Tag: legislature

HOA foreclosures illegal under “no title” rulings?

I now address the overall legitimacy of this right by the HOA to foreclose. I have said enough about the HOA draconian foreclosure right, its discriminatory nature, and its cruel and unusual punishment aspect when the homeowner losses more than 10 times the amount owed the HOA. Or the fact that it reflects the mismanagement by the board who refuse to use standard AICPA “provisions for bad debts” to ameliorate any shortfalls.

Most CC&Rs and state laws grant the HOA a lien on the homeowner’s property from the day the assessment is due, and that the perfection of that lien is automatic when the CC&Rs are filed with the county clerk. They go on to say that the foreclosure of the lien is the same as a mortgage foreclosure. And, to get around the protections against deficiency sales, the right to a personal judgment is given the HOA by the unsuspecting homeowner. However, if the underlying right to foreclose is invalid, then the personal judgment is notwithstanding. Also, the claim that the lien is supposedly a valid consensual lien is irrelevant to the argument advanced below.

Recent developments (see in general, “MERS: Is Your Home Foreclosure Proof?”) have surfaced the longstanding rule of law that to foreclose on real property, the plaintiff must be able to establish the chain of title entitling it to relief. Although the court rulings pertain to the electronic deed filing service, MERS, the reasoning can easily be applied to HOAs since they do not hold title, nor can they establish a chain of title for relief. The law requires that the party foreclosing must produce a promissory note or assignment that it is entitled to relief. The recent court cases held that, in regard to MERS, if the foreclosing party is not the title holder of properties held in its name, the chain of title has been broken, and no one may have standing to sue.

 

We all know that the HOA is not the title holder, nor has an assignment of interests in the property. Remember that the laws and CC&Rs explicitly specify that the HOA foreclosure procedure follows a mortgage foreclosure procedure, which renders its right to foreclose invalid under the recent court holdings (California, Florida, Kansas, Nebraska all serve as persuasive precedent). If the laws so favored the protection of a person’s home as to require a proof of a chain of title, there should be no exception for the HOA to have a bona fide right to foreclose.

There cannot be unconstitutional special laws for a private organization without passing judicial scrutiny as to an appropriate level of government interest or purpose. If there is such a compelling necessity, and not just a convenience, then why not protect the homeowner by declaring the HOA a government entity subject to the same constitutional restrictions and prohibitions as all other government entities are subject?

 

These recent developments also raise the issue of an entitlement to relief. What is the entitlement to relief owe to the HOA that warrants cruel and excessive punishment through foreclosure? What are the damages to the HOA that are never stated by the HOA to warrant such a draconian procedure? Damages that favor and benefit the third-party HOA attorney more than the HOA itself? If the lender must produce a chain of title when it has advanced hard cash, why is the HOA, who has not advanced any hard cash, entitled to the same relief?

 

Homeowners facing HOA foreclosures should immediately contact a lawyer to pursue this defense and put a stop to draconian foreclosures that serve to intimidate and punish homeowners who have fallen on hard times.

Understanding the New America of HOA-Land

I assembled several of my publications into this eBook format (5.5 x 8.5 PDF) to present a comprehensive view of the substantive issues relating to the HOA – planned community legal scheme.  The first 3 booklets represent 16 pages, and the “American Political Government” booklet  is a more detailed presentation of some 45 pages.

The cover reads:

“What you need to know about the political and social effects of HOAs on the American way of life.”

“Accepting authoritarian government over democratic government.”

Table of Contents

1. HOAs as an established institution

2. Proposal for muni-zation of HOAs

3. Is there an ideal HOA “constitution”?

4. American political governments

5. George K. Staropoli

Supplemental ebook material (not included):The Foundations of Homeowners Associations and the New  America.

 

Other publications and information can be found at the Citizens for Constitutional Government web site, http://pvtgov.org.

Do homeowner regulations go too far?

  So his homeowners association levied fine after fine and put a lien on his home though he’d coughed up nearly $50,000 to pay fines and other related costs. Eventually, his home was foreclosed because Darius still owed $24,591.

On Aug. 15 – after losing his one-story home and two days before he would be evicted – Darius’ next door neighbor heard an explosion about 2:20 a.m. Patti McCallister ran outside, saw Darius’ home burning and called 911.

Firefighters found Darius’ badly burned body lying on the floor of his living room in the back of his home.

Do homeowner regulations go too far?     By Matt Tomsic
Matt.Tomsic@StarNewsOnline.com

Sep 3, 2010

 

My Reply:  

HOAs will continue to have serious problems because:

1.  They are based on an  undemocratic authoritarian legal scheme that does NOT place the individual rights and freedoms of the members first, as does our Constitution, but the monetary goal of maintaining property values.

2.   Consequently, this un-American private government  exists outside the Constitution and its protections of the people.  All the legal court battles are attempts to restore those lost rights.

3.   The misleading claims of agreement by homeowners is superficial and would not stand up to judicial scrutiny for the valid surrender of one’s rights.  The mere filing of CC&Rs with the county clerk is sufficient to legally bind lot owners, sight unseen, and is a mockery of both Constitutional and contract law.

4.  Then there is the unspoken alliance of local governments, state legislatures, consumer protection agencies, and public interest firms who shout “individual rights” and “no government interference”, but see no problem with private government interference.  And that also includes CAI.

5.   Community Associations Institute (CAI) was formed back in 1973 to address these problems with the HOA legal scheme, yet these problems continue to exist in spite of all that “education” provided for board members, managers, and legislators.  Would you hire a training firm with that record?  State and local governments seem not have a problem and hire “the failure to get results” CAI.

6.   CAI is on record in its amicus brief to the NJ appellate court in the Twin Rivers case, cautioning the court about the “unwise extension of constitutional protections to homeowners” in HOAs.   The common law synopsis of court decisions regarding covenants takes a decided editorial opinion rather than a neutral summary of the cases when it states, for example, that if there’s a difference between servitudes law (covenants) and constitutional law, servitudes law should apply (§ 3.1, comment h).

6.  The media, even in this article, takes the premise and presumption that the  HOA unquestionably has the right to act, and that its motives are pure and for the benefit of the community.  None of the above substantive issues are ever delved into.

In order to avoid another 40-odd years of continued injustice and discontent, government authorities and legislatures must address the above issue of substance, and stop their participation in the unspoken alliance of “No negatives about HOAs”.

HOA attorney collusion and regulation of public streets

During the past Arizona legislative session, HB 2153, dealing with a re-assertion that public streets are regulated not by HOAs but by civil government, was defeated by HOA/CAI opposition and a group of HOA special interests, Sun City HOA.   Part of the argument for the bill were the realistic incidents where the HOA fined a homeowner for a car parked in front of his home, on a public street — without any attempt to verify whether the car was owned by a member of the household.  In other words, in a display of gross injustice and a  stark display of HOA power and intimidation, the HOA simply fined the homeowner. (It is well understood that some 90% of the homeowners pay up rather than go to court to fight for their rights).

 What is further unconscionable and irresponsible, and a violation of an attorney’s code of conduct, HOA attorneys would simply “pick up the paper,” file the charges against the homeowner, and of course tack on its fees, and proceed in a flagrant violation of  Rule of civil procedure, 11(A), which states, in part (emphasis added),

The signature of an attorney or party constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer’s knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

and the Arizona Rules of Professional Conduct, R42, Ethical Rule 3.1 (mimics the above Rule), and ER 3.3, Candor to Toward Tribunal, in part,

(a) A lawyer shall not knowingly:  (1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer . . .  (3) offer evidence that the lawyer knows to be false.

Is this legalized extortion by the HOA attorney and HOA board, acting together?[i]

While the bill was before the legislature, an on going court case[ii] was taking place, just brought to my attention.  A homeowner was being fined for just such an occurrence.  Both the management firm and HOA attorney are Community Association Institute (CAI) members, a trade group that lobbied against the bill.  CAI advertises as being the leading educator for the HOA industry and HOA law experts.  The Arizona law firm is Maxwell & Morgan where both principles are members of the CAI Community Association College of Lawyers.

Upon being notified of parking violations, the homeowner properly informs the management firm, Rossmar & Graham, that the cited cars are not his, and provides the license plates of his 2 cars (Mar. 28, 2009 email).  Subsequently, the board denies his request to remove the fines.  According to the homeowner, the attorneys continue and file suit, and then remove their claim for the fines.  Undoubtedly, the attorney realized she was in trouble for blindly doing the HOA’s bidding. 

Most egregiously and unethically, the M & M attorney still sought attorney fees from the homeowner.  This is unconscionable and unethical.  The attorney did the board’s bidding, ran up  fees, and then found that she was involved in an unsupportable charge, but still sought her fees from the homeowner.  The homeowner has to pay for the wrongful acts of the board, and the blind acceptance of the suit by the attorney? 

And now we have a former CAI legislative action committee chair, Scott Carpenter (another CAI college of lawyers member), whose firm advises HOAs on possible loopholes in the right of HOAs to regulate parking[iii].   In an inexcusable misstatement of the public parking issue, attorney Patel fails to mention the main issue regarding regulation of public streets by public government, citing only a Missouri case, Maryland Estates v. Puckett, that affirms HOA regulation of its members, but not the public.  His reference to checking vehicle ownership is only made in regard  to the possibility of illegal towing.

The battle for HB 2153 was precisely to prevent such abuse as occurred in the Wigwam Creek lawsuit.  But, Carpenter, in his Arizona Legislative Session blog entry of January 13, 2010, “Authority Over Roadways,” only saw, “If the bill is really about parking, then enforcement of a parking prohibition in a planned community’s governing documents is the enforcement of a contractual provision and does not, in its enforcement, exert any ‘authority’ over the roadway itself.”   Clearly this is a biased advocacy statement regarding pending legislation, and hiding behind the imprimatur of an attorney, not addressing or cautioning his readers about the implications regarding the public who are not members of the HOA.

In my Commentary of April 5, 2010[iv] I stated that the purpose of the prolific advisories/advertisements were “to seek and promote loopholes and technicalities in the law and governing documents that would lead to adversarial litigation.”

Something is rotten in Denmark!  Shame on CAI, Maxwell & Morgan and Carpenter, Hazlewood.   And shame on the Arizona Legislature for seeing no evil in regard to public control of public streets, and for accepting the voice of the CAI attorneys as gospel.

Notes

[i] See, Ethical obligations of attorneys to HOA members.

[ii] Wigwam Creek North HOA v. Fuchs, CC: 2010- 49644,  Estrella Mountain Justice Court, Maricopa County, AZ.

[iii] “Enforceability of Parking Restrictions”, Nikita V. Patel, Esq., July 9, 2010 enewsletter, Carpenter, Hazlewood, Delgado & Wood, PLC.

[iv] “How good are the CAI member HOA attorneys?“,  HOA Private Government, http://pvtgov.wprdpress.com.

Does CAI act in good faith for the benefit of the people in HOAs?

Arizona’s Augustus Shaw IV, only recently joining CAI’s College of Community Association Lawyers, was enjoined from running for state representative by a Maricopa superior court decision.  Shaw was found to live in District 20, but wanted to run in District 17, and having given a number of justifications for living in District 17 as opposed to District 20.   Now, it should be quite simple, even if you are not a lawyer, to know where one really lives, unless you are looking “to pull a fast one.”  See the Minute Entry, http://www.courtminutes.maricopa.gov/docs/Civil/062010/m4270712.pdf. 

Is this the caliber of membership in CAI’s self-proclaimed lawyer’s “honor” association?    What will CAI do, since it has a code of ethics, supposedly both for  members and a CCAL members?  I have not seen any evidence or documentation in my 10 years of watching CAI that any action was brought against a member or a CCAL member for violations of the respective codes of ethics

And what about those state legislatures and town councils that employ CAI as the official educator of HOA boards and property managers?  What will they do?  They should be watching for a strong indication that CAI  removes members not of good character and standing, and who display unethical conduct, especially if they are a lawyer.  Why?  Because state legislators have operated under a mistaken presumption that HOA boards will conduct themselves in good faith and obey the laws  —  even without any threat of punishment. 

But, the record repeatedly shows otherwise.  Abusive HOA boards ignore the laws knowing that homeowners will not go to court against the experienced HOA/CAI attorneys.  CAI, that powerful national lobbying trade group, has claimed over the years, before the legislators, that they speak for the homeowners, and what CAI argues is also what the homeowners want.  But, we know better.  Do you really think a homeowner wants his home as collateral for the survival of the HOA?  Or really agrees to being foreclosed on for a mere $200?  Or willing surrenders his right to due process in favor of HOA kangaroo courts?  Get real, legislators!  Get real! 

CAI proposes and supports HOA laws for its own self interest and does not deal in good faith.  The CAI attorneys act as hardnosed defense councils against the homeowner, and do not recognize a fiduciary obligation to the owners of the HOA, the homeowners.  They see it purely as a management vs. employee relationship, and they are on the management side.  CAI does not see, nor does it want ever to admit to any de facto government status, that the HOA is an authoritarian form of political government and an anathema to our democratic system of government. 

If CAI is really acting in good faith for the benefit of the people living in  HOA territories, it will seek the dismissal of Augustus Shaw from its CCAL.