Tag: enforcement

What is an HOA’s duty of care liability to its members and to all others?

State laws, in general, hold that the duty HOA board of directors is one of good faith, and as a fiduciary or prudent person with respect to the members, where “members” does not mean an individual member.  This is based on the nonprofit, membership corporation and HOA/condo Acts that can be found in almost every state.

But, what about tortious or wrongful acts under tort law negligence, or agency law, or real estate law on an owner liability for injuries to others on his property?  And there is also the charitable volunteer laws shielding all but grossly negligent acts by volunteers.   These laws apply although you can’t find them in your CC&Rs or in the HOA/condo statutory Acts, and the average board member probably has very little, if any, awareness of their applicability to HOAs.

I write as a lay person, because no one else is writing and the national lobbying organization is not likely to tell it like it is — nothing bad about HOAs.  Not even any of your state consumer protection agencies.  With respect to the Trayvon murder incident, I wrote about some of these HOA liability issues in, “What is the HOA liability for wrongful acts by its security officers?”   Information has come forth in the media that the Retreat at Twin Lakes, the HOA, either “hired” Zimmerman or at least had knowledge, or should have had knowledge, of Zimmerman’s history.

My initial research into the question of HOA duty of care under tort law of negligent acts revealed a few court cases that shed some light on this question.  The most recent case (The Landings v. Williams, No. A10A1956, GA App. 2011) is the mauling by an alligator of an 83 year old woman on the common property of the HOA in Georgia.  The woman was visiting her family and is an “invitee” (legal term pertaining to a third-party on property held out to the public), and the appellate court denied a motion for reconsideration and upheld the HOA to have a duty of care and was negligent in this instance.

In California, several related cases have been reported by attorney Jeffrey A. Barnett in “Aberrant Behavior in Associations.”  He references the California Supreme Court holding that,

the owner’s duty to provide protection from foreseeable third party crime has always been determined in part by balancing the foresee ability of the harm against the burden of the duty to be imposed . . . . The board can be liable for failure to take reasonable steps to prevent injuries from foreseeable criminal activity.  (Isaac’s v. Huntington Memorial Hospital,38 Cal 30 112 (1985)).

The Court further held (Frances T. v. Village Green Owners Assn., 42 Cal 3d. 490 (1986), “that a homeowners association has a duty to exercise due care for the safety of residents in those areas under the association’s control.”  And that,

the property owner’s duty includes exercising reasonable care to discover whether criminal acts are being, or are likely to be, committed upon the owner’s land. If an investigation would in all probability lead to the discovery of prior similar incidents to the occurrence giving rise to an injury, constructive knowledge of such incidents is imparted to the property owner, and the owner may be liable for the damage resulting from the criminal activity.  (Phillips v. Perils of Pauline Food Production, Inc., 35 Cal.App. 4th 1510 (1995).

The HOA board cannot be allowed to justify negligence of this magnitude in the Trayvon slaying by claiming that they are just poor unpaid volunteers working for the community.  No!  HOA boards must be held accountable like all other government officials and entities.  Our public officials and entities are not given absolute immunity, and neither should that be given to HOA boards.

What is the HOA liability for wrongful acts by its security officers?

 

As a private government, HOAs are not subject to government immunity as other government entities.  Its officers are not covered by limited immunity for discretionary decisions as government officials are.    Can the HOA board escape liability because they are volunteers?  Does their D & O insurance cover such negligence as appears to have occurred in the tragic incident described below?  Or escape liability under the pro-HOA attorney’s business judgment rule defense (my emphasis)?

 

The business judgment rule thus provides significant protection to directors (and officers) from personal liability for their good faith, informed, business decisions. The presumption may be rebutted where it is shown that a director . . . did not inform himself of all information that was reasonably available, failed to exercise the requisite level of care . . . .

 

In other words, doesn’t the HOA board of directors have a duty of care as a prudent person acting in good faith, and under fiduciary duties to the HOA to properly supervise and oversee the acts of their agents?    Under agency law and tort respondeat superior liability, the answer is YES.   And how much can that liability amount to?   Millions of $$$?  I think in the following incident it could well be.

I call your attention to the killing of a 17 year-old in a gated Florida HOA by an armed HOA security guard who is not even a police officer.  Read this report and judge for yourself:  Shooter of Trayvon Martin a habitual caller to cops.  By what authority do HOA governments usurp legitimate public government police powers to stop and detain others?  A recent Illinois court says that stopping and detaining, no less shooting others, was a violation of government authority. See How far will independent HOA principalities go in usurping police powers.

HOAs must be held subject to the Constitution and the laws of the land.  They must not be permitted to hide behind exaggerated claims of “private contract” exclusions and escape application of the 14th Amendment that applies to all legitimate public government entities. They must not be permitted to escape application of their state’s constitution and its Declaration of Rights.

No HOA reforms? blame it on the legislature

As of this morning, of the 16 Arizona HOA reform bills that I’ve been following, only 3 bills have a chance of becoming law: HB 2160, elections reform, HB 2170, HOA cannot charge escrow agents for fees, and SB 1239, zoning board prohibitions against mandatory HOAs. The 3 bills carrying penalties against wrongful acts by HOA boards, and holding the boards accountable, are all DEAD!

Except for the possible penalties in regard to elections, there are no deterrents to the intentional abuse and violations by the HOAs regarding fines, failures to provide corporate documents, or to respond to homeowner inquires in order to resolve payment disputes.

The absolute “sanctity of contract” argument by CAI lobbyists continues to be thrown at the legislators, and shamefully accepted by many. This acceptance by these legislators insults homeowners as it carries an implied attitude that homeowners are masochistic, and openly and fervently signed a solid contract to be treated harshly if they dare raise a question — the “a contract is a contract no matter what” excuse to deny your rights. Shameful!

Actually, if they had consulted their legislative council, there are indeed restrictions on the validity of covenants, — not everything goes. (Remember, we must educate the legislators otherwise they will continue to accept the “gospel of HOAs” from CAI, as taught in their “educational” indoctrination classes and seminars).

Covenants that are 1) contrary to public policy, 2) arbitrary and capricious, 3) unreasonable, and 4) unconstitutional are invalid no matter if they were approved by the membership. And that’s the whole point of the issue: HOAs and legislators cannot ignore the laws of the land and do as they please, in spite of what the CAI attorneys like to proclaim. But, some legislators actually believe in “everything and anything goes.”

NOTHING WILL CHANGE UNTIL THE LEGISLATURE STOPS SUPPORTING DE FACTO HOA GOVERNMENTS AND RECOGNIZES HOAs AS DE JURE GOVERNMENTS SUBJECT TO THE LAWS OF THE LAND, AS REQUIRED OF ALL OTHER GOVERNMENT ENTITIES

Under these conditions, do not ask for assistance unless you have the personality and will to fight for your rights all by yourself, and are willing to spend your money to do the state’s job for them, JUST MOVE OUT! The laws and governing documents all favor the HOA against you and the rights that you thought could not be taken away.

AZ HB 2160, HOA elections reform, provides misdemeanor penalties

One of the most needed bills for enforcement to protect the rights of homeowners in HOAs is Arizona’s HB 2160, which passed the House and goes on to the Senate.  This bill makes “A corporation or other entity that intentionally violates subsection [ ] of this section is guilty of a class 1 misdemeanor.”

In a subculture where legalized extortion goes unpunished, and where recourse to democratic election processes to elect and replace corrupt government “officials” are woefully inadequate, the Arizona Legislature is finally putting its foot down on such acts against public policy. HOAs hide behind the fact that they are private contracts and are not bound by constitutional protections while proclaiming how HOAs are a great town hall democratic institution.

However, the newly elected President-elect of CAI’s College of Community Association Lawyers, Arizona’s Scott Carpenter, protests this bill: “Where is the evidence that voting ballots should have a cloud of criminal prosecution having over it? Criminalizing the counting of homeowners association and condominium association ballots should outrage Arizona’s citizens.” (Criminalization of HOA Elections).

Why should citizens be outraged? While complaining about no justification to hold violators accountable, Carpenter offers know valid reason not to.  Perhaps the newly elected President-Elect doesn’t understand the difference between criminal and civil law. Let me explain.

Civil law is in regard to disputes between two parties, like a contractual dispute. Criminal law, on the other hand, are violations against the state and its laws. Nothing new, nothing different. It is there to “protect society . . . from those forces that most threaten the peace, the harmony . . . and society as a whole.” It is there to deter and to punish.

This bill is an affirmation that the violations of state laws by HOA boards and officers, and their agents, are contrary to the good of the greater society and must cease. The bill says that HOAs are no longer independent principalities doing as they wish without fears of liability for wrongful acts. If this is too much for some people, that their “free ride” is over, well, then they can just move out! But, the American system of government that treats all people equal and applies the law equally, and that now applies to HOAs, cannot continue to tolerate this separation from constitutional government.

It is the gross and prolonged failure of the industry to police itself in the midst of such abuse that has caused the legislature to act. It is the gross and prolonged failure of the “national HOA educator” organization with all their attorney lobbyists to work in support of, and not in opposition to, these bills that protect society as a whole that has caused the legislature to act.

A Class 1 Misdemeanor is an offense that carries up to 6 months in jail (ARS 13-707(A)(1)), and up to $2,500 in fines (ARS 13-802(A)). Neither are mandatory. However, a fine for a misdemeanor committed by an enterprise is up to $20,000 (ARS 13-803(A)), but is not mandatory either.

Why do people harm others in HOAs?

The following is my conclusion in Why people do harm to others in the HOA subculture.

Looking Toward the Future

In the Milgram and Stanford Prison Experiments researchers explored what evil men can and will do to others 1) under repeated pressure from authority figures to follow the rules, and 2) in an environment where one is expected to act in accordance to the  roles of the community.  The researchers found that basically good people will indeed do harm, even do severe harm, to others.  The conditions and factors present in these experiments exist within the HOA community, and the harm being done to others in these HOAs is well documented in the media and in the courts.

 The authoritarian insistence on enforcing complete obedience to the CC&RS, as repeatedly impressed on HOA boards by their attorneys, is well documented. The compliance by the directors and officers with these pressures for enforcement is well documented.   The blind obedience, apathy, and passivity  to authority by HOA members – the “prisoners” — who sign and agree to provisions blatantly detrimental to their interests, is well documented.  The adoption of the roles demanded of them by the system  and by the situation —  state laws and the court opinions, the adhesion CC&Rs and governing documents, and the lack of effective recourse — is well documented.  

The numerous “educational” seminars taught  by the attorneys and managers, many of which are sponsored by state and local governments,  serve not to fully inform but to indoctrinate the members into roles of obedience  and passivity, is well documented.  Good people doing bad things or remaining silent in the midst of wrongful acts and actions by the HOA is well documented.

State governments, the legislatures,  cannot allow HOAs to continue to  run amuck and to  freely violate the laws and their contractual obligations without legitimate and necessary constraints holding them accountable for the harm that they do to others.  Stop the “free rides.”  

Do not be conned by the HOA special interests unsubstantiated fear mongering about the demise of HOAs, and their  “only 5% are bad”, so we don’t need any restrictions.  Property crimes over the past 5 years averaged 3.3% yet we have laws.  Murder and rape rates are so miniscule compared to 5% (roughly 5 in 100, 000, or .00005), yet we have laws against these crimes.   If HOAs are indeed the next best thing to Mom’s apple pie, then they will survive.  If not, then it was the factor that “we got a good thing going here,” in terms of anything goes, that was the driving force behind all the clamor.  Fear not, people will continue to buy homes that are truly their private property.

But, to let the people in HOAs  continue to do harm to others and do nothing as  a matter of public policy is shameful.

Read the full paper here.