Tag: due process

The acceptance of Privatopia and the New America of HOA-Land

In his recent interview on OnTheCommons, Evan McKenzie suggested that his new book, Beyond Privatopia, is a collection of his past papers. If so, I believe the following gives a glimpse into what the reader can expect.

In 2004, Arizona advocates had a tough fight to get HB 2402 passed into law. It was to eliminate HOA foreclosures, but we had to settle for no foreclosures for fines, retaining foreclosure for assessments.

McKenzie gave his views on HOA foreclosure and the need for HOAs to survive during this hard fought battle in his Privatopia Papers Blog of March 12 and 13, 2004. (Scroll down and read the March 12th entry, “The plain truth about HOA foreclosures…”, then read his defensive entry of the 13th, “More on foreclosure.” I, too, took offense to his views.

McKenzie’s comments were not at all helpful to the people suffering this gross injustice of this law. His statements reflected the views of the legal-academic aristocracy that the state must survive, that the state comes first. And by “state” I mean the HOA. That the New America of HOA-Land is a legitimate government of the people.

An excerpt from this lengthy entry sums it up,

A third [objection] is the lack of any alternative [by advocates] that would allow HOAs to continue functioning, and advocating instead for positions that would almost certainly destroy common interest housing and leave millions of people in major financial trouble. . . . HOAs would end up competing with all the other creditors–credit card companies, tax collectors, etc.–for the money they need to fix the roof this month. Net result: the existing owners bear the burden for the non-payers. . . . That is a completely unsustainable situation.

I’ve always been against associations having dictatorial power. I’m also against going to the opposite extreme and leaving them powerless. If we go from banana republics to failed states, most people won’t like the latter any better than the former, and somebody will have to pick up the pieces of failed CIDs. Who will that be?

McKenzie presumes that the status quo preserves the HOA, and that susbstantive reforms will only leave the HOA powerless and lead to its inevitable failure. As a political scientist, he does not address the questions that maybe, just maybe, with their current defective legal scheme that HOAs should be allowed to fail. He avoids “muni-zation”, creating special HOA “taxing districts” as public entities, as an alternative. He does not address the question as to why HOAs deserve government protections to foreclose for failures to pay “taxes” as if it were a public entity. The HOA has no hard cash outlays to recoup as a lender does.

Perhaps he fears that real democracy will destroy the HOA that needs strict enforcement of “laws” and an unquestionable obedience to its often arbitrary and capricious objectives in order for it to survive. That public government intrusion is worse than today’s unaccountable private HOA government intrusion. He no longer speaks in the same terms of the constitutional arguments as he did in the 1994 Privatopia.

History shows that successful social and political change involved both an intellectual group to guide and show the way, and an operational group to make their thoughts a reality — working together. You just need to look at the American Revolution, the Irish and Indian independence movements, and the rise of communism in Russia, China and Cuba. There are no intellectual leaders for HOA reforms, and that is a prime reason why the “pink flamingo groups” are not united.

In Gandhi’s dealings with the British Raj for independence, the Brits reminded him that India was a British Colony. He replied, “India belongs to the Indians.” 

In America today, America belongs to the people, not to the HOA regime.

Want more neighborly love? In an HOA??

 

I submitted the following comment to the shreveporttimes.com article, “A sign that we need more neighborly love.”

 

HOAs were never really about neighborly love.  They were promoted as such a fellowship of people with a common goal, “building better communities” and “fostering vibrant, harmonious communities” by the national lobbying organization.  But, in reality, they are highly divisive and adversarial because strict enforcement of often arbitrary and capricious rules abound, enforced by the “protection agency”, the HOA, whose directors are reminded that they can be sued for not enforcing the CC&RS or declaration.  Couple that with aggressive HOA lawyers whose income is not based on contentment and neighborly love, but on adversity that leads to the courtroom. It’s in their best interests to preserve the HOA in its current form.

This authoritarian form of government, backed by pro-HOA laws to inflict severe penalties on homeowner offenders but give a slap on the wrist to HOA offenders, make an excellent environment for the power seekers and misguided true believers who believe that they  are part of a grand and glorious new America. And for the profit-seeking developers, HOA vendors and lawyers.

IF YOU THINK ABOUT IT, HOW ELSE CAN IT BE?  No country, no community has ever obtained strict compliance to rules that are aimed to preserve the state, like Nazi Germany  Communist Russia, without imposing restrictions on the rights and freedoms of its inhabitants  “in the name of the state.” Its corporate form of government is no different from any other business where there are the managers who control and the people who are to obey.  HOA directors are in the “management” class and homeowners are in the “employee” class, even though the “employees” may also be owners of the corporation.  And we all know that management does not have the 100% whole–hearted agreement and support of its people. 

Yet, the courts and state legislatures truly believe that the board speaks for the members on all matters, great and small. That the HOA is imbued with public government attributes and, ignoring the reality of a contract, by merely living and remaining subject to the HOA the “employee” surrenders all his rights and freedoms contrary to constitutional law. But, as we all know, how many people, employees, work and remain at a business for valid reasons other then that they fully consent to be governed by the corporation? The public officials have adopted this “remaining within the HOA” argument not because it is valid, but because it offers a plausible defense for their actions.

Want more neighborly love?  Hold HOA boards accountable for their actions, and provide protections for the rights and freedoms on the owners.  Forget the “we don’t want government” and get to “we want the same government protections as all others.

What the HOA laws say and don’t say, and unjust narrow readings

 

The unjust HOA statutes on the books in almost all states were written with the help and guidance of the national pro-HOA lobbying organization known as Community Associations Institute – CAI. Many of these laws, in addition to a narrow reading for questionable Rule 11(a) litigation,  use phraseology leading the reader to believe that HOAs are fair, just and democratic governments. But, when the uniformed read and apply them, like in the case of many HOA managers and boards, they adopt an unjust strict and narrow, “black and white” reading of the words.   

A few examples, as commonly found in both the CC&Rs and statutes, are: 1) with respect to violations alleged by the HOA before it may fine a member, “after an opportunity to be heard”; and 2) with respect to homeowner access to HOA corporation records, “privileged communication” or “attorney – client privilege,” and “contemplated” or “pending” litigation. The attorneys well know the legal concepts behind these terms and how they are unjustly used by the unknowing to the detriment of the homeowner.

First, with respect to HOA violation hearings, a narrow reading of the law simply says that the HOA hold a meeting to allow the member to speak before it finds him guilty of violations. It does not have to meet the legal doctrine of due process protections of a hearing by an independent tribunal where the accused can confront the evidence and witnesses, and may bring witnesses and present his evidence. The law neither requires any adherence to minimal hearing procedures for a fair trial, such as mediation rules, or the rules as set forth in the state’s APA laws regarding hearings before administrative law judges (ALJ). The law and the CC&Rs don’t require them to! But the HOA defenders offer these covenants as just procedures.

 Second, “attorney – client” privilege or “privileged” communications is another “half-truth” misapplied by the unknowing to prevent access to legitimate corporate records, such as detailed financials; contracts, including management firm and attorney contracts; monies paid to the HOA attorney in pursuit of litigation, etc. Privilege is raised not by the attorney, or at the attorney’s insistence, but by the board.

The meaning of “privileged attorney communications” is well established legal doctrine pertaining to attorney work product – the notes, communications pertaining to strategy and tactics in regard to litigation. It is well established that attorney-client privilege does not apply to corporate records.  But the uninformed use it to refuse the homeowner’s legal request, which leaves the homeowner to indeed consider litigation to obtain what is legally valid.

And when is “pending litigation” a fact? Wouldn’t one think that it would require that the HOA was informed by a reliable person, like an attoreny, that if so-and-so doesn’t occur he will sue? Or, is it simply that the board raises this in any context where it refuses to provide the business documents by saying, “I think the homeowner is going to sue”, or “Let’s sue him”?  That is pure and simple “abuse of process.”

Why would a board refuse to proved HOA business records? Wouldn’t that be an indication that they have something to hide? Isn’t that a violation of the board’s duty to the HOA nonprofit corporation to act 1) in good faith , 2) as a prudent person would in similar circumstances (as if it had to spend its own money), and 3) for the benefit of the HOA? And not to protect their activities.

 Apparently the board is unaware, or hasn’t been properly informed by its attorney, that “A director is not acting in good faith if the director has knowledge concerning the matter in question that makes reliance [on competent legal advice] unwarranted.” Like, maybe, the allegations of a violation are false and contrived, or the “facts” are not true, or that “Mr. X is lying. (The quote is taken from an Arizona statute, but the point is that his good faith reliance cannot be claimed as a defense when the director had other knowledge.)

One would think that the HOA attorneys, especially those “illustrious” members of CAI’s College of Community Associations Lawyers, would know all this. And that these CAI lawyer – lobbyists would be at the forefront of HOA reform legislation to correct these injustices. Doesn’t CAI promote the message (see its web site) that they are “Building Better Communities” and “dedicated to fostering vibrant, competent, harmonious community associations.” Yet, they work against these simple reforms. How can CAI make such statements and not work to create a just and legitimate form of community government?

Narrow interpretations of HOA law and Rule 11(a): CAI game plan?

 In order to understand CAI’s adversarial position to homeowner reforms and its activities to promote litigation challenges, we need to look into its activities and not its lofty pronouncements. As you know, Rule 11(a) requires that the attorney perform a reasonable inquiry into the genuine issues of law or fact of the HOA allegations before undertaking any law suit. (See HOA attorney failure to inquire into merits of a complaint — R Civ P. 11(a)). We can get a good idea of CAI’s motivations for pursuing litigation from its activities with respect to HOA reform laws.

In spite of strenuous opposition by advocates, the sponsor, Arizona Rep. Montenegro, pursued this bill, HB 2441, to the very last floor vote before it was soundly defeated. (See CAI soundly thrashed by Arizona Senate). His support for this disgraceful bill can only stem from 1) that he is true believer in the New America of HOA-Lands, or 2) that he succumbed to the heavy influence of the national trade organization, CAI.

Advocates had attempted to inform Montenegro and the legislators of CAI’s real intent, which was not the betterment of the community or the state of Arizona, but its own self-interests – control of the HOA landscape.  As further evidence of this opposition to the intent of the law, the former CAI chapter president and lobbyist, Scott Carpenter of Carpenter Hazlewood, released examples of what could be seen as “how HOAs can get around the law.”

In my comment to New Arizona laws for 2011 session — thanks to the legislators, I critique Carpenter’s “reasonable rules” that HOAs may impose on the recording of HOA meetings, the new HB 2445 law. One is a 24-hour prior written notice to the board, which can easily “disappear” at its convenience. Also, among is “reasonableness” are that all recordings must be on tripods and must use batteries – seems contradictory with respect to its stated concerns about safety issues. And that the HOA has a right to obtain a copy of the recording – at a reasonable cost. H’mmm, maybe the feel paranoid and that its own recordings won’t capture everything? Or is he just putting up obstacles “to make life difficult?”

Again, a CAI attorney, Carolyn Goldschmidt, takes up another controversial issue with respect to applicability of Title 10 statutes for nonprofit corporations and Title 33 statutes on HOAs and condos. (By the way, the resurrected statutes for ALJ adjudication of HOA disputes, SB 1148, does not permit the ALJ to decide issues outside of Title 33). Basically, does ARS 10-3708 or ARS 33-1812 control the holding of HOA elections and meetings? In an attempt to avoid the HOA statutes with respect to meetings and elections, Goldschmidt narrowly argues that an election without a meeting is valid under Title 10. Yet Title 33 contains strict requirements for meetings and elections – notice, ballot, agenda and quorums.

The HOA held an election that was not part of the meeting, as it claims, and the subsequent meeting just counted the votes but took no action. Say what? Isn’t a “certification” or a counting of election results at an annual meeting an “action”? And, as Goldschmidt well knows as she had participated in several OAH complaints, this dispute would not fall under the Office of Administrative Hearings jurisdiction by an ALJ. (And neither would the other very important common laws found in Chapters 6 and 3 of the Restatement (Third) of Property: Servitudes).

It is these actions in the real world and not the pontifications by CAI and it seminars, conferences, articles, columns or interviews that reflect what CAI is all about. That reflect CAI attorney pursuits of litigation, advertising and advising loopholes in the laws using narrow interpretations of the law, which can be highly questionable under Rule 11(a). And it is not about principles of democratic government within the New America of HOA-Lands or making for a better America or community, its about power over the HOA second form of political government. And attorney fees.

If charged with violating Rule 11(a), and so judged, can the HOA file against the attorney for its attorney fees?

New Arizona laws for 2011 session — thanks to the legislators

 
HOA laws for the 2011 session:
 
 The 7 new  laws, out of 22 bills introduced, affect due process protections for homeowners that levels the “litigation playing field”;   homeowner meeting rights, including the right to record board meetings, as a check on abusive boards and attorneys; new restrictions on transfer fees;  free speech rights to fly flags and political signs; and restrictions on fees for leasing signs.
 
They are:  HB 2245, HB 2609, HB 2717, SB 1148, SB 1149, SB 1326,  and SB 1540.  All homeowner friendly, and as many would say, making for a better community and a better Arizona. 
 
This Arizona session has been the largest pro-homeowner crop of HOA reforms in my 11 years of advocacy. 
 
And it also included a sharp rebuff to CAI in its desperate attempt to retain influence over HOA boards through lobbying our legislators.  HB 2441, the minority control / no court appeals  bill – failed.  Now, they alone, are setting out to put the spin on these new laws by offering seminars and classes. 
 
The public has no alternative to this pro-HOA special interrests propaganda since the news media remains firm in its policy of No Negatives About HOAs.  It would be impossible for the media to explain the new laws without reference to the abuses and lack of homeowner protections in HOA regimes.
 
Thanks to the tenacity of several outspoken Arizona advocates, the laws become effective on July 20th.