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.
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.
I just read the Illinois CAI chapter’s amicus curiae brief in the IL Supreme Court appeal of the groundbreaking Spanish Court v. Carlson decision. The court held the HOA liable for violating contractual obligations to repair and maintain common areas, and homeowners could withhold assessments.
Speaking about the need for timely payment of assessment to keep the HOA going, CAI argues,
The very real impact of the Second District’s decision is peculiarly analogous to our government’s need to collect taxes free from objection by individual taxpayers. Surely, if people could refuse to pay taxes and then defend against their collection based upon a claim that the government had been negligent in the maintenance of public spaces and providing services, the government would find itself in dire financial straits and unable to fulfill its obligations.
The other decision in this 2012 caseprevented the HOA from using the draconian measure of “forcible entry” – occupy the unit — to get the member to pay right away. CAI’s argument for the HOA was that forcible entry was a valid tenant-landlord action, but the court had held that not paying rent was also a valid landlord-tenant action.
The major selling argument for CAI’s being “a friend of the court” is its repeated claims to speak not only for the HOA, but for the members, too. CAI offers the same ol’ impression that it is an educational organization and not a business trade group that lobbies for the business interests of its members. And as such, why is it defending the consumers of its services, the HOA? We know why? Does the Illinois Supreme Court know why?
The Institute’s [CAI] mission is to serve as a national voice for those involved in community associations, including homeowners, governing boards, service providers, and vendors. (My emphasis).
The Illinois Chapter’s mission is to provide education and resources to Illinois residential condominium, cooperative, and homeowners associations, as well as represent their interests and the interests of Illinois community association members on issues of legal importance. (My emphasis).
However, the brief is full of arguments supporting the HOA and it right to use the draconian measure of forcible entry, while denying the contractual right to withhold payments when the HOA defaults on its obligations.
This video covers the Arizona Senate GE committee hearing on a bill that would allow unlicensed HOA managers to represent HOAs. It shows the AZ legislature abdicating and supporting HOA-Land rule over democratic rule, and over the Constitution. It shows a banana republic, “I see no problems,” mentality.
Here are my comments at several points in the video.
My opening statement
Hi, I’m George Staropoli, also known on the internet as HOAGOV. I am once again, reluctantly, before the camera with another HOA legislative documentary. My material comes from events at the Arizona Legislature, and from the legislators themselves.
Viewers will be alerted to the following comments at appropriate points in the video. They are provided to assist you in understanding of what’s really going on. With this in mind, I strongly recommend that you take time to read my HB 2371 Commentary (on this date) on my website before continuing — the link is now being shown.
This video will also be posted to my HOA Constitutional Government website along with my detailed comments — the link is on the screen.
Let’s view the hearing . . .
Opening comments by Ugenti:
You just witnessed the sponsor’s “opening statement.” Note her motive for the bill: Let me quote her, “Every year there is a plethora (many, many) of personal HOA legislation . . . as well as industry HOA legislation.” She stated that she combined all those bills “working through a stakeholder process and allowing the stakeholder process to filter the proposed legislation . . . representing a consensus from the AZ realtors, and AACM (AZ Association of Community Managers, the beneficiary of this bill).” She further added “to spare the members from the agony of voting up or down on personal pieces of legislation.”
Now, what was she saying? First the “personal” bills come from homeowners while the other legislation is “HOA industry legislation.” She put the bills through a stakeholder process and used the process to filter the bills. She failed to say, however, that no homeowner advocates participated in this stakeholder filtering process, which was brought to light in her House GOV testimony, and not denied.
Ugenti said nothing about fixing HOA problems and making HOAs better for everyone, especially the real stakeholders — the homeowners. Not even entertaining an amendment to address issues of substance relating to constitutionality, fair and just laws, and of other homeowner concerns as emailed to her.
Now let me explain that in her earlier statement to the House GOV committee, she also said that she wanted to avoid any controversial bills. But, think about it. If there is serious opposition, based on authoritative sources, wouldn’t that that create a controversy? So, her choice was to deny any opposing views, and only pick the special interest agenda – the stakeholder agenda. Isn’t Ugenti failing to understand that these problems are not singular or personal to just one homeowner? I mean, after hearing more of the same from others and the media, you would think she could take a hint! Apparently not!
Homeowners appear to have been given short rift, and have been placed “at the bottom of the food chain,” defenseless and being gobbled up by everyone else. And here I thought our representatives are supposed to represent the people, not the moneyed special interests.
Art. II, Sect. 2, of the AZ Constitution states, “Governments . . . are established to protect and maintain individual rights.” Did I miss something?
Furthermore, in an outright act of favoritism toward the special interests, as shown in the video, Ugenti asked for questions that she or the stakeholders can answer.
Let’s return to the video . . . .
Homeowner email:
Please understand what has happened in this staged scenario with this constituent email, which the legislators viewed as having a “personal issue” with her association — homeowner owners only bring personal problems while the special interests deal with non-personal agendas.
With the several email dealing with issues and problems of substance, why was the single email chosen for airing before the committee? Why? Because it serves to reinforce the sponsor’s false argument that homeowners only deal in personal issues, which justifies her leaving out the homeowners from serious, authoritative HOA industry specialists! There was no mention of the non-personal, substantive constitutional issues brought to the attention of the legislators in my emails and commentary, or in two other homeowner advocate emails that I have personal knowledge. Nothing! Silence! Not a word!
The legislators “hear no evil, see no evil, and speak no evil.”
Let’s return to the video . . .
Conclusion
You have now witnessed another episode of “the unspoken alliance of no negatives about HOAs.” Did you hear any of the objections that were emailed to the committee? NO! You did not hear that the bill would allow unlicensed HOA property managers to represent HOAs in small claims court, or before an administrative law judge at the Office of Administrative Hearings? Did you know that even licensed paralegals are not allowed to represent others? Did you know that the current law applies to all hearings from all agencies before OAH?
Don’t tell me that the legislators, AACM, CAI, or the sponsor of HB 2371 don’t know about the 2012 AZ Supreme Court opinion on HOA managers engaged in the unauthorized practice of law, and the decision against for numerous UPL violations against one CAI/AACM member? C’mon! The legislators were sent copies of these decisions. The viewers of the hearing video would not think any such events against unlicensed mangers had occurred. In court, hiding exculpatory evidence (evidence in favor of the defendant) is a crime! But, apparently it’s OK in the legislature.
And rather than do what is just, fair and reasonable, and that is to require proper licensing for managers if they are being allowed to represent HOAs, HB2371 is silent on education!
What we have here is a special law for special private entities, without even a whisper of any legitimate justification. The bill is an unconstitutional special law violating the AZ Constitution, ART II, section 13, which states, “No law shall be enacted granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which, upon the same terms, shall not equally belong to all citizens or corporations.” In other words, no special laws for special people are permitted.
Section 32 states, “The provisions of this Constitution are mandatory, unless by express words they are declared to be otherwise.” Where are the “express words” in this bill to override the Constitution?
What you have witnessed is the homeowner, the real stakeholder, has been cut out from the legislative process. What we have here is legislative support, cooperation, entwinement, and a symbiotic relationship between the state and the HOA, thereby making good cause for HOAs to be declared arms of the state, or state actors, subject to the 14TH Amendment protections.
It must still pass the Rules committee and the final vote of the entire Senate before becoming law. Passing this bill into law would be unconscionable!
Please read this unfolding case study of how the “stakeholders,” those who have put forth HB 2371, dominate the members of an upscale HOA in Scottsdale, AZ. HB 2371 calls for unlicensed HOA managers to represent HOAs in small claims court and creates an exception to state UPL laws.
In the Terravita Community Association, a vote was held this past Tuesday to amend the CC&Rs to permit the HOA to assess attorney fees against losing homeowners in an administrative hearing. (See HOA democracy at work: dysfunctional adoption of amendments by minority vote). The unusual wording only permits the petitioner who filed the complaint to be awarded attorney fees if the prevailing party. But, the administrative hearings do not award attorney fees by law, and attorneys are not required. Yet Terravita sees the need to use an attorney and use member fees for this unnecessary expense.
Furthermore, as called to the attention of the Terravita board, the wording of the amendment would strip the existing contractual agreement that attorney fees be awarded in civil court, a more expensive procedure and subjecting the HOA to increased litigation costs.
In other words, state law be damned! The members have declared that they have agreed to ignore the law and to charge attorney fees as stated. And for only a few administrative petitions that have been filed. There was no debate, no discussion, no opposing views presented to the members. Just, “Here’s the ballot. Vote YES and return it.” And the members, like Colonel Potter in MASH who signed anything Radar put in front of him, voted in favor.
It should be noted that the CC&Rs amendment was passed by a minority of the members, only 571 members out of 1380 voted, a minority of 41%, and the amendment passed with just 514 votes or 37% of the membership. Minority voting was approved by the members in 2010, making this mockery of democratic principles possible. In 2011, the legislature had voted down a statute, proposed by the “stakeholders”, that would allow all HOAs to implement minority control of the amendment process — an unthinkable procedure allowing minority adoption of amendments to constitutions and charters.
Well, what does that say about that unassailable, inviolate “contract” that the special interests, those “stakeholders,” have been shouting? It is meaningless when others can amend your agreement with changes that reasonable persons would not anticipate or expect. And now in Terravita, by a minority vote. Apparently, it’s not an issue with the members of Terravita.
Tearravita Community Association is an upscale “resort” type HOA in Scottsdale, AZ, with a golf course, community center, and a security guard entrance. It has 1380 members, has a CAI/AACM management company, and a CAI attorney.
HOA Constitutional Government 