Tag: HOA

Restructuring HOAs: “benefit of the member” pt. 1

Mentoring: “inure to the benefit of the member”

Government of the members

Continuing my discussion of the Declaration’s intent and purpose[1] as expressed by “shall inure to the benefit of the member, ” the question arises as to how does the BOD accomplish this task when it has a contractual obligation to many owners. How can the BOD represent the individual interests of the buyer with those of all existing members? Must we accept the interpretation of “member” in the Declaration to really mean “members”? Really!

This concern is of importance and not a mundane, trivial concern because it involves concepts and principles of representative democracy, as claimed by HOA proponents, the will of the people doctrine, vote of the majority, and obedience in conscience. It is relevant because the HOA is not subject to municipal law or the Constitution, but under a binding, private contractual agreement. HOAs are allowed to exist as outlaw governments, operating and functioning outside the laws of this democracy.

Much too often the courts and legislatures have treated the HOA as if it were a municipal government, ignoring the CC&Rs contract and misapplying municipal doctrine and precedent; without applying those aspects of the laws that protect the member’s constitutional rights. For example: allowing the HOA to tax its members — called assessments — with a right of draconian foreclosure, but providing a laughable “due process” known as “a right to a hearing” where the judges are the accusers and judicial civil procedure is an unknown.

Ask yourself: Is this the benefit being provided in the best interests of the members? I think not! And the legislatures do not have clean hands in this matter, not at all!

Maintaining an orderly HOA

The philosophical theory, simply stated, behind a democracy as a direct democracy is the voice of the people. But what does that really mean? First, it means each person gets to have his voice heard in the governance of his community or society along with all others. And that combined, aggregated voice is measured not so much as by shouting but by a vote of the hands or a ballot. Second, our US representative democracy the people elect representatives to speak their voice. In HOA governments members choose a board of directors to govern the HOA as their elected representatives, or their voice.

In both cases the practical application of the voice of the people has been reduced to a vote of the majority and the majority rule doctrine.[2] These were issues that the political philosophers of the Age of Enlightenment — Rousseau, Montesquieu, Voltaire, Adam Smith — had to contend with as necessary for an orderly society even though it was not a true, direct vote of the people. But what about the minority, those who disagreed with the majority position? Well, they had to obey the general will of the people represented by the majority even though they were on the losing side.[3] However, they may not agree in conscience especially if they firmly believe the law is unjust and not fair.

Former AG Meese wrote,

Through deliberation, debate, and compromise, a public consensus is formed about what constitutes the public good. It is this consensus on fundamental principles that knits individuals into a community of citizens.[4]

Where is the consensus of the HOA members to constitute the public good? To knit individuals into a true community? Surely not by a hand-me-down contract that the buyer must accept as is without any give and take.

Randy Barnett, Director of the Georgetown Center for the Constitution, wrote,

A law may be ‘valid’ because it was produced in accordance with all the procedures required by a particular lawmaking system, [the HOA amendment procedure, for example] but be ‘illegitimate’ because these procedures were inadequate to provide assurances that a law is just.[5]

With respect to the courts and legislatures upholding tacit (implied) consent, Keith Wittington, Prof. Politics at Princeton, wrote,

Tacit consent purports to provide a rationale for obligating those of us who, by chance or choice, have not made their approval of the government explicit. . . . Perhaps most significantly, we are taken to have consented tacitly to government action if we continue to vote for government.[6]

Understand that when your HOA says the majority rules maintaining that it represents the voice of the owners just remember it’s just a means to maintain an orderly society and to grant the board the authority to govern. What about a member’s agreement in conscience?

This topic continues with Restructuring HOAs: “CAI influence on member benefits” pt. 2 with the CAI School to be posted soon.

Notes

[1] See “Restructuring HOAs – intents and purposes,” George K. Staropoli, HOA Constitutional Government (Feb 2020).

[2] State laws governing corporations provide the legal basis for BOD authority and powers. Robert’s Rules provides widely accepted procedures based on majority rule.

[3] For a summary of the will of the people see my Commentary, HOA consent to agree vs. “the will of the majority”. For a detailed discussion of agreement in conscience and consent to agree see Randy Barnett, Restoring the Lost Constitution, Princeton Univ. Press, (2004); Keith E. Whittingham, “Chapter 5, Popular Sovereignty and Originalism,” Constitutional Interpretation, Univ. Press of Kansas (1999); Edwin Meese III, “What the Constitution Means,” The Heritage Guide to the Constitution (2005).

[4] Id, Meese.

[5] Supra n. 3, Barnett.

[6] Supra n. 3, Whittington.

 

Restructuring the HOA model

This Commentary is a position paper on the need to restructure the HOA model of government.  It is not light reading and requires serious consideration and understanding  of the underlying issues.

Background

I have stepped outside the box to offer the boards of directors (BOD) a fresh view of the nature and legalities of the HOA legal scheme. StarMan Group HOA Management Consulting believes that the HOA legal model of government must be restructured to

establish the climate and culture of the HOA enabling the restoration of the lost constitutional principles of democratic government — individual rights, justice and fair play — for its members within the confines of a private contractual government,

In my activist 20 years of HOA reforms, irrational fears have been inculcated in the general public and are the primary elements for the failure to resolve 54 years of endemic HOA issues: fear of loss of home, fear of financial and emotional stress, fear of legal actions and lawsuits, fear of social isolation, and fear of property devaluation. These have been advanced by pro-HOA forces.

The current embodiment of a utopian society (HOAs) was formulated in 1964 (The Home Association Handbook) and CAI was created in 1973 to address the growing dissatisfaction with HOAs. In 1993 it dropped being a tax-exempt educational nonprofit to become a business trade group in order to more effectively lobby state legislatures to protect the status quo of the HOA model of governance.

The HOA model of local government is a fourth type of local government in addition to the public domains of commission, council-manager and council-mayor forms. I ask: Is there a legitimate, bona fide reason and justification for the HOA to function outside public government?   No, there is none!

BOD Reorientation to review the HOA mission

The restructuring of HOAs starts with the education and reorientation of the BOD to better achieve its primary, broad purpose which is to provide quality services to its members. The only statements or covenants relating to the intent or purpose of the HOA focus on the interests of and benefits to the members, and neither to investments nor to social welfare services. The BOD must face the question as to how the best interests of the members can be accomplished by a rejection of the US and state constitutions.

“Maintaining property values” cannot be taken as an investment in your home. The CAI model focuses on punishment and enforcement of violators of the governing documents or those who fail to timely pay their assessments. The governing documents (CC&RS and bylaws) contain restrictions and limitations and any rights or privileges that the members possess under the CC&Rs are laughable when compared to the Bill of Rights or state Declaration of Rights.

I firmly believe that the BOD must undertake a serious, in-depth review of the original intent of HOAs and where it is today and where it’s going. For example, surely an HOA is not a social welfare organization but a private membership nonprofit regardless of any misguided ruling by the IRS. This review must be conducted in an open and unbiased manner free from the years of CAI indoctrination by the CAI School of HOA Governance (my appellation), to which far too many BODs have long been a willing and obedient adherent. Being under the spell of the CAI doctrine, the BOD has lost its freedom of mind, has neglected principles of local government, and functions outside constitutional application.

BODs, in general, resort to CAI not for legal advice on how to run the HOA government but as a crutch to allow them to dodge their obligations to govern the people — their residents — living in the territorial subdivision of the planned community or condo. Why would CAI speak of or admit to the Bill of Rights or to state Declaration of Rights and lose control of the industry? Why haven’t they?

In addressing the management of nonprofit organizations, eminent management consultant Peter F. Drucker wrote: “The first job of the leader is to think through and define the mission of the institution.”  He makes the point that the worthiness of a mission statement lies not in its beauty but in leading to “right action.” It has to be operational, otherwise it’s just good intentions. “One of the most common mistakes is to make the statement [a series] of good intentions.”

CC&Rs are a devise to circumvent the Constitution

The recourse to the real estate laws of equitable servitudes giving legitimacy to the declaration of covenants, conditions and restriction has gone afoul with respect to HOA governments. “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.” The governing documents reflect the undue influence of the CAI School of HOA Governance, and the failure to accept the reality that the HOA is a de facto form of local government that functions outside the US Constitution.

The Homes Association Handbook model set the tone, the character, and the culture of the HOA “community” from which the boilerplate declarations flowed with the help of CAI lawyers. There are no public disclosures of the loss of individual property rights, or the legislative immunity granted to BODs, or the unjust elections procedures, or the absence of constitutional due process protections, or court rulings of implied waivers and surrenders of individual rights, just to mention a few.

It goes without saying that private HOA governments must be restructured to return to the Union and restore member rights, freedom, privileges and immunities. It can be done and must be done. Plessy v. Ferguson (163 US 537 (1896)) was overturned by the US Supreme Court fifty-eight years later in 1954 by Brown v. Bd of Educ. (347 U.S. 483 (1954)). So can years of unjust HOA Acts and statutes be overturned in the light of today’s knowledge and conditions.

And so, it starts with the review and restructuring of the purpose and intents of the HOA to establish a climate and culture of the HOA conforming to the principles of democratic government as required of all local government by the Constitution.

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Further reading:

 

Authorities for protected HOA political speech — SB 1412 poll

In regard to Arizona’s SB 1412 seeking free political speech with regard to HOA governance issues, please see the following Commentaries containing relevant court opinions and California bill, SB 323, passed into law last year. Don’t forget about the important references — endnotes — found in these Commentaries.

Take the HOA public issues poll in confidence. Complete privacy. I don’t get name or email address, so take the poll today!

  1. Political free speech both without and within the HOA (2018).
  2. NJ Supreme Court upholds constitution against HOA free speech electioneering violations (2014).
  3. CA SB323 a model on fair elections for all states (2019).
  4. courts hold HOAs as political second governments with public issues (2009).
  5. Protecting HOA political free speech on matters of general community interest (2015). Applies anti-slapp laws protecting HOA free speech.

 

 

HOAs are in need of a major restructuring

Whether you like your HOA, or dislike your HOA, is immaterial. It’s all about the Constitution and the HOA legal scheme. What matters is whether the HOA legal structure is a danger to the country, because it will happen again. And none of us can have confidence, based on the historical record, that it will not happen again because . . . every day it is allowed to continue at will.[1]

It is well past the time for a restructuring of the HOA model of local government formulated some 56 years ago by ULI in 1964 — The Homes Association Handbook. In 1973 CAI was formed to deal with the persistent problems facing the HOA model, and in 1992 CAI was forced to change its educational tax-exempt status to that of a business trade group in an attempt to deal with the continued problems with HOA.[2] In 2005 it had to drop HOAs as a member due to conflicts with the purpose of a business trade group — HOAs are consumers of CAI services.

These HOA problems and issues are endemic to the legal model of unconstitutional, private governments as a result of the intents and motivations behind the introduction of HOAs: to make $$$ by means of a mass merchandising effort.[3] Constitutional considerations were ignored and avoided by focusing on the legalities of real estate law and equitable servitudes to justify the legal authority over the HOA members. 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.

There is no denying that the HOA subdivision managed by competent boards and professionals appeals to the desires and wants of home buyers and bring many benefits. It comes as no surprise that the vast majority of persons living in an HOA approve and love their HOA, finding only minor problems with the board of directors or HOA managers. The annual “satisfaction” surveys produced by the pro-HOA trade group, CAI, reflect this positive attitude.

However, the HOA legal structure and scheme is authoritarian in nature: strong central power, limited political freedoms, no accountability, and under the rule of man, not law.

But the HOA is truly a totalitarian democracy. A totalitarian democratic state is said to maximize its control over the lives of its citizens by using the dual rationale of general will (i.e., “public good”) and majority rule.[4]

Prof. McKenzie wrote in 1994: “HOAs currently engage in many activities that would be prohibited if they were viewed by the courts as the equivalent of local governments.”[5] The authoritarian nature of HOA-Land is masked by a thorough indoctrination that presents a false picture of the real estate subdivision as democratic, inappropriately named a community, simply because the members are allowed to vote, as meaningless as it is.

The HOA danger to the Constitution has been presented in several Commentaries herein, and in the white paper found in the book, The HOA-Land Nation Within America.[6]

There is no denying that the HOA subdivision managed by competent boards and professionals appeals to the desires and wants of home buyers and bring many benefits. However, as this whitepaper addresses, the means to this end are highly suspect and harmful to our democratic system of government.

StarMan Group, HOA Management Consulting, offers a program to resolve many of the substantive defects with HOAs by means of the complete restructuring of the model: a program of organizational development. It also requires the removal of the adverse influences by the CAI School of HOA Governance as I collectively refer to CAI’s policies, best practices, guides, communications, seminars and certifications, and in its Manifesto.[7]

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References

[1] Rep. Schiff’s (Rep. Adam Schiff is the leading Democratic impeachment prosecutor), opening argument Friday, Jan. 24, 2020, appealing to the Senators to uphold the Constitution. “Whether you like the president, or dislike the president, is immaterial. It’s all about the Constitution and his misconduct. What matters is whether he is a danger to the country, because he will do it again. And none of us can have confidence, based on his record, that he will not do it again because he is telling us every day that he will.”

[2] See in general: Evan McKenzie, Privatopia: Homeowners Associations and the Rise of Residential Private Governments, Yale Univ. Press, 1994; Donald R. Stabile, Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing (funded by CAI and ULI).

[3] See in general, “Analysis of The Homes Association Handbook,” George K. Staropoli (2006).

[4] George K. Staropoli, The HOA-Land Nation Within America, p. 22 (StarMan Press 2019).

5 Supra n. 2, Privatopia.

[6] Supra, n.4, p. 4.

[7] Community Next: 2020 and Beyond (May 5, 2016).  A manifesto is a public declaration of intentions, opinions, objectives, or motives, as one issued by a government, sovereign, or organization. A white paper is an authoritative report or guide that informs readers concisely about a complex issue and presents the issuing body’s philosophy on the matter. It is meant to help readers understand an issue, solve a problem, or make a decision.

 

State legislators have placed HOAs above the law

There are strong parallels between the shameful conduct of our elected officials in Washington and that of “elected” HOA boards, each made possible by the strong support of irrational, dogmatic cult followers. In turbulent Washington with the upcoming impeachment of trump, Congressional Democrats and some Republicans are staunchly upholding a fundamental principal of democracy: no one is above the law!

To allow any person or organization to operate above the law is to reject the US Constitution founded on representative democracy. In Washington there is the minority faction of Republicans and in HOA-Land[1] there is the a majority faction of homeowners who accept the conduct of the leadership, failing to recognize its wrongful and illegal conduct. By their active support, these authoritarian followers[2] are placing the leaders above the law. Cults exhibit a lack of any freedom of mind by their followers who blindly and irrationally submit to the will of the cult leader.

“What has this to do with state legislatures and HOAs,” you may ask. Plenty!

Over the years state legislatures, each and everyone, have by acts of commission and omission enacted special legislation — generally known as PUD, CID, HOA, POA, etc. Acts — for a special class of nonprofits that placed HOAs above the law. While granting and permitting broad de facto political governance over the residents of the HOA subdivision, HOA boards of directors, the directors themselves, the officers, and their attorneys and managers/firms are not subject to effective enforcement by the application of meaningful penalties.

There are none or hardly any provisions for the enforcement of the law that are substantial enough to serve as a serious detriment to continued HOA board violations of the law and their contractual obligations. This unconscionable state of affairs is the result of the failure to enact legislation to hold HOAs answerable to the law. It is the public policy set by the state legislatures, themselves, as found in their enacted laws to hold and place the HOA and its leadership above the law.

 

If Trump is not impeached and removed from office, there would be little hope that the state legislatures would feel compelled to honor their oaths to uphold the US Constitution and to hold HOA-Land to the laws of the land. The shameful conditions of HOA-Land statutes will continue with little fear of Congressional interference. Without the fear of enforcement – shared by HOA- boards — State legislatures would be given an enlarged “free ride” that violates the US Constitution.

 

Author’s note:  The public needs to stop being conned by “political correctness,” which is the real-world embodiment of Orwell’s Newspeak.

“Many can see the parallels and extensions of Orwell’s 1984 in the real 1984, and current world. In 1949 George Orwell published 1984 where the fictional Oceania (formerly known as England) is a totalitarian state that has instituted a new society designed for the survival of the country. . . . Thought Police (don’t speak out or question, or else); Doublethink, creating the ability of the people to hold and accept two contradictory thoughts at the same time; Newspeak, the official language, replacing English, that redefines words and concepts; Ministry of Truth, the agency of propaganda and historic revisionism; and the Ministry of Love, the agency of regulations and enforcement.”[3]

Political correctness is not ethical or moral correctness! It has been instituted in the US to support the government from attack or criticism. Its purpose is to intimidate the public, by social ostracization, from its right to free and open political free speech and discussion. And it has been very successful both in general and in regard to HOA members.

 

References

[1] Definition of HOA-LAND:  HOA-Land is a collection of fragmented independent principalities within America, known in general as “HOAs,” that are separate local private governments not subject to the constitution, and that collectively constitute a nation within the United States. For more see, Defining HOA-LAND: what it is. (George K. Staropoli, HOA Constitutional Government.)

[2] See in general, “HOA political dynamics: totalitarian democracy.” George K. Staropoli, HOA Constitutional Government.

[3] George Orwell’s 1984 is alive and well in HOA-Land, George K. Staropoli, HOA Constitutional Government.