The Arizona Senate is still sitting on HB 2052 since a month ago, March 1st, a bill providing for member participation in HOA governance. The bill explicitly states, since the CC&Rs is seen as a contract, what the HOA cannot do and must allow for fair elections and meaningful participation in HOA governance.
In the past I’ve addressed this constitutional question of fair elections in the HOA model of an authoritarian, business form of governance. I’ve provided examples of incidents and court cases reflecting this denial of fair elections, which exist in the public domain, as if the HOA is afraid of the democratic voice of its members.
In this writing I will call to your attention how an upscale, over 1,000 member HOA board — as a representative example of such HOAs — refuses to accept the facts laid before it that provide valid cause to conduct a due diligence examination; and to validate its positions in regard to its fiduciary obligations of good faith conduct and obedience to the governing documents.
Below I’ve copied parts of its application package provided to all candidates for a director’s position. The package material clearly shows the BOD’s awareness of its fiduciary obligations and its required treatment with respect to the membership.
Obligations and liabilities of directors
“Directors have a fiduciary duty to the Association and to each member.
“The duty of loyalty requires that: Directors act in good faith pursuant to a free, honest exercise of judgment not influenced by considerations other than the best interest of the Association.
“Failure to discharge the fiduciary duty can subject the Association to liability and subject the Director to personal liability. A Director can also be liable for illegal or tortuous acts of the Board of the Association if he/she participates in the decision to authorize the acts or knowingly fails to take steps to avoid the action. “[Emphasis added].
HOA control of the candidate process and campaigning
Getting down to the specific application of HB 2052, the relevant HOA’s candidacy procedures follow, with the opening line stating: “The Campaign and Election Policies have been carefully developed to provide a fair and clean process for candidates and all members.”
While the specific policies are not clearly stated as whether prohibited or permitted, the overall tone is definitely of a prohibitive nature. The 14 points are shown as Exhibit 1 below. In sum, they include not using email listings; association facilities or agencies, clubs, etc. websites; no right to hold Q & A sessions independent of HOA; no right to campaign through social media — Facebook, Instagram, etc.; all advertising must be HOA approved; distributing flyers outside restaurants, presumably those within the HOA, or on common areas.
The policies of this HOA, and many other large-scale HOA are similar but not so detailed, demonstrate the failure of the board directors to act in good faith and as a fiduciary for the members. For the HOA to argue that “The ends justify the means and we determine what’s good for the members, but the HOA entity comes first” is unsatisfactory and irrelevant. These policies reflect an authoritarian government that accepts the rejection of fundamental member democratic rights and privileges because they can hide behind the questionable legality of the CC&Rs.
There can be no excuse for HOA directors not being aware of the voluminous materials available for conducting their due diligence with respect to democratic, fair elections and member participation in HOA governance. They have been given plenty of notice, which subjects them to personal liabilities and prevents them from hiding behind “my attorney said it was OK,” or from acts of omission – doing nothing.
This representative HOA’s policy so informs them of their liability. Yet, nothing is done to correct these violations of good faith. And still the directors, officers, and managers all demand respect! It’s shameless!
What is going on, you may ask? Well, the board is setting policy for the acceptance of candidates without a vote of the membership. In other words, unless the proposed candidates are accepted by the BOD, the members have lost a candidate of their choosing. They have lost a meaningful participation in the governing of the HOA; they cannot disagree with the establishment! So, if you thought your HOA was democratic, forget about it!
Also, the BOD controls how candidates acceptable to them can campaign, placing severe restrictions not found in the fair public elections procedures. See Exhibit 1 below. Again, members have lost their right to fair and free elections in HOA matters.
AZ Senate’s rejection of HB 2052
It is easily seen that the AZ Senate supports these undemocratic polices as represented by this HOA’s practices.
I have maintained that,
“Public policy today rejects constitutional government for HOAs allowing them to operate outside the law of the land. The policy makers have failed to understand that the HOA CC&Rs have crossed over the line between purely property restrictions to establishing unregulated and authoritarian private governments.”
See, CC&Rs are a devise for de facto HOA governments to escape Constitutional government; Reorienting the HOA board – fair elections; HOA Common Sense, No. 6: Fair and just hearings
And furthermore, “CIDS [HOAs] currently engage in many activities that would be prohibited if they were viewed by the courts as the equivalent of local federal amd Arizona governments.” … Privatopia (1994), Evan McKenzie.
It is not too late for the Senators to meet their obligations to uphold the federal and Arizona Constitutions by passing HB 2052 into law.
Exhibit 1. HOA BOD campaign policies.
- Using email listings, electronic or websites of Neighborhood Representatives and Alternates, Charter Clubs, Interest Groups, community and specialty groups.
- Addressing a formal . . . Group (e.g., Neighborhood Representative, Charter Club, Interest Group, specialty group meetings, sports venues, etc.). However, a person’s right to free speech in casual conversations shall not be restrained.
- Participating in formal Q&A sessions and programs other than those sponsored by the . . . Election Team.
- Using Association facilities for campaign events for individual candidates.
- Removing other candidates’ campaign flyers from approved locations.
- Using the official . . . website, Facebook or Instagram social media accounts to promote your campaign or to use your personal social media accounts to defame or incite defamation of candidates, engaging in unkind innuendoes / slander / harassment at any time or in any setting.
- Posting campaign flyers on street signs, trees, light poles, motor vehicles, golf cars, lawns, windows, auto windshields, or in commercial buildings.
- Defacing approved campaign flyers.
- Using balloons, buttons, t-shirts, marked-up election ballot, etc. as campaign tools.
- Using advertising of any type (other than approved campaign statement and/or approved personal correspondence).
- Using multiple versions of campaign flyers at the same time.
- Placing flyers in mailboxes (against the law).
- Distributing campaign flyers outside the entrance of or in the restaurants.
- Distributing campaign flyers in common areas except as noted.
HOA Constitutional Government 