issue?”

The HOA attorney, CAI member and “defender of the faithful,” Scott Carpenter, made the following arguments, among others,

The [HOA] letter asserted without elucidation that the “governing documents prohibit this type of sculpture.” (Emphasis added.) Derailed responded that if the sculpture constituted a violation, many other violations were visible on neighboring properties and declined to remove the sculpture. . . . counsel cited Article 1, § 15 of the CC&Rs, which requires Committee approval of “all landscaping plans.”

The trial court, having reviewed the definitions of “landscaping, and in the absence of a “redefinition” of landscaping in the governing documents, held that sculptures are not part of the meaning of landscaping. The court, siding with the homeowner, wrote

the governing documents did not either require Derailed to seek approval for a sculpture or prohibit a sculpture. The court also found that the sculpture was neither “landscaping” nor a “structure or dwelling” and that the Association had not argued that it was an unsightly object.

The appellate court refused to “read tea leaves” and divine meanings not set forth in the governing documents, “we also “should not give a covenant a broader than intended application.” Carpenter then tried to argue that a sculpture was a structure, and that it failed to meet architectural designs. Both rejected. But, Carpenter failed to argue that the sculpture was unsightly, perhaps, if true, would have been a grounds to not allow the sculpture. “The Association did not characterize the sculpture as “an unsightly object.”

However, the court became activist and wanted a “do over” as it felt some issues weren’t considered by the trial court and it wanted the court to consider them.. A “do over”, a second “grab at the apple.” On legal “technicalities”, once again, the appellate argued that Derailed failed to object to Carpenter’s raising the issue of “unsightly” and claiming that Carpenter had “waived” this argument. Consequently, the issue of “unsightly” can be considered by the appellate court. In other words, Derailed did not argue that it was not an issue before the trial court and cannot now be considered at the appellate level. (I can’t count the number of times I mentioned that the homeowner must respond to all charges and claims made by the HOA, otherwise it might come back and bite them in the ass, like now.)

It should be noted that when the court asked at oral argument “which provision of the governing documents authorized regulation of sculptures”, Carpenter “cited Article 1, § 15 of the CC&Rs” and made no reference to Rule 2.28 of the ACC that pertained to “unsightly object.”What happened to“we also should not give a covenant a broader than intended application?” I guess the denial of the motion for reconsideration amounted to a bona fide trial court argument. And the court wanted an answer to the “unsightly object” issue that was not brought before the trial court,but apparently brought before the appellate court.

It seems that the court has leaned backwards to compensate for the failure of the HOA to specifically raise the question of “unsightly” at the trial level. How many times have I wondered what if these judges really sought to do justice and interjected themselves on behalf of the homeowner and said, in effect, “Hey boy, ya’ didn’t raise this valid and potentially winning issue of … So I’m sending it back to the trial court. Got my drift?”

As an aside, In March 2010 I spoke with the owner and, anticipating the HOA’s defense, I asked about the sculpture, “Was it acceptable”? He replied that it was the work of a known sculptor. I wonder how the trial court would decide? How much would it cost the HOA for Carpenter to pursue this uphill fight on “unsightly objects”?

As a second thoughtdid the court issue a memorandum and a restriction on the case being published and made a precedent? Generally, this occurs when the court feels no new opinions were made to serve to guide future cases.

CAI already spreading the fear of raised DFBLS fees for HOA disputes

In Scott Carpenter’s video seminar on 2011 Changes in the law for Arizona, May 23, 2011, Carpenter speaks of the possibility of raising the “steep” fees at DFBLS. He states that “in speaking with the people at DFBLS, they are considering changes in the fees” to meet the requires of the law that HOA adjudication fee would cover all costs.

 

The DFBLS website already has wording, “Filing fee amounts are to be determined.”

See more at  AZ DFBLS seeking to raise HOA fees already??

AZ Supreme Court denied hearing the Gelb Petition to restore ALJ adjudication of HOA disputes

Yesterday, May 24th, the Arizona Supreme Court simply DENIED hearing this Petition to vacate the lower court ruling that the Arizona agency, DFBLS, had violated the separation of powers doctrine when hearing  HOA disputes .  Disappointing, but not surprising given the new laws to take effect on July 20th, that addressed the separation of powers opinion. It still allows DFBLS to deny accepting complaints since ARS 41-2198(3), the statute authorizing DFBLS, was not vacated. It still stands.

Consequently, in the event that a complaint is filed on or after July 20th and DFBLS denies accepting the complaint, another challenge to the constitutionality of the law would be necessary. If DFLS accepts the complaint, rest assured that Darth Vader is ready with another challenge.

Why is this possible? Doesn’t the appellate court opinion serve as precedent and that’s that? NO, the door was opened by the Court! The Court in addition to its regular fashion of terse announcements, DENIED or ACCEPTED, added an order under its powers to do so, AZ Supreme Court Rule 111(g), that the Gelb decision was not to be published. Not being published means that it is not binding authority, or precedent. It seems then that the door is open and res judicata – already decided – doesn’t apply.

Why allow another shot” at constitutionality? Maybe, as I have argued, the arguments in support of the law relied on the same two cases, Cactus Wren and Hancock, accepted as controlling in both Gelb and in Waugaman (in the only other case that involved a decision, the superior court decision Troon v. DFBLS, Waugaman, LC2007-000598, Maricopa County), left something to be desired. Like the entire body of constitutional law and on the administrative procedures act concerning the acceptance of quasi-judicial authority of executive agencies. Yes, sharing does occur, and none of the applicable rulings were based on the extent of the agency’s regulatory functions, as the DFBLS cases were, (Gelb essentially followed the arguments in Waugaman).

July 20th will be the next phase of the fight by homeowner rights advocates for due process and the equal protection of the laws. The AZ Supreme Court just “punted.”

See AZ Supreme Court to decide whether  or not to proceed on Gelb and HOA adjudication