Tag: prudent man

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