Tag: foreclosure

HOA foreclosures: will the real CAI stand up

In reading the Carpenter Hazlewood (CHDW) October 28, 2011 eNewsletter, Lien Foreclosure: Is it Still a Viable Option?, I asked myself : Did the CAI attorneys lack “candor toward the tribunal” (as required by attorney Professional Conduct Rule 42, ER 3.3, as can be found in all states) when opposing foreclosure reforms all these years? It seems that CAI presents more than one personality, more than one face, depending upon its audience. CHDW (and CAI firm Ekmark & Ekmark) had vehemently opposed foreclosure reforms as far back as 2004 when, in Arizona, HB2402 sought relief and justice for homeowners. Never once did the legislators hear what is now admitted to in this article by Ms. Patel.

The following excerpt from Who prosecutes on behalf of homeowners in HOAs? (2010) reveals the attitude of CAI lawyers in 2004. Through the questioning and testimony of Ms. Koepke (Ekmark & Ekmark) by the FMPR committee in February 2004 (based on the audiotape record of the committee hearing), we learn,

In her testimony Ms. Koepke had stated that she was an ethical person of integrity who foreclosed only as a last resort upon the instructions of her HOA clients. However, she had a problem with making use of alternative methods of collecting debts as are available to all lien holder in other arenas, and saw no moral issue with completely stripping the homeowner of all his equity for a few pieces of silver. Her justification was that they were “scofflaws” who needed to be punished to deter future untimely payments. In the complete audio, you will hear the committee Chair informing Ms. Koepke that such actions were “unconscionable.” I added a commentary as an addendum, which presented a few background cases and incidents in which Ms. Koepke was involved. This short commentary video can be found at Foreclosures.

A few important questions not answered by the CAI attorneys are: 1) Why should the HOA be allowed foreclosure rights when it has not advanced any real, hard cash like a bank or other lender? 2) Why aren’t alternative means of collection, as available to all other entities, not satisfactory? and 3) Why this special right for HOAs?

The current Patel article, addressed to HOA directors and managers not the legislators, shows another attitude toward HOA foreclosure.

Assuming foreclosure eligibility requirements are met, whether foreclosure is a viable option depends largely on what other liens, interests, and encumbrances burden the subject property. . . . If the property is not subject to a mortgage or there is a minimal first mortgage, foreclosure is a viable option as there is likely equity in the property. . . . Even if the property is subject to a recorded first mortgage and there is no equity in the property, foreclosure still may be a viable option. Sometimes the threat of foreclosure alone is enough to get a delinquent owner’s attention. . . . the owner will often pay the association in order to keep his/her home.

This is an admission of the discriminatory nature of the foreclosure process — works only if the homeowner was an upstanding citizen who had paid his mortgage and assessments for many years, and had created all that equity that the HOA now seeks. It is also an admission of the punitive and intimidation motives of the HOA — “the owner will often pay the association in order to keep his/her home” — without facing the reality that “you can’t get blood from a turnip”! What the foreclosure process does do, and is not mentioned by these CAI attorneys, is that the attorney can claim fees many times in excess of the amounts owed the HOA.. So, who really benefits? Is this good public policy?

Important questions for all homeowners:

1. What are the CAI attorneys telling your legislators today?

2. Are they being candid with the legislators, or are they pursuing their — the CAI, not the HOA – personal agendas?

3. What are you doing to make sure the legislators are being given the whole story?

 

For further reading . . .

Special Message to McCain and Obama on Homeowner Protections in HOAs

Right to Foreclose laws are supposedly good for HOAs, so why are fees increasing?

Do HOA foreclosures violate 14th Amendment?

Homes in HOAs are Lifetime Collateral for HOA Survival

For legislators: poster-child case of HOA extortion of homeowners

This Florida case is the poster-child for the “standard operation procedures” by rogue HOA boards. The situation heard too many times by this advocate, and amounting to legalized extortion because most homeowners cannot afford to go to court for justice. And the HOA, its management firm, and its attorney all too well know this!

The “see no evil, hear no evil, speak no evil” attitude of state legislatures and their misguided belief that the HOA, like any other business  are angels can do no wrong — and will protect the rights and freedoms of its members — must cease right now! This is another example of “us agin’ them” and the destruction of trust and social capital within HOAs.

The appellate court quoted,

“The trial court found that the complaint to foreclose the lien was premature. Agreeing with the trial court, the Third District noted, ‘Had the Association accepted and applied the tendered payments, the dispute would have been reduced to an inconsequential amount, and the Association’s attorneys could not in good faith have filed to foreclose the miniscule claim remaining.’ Ocean Two Condominium Ass’n v. Kliger, 983 So.2d 739 (Fla. 3d Dist. App. 2008).”

The court held,

“What can be gleaned from this record is that the association and its accounting methods were woefully inadequate to correctly ascertain and give notice of the amounts claimed to be due. Because of this imperfect record-keeping, the association did not make a proper claim of lien, nor did it give sufficient notice in its complaint of its claim. Had it done so, in all likelihood this case would not have even been filed. Saar showed that she consistently made the payments required and had detailed records to support her payments, many of which were not properly credited by the association. She paid all sums due in accordance with the notices and claim of lien.”

SAAR v. WELLESLEY AT LAKE CLARKE SHORES HOMEOWNERS ASSOCIATION, INC.

HOA Kindle books

I have compressed and summarized my research on HOA constitutional  issues over ten years and have produced several Kindle books for a comprehensive understanding of the issues.  The historical basis for the current version of utopian societies begins with a review of The Homes Association Handbook of 1964, and the history of Community Associations Institute.

I’ve tried to bridge the gap between the writings of the academic,  political scientists and the people, and present and clarify the constitutional issues facing the curent HOA hegal scheme.

The following Kindle ebooks are available for downloading

2.

The Foundations of Homeonwers Associations and the New
America REVISED by George K. Staropoli (Kindle Edition – Oct 14,
2009) – Kindle eBook

Buy: $5.95
Auto-delivered wirelessly

3.

Establishing the New America: independent HOA
principalities by George K. Staropoli (Kindle Edition – Jul 17,
2008) – Kindle eBook

Buy: $15.95
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4.

Understanding the New America of HOA-Lands by George Staropoli (Kindle Edition – Sep 24, 2010) – Kindle eBook

Buy: $8.95
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Truth in HOAs disclosure poll — please vote your conscience

Please let us know where you stand on the HOA issues of “agreement to be governed” and “consent to obey.”   If the following Truth in HOAs Disclosure Agreement were required to be signed at the time of purchase, would you sign or not sign your waiver and surrender of your rights and give you explicit consent to be governed?

Homeowner Association (HOA)
Buyer “Truth in HOAs” Disclosure
&
Consent to be Governed Agreement

 

By my signature below, I , the undersigned Buyer, have read and understood the restrictions imposed upon me by law and the courts as a member of an HOA, and have agreed to the waiver and/or surrender of my rights explicitly contained below. All other rights not expressly prohibited below or expressly granted below to the HOA are retained by me.

I, the undersigned Buyer, and the undersigned HOA by its President, hereby acknowledge and consent to the following:

(a) that the declaration of covenants, conditions and restrictions (CC&Rs), the bylaws, and any written rules and regulations are treated as binding private contracts by the courts; and that to enforce my rights under or compliance with the governing documents I must file suit in civil court, and that such a civil suit involves no state agency official, attorney general, or county attorney ;

(b) that under current court holdings, I am legally bound by any and all amendment to these documents validly enacted in accordance with the governing documents, with or without my vote or consent, provided that they are found not to be unreasonable, contrary to public policy or unconstitutional; and that an amendment may alter the CC&Rs at the time of purchase, binding me to
the amendment without my consent;

(c) that under current law, there are no substantive penalties against violations of the governing documents or state laws by the officers or directors of the association sufficient to serve as a detriment to future violations;

(d) that the association (HOA), as a private entity and not an arm of the state, is not subject to the restrictions and prohibitions of the 14th Amendment to the US Constitution that otherwise protects the rights of the people against actions by public government entities; and that the governing documents in all legal practicality serve as the subdivision’s “constitution,” taking precedence over
state laws and the state and US Constitutions, unless specifically denied by any such laws or legal precedence;

(e) that the governing documents contain due process protections, in instances of alleged violations of the governing documents, that are less than as required under public laws and civil court procedures, that are lacking requirements for an independent tribunal, such as the right to introduce or confront witnesses, or the right to introduce and challenge contrary evidence;

(f) that in any dispute with the HOA, and contrary my rights under the federal fair debts collection practices act (FDCPA), the courts require continued payment of your assessments even while the dispute continues;

(g) that there are no equivalent clean or fair elections procedures as found in public government elections, to protect the integrity of the HOA election process; and

(h) that the practicable ability to institute member “initiatives” and make changes to the governing documents or ACC rules is highly dependent upon the active participation of my neighbors who, as a member of an HOA, have been described as indifferent and apathetic; and that there are no provisions for HOA board “referendums” on issues that ethically should be put to a vote of the members.

HOA limitations: conscripting people who cannot run an HOA

Highlights of the The Urban Institute Forum, June 30, 2011, Private Community Associations: Boon or Bane for Local Governance?

Sadly, Robert Nelson’s pro-HOA opening statement was filled with the myths, misconceptions and half-truths that perpetuate the laissez-faire attitude from government. Legislatures that have failed to reign in these undemocratic private, second political system of government known as HOAs. He is part of what I term the legal-academic aristocrats. McKenzie’s response rejected what he called Nelson’s theoretical, alternate form of government, saying that, “If you actually look at the reality of the way these [HOAs] . . . function, they do not fit these assumptions at all.”

McKenzie said that, for example, this “volunteerism” simply doesn’t happen, since, as it appears that,as all the “common people” know, the agreements are created by the developer’s attorneys and handed down. There is no give and take in creating this form of individualized local government, so often touted as town hall government at work in HOAs. McKenzie described these declarations as “boiler plate”, and mentioned seeing covenants relating to elevators when there were none in the subdivision.

“People are “conscripted” into these associations if you buy the lot”, he further added. They are then told “that they consented to the agreement, but that’s a legal fiction.” “And realtors don’t even tell them anything about it.” In reality, he continued, “the people really don’t control their association, the dead hand of the developer does” since changing the CC&Rs is difficult to do. [With respect to the past attempt at Arizona legislation to allow 1/3 of the members to change the CC&Rs for everyone does not address the problem of ex post facto contracts].

Addressing the contractual legal scheme, McKenzie stated that, “This [HOA legal scheme] is a model . . . that trickled down from the top of the income distribution . . . . It is probably a form of governance that would work reasonably well if practiced by 1% of the population.” The wealthy and reasonably affluent with money “who can hire lawyers and who came in with their eyes open and knew what they were getting into.” In other words, a specialized, utopian, perhaps cult community for the wealthy. As I’ve written many times, McKenzie said the mass merchandising [my words] was driven not by the people demanding HOAs, but by the developers and municipalities that are increasingly mandating only HOA regimes for new developments. There is no free market system at work, no freedom of choice.

As this mass marketing proceeds, “you begin to conscript people into this mass housing who cannot run it.” In particular in today’s climate, the failure to establish adequate capital reserves to offset decreased income. Well, isn’t that also a failure of the national HOA educational organization that “certifies” HOA managers for the past 40 years?

“The idea of private government is fine,” according to McKenzie, “for people who can afford to operate it. Imposing this on people, which we have done, who cannot run it, who don’t know how to run meetings, who won’t go to board meetings at all . . . . What we are seeing is professional people, managers and lawyers actually running the associations.” You know, the “hired hands.” “The priority on foreclosure is driven by the professionals. It is not driven by what’s best for the community.”

“The owners are not loyal to their association. They put up flagpoles because they don’t think they are legitimate.”

The policy makers and public interest ‘influencers” should pay attention to the realties before them, and cease their dogmatic, unworkable ideology. This Forum is a good start.