Tag: legislature

Alleged waiver of rights in HOAs are invalid

I congratulate California Senate Majority Leader Ellen M. Corbett for sponsoring SB 561. This bill asserts California’s rightful authority to impose and restore law and order over this second form of political local governments known as HOAs. This is still America, a land under the rule of law. The disintegration and fragmentation of government and society must be stopped before anarchy reigns, right here in America.

 

The law firm of Swedelson & Gottlieb (S & G) argues on its Blog that they know of no one losing their home just because they waiver their rights to have their payments applied first to assessment reduction rather than to collection costs. There are good, equitable and just reasons for paying down the debt first: paying the costs first prolongs the collection agency income stream, not the HOA’s, as the amount of debt goes on forever and may never decrease. Under these circumstances, like “being under water” in today’s housing market, why pay at all?

 

HOAs are required to apply payments to debt reduction, just like your credit card companies. With a straight face S & G states, “We are aware of no homeowners who have ever lost their homes in an association’s foreclosure simply because of unpaid fees and costs of collection.” So, I guess all is well and right with this use of the payment waiver.

 

This attitude, used by other proponents favoring the survival of the HOA and their incomes streams, portrays all members of an HOA as being so enamored with their HOA that they place their well being and financial conditions in the hands of the HOA board. They are portrayed as being true believers seeing no wrong with the HOA, much as one sees with many religious cults. They are portrayed as openly and eagerly waiving their rights in favor of the HOA no matter how disastrous to them. How insulting to all Americans: your obligation to the “state”, the HOA, is to make timely payments, and any rights, freedoms, privileges or immunities are notwithstanding.

 

In its argument for payment plans, created by the HOA’s agent, but “the board dictates the terms of the agreement,” S & G seems to contradict its argument that the “pay costs first” is for the benefit of the HOA, not the collection agency (emphasis added).

 

There is good reason for this– boards know from experience that many homeowners pay the assessment portion of the payment plan agreement but do not pay the costs of collection, knowing full well that the association cannot foreclose for costs of collection only.

 

Say what? The debtors will pay their assessments to the HOA, making the effort for the benefit of the HOA, not the collection agency? Why would a board give up its first claim to $$$ for the benefit of the collection agency? That doesn’t make sense at all, does it? Why are HOA boards allowing their right to first $$$ go to a “hired-hand” vendor, in violation of their duties to the HOA? Why?

 

It makes sense if the whole purpose of S & G’s position is not to benefit the HOA but its own pocketbook. Furthermore, S& G continues to whine about the debt owed to them that the HOA cannot pay since all the money is going to the HOA first. Boo hoo! I guess they know all about “You can’t get blood from a turnip.”

 

Isn’t that a business decision all businesses face? The loss against the cost of collecting? What about contingency collection agency arrangements? Don’t let S & G slip past this point! If they are so good, the HOA should insist on this type of an arrangement rather than the punitive arrangement now commonly used.

 

And when all else fails, we hear the familiar mantra, “But really, is it fair for the paying/current homeowners to have to subsidize delinquent homeowners?” Well, you see, that “contract S & G says binds all homeowners may not be fair to some homeowners, but that’s what the legal structure of an HOA imposes on members. Is it fair not to tell home buyers about this, and about some other waivers and surrenders of rights unbeknownst to them? Take a look at “The Truth in HOAs Disclosure Agreement” for some eye-openers.

 

Cleverly, S & G avoids the question of a violation of public policy, which as stated in the Restatement (3rd) of Property:Servitudes, Sec. 3.1, makes any covenant invalid. The argument against SB 561 is simply: How dare the California Legislature prohibit a homeowner, exercising his write to contract, without any duress, from surrendering his right to the ethical and fair procedure of debt reduction before costs. How dare the legislature!

CAI already spreading the fear of raised DFBLS fees for HOA disputes

In Scott Carpenter’s video seminar on 2011 Changes in the law for Arizona, May 23, 2011, Carpenter speaks of the possibility of raising the “steep” fees at DFBLS. He states that “in speaking with the people at DFBLS, they are considering changes in the fees” to meet the requires of the law that HOA adjudication fee would cover all costs.

 

The DFBLS website already has wording, “Filing fee amounts are to be determined.”

See more at  AZ DFBLS seeking to raise HOA fees already??

AZ Supreme Court denied hearing the Gelb Petition to restore ALJ adjudication of HOA disputes

Yesterday, May 24th, the Arizona Supreme Court simply DENIED hearing this Petition to vacate the lower court ruling that the Arizona agency, DFBLS, had violated the separation of powers doctrine when hearing  HOA disputes .  Disappointing, but not surprising given the new laws to take effect on July 20th, that addressed the separation of powers opinion. It still allows DFBLS to deny accepting complaints since ARS 41-2198(3), the statute authorizing DFBLS, was not vacated. It still stands.

Consequently, in the event that a complaint is filed on or after July 20th and DFBLS denies accepting the complaint, another challenge to the constitutionality of the law would be necessary. If DFLS accepts the complaint, rest assured that Darth Vader is ready with another challenge.

Why is this possible? Doesn’t the appellate court opinion serve as precedent and that’s that? NO, the door was opened by the Court! The Court in addition to its regular fashion of terse announcements, DENIED or ACCEPTED, added an order under its powers to do so, AZ Supreme Court Rule 111(g), that the Gelb decision was not to be published. Not being published means that it is not binding authority, or precedent. It seems then that the door is open and res judicata – already decided – doesn’t apply.

Why allow another shot” at constitutionality? Maybe, as I have argued, the arguments in support of the law relied on the same two cases, Cactus Wren and Hancock, accepted as controlling in both Gelb and in Waugaman (in the only other case that involved a decision, the superior court decision Troon v. DFBLS, Waugaman, LC2007-000598, Maricopa County), left something to be desired. Like the entire body of constitutional law and on the administrative procedures act concerning the acceptance of quasi-judicial authority of executive agencies. Yes, sharing does occur, and none of the applicable rulings were based on the extent of the agency’s regulatory functions, as the DFBLS cases were, (Gelb essentially followed the arguments in Waugaman).

July 20th will be the next phase of the fight by homeowner rights advocates for due process and the equal protection of the laws. The AZ Supreme Court just “punted.”

See AZ Supreme Court to decide whether  or not to proceed on Gelb and HOA adjudication

HOA Syndrome survey: YES, it exists!

The CBS TV Phoenix affiliate, KPHO reporter asked in its HOA Syndrome coverage, What could someone do to escape the HOA Syndrome? The only answer provided as to “move out”.

That was a completely unsatisfactory solution! In a hearing on HOA reform bills in this past session, a legislator stated that 94% of all new homes was in an HOA. A completely unsound solution not based on the facts.

Furthermore, it rewards the guilty parties. The government was not called upon to do something to stop this disgraceful condition in what the government continues to tout as “the next best thing to Mom’s apple pie.” There was no call for the immediate adoption of a consumer advisory like a Truth in HOAs Disclosure Agreement. There was no call for ADRE, the real estate department, to enforce its rule on material disclosure, R4-28-1101. There was no call for the Legislature to enforce HOA laws and to hold the HOA accountable under the laws, so homeowners can feel that there was someone on their side. That there was a viable method to ease the pain. KPHO offered no such call except to “move out.”

HOA SYndrome survey

KPHO’s internet survey, “Question of the Day,” asking whether the Syndrome does really exist has received, after 24 hours, a steady 67% YES replies from respondents. Perhaps this will be an awakening call that the legitimate grievances of homeowner rights advocates over the years are valid! And the only reply from the national pro-HOA trade lobbying group, CAI was a faint, “But, it’s not officially recognized.” Not even a word that something has to be done to make its claims of happiness and harmony a reality. Not a word!

As I wrote about not moving to Arizona, “You are on your own!”

The acceptance of Privatopia and the New America of HOA-Land

In his recent interview on OnTheCommons, Evan McKenzie suggested that his new book, Beyond Privatopia, is a collection of his past papers. If so, I believe the following gives a glimpse into what the reader can expect.

In 2004, Arizona advocates had a tough fight to get HB 2402 passed into law. It was to eliminate HOA foreclosures, but we had to settle for no foreclosures for fines, retaining foreclosure for assessments.

McKenzie gave his views on HOA foreclosure and the need for HOAs to survive during this hard fought battle in his Privatopia Papers Blog of March 12 and 13, 2004. (Scroll down and read the March 12th entry, “The plain truth about HOA foreclosures…”, then read his defensive entry of the 13th, “More on foreclosure.” I, too, took offense to his views.

McKenzie’s comments were not at all helpful to the people suffering this gross injustice of this law. His statements reflected the views of the legal-academic aristocracy that the state must survive, that the state comes first. And by “state” I mean the HOA. That the New America of HOA-Land is a legitimate government of the people.

An excerpt from this lengthy entry sums it up,

A third [objection] is the lack of any alternative [by advocates] that would allow HOAs to continue functioning, and advocating instead for positions that would almost certainly destroy common interest housing and leave millions of people in major financial trouble. . . . HOAs would end up competing with all the other creditors–credit card companies, tax collectors, etc.–for the money they need to fix the roof this month. Net result: the existing owners bear the burden for the non-payers. . . . That is a completely unsustainable situation.

I’ve always been against associations having dictatorial power. I’m also against going to the opposite extreme and leaving them powerless. If we go from banana republics to failed states, most people won’t like the latter any better than the former, and somebody will have to pick up the pieces of failed CIDs. Who will that be?

McKenzie presumes that the status quo preserves the HOA, and that susbstantive reforms will only leave the HOA powerless and lead to its inevitable failure. As a political scientist, he does not address the questions that maybe, just maybe, with their current defective legal scheme that HOAs should be allowed to fail. He avoids “muni-zation”, creating special HOA “taxing districts” as public entities, as an alternative. He does not address the question as to why HOAs deserve government protections to foreclose for failures to pay “taxes” as if it were a public entity. The HOA has no hard cash outlays to recoup as a lender does.

Perhaps he fears that real democracy will destroy the HOA that needs strict enforcement of “laws” and an unquestionable obedience to its often arbitrary and capricious objectives in order for it to survive. That public government intrusion is worse than today’s unaccountable private HOA government intrusion. He no longer speaks in the same terms of the constitutional arguments as he did in the 1994 Privatopia.

History shows that successful social and political change involved both an intellectual group to guide and show the way, and an operational group to make their thoughts a reality — working together. You just need to look at the American Revolution, the Irish and Indian independence movements, and the rise of communism in Russia, China and Cuba. There are no intellectual leaders for HOA reforms, and that is a prime reason why the “pink flamingo groups” are not united.

In Gandhi’s dealings with the British Raj for independence, the Brits reminded him that India was a British Colony. He replied, “India belongs to the Indians.” 

In America today, America belongs to the people, not to the HOA regime.