Tag: justice

Combatting the CAI happiness in HOAs surveys

It is the CAI sponsored/conducted surveys of overall “happiness in HOAs” (my words) that advocates must come to deal with.  The surveys must be challenged and confronted, because the HOA lobbyists will show them, with a smile, to your state legislators. And then they will point out several other similar surveys. The legislators will simply glance at the data, smile, and say, “How can I help you?”

It is accepted doctrine, especially in the courts, that if a statement is not refuted it is taken as true. Same applies here when arguing for HOA reform legislation.  The surveys can be challenged on several points, such as, biased surveys even though the reputable Zogby conducts the actual survey under the sponsorship of CAI;  the questions asked and not asked; and the conclusions drawn from the data presented if you obtain access to the actual survey questionnaire and unedited responses. (Any reputable organization will provide this information as verification of its conclusions, as is standard operating procedure with any validly conducted research).

Take the latest CAI 2012 survey under “Association Rules”  that contained an assertion that 25% — note not 5% — had a  “significant” personal issue or disagreement” with their HOA. It also stated that just 42% were satisfied with the outcome. Yet, the survey concluded with the finding that just 8% dissatisfied with their board: “This strongly suggests that the vast majority of residents recognize and appreciate the net benefit of living in their communities—even when there are differences of opinion.”  The survey did not go into the nature of the disputes.  Were they trivial, or did they involve homeowner rights and the fair and just treatment of homeowners?

The following question was asked under “Pre-purchase Awareness:”  Did the fact that your current home is in a community association make you more likely to purchase or rent your home, make you hesitant about purchasing or renting your home or have no impact? An interesting question that indicates an awareness of advocate arguments that if they knew the whole truth about HOAs they wouldn’t buy into an HOA.  Of course the survey revealed that 64% indicated “no impact” and 29% indicated “more likely,” for a 93% positive view of HOAs.

However, no one was asked to read my Truth in HOAs Disclosure Agreement and its comments from readers, for example, that provided a lot of material information about HOA life.  What do you think the response would have been?  But, if nobody tells the legislators about the Truth in HOAs disclosure, or can get the local media to run a survey, then the legislators can pretend ignorance, or at least ignore the babblings of a few malcontents. 

It seems that the predominate attitude of the vast majority of state legislators is that the overall benefits of HOA legal scheme far outweigh any concerns for homeowner constitutional protections  – due process and the equal protection of the laws.

CAI’s Research Foundation makes the following broad claims in its Statistical Review (my emphasis),

Because of the fiscal challenges faced by many local municipalities, communities are often created with the stipulation that the developer will create an association that will assume many responsibilities that traditionally belonged to local and state government.  This privatization allows local jurisdictions to permit the continued development of needed housing without having to pay directly for that infrastructure through property taxes. . . . Community associations not only maintain home values, but also reduce the need for government oversight and expenditures by providing services, assigning payment responsibility to homeowners and being responsive to local concerns.

Read the above carefully!  Where are the protections for homeowner rights under the contractual, not public domain, nature of HOA governments?  There are no protections as one would expect under our system of democratic government.  That is inexcusable! And state legislators do not see any problems with private governments operating outside their state and US Constitutions.

 

If the above surveys and conclusions by CAI are not challenged, life will remain difficult for meaningful HOA reforms.

North Carolina: second battleground for people’s rights in HOAs

North Carolina is proud that it was the first state to vote for independence from Great Britain (Halifax Resolves, 1775).  Today, some 238 years later, another battle for independence from oppressive government has commenced in the NC General Assembly.  This time, it is the people subjected to authoritarian, oppressive private HOA governments who seek equal justice with regard to safeguarding their homes against HOA foreclosure.  This time, it is the citizens of North Carolina who seek a redress of their grievances against the NC General Assembly that has supported, and continues to support, special laws for special groups.

In every stage of these oppressions we have petitioned for redress in the most humble terms; our repeated petitions have only been answered by repeated injury. (Decl. of Indep.).

Today, the NC assembly has two HOA bills before it, HB 175 and HB 331:  one seeks to impose harsher terms for HOA foreclosure rights, HB 331, and the other seeks to remove the unconscionable right of HOAs to foreclose, HB 175.  While NC currently allows unconscionable nonjudicial foreclosure, HB 331 would now put the HOA in the same position of a Trustee holding a deed of trust with the “power of sale,” which amounts to an auction sale without having to go to court. This amounts to putting the HOA in the same position not only as the mortgage holder, but as the trustee as well.

The bill further proscribes new foreclosure procedures that supersede the general NC foreclosure statutes, just for HOA foreclosures. There is nothing in the detailed procedures contained in 4 pages of the bill that addresses any procedures for the homeowner to contest the amount of debt being foreclosed by the HOA.   What does the simple phrase, as used in the bill, “if not contested” mean?

On the other side of the battle-line, HB 175 does away with special foreclosure rights just for HOAs. And rightfully so!  The right to foreclose has been argued on the basis of the need to collect assessments – read HOA “taxes” — so the HOA can survive.  Well, this argument could apply to any nonprofit that seeks to foreclose in order to survive.  But, there are no such laws protecting these nonprofits from failure, is there? And these nonprofit, charitable, and educational corporations can argue that they provide a public service, while the HOA provides services to a private group of people, only its members.

Other arguments against HOA foreclosure rights include:

  1. The HOA has not advanced any hard funds like a bank, yet it is treated as a public entity with the right to foreclose on the nonpayment of “taxes.”  But, the Assembly does not feel the need for checks and balances on the HOA board for this grant of special powers.
  2. The US Supreme Court has held that punitive damages, which the foreclosure essentially amounts to, in excess of 10 times the actual damages, violated the 8th amendment’s prohibition on the infliction of cruel and unusual punishments.  For example:  Foreclosing on a $2,000 debt, of which $500 is the actual assessment debt, on a home valued at $140,000 amounts to a whopping 70 times the debt.
  3. Foreclosure discriminates and is essential an intimidation and punitive measure that is effective only on certain members and not others – only those who have paid their mortgage over the years so that the HOA can collect funds in excess of the existing mortgage.  Is it fair for the good people who have paid and paid not only their mortgage but their HOA dues over the years to lose their home?  I think not!  But, on the other hand we hear their self-righteous chant that it’s “unfair for others to pay for deadbeats” who are behind in their assessments.  There seems to be a huge disconnect here.

I cannot entirely blame the members for this attitude, because they have been deceived. They have never been told the facts about the possible adverse financial conditions that could lead to holding them legally obligated for the debts of others.  HOA membership is like buying into a small, privately held business that has limited ability to exit or to raise additional funds if needed.  Also, the HOA is similar to a partnership where each member is jointly and severally obligated for the debts of the HOA. 

If some members cannot meet their “fair share,” any deficiency will be made up from those who can afford to pay.  These additional funds, like now being needed by many HOAs, can only come from existing members, which can be imposed upon them through the courts.

Also, I cannot reconcile this obsession by members against letting the deadbeats get away with not paying their HOA debts that often amount to less than $2,000, but who say nothing when their HOA spends $5,000 – $100,000 in attorney fees  pursuing trivial lawsuits against minor and questionable violations of rules.  We see these cases in the media quite frequently.  Something is wrong with the attitudes of members in HOAs, definitely wrong!  The attitude of the HOA members themselves is discriminatory and unconscionable.

Which direction will the General Assembly take?  For the people by ending the unconscionable and discriminatory HOA rights to foreclose, or for the  defective HOA legal structure that denies homeowner protections?

Arizona bill tells HOAs that they do not control public streets

[Please note that a previous post on this bill, SB 1278, was posted in error, referring to restrictions on mandating HOAs in new subdivisions.  An Arizona bill, SB 2292, that would have made this a law has been stalled in the Legislature and will die there.]

Arizona Session Law Ch. 103 (2013), SB 1278,  reaffirms local municipality control of public streets within an HOA.  It is a groundbreaking bill because it relegates HOA private governments to a rightful secondary status and subject to public government laws.  In a disgraceful rejection of the Constitution, courts see no problem with upholding the common law Restatement of Property (Servitudes) as controlling over Constitutional and contract law.

It’s a simply worded bill:

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 33, chapter 16, article 1, Arizona Revised Statutes, is amended by adding section 33-1818, to read:

33-1818. Community authority over public roadways: Applicability

A. NOTWITHSTANDING ANY PROVISION IN THE COMMUNITY DOCUMENTS, AFTER THE PERIOD OF DECLARANT CONTROL, AN ASSOCIATION HAS NO AUTHORITY OVER AND SHALL NOT REGULATE ANY ROADWAY FOR WHICH THE OWNERSHIP HAS BEEN DEDICATED TO OR IS OTHERWISE HELD BY A GOVERNMENTAL ENTITY.

B. THIS SECTION APPLIES ONLY TO THOSE PLANNED COMMUNITIES FOR WHICH  THE DECLARATION IS RECORDED AFTER DECEMBER 31, 2014.

While homeowners must wait until 2015, this bill is a giant step forward to curtail the unconsitutional reach of private regimes where homeowners are outside the protections of the US and Arizona Constitutions.  It speaks to putting a clamp on The New America of HOA-Land. The bill took 5 years of dedicated effort by HOA champion and State Senator Nancy Barto before it became law.

HOAs had raised feeble arguments that could and still can  be easily addressed by seeking ordinance variances.  The HOAs and their hired-hand venders have refused to avail themselves of this avenue of redress, which is available to all citizens.  No, this 4 year long battle was a battle for power and control.  Which form of government controls your public streets,  the municipality of the HOA regime?

 

NC adds another bill to protect homeowners from HOA abuse

Another bill to reign in HOAs and their hired-hand mercenaries was introduced in the NC Assembly, HB 871.  An agency is sought to regulate, including rule-making authority, to license property managers with restrictions prohibiting the giving legal or financial advice, and from controlling reserve and operating funds of the HOA.  Furthermore, a fidelity bond will be required of all property managers.

Very importantly is the intent of the legislature to protect homeowners.  HB 871 reads (emphasis added),

The General Assembly further finds that managing a community association by collecting and handling assessments and other funds and managing property of the community association are deemed to be real estate transactions. If a community association is not properly managed the improper management can adversely affect the real estate through foreclosure of the community association member’s property or bankruptcy of the community association. Improper management may also affect the rights of the community association members as consumers and property owners. It is the purpose and intent of this Article to protect the public from persons unqualified to provide community association management and from unprofessional conduct by persons regulated pursuant to this Article.

 

As more and more state legislatures awaken from their long slumber and remove their rose-colored glasses, the extent of the wrongful, unethical, and immoral acts of HOA property managers, as well as HOA attorneys involved in collusion, is becoming apparent.  I congratulate those state legislatures for joining the Enlightenment Movement, and bringing a just and fair governance of subdivisions currently unaccountable to the state for their actions.

The HOA industry has failed to regulate itself.  The hired-hand property manager and attorney associations, who claim to be of professional status,  have failed to regulate the conduct of their members.   Therefore, it is only rightful for  state legisaltures to step in and protect its citizens from the abuse by powerful factions.

 

See The HOA Enlightenment Movement continues to spread: just legislation for homeowners

The HOA Enlightenment Movement continues to spread: just legislation for homeowners

A review of new legislation being considered in many state legislatures clearly shows a growing trend toward justice and fair play for homeowners.  Substantive HOA reform bills can be found in Arizona, Colorado, Florida, North Carolina and Texas to name those are known to me.

Arizona. 

SB 2292 seeks to end mandatory HOAs for new subdivisions.

SB 1278 reasserts local municipality control of public streets in HOAs.

Colorado.  HB 1276 seeks to restrict HOA foreclosures by setting forth strict procedures for HOAs to follow if they seek to foreclose on a homeowner that include restrictions on the sue of collection agencies, the adoption of a formal payment plan, notice to delinquent homeowners stating the exact amounts owed, and the procedures to resolve issue before any action can be taken..

Florida.

SB580 places restrictions on management firms.

SB 596 creates a powerful, bona fide state agency to regulate HOAs and that can make rules, to investigate complaints and to seek penalties and restitution in civil court.

North Carolina.  HB 175 is another foreclosure reform bill that prohibits assessment foreclosure, but allows HOAs to obtain court judgments for the assessments owed.  It requires a notice of a claim of lien to be served on the homeowner before any action can be taken.

Texas.  HB 3803 seeks state oversight by allowing the attorney general investigation of financial wrong-doing by the HOA, with penalties.

Much, much more legislation dealing with substantive HOA reforms is needed.  This legislation would deal with fair and just due process procedures in HOA disputes, foreclosure reforms, clean elections procedures, meaningful enforcement against HOA violators, and ending the “consent to agree” misrepresentation in the sale of a home in a HOA.

 

For more information . . .

the age of HOA enlightenment is coming?

And the HOA Enlightenment Movement grows . . .

Court decisions: HOA Enlightenment Movement vs. the Dark Ages