Tag: legislation

NJ bill A469 a step toward regulatory agency oversight of HOAs?

NJ bill, A469 (former A1730), sponsored by NJ Speaker Pro Temp, Jerry Green, attempts to detail certain state protections for owner-members of HOAs.  Detailed protection is needed as a result of the vague and broad language of the statutes and governing documents that cause 1) unknowledgeable owners who complain to be “blown away” by HOA “officials,” including attorneys, and 2) unnecessary law suits just to clarify language that the HOA attorneys know misrepresent legal doctrine.

For example, “attorney-client privilege” is abused to apply to legitimate corporate records that are not attorney work products; and the misleading, contractual “after notice and opportunity to be heard” phrase regarding complaint hearings that short circuits the legitimate due process protections specifying confrontation of witnesses, providing evidence and the questioning of witnesses by an independent tribunal.

Among other things, the bill addresses due process by DCA (Department of Community Affairs) and fair election procedures, another vague and unspecified process in the governing documents.  It further takes the proactive step, as I’ve alluded to in my writings on HOAs as a government entity, with the pronouncement that, “Any governing documents of an association not in compliance with this section . . .  shall be deemed amended to be in compliance” (C.45:22A-43.c); and “Notwithstanding the provisions of any law to the contrary, a homeowners’ association shall be deemed to have amended its governing documents, including its bylaws” (45:22A-46.e.) (my emphasis).

In addition, additional regulatory powers are granted to DCA, “The Commissioner of Community Affairs shall promulgate any rules and regulations that may be necessary to effectuate the provisions of [this bill]” (C.45:22A-48.b).

Relevant excerpts from this bill can be read at Excerpts.

Some call it government interference in a democratic society.  Others, including yours truly, see it as legitimate police powers of the government to protect its citizens. As stated in this bill in its closing “Statement” (“legislative intent” statement), “This bill clarifies the intent of the Legislature that P.L.1993, c.30 (C.45:22A-43 et seq.) be viewed as an enabling act for homeowners’ associations of non-condominium types of planned real estate developments . . . .” (My emphasis).

In fact, the Planned Community Act states,

 “45:22A-22. Public policy

“The Legislature in recognition of the increased popularity of various forms of real estate development in which owners share common facilities . . .  deems it necessary in the interest of the public health, safety, and welfare . . . that dispositions in these developments be regulated by the State pursuant to the provisions of this act.

“45:22A-24. Administration of act. 4.

“This act shall be administered by the Division of Housing and Development in the State Department of Community Affairs, hereinafter referred to as the “agency.”

Does NJ law make HOAs an arm of the state, state actors, or an unconstitutional delegation of legislative powers to a private entity? 

In short NJ law has created a state regulatory agency and is now proposing to grant it further legitimate authority under its police powers in the “interest of the public health, safety, and welfare.”  An “enabling act,” as the statutes are clearly being designated, is required to grant powers and authority to state agencies.  State agencies are “arms of the state” subject to the 14th Amendment.

If deemed not, then do the NJ statutes provide sufficient control and oversight of private entities by the legislature?  I believe a resoundingly not!  A469 attempts to move in this direction, but more is needed.

I argued this issue in regard to HOAs in general in Supreme Court says corporations cannot be used to evade Constitution and Regulatory agency enforcement of HOA violations.

AZ Model regulatory HOA agency fact sheet

Explanation

This proposed bill was adapted from Florida’s SB 1348 (2015) and specifically tailored for Arizona. (It was initially proposed in 2008 by Florida’s Cyber Citizens for Justice, http://ccfj.net).  Its objectives are the creation of a state agency called the Department of Homeowners Associations headed by a Commissioner, and the creation of an HOA advisory board to make recommendations to the Commissioner.  It was modeled along the lines of the AZ Department of Real Estate.

Understand that the bill must specify in detail the powers, authority and procedures to follow in conformance with the law.

The format of the bill follows generally accepted standards for bill drafting.  It uses CAPS for new words and strike-outs for deletes.  These are the important provisions of the bill.  The remainder, in normal formatting, is presented as unchanged wording that must appear as required by bill drafting standards.  Generally, they may be ignored. Each part of the statutes is introduced with “Section n,” not part of the statute, followed by the title of the actual statute being changed, such as “Section 33-1806.” A descriptive, either a “is repealed” or “is added”  in total, or  “is amended” phrase follows. Changes are then presented along with the required unchanged wording of the section.

Adapting to other states. The areas to focus on in order to understand the proposed agency are those, as mentioned above, in CAPS and strike-outs.  They may be incorporated into the statutes of other states as is.  However, no complex bill is without links or references to other statutory sections that relate and bear directly on the validity of the new agency.  These ‘links’ would need to be modified and adjusted, most likely extensively, if the bill is to be introduced outside Arizona.  It requires someone with sufficient understanding of bill formatting and who can work with legislative staff to assist in making these necessary adaptations.

The descriptions given below may contain the advisory, “IGNORE,” which identifies code unique to Arizona and probably needs to be changed if adapting for use in other states.

Understanding the bill, Sec. by Sec.

Note that the bill contains seemingly duplicative changes.  One addresses 33-1200 et seq. (and following) and the other addressing 33-1800 et seq. This is because the 1200 sequence pertains to condos and the 1800 sequence pertains to HOAs (planned units).

Sections 1 and 2 add additional wording to title of existing statutes. IGNORE.

Section 3 adds the Department of Homeowners Associations and establishes the office of an HOA commissioner under Title 41, Chapter 20, 41-2325.  Paragraph (A)(3) defines the duties and powers of the department, including the authority to use the Office of Administrative Hearings (OAH) for dispute resolution. Subsections (B) and (C) present the intent and purpose of the bill.

Section 4 adds the powers of the Commissioner to enforce the condo and HOA statutes, which under subsection (B) includes training and education requirement.  Subsection (C) grants the Commissioner the power to set rules that have the power of law. Many agencies have been granted his power, including the real estate department.

Sections 5 and 6 detail the procedures to follow and powers of the Commissioner to handle complaints and investigate complaints, respectively.

Section 7 specifies the penalties for violating the proposed bill statutes, a requirement absent from HOA governing documents, but required by public criminal law.  It’s a notice requirement.

Section 8 adds the funding requirement of $4/door to support the agency.

Section 9 adds the establishment of the HOA advisory board. Subsections (A) and (B) specify the breakdown of the homeowner dominated board.  Subsection (E) defines the authority to recommend revisions in the best interest of the public.

Sections 10 – 16 specify the procedures regarding HOA disputes and OAH hearings since the existing agency is set to expire in 2019. It just moves current law into a new section of code, Chapter 20.  IGNORE.

Sections 17 and 18 revise linked statutes to the addition of Chapter 20 above.  IGNORE.

Section 19.  Omitted in error.

Section 20 repeals the existing OAH funding.

Arizona HOA regulatory bill needs your support.

Last Friday, June 5th,  I emailed a revised AZ model bill to AZ legislators for sponsorship in January 2016.  It was initially drafted this past January, too late for introduction in 2015.  See model HOA regulatory agency bill.

“Summary.   This bill establishes a department of homeowners associations with full direct regulatory authority over Ch.9 and Ch. 16 associations under the direction of a commissioner. It provides for receiving complaints, investigations, filing legal actions, issuing civil penalties, rulemaking, and education as well as establishing an Advisory Board to provide recommendations to the commissioner.   Funding is provided by a $4 per unit fee per year. The processing of HOA disputes by DFBLS is stricken and processing is replaced  by the department of homeowner associations.”

Arizonans, email your legislator and demand sponsorship in 2016!  I will meet with any legislator to clarify and to answer any questions.  This bill affects the general public across the state and attempts to restore law and order to HOA-Land.  It deserves to be made law ASAP!

As you all know, HOAs are private persons and lawmaking is mandated to state legislatures as set forth in their respective constitutions. And you know that the state does not supervise HOAs, but has adopted a ‘hands off’ posture — no penalties for HOA board violations, for instance. “[i]t is a well established theory that a legislature may not delegate its authority to private persons over whom the legislature has no supervision or control.” (McLoughlin v. Pima, 58 P.3d 39 (2002).  This bill would provide constitutionally required legislative supervision and control.

Read the proposed regulatory bill:  Regulatory agency

SB 1008, Virginia’s ‘HOA Bill of Rights’: an illusion of justice

The Virginia Legislation passed SB 1008 that modified the Code of Virginia adding a “Statement of Lot/Unit Owner Rights,” sections 55-79.72:3 and 55-509.3:1.  It sounds like a Bill of Rights, but the 5 items merely repeat existing law without meaningful and effective enforcement.

Consider that Virginia has a constitutional Bill of Rights, Article 1, that contains section 14,

Government should be uniform. That the people have a right to uniform government; and, therefore, that no government separate from, or independent of, the government of Virginia, ought to be erected or established within the limits thereof. 

It seems that HOA private governments violate Virginia’s Constitution.

Furthermore, take the first 2 clauses of Section 11, “That no person shall be deprived of his life, liberty, or property without due process of law; that the General Assembly shall not pass any law impairing the obligation of contracts.”  Compare the “fine print” of SB 1008 that adds, “the right of due process in the conduct of that hearing” (my emphasis), referring to the section on enforcement of rules, (Sec. 55-513 or 55-79.80:2).  The enforcement section specifies the hearing in accordance with the [governing] documents, “the member shall be given an opportunity to be heard and to be represented by counsel before the board of directors or other tribunal specified in the documents.”  Does that mean that the counsel is restricted to seeing that the homeowner is allowed to be heard, or is there more?

I have not come across a governing document that calls for hearings that allow presentation of documents and witnesses and the questioning of this evidence, or that the tribunal be an independent body. My point is, What does due process meaning in the context of SB 1008?  Is it under the constitutional bill of rights meaning, or constrained by the CC&Rs and bylaws private contracts?  Sounds like same ol’, same ol’.

Legislation without effective enforcement through monetary penalties is merely a recommendation that relies on the good faith of the parties, namely the board and its attorney and manager advisors.  But, we know all about the good faith acts of many of these responsible parties, especially those of rogue boards that ignore the laws and governing documents or knowingly violate them with impunity.

It would have been so much simpler to have these details spelled out in this one page bill if, indeed, justice for homeowners was sought.

model HOA regulatory agency bill

shockingThe attached was submitted to AZ legislators.  The model bill should be tailored to your state’s laws.  The sections under 41-2000 et seq. are the amendments that should be included as part of any similar effort to create a level playing field for homeowners.

 From: George

Sent: Monday, January 26, 2015 6:11 PM

Subject: department of HOA is desperately needed as DFBLS is doomed

Dear Arizona Legislators,

I quickly put together a solid bill (attached) based on a Florida bill and adapted to Arizona to help relieve continued legislative involvement in what should be handed by a bona fide regulatory agency.   I took pains to write a good bill in conformity with the drafting requirements and I hope it will ease your review.

I well understand the current atmosphere of no government interference, but the gross and shameful treatment of HOA members by the HOA stakeholders demands justice.  It is not a question of misplaced dogma, but of treating all the people equally under just and fair laws.

The proposed bill summary reads:

Summary.   This bill establishes a department of homeowners associations with full direct regulatory authority over Ch.9 and Ch. 16 associations under the direction of a commissioner. It provides for receiving complaints, investigations, filing legal actions, issuing civil penalties, rulemaking, and establishing an Advisory Board to provide recommendations to the commissioner.  Funding is provided by a $4 per unit fee per year.  The processing of HOA disputes by DFBLS is stricken.

My proposal brings a more level playing field in that the proposed Advisory Board will be balanced in favor of the members, and does not consist of any HOA stakeholder vendor lawyers or managers.  It’s the people’s vehicle for justice.

I urge you to stand behind the effort and sponsor the bill, and campaign for its passage.  I will be happy to meet with any legislator to explain the bill and answer any concerns.

Respectfully,

George K. Staropoli