Tag: quasi-government

Law review article criticizes HOA public policy

In her 44-page OK Univ. Law Review “Note” (2022) the author, Saige Culbertson, concentrates on the questions of agency relationships and duty of care. However, in order to discuss the question of agency relationships, Culbertson addressed many of the issues still causing problems in HOA-Land including the status of HOAs as quasi-governments, the validity of the CC&Rs “contract,” and the reality of maintaining property values.

With respect to agreeing to be bound, the author maintains in regard to the individual homeowner subject to the CC&Rs,  that

  • “HOAs use these contracts as a basis for their decision making because courts often presume the homeowners have a full understanding of their HOA’s obligations, because they have the duty to examine their contract for real property. The typical HOA contract is overly generalized and broad.
  • “When buying a home, a homeowner does not often have the option to not join. Homeowners also have little-to-no choice of which actions the HOA may take on their behalf, or, crucially, any actions taken by the HOA for any purpose.  
  • “However, the lack of mutual assent is constant throughout the relationship with the HOA. At the beginning, the homeowner might not have agreed to a relationship with the HOA, and those who have agreed might not have a full understanding of the rules of the HOA.
  • “[S]ome courts and scholars argue that HOA contracts are a form of adhesion contracts. Adhesion contracts are exclusively pre-determined by a single party and are presented as “take it or leave it,” while the non-drafting party has no room to negotiate.”

With respect maintaining property values, Culbertson is concerned about “The Fictional Purpose of a Homeowners’ Association,”

  • “The Community Association Institute recently reported 71% of individuals believed their community association rules ‘protect and enhance property values.’ While this belief may have been true in 2005,  more recent research indicates otherwise. 
  • “[A] study found that “[p]roperties located in HOAs do not appreciate faster, on average, than properties not located in any type of neighborhood government”

 and cites this study by Robertson,

  • “[A] 2021 study conducted by former Yale Professor Leon S. Robertson found that “[c]urrent sales price[s] [are] related to property characteristics and local market conditions[,]” and that “sales prices do not reflect the efficacy of homeowners associations to protect property values.
  • “Robertson remarked that “[s]tate and local laws that sanction homeowners associations and allow their coercive practices based on the premise of property value preservation are ill founded.”

With respect to quasi or local government, the author favors making “HOAs part of local government, founded in democratic ideals, and with regulation by the state or municipality,”

  • “The nature and purpose of the HOA are so closely linked to that of local government that . . . clearly give rise to a special sense of responsibility . . . . This special responsibility is manifested in the . . . requirements of due process, equal protection, and fair dealing. The severity of the risks associated with the substantial overreach by HOAs is further shown by actions depriving individuals of their basic rights.
  • “[U]pon analysis of the association’s functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government. As a “mini-government,” the association provides to its members . . . . [citing Cohen v. Kite Hill Cmty. Ass’n, 142 Cal. App. 3d 642].
  • “The lack of checks and balances on HOA actions is a national problem and homeowners are often left with no remedy for violations of their rights. The need for regulation of HOA activities, and further federal protections for individuals, is especially apparent . . . .
  • “[H]omeowners should urge their local government to increase regulations on HOAs to protect their fundamental rights as Americans. States should therefore pass legislation to make HOAs part of local government, founded in democratic ideals, and with regulation by the state or municipality.”

Source: OK Univ. Law Review (PDF download).

The Lone Ranger still fights for HOA constitutionality

“(Common Ground, May/June 2006, Christopher Durso, Editor).

“CCLG’s [Citizens for Constitutional Local Government] founder and president, George Staropoli, for example, originally agreed to an interview but later changed his mind. In a brief phone call during which he’s quiet and almost courtly, he explains that Common Ground is CAI’s ‘house organ,’ and that he’d be more comfortable with a debate or similar format where he could express himself at length, without the risk of being quoted out of context. He asks that his prolific writings on the CCLG website speak for him, although a week or two later he sends an ‘open e-mail questionnaire to CAI’ containing four questions that sprout from CCLG’s mission.”

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 As of this writing, the four questions, also sent to the Arizona Legislature, have not been answered by any party.  Why not?

“1. Is it proper for the state to create, permit, encourage, support or defend a form of local government of a community of people, whether that form of government is established as a municipal corporation or as a private organization that is not compatible with our American system of government?

“2. Is it proper for the state to permit the existence of private quasi-governments with contractual ‘constitutions’ that regulate and control the behavior of citizens without the same due process and equal protection clauses of the 14th Amendment; that do not conform to the state’s municipal charter or incorporation requirements; or do not provide for the same compliance with the state’s Constitution, statutes or administrative code as required by public local government entities?

“3. When did ‘whatever the people privately contract’ dominate the protections of the US Constitution? The New Jersey Appeals Court didn’t think so. Does “constructive notice”, the ‘nailing to the wall,’ the medieval method of notice, measure to the requisite level of notice and informed consent to permit the loss of Constitutional protections?

“4. Please state what, if any, are the government’s interests in supporting HOAs that deny the people their constitutional rights?”

Staropoli lists a selection of unsolicited testimonials over his many years of HOA activism.  

His latest activity in January 2024 was the publication of “Seeking HOA Constitutional Government: the continuing battle, Collected Writings.” It contains in one volume some 56 writings — emails, social media postings, and articles — presenting 24 years of historical events, case histories, legislation and related documents by proponents of the HOA status quo.

The HOA legal scheme is ab initio unconstitutional

TO:     Legislative leaders in every state

The HOA legal scheme based on the Homes association Handbook is ab initio unconstitutional

In March 2006 I wrote Christopher Durso, editor of the Community Associations Institute’s (CAI) monthly house organ, Common Ground, asking four questions in regard to the constitutionality of HOA’s  (CID, POA, planned unit development, etc.) legal scheme.  My concern was that CC&Rs are a devise for de facto HOA governments to escape constitutional government as presented in  the 1964 “bible” that brought forth the legal scheme, The Homes Association Handbook. 

Replacing democratic local governments with authoritarian private governments:  Is this good public policy? 

“Public policy today rejects constitutional government for HOAs allowing them to operate outside the law of the land. The policy makers have failed to understand that the HOA CC&Rs have crossed over the line between purely property restrictions to establishing unregulated and authoritarian private governments.”

Here are the four questions:

 1. Is it proper for the state to create, permit, encourage, support or defend a form of local government of a community of people, whether that form of government is established as a municipal corporation or as a private organization that is not compatible with our American system of government?

2. Is it proper for the state to permit the existence of private quasi-governments with contractual “constitutions” that regulate and control the behavior of citizens without the same due process and equal protection clauses of the 14th Amendment; that do not conform to the state’s municipal charter or incorporation requirements; or do not provide for the same compliance with the state’s Constitution, statutes or administrative code as required by public local government entities?

3. When did “whatever the people privately contract” dominate the protections of the US Constitution? The New Jersey Appeals Court didn’t think so (CBTR v. Twin Rivers, 2006). Does “constructive notice,” the “nailing to the wall,” the medieval method of notice, measure to the requisite level of notice and informed consent to permit the loss of Constitutional protections?

4. Please state what, if any, are the government’s interests in supporting HOAs that deny the people their constitutional rights?

Please respond  to these fundamental questions of HOA constitutionality.

Law review on CC&Rs constitutionality – part 1

While the title of the Ken Stahl Pepperdine Law Review article[1] addresses the “validity of private deed restrictions” (CC&Rs) and “an unconstitutional taking” (eminent domain) with respect to affordable housing, Stahl’s investigation covers many of the HOA constitutionality concerns that I’ve raised over the years. He warns about legislative “overrides” – statutes that impinge on CC&Rs – and the balance of governmental powers between the state/county and private, contractual governments.

While the article is focused on California’s dealing with its affordable housing crisis, my annotations are questions focusing on the constitutionality of the  HOA CC&Rs. The article covers a lot of ground – 55 pages of legalese — and so I will make several commentaries or, in this case, research memoranda. Starting at the beginning, the Abstract and Introduction materials, Professor Stahl speaks to:

  • California legislature invalidating CC&Rs. We  are aware of statutes regulating what HOAs can and cannot do on things like “pets, clotheslines,  signs and flags” but the legislature is going a bit further in regard to local zoning, home rule statutes, and “overriding” many covenants in the interest of affordable housing. 
  • “The doctrine of “home rule” that places some outer limits on the ability of state legislatures to preempt local regulatory power.”
  • Home rule statutes exist in all states that allow a high degree of community independence from state/legislative interference on local matters.  The HOA scheme avoided these statutes that would provide all the current benefits but subject the HOA to the Constitution – HOA could not hide behind “not us, we are private” nonsense.
  • This overriding is facing concerns of the state “taking” of property rights that HOA members agreed to under a private contract. This invokes eminent domain concerns of just compensation as I have raised with respect to the questionable HOA contract’s taking of a member’s property rights.
  • All fifty states have detailed legislation regarding the governance and management of HOAs, including voting rules, budgeting, disclosure, and so forth, and a few states authorize state agencies to regulate HOAs.
  • “HOAs are ubiquitous, vastly outnumbering local governments, and they act essentially as little municipalities, taxing residents through mandatory assessments and regulating land use with detailed restrictions, called “covenants, conditions, and restrictions” (CCRs), that often mirror local land use regulations. Indeed, CCRs are typically far more restrictive than local land use regulations in many respects.”  There you have it, almost like McKenzie’s words in his 1994 Privatopia [2].
  • The question of quasi-government HOAs is expressed  as “the HOA is “simply a convenient mechanism to enforce those rights.”  Recall my charge that “HOAs are a devise to circumvent the Constitution.” The rights in context above refer to “the extension of the property rights” imposed by the CC&Rs.
  • “In contrast to the local government, which is considered a public body within the quasi-federal structure of state government, the HOA is generally considered a private entity, an extension of the property rights of homeowners.”
  • The author is concerned about the aggressive nature of the California legislature in regulating and controlling HOAs, far beyond their previous involvements. They deal with “what HOAs are really about: the ability to strictly control the character of the community by excluding undesirable uses of property within the community.
  • The controversial issue of consent to be governed or agreed to be bound does not escape Stahl’s view. “Homeowners are presumed to voluntarily subject themselves to CCRs when they choose to purchase property.” He makes the strong point that public policy  “causes courts to treat them as formally private, in contrast to the coercive nature of land use regulations enacted by public municipalities.”  This is a reference to the balance of power between the  state and supposedly freely agreed to expression of homeowners, the CC&Rs.
  • The mantra of CAI and legislators – You agreed to be bound! I witnessed an AZ legislator condemn a homeowner speaker that he was trying to get out of a contract that the speaker discovered was bad and he wasn’t going to be a part of it. A deal is a deal!
  • The author believes that the newer  legislative overrides will be constitutionally challenged,  arguing “ that overrides are likely to be upheld against constitutional challenges except in very unusual circumstances.”  In other words, Stahl seems to be saying that advocates can look to favorable legislation regarding due process and the equal protection of the laws for homeowners. He has already made favorable arguments in his journal article that simply need to be focused on justice and homeowner rights than just affordable housing.

I plan  at least  2 additional commentaries concerning this article following its structure: the role of equitable servitudes (covenants) and CC&Rs, and  constitutional concerns.

Acknowledgement

I would like to thank Barbara Lorraine-Johnston  for bringing this law review article discussing many of the constitutional issues that I have repeatedly argued and commented on over the years.  The importance of advocates bringing events, court cases, statutes, papers, articles, and law journal publications cannot be overstated. I can only comment on what comes to my attention.

For additional information, visit my comments, some 1,314 since 2004, can be found at HOA Constitutional Government.  Become a Subscriber to receive automatic updates.

NOTES

[1] “The Power of State Legislatures to Invalidate Private Deed Restrictions: Is It an Unconstitutional Taking?” (pepperdine.edu). (50 Pepp. L. Rev. 579 (2023)). Kenneth Stahl is a Professor of Law and the director of the Environmental, Land Use, and Real Estate Law program at Chapman University Fowler School of Law.

[2] Evan McKenzie, Privatopia: Homeowners Associations  and the Rise of Residential Private Government (1994) and Beyond Privatopia (2012)).

Court requires constitutional due process in HOA foreclosures

The enlightenment and awareness that the US Constitution and its due process requirement extends to private government HOAs is gaining momentum. ”The writing is on the wall.”

In the recent Colorado appellate decision in Hummel (C&C Investments v. Hummel, 022COA42, April 14, 2022)  concerning proper notice of homeowner foreclosure by the HOA, the court surprisingly acted sua sponte —in the name of justice. The courts have repeatedly failed to invoke, in the pursuit of justice as it claims to be its fundamental purpose, its right to act sua ponte — on its own — raising discussions of issues not raised by either party.  

In Hummel the question arose as to whether or not the homeowner was given notice of impending foreclosure action by the HOA.  The HOA send a processor server who said he posted the notice in the newspaper, which is allowed under certain circumstances. She discovered her plight only when an eviction notice was pinned to her door. The question be determined was, What is proper, legal service?

While court rules require that the HOA serve notice, the court held that it “must also meet the mandates of due process before foreclosing on an individual’s property” and that,

“[I]t is not unreasonable to require a homeowners association to make a good faith, rather than a highly technical, effort to effectuate actual notice to a fellow neighbor before foreclosing on their property.”

In support of its opinion, the Court referenced the Colorado appellate court’s court view:

“Although an association is not the government, it serves “quasi-governmental functions” when enforcing covenants and must abide by the due process requirements of the United States and Colorado Constitutions.“

“[T]he United States Supreme Court has long held that when foreclosing a lien against an individual’s home, due process requires “notice [that is] reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”

The appellate court found that the trial court failed to adhere to these principles before ordering a default judgment.