Tag: legislature

why shouldn’t HOA directors be held for criminal activities if the shoe fits?

The latest AZ-CAI chapter’s Call to Action, Apr. 5, 2012, objects to the AZ bill, HB 2160, that would make violations of the HOA elections procedure a Class 1 Misdemeanor. No reason s offered as to why not. The bill clearly states that only if the violation is an intentional violation, which is only fair considering the importance of fair and just elections in a democratic society. And aren’t we told by CAI that HOAs are the model of democracy?

Again, CAI resorts to scare tactics by focusing on the penalties under a class 1 misdemeanor. And that the fines, that can be as high as $20,000 for the HOA corporation, would be passed on to the homeowners. What an excellent approach to get member involvement, don’t you think, CAI? BTW, the Call does point out that the bill is to stop “electioneering,” you know, to stop the political machine interference so the people can “throw the bums out.”

The “we are poor volunteers” doing community good argument appears, but the presumption is that they are indeed doing good by opposing elections reforms. It ignores the fact that the bill addresses intentional acts by the political machine running the HOA for its own personal agenda. And the “death of the HOA” argument if we hold directors accountable for their acts is there, too. Well, should we support corrupt and incompetent entities used by a few for their personal agendas, entities that can ruin a member through fines and cruel foreclosure?

Finally, in an admission that not all actions by directors are covered by insurance — surprise, surprise – the fear of no insurance coverage is used. You know, it is not the acts of the directors themselves that is the precipitating cause of such refusals by insurers. No, not the directors, us poor volunteers.

I can hear those directors saying, “Damn! And we had it so good not being held accountable. Gee, I don’t think HOA life is such a good idea now that the “free ride” is over.”

I am well aware of the frequently used techniques that amount to legalized extortion by the HOA or its agent, the management firm. The 2 common instances are forcing the member to talk to the HOA attorney, and to sue on unsubstantiated and frivolous allegations. In the first instance, the member who is given notice of unpaid assessments but does not receive a detailed accounting of the alleged debt. So he rightfully asks the HOA for a statement of his account, not provided by the attorney, but is told to talk to the attorney. Why?

If the manager of president is not sure, he should contact the attorney on his dime and not the member’s dime – attorneys costs are charged back to the member. This is a legitimate request for corporate records and not attorney-privilege concern. And the HOA attorney knows this.

The second instance is the notice of a violation by the  attorney on HOA statements that would fail “reasonable cause” tests.  These allegations are acted upon without any attempt to “check out” the HOA charges, as it must necessarily be concluded, violating R. Civ. P. 11(a), “that to the best of the [attorney’s] knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law.”

The attorneys know that in the vast majority of these cases the homeowner will not go to court and either pay, if he can, or take the default judgment by the court. One JP Court judge told a homeowner in such a case that, “Normally, these type of HOA cases are default decisions . . . “ I would say that that amounts to legalized extortion with the attorney cooperating and looking the other way. See Code of Professional Conduct below).

(Sadly, Arizona bills with meaningful penalties against the HOA failed: SB 1240 would have awarded triple damages against HOA for selective enforcement actions; HB 2455, would have held the directors directly personably liable for member attorney fees; and HB 2731, would have held directors personally liable for lawsuits not made in good faith. They will be back next year, and the year after until put into law.)

HB 2160, elections reforms with meaningful penalties, gives the member a solid footing to take away control of the HOA by political machines and rogue boards. It awaits final votes.

Rules of the Arizona Supreme Court, Part V, Regulation of the Practice of Law, D, Lawyer Obligations, Rule 42.

1.2 (d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent

1.13 (b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act . . . that is a violation of a legal obligation to the organization, or a violation of law . . . .

The public policy of the states with respect to HOAs

In order to understand what this Commentary is addressing, here is a general definition of “public policy.” First, “public interest” refers to the “common well-being” or “general welfare.” “Public policy” is generally defined as,

A principle that no person or government official can legally perform an act that tends to injure the public.

Public policy manifests the common sense and common conscience of the citizens as a whole that extends throughout the state and is applied to matters of public health, safety, and welfare. It is general, well-settled public opinion relating to the duties of citizens to their fellow citizens. Public policy enters into, and influences, the enactment, execution, and interpretation of legislation.

Yet, with respect to HOAs we find that, over the years and in almost every state, the acts and actions, the absence of acts and actions, and the statements and communications by state legislators, government officials and court decisions have created a pro-HOA public policy. I summarized this policy as,

The Public Policy of the states with respect to Homeowners Associations.

1. To protect and defend the HOA;

2. That “you are on your own,” and not inform those now living in HOAs, or about to buy into an HOA, that they will not be protected by the state against HOA wrongs and that HOA violations will go unpunished;

3. To allow HOAs to violate contractual provisions and state laws, as such lawlessness does not constitute an issue of public interest warranting state involvement and protection;

4. To ensure the survival of the HOA, even if it requires the denial of rights and freedoms enjoyed by those not living in HOAs;

5. To protect and defend HOAs as if they were necessary for the security of the state, warranting the suspension of constitutional protections.

AZ HB 2030 – slippery slope to Sanford police dept.?

The failures and continued actions of the Sanford, FL police department, with respect to the failure to uphold the laws on arrest in the Trayvon slaying, is disturbing. It reeks of a total disregard for justice and fair play. It causes me to consider what if your neighborhood HOA had these powers? The public policy with respect to HOAs has been a hands-off policy with and no accountability under the law – let them do as they please. Just as it seems the Sanford police department has adopted with its failure to arrest Zimmerman.

And yet, the Arizona Legislature sees no serious issue with the unrestricted delegation of regulatory powers to HOAs over parking on public streets as set forth in HB 2030.

“An association may regulate the parking of noncommercial vehicles on any roadway for which the ownership has been dedicated to or is otherwise held by a governmental entity . . . .”

My suggested amendment was ignored, “may regulate the parking . . . only with respect to parking by the members of the HOA who have waived their right to public parking on public streets within the HOA governed subdivision.” And the legislature rejected the position that the HOA can get a variance if it has legitimate parking concerns, like everybody else! The legislative intent to allow further unrestricted powers to these independent HOAs has become much clearer.

Would this bill put us on the slippery slope path that can produce an event like the Trayvon slaying? In Arizona, you can carry concealed weapons almost anywhere. The bill does not create any new laws, but is simply a re-affirmation for all to know of who runs local government. If this bill becomes law, then I believe we are on the slippery slope to the “law and order” of the wild, wild west by the power factions, like the cattle barons, railroad, and mining interests of the Old West. Arizona already had one incident where two HOA board members were killed in 2000 during a board meeting.

Although the bill is only about parking at this point, the real import of this bill is the starting out on the slippery pathway to further lawlwssness by HOAs. Where does it say that the the uniformed and arm-banded “HOA Security,” the police arm of the HOA, cannot stop and detain – that means ‘arrest’ — people on public streets? And Maricopa County Sheriff Joe Arpaio doesn’t want to do police public streets in HOA subdivisions. And we well know the great care and concern for proper procedure and obedience to the laws as exhibited by HOAs today in other areas. Can an incident like in Sanford happen with this grant of unrestricted powers?

Won’t happen here? Too far fetched? Wanna bet? To a lesser extent lawlessness  is happening everyday in HOA-Land, with respect to such issues as, failing to respond to records requests, making up rules on the fly, arbitrarily fining people, “political machine” elections, and going to court on the most trivial grounds, etc.  Now what will these rogue boards do next?

Was I wrong in 2006 about CAI and HOA independence?

My research into the historical role of CAI can be found in the 2008 The Foundations of Homeowners Associations and the New America, “Part II, The National Lobbyist for HOA Principalities.”  Part II is subtitled, “Community Associations Institute: Dominating the Emergence and Acceptance in America of a Quiet Political Revolution in Authoritarian, Contractual Private Local Government.”   It was primarily based on the 2005 book, Community Associations, partially funded by CAI and ULI and written by Donald R. Stabile. 

I concluded Part II with,

In short, CAI has been setting itself up as the national private authority, a sort of Board of National HOA Governors, on local community governance through the adoption of uniform planned community acts that perpetuate the current anti-American HOA governments.  In effect, the super, privatized agency to replace the US Constitutional system of government.

This was written back in 2006, before the 2008 revision to an eBook and the 2010 addition of Part III. 

The subsequent acts and actions by CAI include the behind the scenes support for imposing and promoting   the top-down, “one law fits all,” UCIOA laws for adoption by the states.  Its subsequent acts and actions also include positions taken before state legislatures over the years that support and reinforce the denial of due process and the equal application of the laws for HOA members.  And there is CAI’s performance as presented in CAI continues to ignore the Constitution for the HOA constitution that clearly makes the case for CAI’s rejection of and secession from Constitutional government.

Some may call such behavior, seditious.

I don’t think I got it wrong.   

Reference

Seditious:  “Given to or guilty of engaging in or promoting sedition.”

Sedition:  “Conduct or language inciting rebellion against the authority of a state.”  

CAI continues to ignore the Constitution for the HOA constitution

CAI continues its stand against HOAs being held to the US and state constitutions.  This is a second case, the first being CBTR v. Twin Rivers, 929 A.2d 1060 (2007). Sort of an argument for secession to an independent principality status where all residents would be regarded as “expats” (expatriates).

In the Twin Rivers case, the CAI amicus brief to the NJ appellate court warned about “the unwise extension of constitutional rights to the use of private property by members [in HOAs].”

Here’s what CAI had to say in this more recent NJ case, 4 years later. Note that it’s a “putative” brief. Aside for being paid by a party, not indicated here, a putative amicus brief can bring up arguments not raised by the parties for the “edification” of the court. This appears to be CAI – NJ’s position.

Excerpts from the “Putative Amicus Curiae Brief” by CAI – NJ to NJ Supreme Court, July 27, 2011

Whatever rights common interest association members have to express themselves regarding association issues arise not from the State Constitution but rather from statute, from contractual provisions of the association’s governing documents, from the fiduciary duty owed by the association trustees, and from concepts of fundamental fairness.

The ability of members to communicate with each other thus may be said to be an implied covenant in the By-Laws, a fiduciary obligation of the organization, and/or due to fundamental fairness to enable members to participate in community affairs and governance.

A governing board’s regulations are enforceable only if they satisfy the business judgment rule, that is, they are authorized by statute or the governing documents and the board’s action is not fraudulent, self-dealing or unconscionable. [citing Twin Rivers].

Because the unit owners have other statutory, contractual and legal remedies to protect them from overreaching by the Association, there is no need to apply the constitutional free speech clause. For that reason as well, the appellate majority opinion should be reversed.

Mazdabrook Commons v. Kahn, No. 67,094, (NJ 2011) (Not yet decided).

In other words, who needs the Constitution? We have our top-down, business profiteer’s CC&Rs private contract, and laws that mimic and are almost identical to the CC&Rs. Who needs the NJ Constitution, too.

See Twin Rivers and NJ HOA free speech rights, redux.