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Undemocratic HOA governments: Politburo federalization

I am not surprised by the silence to my Blogcritic article, ” HOAs: Unrecognized De Facto Local Political Governments ”   It takes time to absorb, since there is the shock that this is happening not in a European or third world country, but here in the US of A. 

In an email back in the summer of 2006, when first writing about the broader impact on constitutional principles by these private governments,  I had the analogy of the Communist Politburo in my mind.  I wrote, in regard to writing another article,

 I will allude to CAI as the modern equivalent of Communist Russia’s Politburo that, from its HQ in Alexandria, VA, has sent its faithful and loyal followers to every state legislature to undermine the American system of government. With less that 17,000 members, smaller than the members of the Arizona Assn. of Realtors alone, CAI controls public policy with respect to the homeowner association governance of condominiums and planned communities.  While its membership represents less than 6% of the homeowners associations in the US as estimated by CAI, its lobbyists control legislation with respect to HOAs in almost every state of the union.

 As added documentation as to where the promoters and supporters of the HOA legal scheme,  are taking us — those legal-academic aristocrats as I refer to them —   here is a real example of a “federal,” Politburo government in Arizona.  The governing structure of Anthem in Maricopa County, AZ, a master community contractual government, binding homeowners under the servitude law of constructive notice, is such a Politburo.  It has a federalized form of government, drafted in 1999 by longtime legal-academic aristocrat Wayne Hyatt, setting out a central government, the Anthem Community Council, ACC, (those socialistic terms) that has no members and is governed by a board of directors.  As the owner/declarant of all the properties to be known as Anthem, it unilaterally declared that,

 To pay for the Council Expenses, all Owners, through an Association or directly, shall be obligated to pay assessments, fees, and other charges as set forth in this Community Covenant . . . This Community Covenant shall be binding upon all Persons having any right, title, or interest in any portion of the subjected real property, their heirs, successors, successors-in-title, and assigns.

 The ACC further binds all property owners who are subject to an association governing a phased subdivision, as hereby subject to this ACC.  In other words, ACC is the federal arm, or more accurately, the Politburo, overseeing the resident-citizens of the Anthem territory and all Anthem subdivision “state” governments.

 BTW, have you noticed the socialist terminology?  In the various state laws, HOAs are called “planned communities”, and Anthem has a “community council,” and there’s the “communal living” aspect of HOAs (described as such by NJ Justice in the Twin Rivers case).  Yes, folks, right here in the good ol’ US of A, and nobody cares.  Not even any of the political parties, or public interest organizations, or the media.

HOAs: Unrecognized, De Facto Private Governments

In the beginning, that’s 1964, the FHA went along with real estate interests and funded The Homes Association Handbook, which, as I have written in Part I of The Foundations of Homeowners Associations and the New America, was the bible for the mass merchandising for “the emergence and acceptance of a quiet innovation in housing” (taken from a historical recounting, Community Associations, the printing of which was funded by both CAI and ULI).

The Handbook had something for everyone who would be involved in making this incarnation work as a widely accepted mode of housing: the builder, the local municipality, the mortgage companies, and even the consumer/homebuyer, to whom it promoted “carefree living,” “affordable housing,” and “maintaining property values,” among other benefits. No negatives were given.and no mention, in this 433-page Handbook, of creating a governing body in accordance with public government statutes (see your state’s municipality laws on incorporated towns or even on home rule). No mention either, of the requirement to be a public entity and therefore to be subject to the Constitution, nor that the Fourteenth Amendment applied to the HOA. The only hint at providing for a democratic form of government came from the promoter’s concern for the legal justification for the HOA to have authority over the private property interests of the homeowners and to impose compulsory assessments: allowing the owners to vote.

Read more on BlogCritics:  HOAs: Unrecognized De Facto Local Political Governments 

CAI Calif. fears threat of artifical lawns to conserve water

In its June 8, 2010 email, CAI-CLAC (California legislative action committee), cries in desperation to stop government intrusion on the right, as they see it, for the HOA to restrict artificial lawns.  A mass rally is called for to stop this serious legal affront to HOA dominance of its members.

State Legislation Removes HOA Authority and Discretion

 Urgent request for “GRASS ROOTS” letters by this Friday

 Assembly Bill 1793 would prohibit associations from restricting or banning the installation of artificial lawns.  . . . The bill totally removes an association’s right to maintain a natural grass streetscape in order to preserve the ambiance and property value.  It will create friction in the association and opens the door to lawsuits.

 Among the reasons for CAI’s opposition to the bill, provided predominantly before its list of “other reasons” is,

 We need to stop the rush to judgment by some legislators who think they are simply saving water by voting for this bill, when in fact the bill creates serious problems and will cause unintended negative consequences. 

 (Please note CAI’s SOP (standard operating procedure) to resort to scare tactics, “the sky will fall”, some dreadful, unsubstantiated consequence will befall the HOA.)

 It’s a water conservation issue to promote the general welfare, including for the benefit of HOA owners who, don’t forget, are still part of the general community.  But, CAI doesn’t see it that way.  CAI does not see HOAs as part of the general community, and therefore, sees no obligations to the to the town, the city or the state to be a good corporate citizen.  The sentiment of the CAI cry in this email is nothing more than:  How dare the Calif. Legislature tell HOAs what to do without our approval?   

 In this email, while CAI proclaims to fight for the noble cause of local, direct democracy,  “the voice of the people”, CAI has actively promoted and encouraged state legislatures to adopt some version of a top-down, parallel set of laws just for private, de facto HOA governments, such as Davis-Stirling, or UCIOA.  The April 2006 media release by CAI HQ said,

 It is the policy of CAI to recommend that when state governments amend their basic community association development laws they consider the need for updated and comprehensive legislation to regulate the development of community association housing consistent with the above goals. Moreover, in undertaking such review, state governments are urged to consider and give favorable treatment to one or more of the Uniform Community Association Acts.

 Furthermore, in this email, CAI advertises, “Serving 3,000,000 California Households in Condominiums and Homeowner Associations.”  This is outrageous and misleading statement! It may serve them as vendors, but not as representatives of these households before public entities.   Even the HOA board of directors does not represent the owners before public entities.  The California Legislature represents all the people of California, including those living in HOAs.  CAI cannot say that it represents HOAs/condos per se, either, since it is not permitted to have these categories as members. 

 The CAI dogmatic ideology is that HOAs are sacrosanct and untouchable, unless approved by CAI, as documented by the  positions taken by CAI lobbyists before numerous state legislatures over the years.   CAI seeks power over HOAs! 

 The California legislators should bear in mind that these canned letters will be coming from the CAI stalwarts and HOA true believers, which will not be a valid representation of the people in HOAs.

  

A digression — checking what the numbers mean

Now, pay attention carefully.  Using this figure of 3,000,000 households (units in Census terms), and CAI and Census data of 2.6 persons per household, gives rise to a calculated  7.8 million people in HOAs/condos.  Also, corroborating, my research[i] on the national ration of HOA population to total US population of 19.6% , yields about 7.2 million people in HOAs — close enough for our investigation.  Consequently, based on the 3 million household figure,  CAI is claiming that it serves almost all of the HOAs/condos in California. 

 Continuing, taking my research figure of the average number of residents in an HOA, nationally, of 211, then there should be 36,997 HOAs/condos (low end).  Cross checking, using the research average of 82 units per HOA, there would be some 36,600 HOAs in California — not bad results.

 Yet, nationally, CAI with its 30,000 proclaimed members, and assuming that each member lives in a separate HOA/condo, would have a membership that contains, at most, about 10% of their stated 305,000 HOAs/condos in this country.   Applying the 10%  membership ratio, then CAI has a member, at most, in some 3,650  HOAs.  (Applying the 211 figure to 3,800 HOAs yields about 770,150 people in HOAs that have a CAI member).

 Notes

[i] cf. Have HOAs hit a growth plateau?, May 22, 2010.

HOAs and unauthorized practice of law

I just received a copy of a letter from a homeowner in which the HOA manager explains the rights of the homeowner under the CC&Rs.  This is not an uncommon occurrence, where untrained and uneducated managers, even if they are  a Certified Legal Document Preparer (independent paralegal), make such statements in response to a homeowner’s request  “to know”.  The average homeowner is not familiar with the law and usually doesn’t understand what the rules mean or say.  And, obviously, the same goes for these HOA managers, including those with those CAI “certified” as to training designations — PCAM, AAMC, etc.
 
The manager, in defense of a board rule change, had misdirected the homeowner by quoting a section of the CC&Rs that grants the board to the right to create rules and regulations.  However, the issue at hand and pointed out to the manager, limiting the number or dogs, is not specified in the CC&Rs, which simple says dogs may be kept.  Consequently, the CC&Rs would have to be modified accordingly to specify any limitation, not by a vote of the board, but by the members.  This is both unethical and an outrageous unauthorized practice of law, which I shall say once more, occurs all too frequently under HOA regimes.
 
The letter did not contain a disclaimer that, “I am not giving legal advice or opinion, and I am not an attorney nor employed by an attorney.  You should seek independent legal advice from a competent attorney.”  (Remember that the HOA attorney is just that, the attorney for the fictitious HOA and not for the opposing party, the homeowner.) This simple disclaimer never appears on statements made by HOA managers, in violation of Arizona, and all other state UPL (Unauthorized practice of law’) restrictions.  Under  the Arizona Rules of the Supreme Court, R 31(a)(2)(A), “‘Practice of law’ means providing legal advice or services to or for another by: (5) negotiating legal rights or responsibilities for a specific person or entity.”
 
Rule 31(a)(2)(B) states:  “‘Unauthorized practice of law’ includes but is not limited to:  (1) engaging in the practice of law by persons or entities not authorized to practice pursuant to paragraphs (b) or (c)”
 
 
Subsections (b) and (c) state that UPL occurs when a person is not a member of the State Bar, including a disbarred or restricted Bar member.
 
 
IMPORTANT
 
If you receive any such letter from a manager or management firm employee, and that letter does not contain a disclaimer, please file a UPL complaint against the manager.  This is the only way to stop this practice.  It is a small thing you can do to help yourself and all other people living in an HOA.  If a director writes such a letter, then he risks personal liability for his error since he did not consult an attorney.  If he claims “acting on the advice of the attorney”, demand to see it in writing!  If he does not provide it, then he is not acting in good faith as required of directors of nonprofit corporations.
 
 

Qui Pro Domina Justitia Sequitur 

 (“who prosecutes on behalf of Lady Justice?“, DOJ seal)

 

 
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HOA homebuyers MUST have a competent lawyer before they buy

 

Not only must prospective buyers of homeowner association controlled homes retain a competent lawyer, if one can be found who will represent the buyer, but must also understand the fact that covenants are being constantly interpreted by the courts.  That means whatever you or your attorney think you’ve agreed to, assuming unlike today the buyer doesn’t even have to see the CC&Rs in order to be bound by them, the court may give any entirely different spin on the meaning of the covenant. 

That’s called making new law.  And that’s on top of existing legal precedent heavily in support of HOA governments, and against the privileges and immunities to which we all are supposed to be entitled.  To a very good extent, buyers of HOA homes are getting “a pig in the poke.”

When further considering the argument, like CAI and HOA promoters like to argue, that buying a home is buying an investment, this HOA investment is a very bad deal for an investor.  Recall that even the common law authority on servitudes (covenants)[i] recommends that in the event of a conflict between servitude law and constitutional law, servitude law should prevail.  There goes any vestige of any rights still retained by a homeowner.

In a recent example of “surprise” by the Wyoming Supreme Court[ii], owners who sued their HOA for imposing unreasonable requirements on modifications to their home, and won on that issue, were still denied their breach of contract claim.  Now follow carefully.  The trial court accepted the claim of unreasonableness and stopped there, not addressing the other claim of breach of contract and payment of attorney fees.  The supreme court took the position,

 While we have often explained that restrictive covenants are contractual in nature . . . that does not necessarily mean that a homeowner is entitled to recover contract damages against a homeowners association. Ms. Dwan has not identified any provision of her CCRs that would allow her to claim damages against the Association. She has not provided any legal authority, from Wyoming or any other jurisdiction, supporting her claim for damages.[iii]

The court distinguished between equitable relief  — this ain’t right — from a contract with its explicit wording and absence of wording, which doesn’t have to be equitable.  The board can act unreasonably, but they are not punished for doing so.  (Contrast this with the right to punish the homeowner with fines, which is granted to the HOA under both the CC&Rs and almost every state HOA statutory Act).  Once again, the developer’s  “take it or leave it” contract does not protect against board actions by providing a penalty as a detriment against any such further actions. Once again, where wrong-doing was found against the HOA, the CC&Rs adhesion contract favors the HOA with its silence on damages in the event the homeowner does win a lawsuit.  

   Notes

[i] Restatement Third, Property: Servitudes, § 3.1, comment h.

[ii] Dwan v. Indian Springs Ranch HOA, No. S-09-0064, (WY June 3, 2010).

[iii] Id.