Tag: legislature

Traitors and turncoats: HOA directors as CAI members

In every state HOA directors have a fiduciary duty to the HOA, to act in good faith, and as a prudent person would (as he would spend his own money).  Why then, are HOA directors also CAI members?  CAI is a vendor, a business trade organization formed to support the business interests of its members, mainly attorneys and managers.  To say that the vendors and the consumers share the same goals is to question the speaker’s mental state.

It’s understandable for consumers to seek assistance from vendors, as happens in many different industries, but to join and support a vendor organization?  The usual procedure is for the vendors to become associate or affiliate members of the consumer organization, which in our case would be an HOA organization.  (Those HOA associations of associations, like ECHO in California and SCOHA in Arizona, are just fronts for a CAI controlled entity.)

How and why did this occur?  It began at the very start with the  initial 1974 composition of CAI that had HOAs as a member category, although not quite explicitly stated.  Each of the 5 categories was to be equally represented in governing CAI: 1) builders and developers, 2) homeowner leaders of associations, 3) association managers, 4) public officials, and 5) other vendors.[i]  At that time, CAI was a 501(c)3 educational organization and not a trade group.  But this changed in the period of 1989 – 1993.

At the 1989 CAI retreat, controversy emerged on just who CAI represented given the fact that HOAs were consumers, not vendors. According to the CAI “historian”  Donald R. Stabile, “One participant commented that the CAI . . .  builder and developer group viewed CAI as a consumer organization teaching consumers how to sue the builders” to which another responded, “CAI is a professional organization and not a consumer group; that it was never intended to be a consumer group”. [ii]

Stabile continues discussing this important turnabout period in CAI history when it felt the need to become a business trade group, yet still retain the homeowners as members. In regard to homebuyers and residents, “To be sure, getting them interested in CAs [HOAS] was an important element in enhancing the popularity of this new form of housing” [read, mass marketing of HOAs]; and, “The advice they [the buyers] received from CAI was consistent with what [CAI developers and managers] needed consumers to be hearing”.[iii] 

As to the thoughts of the 1973 Founders of CAI at this juncture, Stabile adds that they “deemed it important for attaining legitimacy for the  CAI as a voice for the entire industry” [iv] and to relate “positive aspects to the public especially regarding public policy issues”.[v]  (They have since dropped that line).  Concern centered that a “more consumer-oriented organization” would supplant CAI, and that “other citizens’ associations, which were consumer motivated, might become the national representative.” [vi]

It seems that the roots of a great con started in that 1993 period that altered the purpose and mission of CAI, when lobbying for their members predominated under the guise of promoting vibrant and harmonious communities.   In 2005, some 13 years later, CAI finally dropped the façade of representing HOAs – HOAs were no longer members. All through this period CAI, and many of its attorney members, had addressed legislatures saying that they represented homeowners and HOAs.  And still today this claim appears quite frequently in CAI public statements.

What we have today is the faithful follower Team Players and the dogmatic True Believers (see The HOA Privatization Scale) simply denying reality like the Emperor in the fairytale, The Emperor’s New Clothes.[vii]  When a little boy cried, “He has no clothes,”  the Emperor realized that he had been duped. Yet, he continued to believe in his delusion since he could not admit having being wronged by con men.

For whom does the HOA director – CAI member serve?  Isn’t this an outright conflict of interest?   Does he serve as a “patriot” for the HOA, under legal requirements and dictates?  Or, for  the CAI business trade group as a “turncoat” to his HOA?   HOA members must reject board memberships in CAI that are paid for by member assessments.  These directors/officers are traitors, turncoats, and fifth columnists, all believing that they are doing good for the HOA.

 

Further reading:

For a detailed, non-CAI history of HOAs and CAI, see The Foundations of Homeowners Associations and the New America.

 

Notes

[i] Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing, Donald R. Stabile, (Greenwood Press 2000)  p. 117.

[ii] Id, p. 129. (CAI became a 501(c)6 business trade group in 1992).

[iii] Id, p. 133.

[iv] Id.

[v] Id, p.131.

[vi] Id., p. 129.

[vii]  The Emperor’s New Clothes, Mindfully.org (http://www.mindfully.org/Reform/Emperors-New-Clothes.htm), June 7, 2012.

HOA Privatization Scale: facing reality

Note:  As you read this commentary, please keep in mind the serious revelations of wrong-doing in HOA-Land: in Nevada, in California with corrupt judges, in Arizona where the case files on charges against an HOA attorney for aiding and abetting have been sealed, and in those states with consumer “pacifier” ombudsmen who accomplish very little.   Many will blame the government, and ignore the role played by the HOA member in allowing such activities to happen with such ease.  The Privatization Scale shows an attitude that can be described as an irrational fear of, “Don’t make waves otherwise the government will take my HOA away.”

 HOA Privatization Scale

  Having spent a few years in this arena of homeowner associations, I’ve come up with a scale to help define where a person stands on the status and acceptance of HOAs.  This is based on the attitudes and statements made by the person and will be helpful in understanding and communicating with him.

I chose a scale based on the degree of privatization that is acceptable to the HOA member; that is, how strongly does the person identify and accept the level of privatization in one’s life and home and the intrusion into one’s privacy by HOA boards. There are 5 classifications:

 1.      REVOLUTIONARY – This person sees HOAs as an anomaly to the American way of life and beliefs, and operating outside the laws of the land.  The HOA model must be completely revised or removed.

 2.      REFORMER— This person generally accepts the HOA legal model and powers of the HOA as granted by the CC&Rs, and permitted by the state governments. He only wants the board to change its ways to conform to his views.  He’s primarily concerned about his own local problem.

 3.      COMPLACENT — He is the person who is content with his HOA, only seeing “personal” aspects of the HOA’s powers and functions; that is, the HOA keeps the community neat and clean, provides amenities, etc. This person does not understand the broader issues surrounding HOAs.  There are no problems with the board, just those homeowners who don’t comply.  The board does a good job.

 4.      TEAM PLAYER — This person understands the private nature of the HOA, but prefers it and the sanctions against members.  He primarily is concerned about the quality and value of his community.  A believer in private clubs and their restrictions, and a person’s right to associate with whom he pleases. He does not let violations of fundamental principles and laws affect him.

5.      TRUE BELIEVER — This person is a power player who understands that the HOA private organization structure, with the lack of government enforcement against HOA board violators, offers an opportunity to control and to dominate. Enforcement is necessary to protect property values. What’s good for him is good for the community. Most horror stories can be found here.

 The graph shows a normal distribution curve and the percentages of the people within each segment.  As can be seen, I have shifted the Complacent category to the left. It signifies a preference by HOA members in favor of acceptance of the HOA legal concept, beyond an unbiased expectation.  That is, all things being equal, as I’ve tried to accomplish with the scale, category 3 should fall in the center of the graph.

 In the normal course of things, those at the extremes, the Revolutionaries and True Believers, are the most proactive and vocal segments, but not in equal strengths of being active.  The right-side has been more vocal and influential.

 From my many years of direct involvement in the HOA reform movement and my research and study into social and political reform movements, the environment and conditions necessary for substantive reforms to occur are not even on the horizon.  Token reforms will occur here and here, and some have brought substantive changes like the OAH adjudication of HOA disputes in Arizona, and the prohibition on foreclosing just for HOA fines.  Sadly, though, many substantive reform bills have been repeatedly rejected by state legislatures.

 As long as reformer-advocates continue to accept the legitimacy of the HOA legal scheme — not wrongful or unlawful — they have rejected their most powerful weapon in their battle to achieve substantive reforms.  And in doing so, they have allowed their very powerful oppressors to sit as equals at the bargaining table.  The outcome is, and can only be, as expected and as demonstrated historically. 

  

ASSERT YOUR RIGHTS AS A CITIZEN

REJECT THE HOA CONSTITUTION

 Send the HOA Member Declaration of Citizenship to your legislators!

Is your HOA manager engaging in the unauthorized practice of law?

State Bars take a strong stand against persons who are not lawyers or licensed paralegals providing advice, filing forms, or preparing documents that affect your legal rights.  That means, telling you what the law or governing documents say about why they can do what they are doing!  It happens every day, everywhere, in all states.  The regulation of the practice of law can be found in the statutes and Supreme Court rules of every state. They are complex and detailed, but my summary is correct.  (For Arizona see, Supreme Court Rules, VI. UNAUTHORIZED PRACTICE OF LAW, Rule 75 et seq.)

In 2004, the Arizona State Bar Advisory Opinion, UPL 04-02 – Property Management Companies, addressed 2 important issues that occur quite frequently in many HOAs.   They are:

 

1.     May a property management company prepare documents such as late payment notices, demand letters seeking payment of rent or association fees, and eviction notices relating to the property being managed? Yes, if the preparation of such documents is incidental to the regular course of the property management company’s business or if the documents are prepared by a certified document preparer.

 

2.     May a property management company prepare and record liens relating to the property being managed? Yes, if the preparation and recording of such liens is incidental to the regular course of the property management company’s business or if the liens are prepared and recorded by a certified document preparer.

 

The opinion clarifies  (1) above that,

However, preparation of documents such as eviction notices or late payment notices constitutes the practice of law . . . if they are intended to affect a property owner’s legal rights relative to a property owner’s tenant.

And therefore, the manager is engaging in the unauthorized practice of law (UPL) when a state law or governing document requires such an act.  Otherwise, the notice has no legal effect, according to the Opinion.

Also, these notices are not incidental to the HOA property manager’s  duties.

 

In regard to (2) above, filing of liens, the Opinion states,

[A] property management company’s preparation and recording of a lien constitutes the practice of law, because a lien is intended to affect either the property owner’s rights relative to a tenant or a homeowners’ associations’ rights relative to an individual homeowner. Additionally, because a lien is filed with the County Recorder, the preparation and recording of a lien is also the practice of law . . . .

Again, if not incidental and performed by a certified paralegal.

With respect to a 3rd question on representing the HOA before tribunals, the Opinion said no way.  Of course, it may supply information to the HOA.

 

The delegation, and many times absolute delegation, to HOA managers/compnies by the HOA board does not permit the manager to act as an attorney and  to violate the law.

If you are subject to any of the above UPL violations, file a complaint with your State Bar, giving the details and evidence, and stating the management company name, if any, and any CAI or other managers association membership.  Let’s get the facts out.  Only you can clean up this mess with HOAs!

 

Dare oppose the Will of the HOA, you will pay for it!

Local Phoenix Ch. 3, azfamily.com, (HOA forecloses on Mesa homeowner) did an excellent job in bringing out what goes on in HOA-Land where HOAs are protected by public policy.   In this incident, a homeowner builds a wall for security, as she stated, and gets fined by the HOA.  In a default judgment for an injunction, the CAI HOA attorney obtained some $16,000 in fees for less than 9 months’ work.  This incident expanded to the HOA foreclosure for nonpayment of assessments.

In the foreclosure, a simple filing asking the judge to grant the sale — unlike other disputes over nonpayment of a debt, there are no justifiable excuses not to pay HOA dues — the HOA attorneys tacked on another $12,000 in fees, for a total of some $28,000 in fees.  The HOA got a total just $3,300, of which $1,700 were for unpaid assessments.

If this was in the public arena, and a fine was permitted, there would be no attorney fees paid.  If the state foreclosed for nonpayment of taxes, the equivalent of HOA-Land assessments, there would be no attorney fees.  But, the HOA attorneys are allowed to walk away with fees far in excess of the fines and unpaid “taxes.”  I call it legalized extortion.  

The extortion consists in knowing the homeowner does not have the funds or power to oppose the HOA, and the HOA is not punished under law for any wrong doing.  So the HOA sues, knowing that it has an  80% of getting a default decision, or the homeowner pays the money demanded.   Any different from banana republic justice?    The problem becomes out of control when the homeowner falsely, but innocently, believes  the HOA can’t do anything to him. He lets it go until sued for the typical amounts as involved in this incident.

The common pro-HOA, but  misleading, argument on the acceptance to be bound to the CC&Rs has no merit.  It  ignores the questions of fraud and misrepresentation when buying an HOA controlled home.    For example, is the buyer told that the “sacred” CC&Rs at his closing can be modified without his consent, making them a meaningless piece of paper?  That this ability means that his neighbors control what he still thinks is his private property?    Is the  buyer told that his house is collateral to the HOA, and he must pay no matter, even if  the HOA fails to perform or violates the CC&Rs; or that the CC&Rs are a binding contract whether or not he has signed or read them?  And what about the agent who makes the buyer sign the purchase contract and initial all the contract pages, but requires nothing equivalent from the buyer regarding that second, briefly mentioned in passing, CC&Rs contract?   Look up the definition of fraud and misrepresentation.

In the above AZFamily.com story, when  the homeowner appealed   the attorney fees, the judge approved them writing that, “The Court notes in passing that the short answer to defendant’s objection to the amount of attorneys’ fees is that they were caused by defendant’s intransigence.”  (Minute entry of 3/5/2012, CV 20120-12322).

“Intransigence” is a loaded word!   It denotes firmness and sticking to your guns, even stubborness.  What the judge has done here is to punish the homeowner for standing up for her rights and her home against the banana republic justice illustrated above.  Dare oppose the Will of the HOA and you will pay for it!   Big time!  And he rewards the attorney, without any discussion of the role the attorney played in the delays.  What about the 3 minute entries over 2 years that basically said, “nothing is happening for the past 150 days with the suit”, about which the attorney could have prevented by seeking a decision.  But that would cut his fees, wouldn’t it?  The unreasonable prolonging of law suits violates  R11(a) of civil procedure.

Is this the public policy of the State of Arizona?   Support the HOA and its attorney against the people of Arizona who have been misled about HOA-Land?  Four bills that would have held the HOA and its board accountable under penalty, and which would have provided for “clean HOA elections,” failed to become law this past session.

NV agency opinion: stop making homeowners pay HOA attorney fees

The purpose of the homeowner in an HOA is to pay and pay and pay.     Donie Vanitzian, a homeowner rights advocate and author, said it back in her 2002 book, Villaappalling! Destroying the Myth of Affordable Community Living,

When homeowners move into [an HOA] they have only: Obligations to pay out money. . . They also pay out when and if the board tells them, ‘You have to pay’  . . . . Should you disagree with the board’s order (agenda or whim) to pay, you still have to pay to prove that you don’t have to pay.  (P. 296).

This message was recently taken to heart by the Nevada Real Estate Dept. (RED) in response to a request for an advisory opinion by homeowner rights advocate, Jonathan Friedrich.  This issue is a common, and one example of the broader issue of, “the homeowner pays and pays everything.”  Friedrich asked: “Does NRS 116.3115(6) give an association the right to charge a unit’s owner an attorney fee when the association’s attorney attends a hearing against a unit’s owner?”

The RED concluded,

Exercising the due process right to a hearing on an alleged violation under NRS 116.31031 is not in and of itself “misconduct,” “willful misconduct,” or “gross negligence.” Associations should not be using NRS 116.3115(6) to pass on any attorney fees resulting from a hearing, especially where the association imposes a fine to the maximum extent possible under NRS 116.31031. NRS 116 specifically provides for attorney’s fees to be provided to prevailing parties under NRS 116.4117 in civil actions to enforce the governing documents or NRS u6. The court is not required to award attorney’s fees even if an association is the prevailing party. Association board members who chose to have an attorney present at alleged violation hearings do so at the expense of all the unit owners. Such expense cannot be passed on to a particular unit owner.

Let’s look into some of these money making practices, not for the HOA, but for the HOA attorney, which serve to intimidate the homeowner by means of legalized extortion – demanding payments under the threat of harm or injury.

Understand that the modus operandi here – the reason for doing – is fostered by the legal HOA scheme that allows the HOA attorney to control and strongly influence board decisions in its favor.  (Relying on expert advice will relieve the director of any personal liability).  And that is to go to court under the justification, “You can’t let the masses get away with anything as it undermines your authority to rule.”  My words, but to the point.  So, why not adopt a hostile, no holds barred approach which generates income for the attorney. And, making this approach more appealable to the board by pointing the HOA legal scheme, the attorney tells the board, “Don’t worry, you can charge all this back to the homeowner.”

Another  prevalent tactic occurs in an attempt to work out issues with the board on matters of alleged fines or late assessment payments.  The homeowner is often told to talk to the attorney and not anyone else, where the attorney tacks on his usual fee of $150 – $300 per  transaction.   Shades of  banana republic justice!  This amounts to legalized extortion —  pay to resolve our charges even before a hearing on the merits takes place.  But, we all know the hearing is just window dressing  — we’ll give you a fair hearing before saying, “Guilty.” Makes you wonder why the HOA attorneys do not fight for a fair and just due process procedure like that offered by the Office of Administrative Hearings in Arizona, doesn’t it?

I congratulate the Nevada RED for its just and fair opinion, and Jonathan Friedrich for seeking the opinion.  We need justice for homeowners from our state protective agencies to put a stop to these obvious HOA banana republic tactics.

We need to seriously look into the roles of the HOA attorneys and their overbearing advice to go to court no matter what.   And many times these court actions are frivolous and violate rules of civil procedure relating to  a meaningful action  based on an examination of the facts and the law by the attorney.