law – Page 36 – HOA Constitutional Government

Public policy protects HOA principalities

How many readers own a timeshare? I do. Do you know, for a one-week ownership and for a comparatively inexpensive purchase, the buyer gets tons of protections under the law. Why? Because of the abuse in the past. But, not so with respect to all the HOA abuse and questionable validity of CC&Rs and the consent to agree issues over so many years. There are no “Truth in HOA” laws in any state!

When buying a timeshare (“vacation ownership” nowadays), and I bought a few, we actually had a sit-down with the sales manager who, like in a closing, went over all the many documents, took time to answer questions, and had us initial a double-spaced, large type, two-page itemized list of important legal matters, indicating that we had full knowledge and consent of the legal issues. Thats’s in addition to all the other papers that we had to actually sign.

What’s the problem with buying an HOA propertty, if everything is on the “up and up?” Maybe because there would indeed be a “Truth in HOAs” document to be given and signed off by the prospective buyer prior to closing, and only if signed off can the sale be completed. And that’s in addition to the current sales document, the inadequate HOA disclosure document, now required by almost all states.

What seems to be the problem that these HOA buyer protections have been missing all these years?

CAI asks why the government won’t let HOAs do as they please

Under the slow awakening of state legislators across the country, Community Associations Institute (CAI) finds it necessary to remind the faithful followers and public policy makers of the grand and immense contributions that HOAs make toward our society and system of government[1]. So it claims in its “Why HOAs?” article.

In article’s second paragraph the writer recites the history of the “master” land owner who sets forth the use and control over the land forever in what we know as covenants running with the land, or CC&Rs. He then speaks of the value of such CC&Rs, in his next paragraph, bypassing any mention of duly elected government of the homeowners and democratic functions of the HOA. No, you get the HOA constitution from the profit-seeking developer and his attorney written, almost boiler-plate, CC&Rs. So much for a democratic government.

Holmgren, the writer, continues to properly inform the reader that local governments like this – a privatization of government services onto you, the homeowner. But, there is one major problem not mentioned. He does not mention that the protections of your rights and freedoms under the Constitution does not apply to these private contractual HOAs. No, it’s definitely not mentioned, not even hinted.

In an abrupt about face, Holmgren then speaks of “why government is so rarely a friend to homeowners associations,” and “they [government] believe homeowners associations are an untoward restriction on individual freedom.” The issue is one of power – the writer, following CAI policy, firmly believes that HOAs are indeed independent principalities not to be regulated as any other entity, especially as a private government. He plays to the simplistic dogma that the people can do anything they like, and regulation to protect one faction against the evils of another doesn’t apply to these principalities.

The writer then directly attacks the legislatures across the country that have over the years enacted pro-HOA laws. Holmgren blames the government as being opposed to HOAs. Did he fall off a turnip truck and hit his head? In Arizona where he performs, and as reflected in the pro-HOAs laws enacted in other states, my data over the past 8 years show only three substantive bills (foreclosure, due process, control of public streets, etc) out of thirteen that were put into law, and one was declared unconstitutional in a suit brought by the Carpenter Hazlewood law firm.

While CAI argues before the legislatures about freedom of local control and the rule of the majority, it seeks top-down imposition of laws upon the HOA homeowners, without their consent and to their detriment. It has now admitted that HOAs are mini-governments, so now it’s OK to interfere with a government contract. And that the right of a minority to change the HOA “constitution”, the CC&Rs, is consistent with democratic government.[2] It appears to be an effort to control the HOA board cliques with their “expert” advice.

In spite of its alleged argument with the legislature (carefully called “government”), CAI figures that these draconian undemocratic propositions will be accepted by the legislators in view of their alleged necessity and compelling justification to protect HOAs. Propositions denying homeowners the equal protection of the laws and due process protections. I guess CAI, a third-party interloper that seeks to alter the private contract between the HOA and the homeowner, are feeling the threat of a loss of their ability to show a value to HOAs. And to protect their income stream.

This is a sad case of “the tail wagging the dog.” It is sad because there exists an alternative legal scheme for those individuals who seek the benefits of planned communities and condos, who with full knowledge of all the factors relating to HOA lifestyles and without duress, so freely choose. This alternative, existing in all states today[3], can provide these benefits along with the protections of their rights, freedoms, privileges and immunities under the 14^th Amendment and every state’s Declaration of Rights, which do not exist under the HOA authoritarian regime.

References

CAI Carpenter Hazlewood Delgado & Wood enewsletter of 3/11/11, Why HOAS?, Mark Holmgren.
See video of CAI lobbyist’s statement before the Arizona House Government Committee meeting of 2/15/11 on HB 2441. (http://azleg.granicus.com/ViewPublisher.php?view_id=13, scroll down to entry link).
See A proposal for the “Muni-zation” of HOAs; Stop developers from granting private government charters.

AZ bill to allow 1/3 vote to change CC&Rs violates your private property rights

If HB 2441 were to become law it would be challenged as an unconstitutional taking of private property rights by means of a contractual interference without a necessary and compelling government interest; and as creating HOAs as state actors under the US Supreme Court holdings of state actors: cooperation with, the coercion of homeowners, and the entwinement with the HOAs daily operations of HOAs among others.

The bill is lengthy, vague at times, and contradictory at other times. It must be read carefully with close attention as to what is not said and the meaning of the words.

1. Majority rule — HB 2441 strikes to the heart of majority rule and rule by the will of the people. It imposes by fiat, by statute, a minority control of changes the CC&RS, which are seen as the community’s constitution or charter. The modification of this type of document is never made for light and transient reasons, but by super majority vote. CAI lobbyist misrepresented the impact of the heart of this bill (subsection B) with his emphasis on two-thirds and 50% numbers, carefully not stating that it is 2/3 of those voting and not the entire membership. With the 50% quorum (buried within subsection (C)(3) and not part of subsection B, where it ought to be) allows half of the 2/3s, or one-third, of the members to alter the “contract” agreed to by a homeowner at purchase, without his consent, or the consent of the majority.

2. Access to the courts – The original version of this bill (subsections J of 33-1227 and I of 12-1817) had an explicit unconstitutional provision that denied court challenges to any CC&Rs amendment, the very same issue now before the AZ Supreme Court – constitutional due process by the Office of Administrative Hearings that permits appeals to the civil courts. In the amended version, this stark unconstitutional denial has been replaced with a much softer wording that still favors the HOA over any homeowner challenge. It makes the simple, but immensely expansive legal doctrine, that any CC&R amendment has the presumption of validity. It copies the “presumption of constitutionality” doctrine regarding statutes, but is even broader in scope as it would preclude two other factors delineated by the Restatement of Servitudes: unreasonableness and contrary to public policy. (See § 3.1, Validity of Covenants in the Restatement).

The second sentence of this subsection gives the illusion to not prevent any challenges to any amendment. It speaks of “does not limit the right”, which contradicts the first sentence that the amendment is presumed valid. Under this wording, the burden, as if the HOA were a state legislature, falls to the homeowner challenger to prove the invalidity of the amendment without stating the appropriate grounds as contained in the Restatement. A fair and just bill would be silent on this issue, as the Restatement should suffice, and not invoke public entity attributes. If CAI wishes to ascribe public entity attributes to the HOA, then the legislators must insist on the full panoply of protections of the 14th Amendment be applicable to the HOA. The bill is silent on these protections of homeowner rights.

3. Illusion of court protection – Subsections I of 33-1227 and H of 33-1817 claim that the court can still decide validity and enforceability issues, giving the illusion of constitutional protections. However, these subsections refer back to the subsections listing the 13 exceptions to the application of the voting procedure and not at all to the content of any amendment — “Subsection G of this section shall not be construed to affect the court’s ability . . . .” These are empty, meaningless subsections provided to mislead the reader.

4. Stakeholders — Speaker Pro Tem Montenegro spoke of meeting with all the stakeholders who are in agreement with his floor amendment. The word “stakeholder” is CAI newspeak, a redefinition of its common meaning, and accepted by the sponsor. “Stakeholder” includes the homeowner, and all stakeholders are not equal. Surely, the homeowner and his private property rights comes first and foremost above and beyond those who make a living from his membership in an HOA. But, apparently no one speaking for the homeowners were present at the sponsor’s meeting of allegedly all the stakeholders.

5. CAI lobbyists misleads legislators – Among the numerous misstatements, misrepresentations and spin in reference to this bill, and to the HOA environment, made before the House GOV committee on HB 2441, I’d simple like to draw to your attention the following, as they are continually being made before legislative committees. Mr. DeMenna, the CAI lobbyist, opened his remarks with: “This [CAI] is the organization that represents homeowners associations throughout Arizona. We are the association’s and board’s duly elected . . . [trailing off, intentionally not saying elected as what] and what have you.” CAI is not permitted, at risk of losing its tax-exempt status, to have HOAs as members as it is a business trade group, not an educational group, and cannot claim any such representation. or for homeowners either.

Neither have I ever heard of any board acting to give any attorney the right to speak for it before public bodies, nor have I ever heard of any vote of the members granting authority to the CAI lobbyist to speak on any of the issues before legislative committees. But, Mr. DeMenna persists in making this falsehood. CAI is simply a third-party interloper interfering with the private contract between the HOA and the homeowner.

Furthermore, the lobbyist once again makes an erroneous statement that the homeowner signed his CC&RS. No such thing occurs in Arizona! Even if he is required to sign the CC&RS, it would not matter as the common law of servitudes binds the homeowner as soon as he takes possession of his deed, sight unseen. It’s called constructive notice. Contract law and constitutional law have been replaced by the pro-HOA servitudes laws. See Calif. opinion: CC&Rs and surrender of constitutional rights.

See HOAGOV YouTube Channel for 9 min excerpt of the CAI lobbyist’s arguments for minority control.

6. Please note that this bill was written by Scott Carpenter, a CAI member attorney, principal in Carpenter Hazlewood Delgado & Wood who brought the challenge to OAH adjudication of HOA disputes, now awaiting a decision by the AZ Supreme Court whether or not to hear the case. Mr. Carpenter is also on record for his assertion that he will defend local control of the community. This bill contradicts this public display of “for the people” as it imposes state law without the vote or consent of the local community, which Carpenter claims to be defending.

HB 2441 must be emphatically rejected! It would be a blot on this Legislature to enact such an abominable statute.

“The founders understood that the principal mission of government was to secure people in their natural rights — to protect them against the lawless private thugs as well as of ill-intentioned legislators.”

Machiavelli and America, Hadley Arkes, p. 145, The Prince (Yale University Press, 1999).

Calif. opinion: CC&Rs and surrender of constitutional rights

This is an important Calif. case on CC&Rs and the extent to which your “agreement” to be bound satisfies the waiver of your constitutional rights. Arizona’s HB 2441 – written by CAI — proposes a waiver of access to the courts by homeowners. CAI wants it in law rather than by contract to avoid a similar ruling. As I said before, they have an answer or “out” for anything that they propose, which always leads to the courts and $$$$ for them. And, Arizona’s HB 2717 had a restriction on incentives for HOA attorneys to run to the courts on every little thing — cut the fee awards to the them — rather than the HOA and homeowner trying to work it out first. It has been removed by the sponsor.

Here’s a few quotes from the California opinion, emphasis added.

Treating CC&R’s as a contract such that they are sufficient to waive the right to trial by jury does not comport with the importance of the right waived. CC&R’s are notoriously lengthy, are adhesive in nature, are written by developers perhaps years before many owners buy, and often, as here with regard to the waiver of trial by jury, cannot be modified by the association. Further, the document is not signed by the parties.” (Treo, supra, 166 Cal.App.4th at pp. 1066–1067.)

CC&R’s are generally, as here, adhesive and unilateral and those bound by their terms may only have constructive notice of those terms and no contractual relationship with the developer who drafted the CC&R’s.

(This case focuses on the narrower question of waiver of jury trial).

Source: Villa Vicenza v. Nobel Court Dev., 191 Cal. App. 4Th 963 (Cal. App. 4th Dist. Jan. 1, 2011).

CAI response to amicus brief: laws never protected HOA homeowner’s constitutional rights

My long awaited debate with the CAI (Community Associations Institute) lawyers on substantive issues relating to HOAs has finally come about. Well, almost. The CAI member law firm and attorney for the HOA responded to the amicus brief submitted to the Arizona Supreme Court by this homeowner rights advocate in Gelb v. DFBLS, CV 10-0371-PR. In short, two issues are addressed: the constitutionality challenge itself, and the alleged political bias by the appellate court in its decision holding the statute unconstitutional.

First, the Response simple reiterates its Response to the Petition for Review, maintaining that the issue was already settled by the appellate court.

Second, as to the arguments advanced in the amicus brief that the appellate court allowed political considerations to influence its opinion, the Amicus, that’s me, is painted as a conspiracy believer. “The amicus curiae closes his brief with a conspiracy theory about the involvement of undersigned counsel in this case and other cases in which the constitutionality of the statute was challenged.” The CAI member attorney defends his rush to file this appeal, which occurred as a result of the Phoenix Townhouse v. AZ OAH superior court default decision, with “legal counsel had the obligation to raise every issue available that could result in prevailing for his client in the pending case.” However, this sidesteps the question raised in the default Phoenix Townhouse case, still unanswered by the attorney, as to the legal standing of the real person in interest, Ron Meritt, who had left the HOA prior to the constitutionality challenge. Smith coud not risk opening this door again.

In unsupportable conclusions, the attorney, Jason Smith, charges me with suggesting that his constitutionality challenge was made to intimidate homeowners from filing suit. That does not follow logically. The challenge, as stated in the brief, was that the HOA attorneys weren’t looking too good and had to end the success of OAH adjudication. Further far-fetched charges made by attorney Smith include that I “liken undersigned counsel and his firm to henchmen for authoritarian regimes suppressing the rights of homeowners.” The record before the Arizona Legislature over the past 10 years and statements made by the firm are well documented in this respect. Smith adds, “The conspiratorial hyperbole notwithstanding”, we were just doing our job for our client.

Furthermore, in an unbelievable statement echoing that of the CAI amicus brief before the NJ appellate court in Twin Rivers HOA free speech case, Smith firmly states that, “It is clear from the that the amicus curiae simply wants to impose constitutional protections on members in homeowners associations. The law has never supported that proposition.” Let me rephrase that statement:

The law has never supported the proposition that homeowners in HOAs are entitled to constitutional protections.

A copy of CAI’s Response Brief with its above in-your-face statement of the law should be sent to every state attorney general, every state legislature, every state real estate department, and every state’s consumer watchdog and consumer protection agency. This declaration by Smith, p. 8, should be highlighted as evidence of misrepresentation and fraud in the sale of planned communities and condos, and homebuyer protections demanded.

Finally, in Smith’s gratuitously offered proposed solution, as all those of us who have attempted to obtain justice from our state legislatures well know, and as CAI — the national lobbying organization supporting the HOA establishment — and attorney Smith well know, the legislatures have not accepted the fact that the HOA laws are unconstitutional special laws for private organizations, as these laws cannot be supported by a necessary and compelling government interest. This level of judicial scrutiny is necessary to deny due process and equal application of the law protections to the residents in de facto, yet unrecognized HOA private governments.

Sources:

Staropoli amicus curiae brief

CAI/Smith amicus response

CAI Twin Rivers amicus curiae brief, p. 19.