Tag: public government

CAI firmly supports the New America of HOA-Land

This issue of the Community Association Institute’s house organ, Common Ground, has the strongest language for the triumph of private agreements to supersede the US Constitution, making the Constitution a meaningless piece of paper, a meaningless document, and an empty compact between the people and the state. “The right to regulate activities within a community association is an embodiment of our constitutional rights to enter into agreements with our neighbors” so proclaims CAI. It implies that the community association is just another corporate entity, and not the governing body that regulates and controls the people within its borders, which is the essential ingredient that distinguishes a corporation from a political government, a state.

CAI is falsely arguing that anybody can write an agreement to circumvent the Constitutional protections that forms the basis of our political system of government. In essence, CAI is advocating the rejection of the Constitution as the supreme law of the land and you and your neighbor can draft a new constitution as you see fit, ignoring the original Founding Fathers document. And so can another group, and another, and another, and so on. Why Is CAI arguning so? Perhaps because as private organizations, HOAs are not bound by the Constitution and can do as they please – the Constitution be damned!

CAI bitterly complains in this piece about one “disgruntled resident “[who] used the power of government to limit the freedoms of association residents” and caused Arizona to use its legitimate police powers to regulate people and organizations, and to protect the constitutional free speech rights to fly the Gadsden Flag in HOAs

And, seemingly desperate, CAI lets its readers know where it stands: The one constant is that your colleagues at CAI, working through 33 state legislative action committees, are fighting to protect associations and ensure a healthy business environment for the companies that support our communities” (Emphasis added). CAI does not stand for the people, but for the undemocratic governing body of subdivision territories known as homeowners associations. And, CAI says it loud and clear, making it quite explicit: CAI is “fighting to . . . ensure a healthy business environment for the companies that support our communities.”That is, for their members, the lawyers and their self-proclaimed professional management firms. Let the Legislators hear well!

CAI is firmly behind the New America of HOA-Land of independent principalities unaccountable to any state in the Union. A balkanized hodge-podge of independent “city-states, under a parallel constitution known as the Uniform Common-Interest Ownership Model Act (UCIOA) and its variants across this country. Brought to you by the legal-academic aristocrats who have avoided any discussion of secession or repudiation of the principles of our American system of government. But, running to the state for protection as any principality must do. And the civil government of the state abdicates its duties under the US and state Constitutions, and protects these regimes against its own citizens.

“Fees, Finances and Flags,” Common Ground July-Aug 2011, CAI.

HOA limitations: conscripting people who cannot run an HOA

Highlights of the The Urban Institute Forum, June 30, 2011, Private Community Associations: Boon or Bane for Local Governance?

Sadly, Robert Nelson’s pro-HOA opening statement was filled with the myths, misconceptions and half-truths that perpetuate the laissez-faire attitude from government. Legislatures that have failed to reign in these undemocratic private, second political system of government known as HOAs. He is part of what I term the legal-academic aristocrats. McKenzie’s response rejected what he called Nelson’s theoretical, alternate form of government, saying that, “If you actually look at the reality of the way these [HOAs] . . . function, they do not fit these assumptions at all.”

McKenzie said that, for example, this “volunteerism” simply doesn’t happen, since, as it appears that,as all the “common people” know, the agreements are created by the developer’s attorneys and handed down. There is no give and take in creating this form of individualized local government, so often touted as town hall government at work in HOAs. McKenzie described these declarations as “boiler plate”, and mentioned seeing covenants relating to elevators when there were none in the subdivision.

“People are “conscripted” into these associations if you buy the lot”, he further added. They are then told “that they consented to the agreement, but that’s a legal fiction.” “And realtors don’t even tell them anything about it.” In reality, he continued, “the people really don’t control their association, the dead hand of the developer does” since changing the CC&Rs is difficult to do. [With respect to the past attempt at Arizona legislation to allow 1/3 of the members to change the CC&Rs for everyone does not address the problem of ex post facto contracts].

Addressing the contractual legal scheme, McKenzie stated that, “This [HOA legal scheme] is a model . . . that trickled down from the top of the income distribution . . . . It is probably a form of governance that would work reasonably well if practiced by 1% of the population.” The wealthy and reasonably affluent with money “who can hire lawyers and who came in with their eyes open and knew what they were getting into.” In other words, a specialized, utopian, perhaps cult community for the wealthy. As I’ve written many times, McKenzie said the mass merchandising [my words] was driven not by the people demanding HOAs, but by the developers and municipalities that are increasingly mandating only HOA regimes for new developments. There is no free market system at work, no freedom of choice.

As this mass marketing proceeds, “you begin to conscript people into this mass housing who cannot run it.” In particular in today’s climate, the failure to establish adequate capital reserves to offset decreased income. Well, isn’t that also a failure of the national HOA educational organization that “certifies” HOA managers for the past 40 years?

“The idea of private government is fine,” according to McKenzie, “for people who can afford to operate it. Imposing this on people, which we have done, who cannot run it, who don’t know how to run meetings, who won’t go to board meetings at all . . . . What we are seeing is professional people, managers and lawyers actually running the associations.” You know, the “hired hands.” “The priority on foreclosure is driven by the professionals. It is not driven by what’s best for the community.”

“The owners are not loyal to their association. They put up flagpoles because they don’t think they are legitimate.”

The policy makers and public interest ‘influencers” should pay attention to the realties before them, and cease their dogmatic, unworkable ideology. This Forum is a good start.

Calif. HOA laws and community service districts

November 18, 2010

                                                                                                                                   email letter

Mr. Brian Hebert

Executive Secretary

California Law Review Commission
4000 Middlefield Road, Room D-1
Palo Alto, California 94303-4739

                                                                                       re: Study H-855

                                                                                       Memo 2010-8

                                                                                       CID Law

Dear Mr. Hebert:

 I am quite disappointed with the Commission’s continued effort to replace the Davis-Stirling using a carbon copy with revisions dealing with the minutia of CID operations.  And still refusing to recognize CIDs as de facto governments, much as Cuba is an unrecognized but de facto government.  Furthermore, CLRC has seen fit to retain the placement of these special laws for the governance of communities under the Civil Code. 

 It appears that the special interest agenda, promoted by the national lobbying trade organization, Community Associations Institute (CAI), still dominates the Commission’s thinking.  Is the Commission aware of CAI’s repudiation of the US Constitution when it wrote in its amicus brief to the NJ appellate court in Twin Rivers that, “In the context of community associations, the unwise extension of constitutional rights to the use of private property by members . . . ” ? Committee For A Better Twin Rivers v. Twin Rivers Homeowners Association (TRHA), Docket No. C-121-00, 2004.

Davis-Stirling and the Commission’s proposed rewrite continue to reflect the State’s exercise of “coercive power”, and “significant encouragement, either overt or covert”  with regard to CIDs.  The CID Laws portray the CID  in a “symbiotic relationship” with the state, “entwined with governmental policies,” and the state government is “entwined in [the CID’s] management or control.”  Such conditions give easy rise to declaring the CID as a state actor.  (See the summary of state action criteria as set forth by the US Supreme Court in Brentwood Academy v. Tennessee Secondary School Athletic Ass’n, 531 U.S. 288, 2001).

I cannot understand why the Commission continues to permit agreements by private parties to create local, private governments that are authoritarian and that deny homeowners their rights and freedoms to which they would otherwise be entitled.  These “declarations” and CC&Rs are just that – devises to circumvent the application of constitutional protections and prohibitions with respect to local communities.  The unsuspecting public is bound to these so-called agreements by virtue of taking hold on their deed sight unseen, without ever having to read, understand or sign these CC&Rs.  The filing of these CC&Rs alone are necessary and sufficient to bind the homeowner, under servitude laws, and not contract law; where the legal-academic aristocrats offer advice that if a conflict exists between servitude law and constitutional law, servitudes law should prevail. (See Restatement Third, Property: Servitudes, § 3.1, comment h).

 It is even more disturbing when existing California law, and similar laws in other states, permit the ability to attain the advertised benefits to the greater community of California and to the local CID community under municipality laws.  In general, they are the special taxing district laws, and in California they are the District and Community Service District Codes (see Government Code, Title 6, §§ 58000 and 61000 et seq. below for the relevant excerpts).  If town hall democracy, local autonomy and the “voice of the community” are indeed the objectives of good government, then the District Code  will meet these objectives, where the replacement of Davis-Stirling is nothing more than a top-down imposition on the local community of special laws for private organizations.  The CID would be subject to the 14th Amendment as are all other public entities, and the laws of the land would indeed be equal for all people.

 I outline the simple method for accomplishing the transformation of CIDs to taxing districts in Chapter 2 of
Understanding the New America of HOA-Lands  (attached for your edification and convenience).  Chapter 3  explores ideal HOA constitutions and Chapter 4 is a lengthy discussion of the two forms of American political government:  HOAs and public entities.


 The Commission should cease and desist its current efforts to further promote the establishment of the second form of American political government, the CID, and return to supporting the principles of democratic government under the US and California Constitutions.

 

Respectfully,

George K. Staropoli

President

Citizens for Constitutional Local Government

 

References

California  Government Code Title 6,  Districts, Division 1, General, § 58000 et seq., and in particular Division 3, Community Service Districts, § 61000 et seq. as relevant.

 

§ 61001.

(a) The Legislature finds and declares all of the following:

(1) The differences among California’s communities reflect the broad diversity of the state’s population, geography, natural resources, history, and economy.

 

(b) The Legislature finds and declares that for many communities,community services districts may be any of the following:

(1) A permanent form of governance that can provide locally adequate levels of public facilities and services.

(3) A form of governance that can serve as an alternative to the incorporation of a new city.

 

(c) In enacting this division, it is the intent of the Legislature: (1) To continue a broad statutory authority for a class of limited-purpose special districts to provide a wide variety of public facilities and services.

(3) That residents, property owners, and public officials use the powers and procedures provided by the Community Services District Law to meet the diversity of the local conditions, circumstances, and resources.

 

Appellate court holds HOA board to fiduciary obligations of good faith and negligence

The California appellate court in Telford[i] has taken a long sought defense in favor of homeowners against the negligence and bad faith dealings by the board, stating that the homeowners’ association is not relieved “from liability for breach of its fiduciary duties because it occupied ‘a particularly elevated position of trust’ due to its quasi-governmental status and ‘the many interests it monitors and services it performs.‘” (Emphasis added). The court added that:  “because a homeowners’ association stands in a fiduciary relationship with the member homeowners,” a failure to monitor the project was a breach of its fiduciary duties to the memebrs in general. (Understand that the board does not have a fiduciary duty to any one specific member).

This single opinion strikes at one defect in the HOA legal scheme that was necessary for the widespread adoption and mass marketing of HOAs, the “free ride.” No longer will HOA boards get a free ride under the business judgment rule, but will now be held to act responsibly under its quasi-governmental legal status. The “free ride” laws and rulings were necessary to get uninformed, untrained and, in many cases, conscripted members, to join the board without any accountability. Now, this holding places a real-life awakening to the propaganda and myth that the HOA has no downside.

In this case, plaintiff Telford filed suit against the board on the basis of an approved construction project by a neighbor, charging a loss of quiet enjoyment, emotional stress, public and private nuisance, and negligence in enforcing compliance with the governing documents. (It is important to note that this was not a claim of contractual violations). Telford also charged that the approval “was not only negligent, but unreasonable, arbitrary and in bad faith” as its approval was based on friendships between the board and the member. Here, we are not only concerned with those broad powers and obligations granted to the board, but the application of the business judgment rule [BJR] that governs the broad, discretionary powers granted to the board. The Court repeated the precise ruling in Lamden (often neglected in CAI attorney citations): “deference is accorded only if the association has acted ‘upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members.’” BJR is not a grant of unlimited powers to the board.

Furthermore, with respect to a breach of fiduciary duty, the Court stated that a “breach of fiduciary duty is a tort.” And as I mentioned elsewhere, a tort is a common law wrongful act that allows for punitive damages against the board and/or individual director. A tort provides a strng counter-measure against the one-sided financial damages that HOA boards are entitled under state laws and the governing documents.

A second very important opinion that is addressed in Telford is the HOA board’s defense that there is an exculpatory clause in the governing documents; that is, a clause that grants the board immunity from liability as a result of its actions. The Court held, however, that this type of clause was against public policy and therefore invalid:

The law has traditionally viewed with disfavor attempts to secure insulation from one’s own negligence or wilful misconduct[.] “Furthermore, it is the express statutory policy of this state that `[a]ll contracts which have for their object, directly or indirectly, to exempt anyone from the responsibility for his own fraud or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.’”

Punitive damages are monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses, and that is intended to punish the wrongdoer.

Punitive damages can serve to “police” the HOA board in view of the fact that state laws and the governing documents do not contain penalties, and serve to protect boards from accountability.  See Public Policy, Tort Law and Planned Communities[ii].
 
 

 

 

Reference 

i Telford v. Sagewood HOA, No. E048483, Cal. App. 4th Dist., Nov. 16, 2010.

ii  http://pvtgov.org/pvtgov/downloads/policy-torts.pdf

Unrecognized, de facto government: the State of Frankland should have written CC&Rs

 
And you thought that unrecognized de facto goverments, like HOAs regimes, were a figment of my imagination.

The State of Franklin was set up in 1784 out of the westerly portion of the colonial state of North Carolina. Shortly after the War of Independence the original colonies were asked to pay for the war efforts and create a country with a sound financial policy. Since the taxing the population was difficult and cash was in short supply North Carolina ceded the western portion of the state to the federal coffers. Before the Congress could accept the offer North Carolina withdrew the offer. The citizens of the region decided that federal rule in the meantime was probably a good idea since North Carolina as a state had given this remote region little support in its fight with the Indians or protection from criminal refugees. They saw other benefits as an independent state in terms of taxation, representation and an understanding attitude toward local problems. Representatives of the North Carolina counties of Sullivan, Washington, Greene, and Davidson accepted the offer of cessation to federal territory. The state of Franklin existed for only four years to finally merge with the new state of Tennessee. 

http://www.next1000.com/family/GRUBB/sullivan.tenn.html

Attempt at statehood
  
The State of Franklin, known also as the Free Republic of Franklin or the State of Frankland (the latter being the name submitted to the Continental Congress when it considered the territory’s application for statehood[1]), was an autonomous United States territory created in 1784On May 16, 1785, a delegation submitted a petition for statehood to the Continental Congress. Seven states voted to admit what would have been the 14th federal state under the proposed name Frankland. The number of states voting in favor of statehood, however, fell short of the two-thirds majority required to admit a territory to statehood under the Articles of Confederation. Late the following month, the government again convened to address their options and to replace the vacancy at Speaker of the House, which had been held by the late William Cage. Addressing the vacancy, Joseph Hardin was elected to the Speaker of the House position. Then, in an attempt to curry favor for their cause, delegation leaders changed the proposed name to “Franklin” (after Benjamin Franklin), and even initiated a correspondence with the patriot to sway him to support their cause. Franklin politely refused, writing:

I am sensible of the honor which your Excellencey and your council do me, but being in Europe when your State was formed I am too little acquainted with the circumstances to be able to offer you anything just now that may be of importance, since everything material that regards your welfare will doubtless have occurred to yourselves. …I will endeavor to inform myself more perfectly of your affairs by inquiry and searching the records of Congress and if anything should occur to me that I think may be useful to you, you shall hear from me thereupon.[4] —Franklin’s letter to Governor John Sevier, 1787

Independent Republic

After the failed statehood attempt, the now de facto independent republic was ‘officially’ re-named Franklin.

 Up to this point, the government had been assembling at Jonesborough, mere blocks from the competing (although idle) North Carolina seat of government. Because of this, Greeneville was declared the new capital. The first legislature to meet there did so in December, 1785. At Greeneville, they finally adopted a permanent constitution, known as the “Holston Constitution”,[5] a decree which was modeled on that of North Carolina with few changes.

The new legislature made treaties with the Indian tribes in the area, opened courts, incorporated and annexed five new counties (see map below), and fixed taxes and officers’ salaries.[6] Barter was the economic system de jure, with anything in common use among the people allowed in payment to settle debts, including federal or foreign money, corn, tobacco, apple brandy, and skins (Sevier himself was often paid in deer hides). Citizens were granted a two-year reprieve on paying taxes, but this lack of currency and economic infrastructure slowed development and created confusion.

The year 1786 was the beginning of the end of the small state. Franklin was placed in a precarious position by not having been admitted to the United States. Because it shunned North Carolina’s claims of sovereignty over it, Franklin did not have the benefit of either the national army or the North Carolina militia. North Carolina offered to waive all back taxes if Franklin would reunite with its government. When this offer was rejected, North Carolina moved in troops under the leadership of Col. John Tipton and re-established its own government in the region. The two rival administrations competed side by side for many months. Loyalties were divided among local residents.

http://en.wikipedia.org/wiki/State_of_Franklin