Tag: government

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.

“Beyond Privatopia” – understanding the economic theories that brought about the New America of HOA-Land

Beyond Privatopia: Rethinking Residential Private Government, Evan McKenzie (Urban Inst. 2011)

 

Once again, a short book, 168 pages, by McKenzie is packed with very important information for those seriously interested in understanding the HOA phenomenon. A must reading for the public interest nonprofits, the legal-academic aristocrats, and all state legislators who have failed over the years to face the realities of the social and political impact of HOAs on our democratic system of government.

 

In his Preface, McKenzie proclaims that “this book is written in my own unusual hybrid perspective”, having one foot in the legal-academic club and the other foot amongst the homeowner rights advocates. He names names of leading advocates (p. 121, n. 4): Shu Bartholomew, Jan Bergemann, Pat Haruff, George Starapoli [sic], Fred Pilot and Monica Sadler. Yet, my impression so far is that the book is addressed to the legal-academic aristocrats to remind them that America was not founded on the state being an neoclassic economic force, a business, concerned with efficiency, productivity, wealth redistribution, or rational choice But, that America was founded on principles of democratic government as set forth in the Preamble to the US Constitution (my interpretation):

We the People of the United States, in Order to form a more perfectUnion, establish Justice, insure domestic Tranquility, provide forthe common defense, promote the general Welfare, and secure theBlessings of Liberty to ourselves and our Posterity . . . .

In Chapter 3 McKenzie discusses the libertarian views of Robert H. Nelson and Nozick, among others. He references Nelson with, “They contend that CIDs [McKenzie’s generic term for HOAs] are more efficient and more democratic [my emphasis] than municipalities and should replace them.” (p. xi). He present’s Nozick’s 1974 argument (p. 47) for “minimal states” that lead to “private protective associations.” Minimal states and protective associations have become today’s call for less public government and the CC&Rs enforcement agency known as the HOA.

 

Nozick’s defense of minimal states, according to McKenzie, is that “This [minimal] state would be legitimate, even though it may infringe on the liberty of individuals [my emphasis], because from the bottom up it would have been based on voluntarism and the rights of contract.” Sounds eerie doesn’t it? We hear these arguments today in defense of the HOA legal scheme, but as McKenize argued, they are based on myths. “The notion that individual owners agreed among themselves to perform these services for each other, and subsequent owners took over from them, is entirely fictional.” (p. 60).

 

Enough for now. More to come . . . .

In search of the elusive ideal HOA agreement

 

I received an email from a well-intentioned homeowner in Georgia. He was on the committee to rewrite the CC&Rs to make it fair both to the 692 homeowners and the HOA, which, I hope he realizes, is the current board of directors. He asked for my input, so I wrote in return:

 

  1. Do you think the Committee can create a more perfect union than that attempted in writing the US Constitution?

  2. Do you think 692 people can agree on everything in the CC&RS that you are putting together?

  3. Do you think 692 people really care about HOA government participation, or did they just want to buy a home?

  4. Would the Committee and the HOA Board sign, along with the 692 owners, the  Truth in HOAs Disclosure Agreement?

  5. Would the Committee include a guarantee that the HOA will maintain property values in exchange for the various waivers and surrenders of the owner’s private property rights and interests, both explicitly stated or implied by the CC&Rs, or by future court rulings? If not, then what is the buyer getting from the HOA? In a true democracy, people give up certain of their rights to the government in exchange for gurantees, justice, protections against more powerful factions, and to obtain an orderly, smooth-running society.

  6. Would the Committee include a prohibition on“ex post facto” amendments to the CC&Rs, similar to that in the US Constitution? That is, honor all prior CC&Rs versions existing at the time of each owner’s purchase? In other words, they are all grandfathered.

  7. Would the Committee include wording to the effect that the HOA irrevocably agrees to be bound and subject to the US Constitution and Bill of Rights in the same manner as if it were a local public government entity, as all other forms of are bound and subject? The phrase, “in the same manner as if it were a local public government entity,” is mandatory. Simply agreeing to obey the Constitution, as found in some CC&Rs, is meaningless would not subject the private HOA entity to the 5th and 14th Amendments.

Now, I hope you will realize the impossibility of your task and its expected failure. No one can expect a bona fide acceptance and willingness to obey any CC&Rs that are created as a mass marketing device to be sold to the public at large. And one that cannot be modified by the buyer in a true give and take exchange necessary for a valid and binding contract.

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!

 

Philippine HOA “Magna Carta” law not based on servitudes

Running through the first few pages of this 20-page PDF on what we would call an HOA Act, but called a “Magna Carta” for HOAs in the Philippines. “SECTION 1. Title. – This Act shall be known as the “Magna Carta for Homeowners and Homeowners’ Associations”. It is a combined social welfare land, reform act and local citizen governance by means of non-profit entities  that allow multiple HOAs within a subdivision.

There is no equitable servitudes law for covenants running with the land that make a mockery of US claims to be the best democratic country in the world. There is no private agreements to replace the Constitution, and allowing the Justices and judges to treat as if it were just another piece of paper.

Most decisions are made by simple majority vote, and members “shall have the following duties (a) to pay membership fees, dues and special assessments; (b) to attend meetings of the association.” It appears that the Filipino law contains most of the same operating provisions as found in the US version. However, audited statements must be posted annually and filed with the national government agency overseeing HOAs (Sec. 17(c)).

Now, how about this requirement of one unified government rather than independent principalities as in the US”

SEC. 19. Relationship with National Government Agencies. – The associations shall complement, support and strengthen the efforts of the national government agencies in providing vital services to their members and help implement the national government policies and programs.
Associations are encouraged to actively cooperate with national government agencies in the furtherance of their common goals and activities for the benefit of the residents of the subdivisions and its environs.
National government agencies shall consult the associations where proposed rules, projects and/or programs may affect their welfare.

Interesting reading for the American legal-academic aristocrats seeking to become Philosopher-Kings, and announce what is good for the American people.