law – Page 22 – HOA Constitutional Government

AZ Admin. Law Judge upholds state law over CC&R contract

It is refreshing to see that the Arizona Office of Administrative Hearings decided a complaint that upheld state law over the CC&R contractual agreement. The ALJ held, “The preponderance of the evidence shows that the Gadsden flag was at some time an official flag of the United State Marine Corp,” thereby upholding ARS 33-1808. (DBFLS/OAH petition, Steadman v. Esquire Village HOA, No. 11F-H1112004-BFS (April 9, 2012)). This statute reads,

Notwithstanding any provision in the community documents, an association shall not prohibit the outdoor display of any of the following: 1. The American flag or an official or replica flag of the United States army, navy, air force, marine corps . . . .

The HOA argued that “the Architectural Review Committee can regulate aesthetic improvements that can be viewed from the street such as a flagpole and flags flown on it,” failing to understand the explicit and straight forward wording in the statute, “Notwithstanding any provision in the community documents.” Or was it the HOA attorney’s lack of understanding.

Furthermore, the HOA obtained an “opinion” from the AZ Legislative Counsel that he believed that the Gadsden flag was not protected under the wording of the statute. It was rejected as not being legal opinion, nor was there an affidavit presented to the hearing. In apparent desperation, the HOA testified that in the CAI lobbyist law firm and Carpenter Hazlewood press release, Carpenter Hazlewood doubted that the Gadsden flag was protected. Also dismissed.

The HOA’s management firm even argued that the flag was not explicitly mentioned in the statute, so therefore it was not protected. Another instance of narrow readings and failure to accept the fact that there are laws and doctrines outside the planned community act to which HOAs are bound to obey.

Yes, no wonder why the CAI layers have fought so hard to squash OAH adjudication of HOA disputes.

Reference

KY legislators allow HOA private contract to determine public policy

FL supreme court upholds private contract over constitution

Does civil government rule or does it submit to private HOA groups?

The power of private HOA contracts, and other “voices of the people”

AZ Gov. finds bill too confusing for HOA boards and managers

AZ Gov. Brewer found HB 2513 too confusing for HOA board and directors, so she vetoed the bill.

The effect of this bill is unclear as to what is permitted or prohibited in terms of renting and the information to be provided to an association regarding an owner’s renter. This would result in confusion for association boards and property management companies who are legally responsible for managing communities.

HB 2513 would have added a new section to the condo and HOA statutes, ARS 33-1260.01 and 33-1806.01. Subsections A an B seem rather straight forward — deal with the designated agent. What’s the problem? Subsection C requires certain information on the renter to be given to the HOA, such as names, number in family, car license plates, and ages if in an age restricted community. No problem here either; rather straight forward again.

Subsection D allows for a measly $25 transfer fee, as compared to fees of $500 – $1,200 on a sale. It also prohibited any “new” types of fines for renters. H’mmmm. Restrictions on the HOA?

Now we come to the last subsection, E. It prohibits the HOA from any of the following:

1. copies of the rental agreement, credit report or other personal information.

2. having the renter sign a waiver of or limitation on his rights due process rights.

The bill is silent on any guarantee that the renter has the same rights and access to the amenities as an owner, except voting rights. This is only fair as it would balance the playing field if the renter is subject to fines. But, the bill is silent on this renter protection.

I AM confused about what’s so confusing, or was it really another issue, one of again protecting the HOA by prohibiting an invasion of renter privacy — some would say it would have prevented HOA snooping. To understand what appears to be happening here, let’s look at ARS 33-1805, HOA record access by members, and see the degree to which the HOA is protecting itself using statutes that allow for a lack of transparency.

Subsection (B) contains restrictions on member access to HOA records that includes,

“4. Personal, health or financial records of an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association, including records of the association directly related to the personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association.

“5. Records relating to the job performance of, compensation of, health records of or specific complaints against an individual employee of the association or an individual employee of a contractor of the association who works under the direction of the association.”

This is clearly protective of the HOA, and its employees and officials acting on behalf of the HOA, and is apparently not too confusing or too complicated for the HOA directors or managers. I mean, don’t they frequently use their attorneys to defend their views of the laws?

So, what’s the real story Governor Brewer? Why are you denying a just and fair procedure to protect the individual rights and freedoms of residents and owners, while at the same time having no issue with protecting the HOA from sunshine laws and transparency? Something is wrong here! It’s plain and simple that your veto is just another act consistent with the Arizona public policy of protecting HOAs from its members who “pay the freight.”

Why has pubic policy favored HOAs with their denial of member rights and freedoms??

Could it be the effect of a corporate – legislator alliance? Last year, ALEC, the American Legislative Executive Council, proposed model legislation that promoted local government by means of restrictive covenants. Yes, that’s right! And supported by none other than The Goldwater Institute.

A model law authorizing a transition from government-controlled local zoning and planning regulations to private restrictive covenants.

(See the 2011 report, Model Legislation, Decentralized Land Use Regulation Act).

The following quotes are from the Arizona Capitol Times article by Jeremy Duda,

ALEC, a conservative state lawmakers’ organization known for drafting model legislation for members to sponsor in their respective states.

“John Loredo, a former Democratic legislator, said ALEC woos lawmakers with trips, fancy meals and expensive gifts to promote its ‘extremist agenda.’

With many of the 56 Arizona legislators – all Republicans – who are ALEC members” [That’s 56 out of 90 legislators!]

See APS ending ALEC membership; SRP considers doing same.

Looking for justice in an HOA? Look here first!

In the recent California case, Sui v. Price, the plaintiff owned a van for 12 years, and parked it in their reserved parking space. For the past 4 years, the van was inoperable due to a damaged engine, but remained locked in the parking space.

In 2006 Price, the HOA president, caused an amendment to the Rules prohibiting inoperable cars to be approved, and had the van towed. Where have we heard this before? A $1,700 fine was levied on Sui, which affected his credit rating and ability to refinance his home. The homeowner sued for breach of contract and several tort claims, based on an intent to harm the plaintiff, and sought $58,000 in punitive damages. Another case of the effects of ex post facto amendments, when the doctrine of estoppel by laches would be very applicable in favor of the homeowner.

There is no statement of ”an unsightly intrusion” caused by the van with a damaged engine — no fact of a beat-up body, or no tires, etc. California law allows the removal of a vehicle in violation, presumably after 96 hours of notice. The complaint was dismissed. The court dismissed the fact that Sui was just one individual with an inoperable vehicle, and that the CC&Rs prohibit rules that discriminate against member. Forget about the holding that the CC&Rs supesede the Rules.

The court only looked to the the reasonableness of a covenant, relying on,

Simply put, there is nothing unreasonable about prohibiting the open, long-term parking of disabled vehicles. The association was perfectly reasonable in prohibiting this unsightly intrusion upon the aesthetics of their common interest development. (emphasis added).

And that is the danger of the “general interest or general purpose” doctrine – almost anything can be rationalized and justified when isolated and only considered by itself. So the court chose – it was a validly passed amendment, and those other, unaffected members, could undo the amendment. Is this communalism or socialism?

We see no reason to apply a different test for reasonableness of an association’s operating rules, especially since a rule adopted by the association’s board may be reversed by majority vote of the homeowners at a meeting called on petition of only 5 percent of the separate interests in the association. (emphasis added).

Here again the court diminishes individual rights for a perceived common good of the community in what many would call socialism. It’s disturbing that the homeowner in these cases is not compensated for a loss in benefits by being a member of the community, while others are held to benefit. Another overlooked requirement for upholding valid amendments.

In the public arena, the homeowner would have received compensation for this “taking.”

If Trayvon HOA is sued, who should share the blame?

As indicated in the media and earlier (What is an HOA’s duty of care liability to its members and to all others?), the HOA could be sued under a number of legalities as determined by the facts. It is important to ask what factors led to the use of Zimmerman by the HOA. Under the legal doctrine could the homeowner members and even the public policies of the state that amount to a “hands-off” accountability toward HOAs — they can do no wrong — be held liable?

The latest media report (Homeowner association could be sued in Martin case) reminds everyone that the homeowners would most likely have to reach into their pockets.

“So, if you’re going to send out a newsletter saying, ‘Hey, he is the captain. Whatever he says goes,’ you have now basically rented a free police officer for your neighborhood,” Clark said. “He certainly took on that role with the homeowners association, and it seems to me that they recognized that.”

Who would pay in the event of such a lawsuit would probably be determined by the type of insurance coverage the association has, Clark said. Some policies may be wide enough to cover Zimmerman’s actions. If there is no policy or the policy in place is very narrow in its coverage, homeowners likely would have to pay out of their own pockets through higher monthly assessment fees because most associations don’t have very deep reserves, he said. He noted that policies typically cover about $1 million.

Many will cry out that it would be unfair and just to make the homeowners pay for the neglect, if true, by the board. But would it? It is obvious that the board of directors, the legal body responsible for managing the HOA would be first and foremost. But what about the homeowners themselves, who have oversight control through the election and recall of board members?

Under a “ re ipsa loguitor” (a form of circumstantial evidence that permits a reasonable person to surmise that the most probable cause of an accident was the defendant’s negligence) theory, do the homeowners have a share of the blame in actions by the HOA’s agents? Would the fact that HOA members are well known to apathetic with respect to the acts and actions of their elected boards absolve them of any failure to act?

In turn, the homeowners could argue that the homeowners’ hands are tied, for the most part, by the adhesion contract CC&Rs that permit an imbalance of powers to the HOA over the rights and liberties of the members, and by statute. That the ineffective pro-HOA state laws reflect a public policy in support of the survival of the HOA at the expense of the homeowner. (See The public policy of the states with respect to HOAs).

Laws that have no enforcement penalties against HOA board wrong-doing may explain some of the members’ apathy — “What’s the use?” You can’t fight city hall.” Laws that Alexander Hamilton called, “recommendations.” “If there is no penalty [for] disobedience, the resolutions or commands which pretend to be laws will, in fact, amount to nothing more than advice or recommendation.” (Federalist #15).

It is difficult to understand the rationality for this hands-off policy that flies in the face of our system of governance, with its checks and balances and separation of powers doctrines felt necessary to restrain the power of government. “If angels were to govern men, neither external nor internal controls on government would be necessary.” ( James Madison, The Federalist papers, # 51).

In answer to the question posed here as to who should share the blame, the answer must be “all the above.” And state legislatures are in the power seat to make the needed changes to fulfill the special interest propaganda of healthy and harmonious communities. All that the state legislatures have to do is to do justice and SAY NO to the special interests!