Tag: statutes

Colorado HOA act creates state actors?

I give credit to the Colorado Legislature for stating its intent, its position, on supporting HOAs, which is rarely found in other state statutes.  Section 38-33.3-102 reads (in part):

Legislative declaration

(1) The general assembly hereby finds, determines, and declares, as follows:

(a) That it is in the best interests of the state and its citizens to establish a clear, comprehensive, and uniform framework for the creation and operation of common interest communities;

(b) That the continuation of the economic prosperity of Colorado is dependent upon the strengthening of homeowner associations in common interest communities financially through the setting of budget guidelines, the creation of statutory assessment liens, the granting of six months’ lien priority, the facilitation of borrowing, and more certain powers in the association to sue on behalf of the owners and through enhancing the financial stability of associations by increasing the association’s powers to collect delinquent assessments, late charges, fines, and enforcement costs;

 

Subsections (c) – (e) contain basically the same theme — don’t let the HOA fail by providing the developer with certain financial protections and operating rules on good management.  In a bold, in your face statement the statute contains an annotation, which reads:

There is no support for the proposition that enactment of a legislative scheme governing the operation of homeowners’ association thereby transforms such homeowners’ association into cities or other governmental entities. Woodmoor Improvement Ass’n v. Brenner, 919 P.2d 928 (Colo. App. 1996).

This 1996 authority still holds true today.  State governments regulate people and entities by establishing laws, such as these HOA “acts” under its police powers “to promote the general welfare.”   That has come to mean to protect the health, safety and general welfare of the people.  The issue at hand, which has not been tested in the courts, is: when does and under what circumstances do these HOA acts create HOAs as state actors?[1]

It would seem that just from this Legislative Declaration of purpose there are reasonable grounds to suspect state cooperation (no penalties against HOA violations of state laws or the governing documents), coercion (foreclosure, pay or lose your home, etc.), and support for HOAs, a close nexus with daily operations (closely involved on HOA management) s symbiotic relationship (you help me, I help you), significant encouragement, either overtly or covertly.[2]  But no mention of any protections of due process and the equal protection of the laws as an objective of its involvement in HOA-Land.

Note that subsection 1(a) above speaks not of individual statutes, but of “a clear, comprehensive, and uniform framework” to support HOAs. Therefore, we must look at the overall picture of the HOA act and determine its broad impact on HOAs, and whether the legal scheme or structure establishes state actors.  And in 1(b) above the general assembly makes a case for establishing state actors when it states, “by increasing the association’s powers to collect delinquent assessments, late charges, fines, and enforcement costs.”  The details can be found within the act itself.

Please understand that in the statutes, both in Colorado and in other states, the statutes give the appearance of protecting the homeowner and his rights, but this is an illusion. What does the homeowner do if the board violates the law?  His ultimate recourse is to sue the HOA in civil court, but the statutes and governing documents (and court case history) are protective of the HOA as this Colorado section clearly demonstrates.

Where are the constitutional protections that would remove the HOA member as a second-class citizen?  To bring him back into the American Zone? They are nowhere to be found!  Why?  Because the state believes that the homebuyer has freely and with full knowledge agreed to be bound by the explicit and implied waivers in the governing documents.  But, have they?[3]

It would seem that the Colorado General Assembly has crossed the line and by its HOA statutes created HOAs as state actors.

References

[1] See, in general, HOA Common Sense, No. 9: HOA governments in fact.

[2] See Do state HOA Statutes Establish HOAs as State Actors?

[3] See HOA Common Sense, No. 4: Consent to be governed

HOA member Declaration of US and State citizenship

 I am proposing that the following be  urged as a bill in your state, which requires a mandatory statement of HOA member citizenship. (Revised August 1, 2015).

Declaration of US and State citizenship

With the understanding that the association, as a private entity and not a subdivision of the state, and as a de facto but unrecognized private government, is not subject to the restrictions and prohibitions of the Fourteenth Amendment to the US Constitution that otherwise protects the rights of the people against actions by public government entities;

and that the governing documents in all legal practicality serve as the subdivision’s constitution, taking precedence over state laws and over the state and US Constitutions unless specifically denied by any such laws or legal precedence;

Therefore, the members of the association, having not waived or surrendered their rights, freedoms, privileges and immunities as citizens of the United States under Section 1 of the Fourteenth Amendment, and as citizens of the state within which they reside, the CC&Rs or Declaration for any planned community, condominium association or homeowners association shall state that, or be amended to comply,

The association hereby waivers and surrenders any rights or claims it may have under law and herewith unconditionally and irrevocably agrees 1) to be bound by the US and State Constitutions, and laws of the State within which it is located, as if it were a subdivision of the state and a local public government entity, and 2) that constitutional law shall prevail as the supreme law of the land including over conflicting laws and legal doctrines of equitable servitudes.

Furthermore, any governing documents of an association not in compliance with the above shall be deemed amended to be in compliance, and notwithstanding the provisions of any law to the contrary, a homeowners’ association shall be deemed to have amended its governing documents to be in compliance.

Sun City HOA: a real independent principality

Sun City, AZ. a renowned retirement community, is an unincorporated town under the governance of the Sun City HOA (SCHOA).  It does not qualify as a planned community or as an HOA under the state’s statutes. SCHOA is a private nonprofit corporation — no mayor & no town council, governs it.  A sort of a throw back to the times when the sovereign, the king, issued charters or grants of authority to private organizations to conduct business or to govern new lands.

In modern times, does the nonprofit corporation charter by the state, the new “sovereign” of a republic, truly grant a nonprofit corporation the right to function as the legitimate government of a sub-division of the state?  This could not possibly the intent of the corporation statutes since the state abounds with municipal corporation statutes — cities, towns, special districts, etc. — and with methods and procedures for incorporating new towns and cities.  The appeal of direct democracy, local government control or “home rule” is understood, and agreeing to be governed by a business form of government under corporate laws could be viewed as a strong desire for independence from unwanted influences and intrusions.

Sun City is indeed such an independent government, not answerable under state municipality laws or the Constitution, as it is not subject to the planned communities statutes. Sun City is just subject to the broader corporation statutes that were in no way written to establish a democratic form of political government.  This sort of independent principality status has more in common with a tribal society where the inhabitants of the village are loyal first and foremost to their tribe and village, and to the leaders of the tribe, than to their state or country.

This tribalism reveals itself as the Sun City HOA does not require mandatory assessments, yet each deed requires that the owner make mandatory payments to another nonprofit, the Recreational Centers of Sun City (RCSC).  And in order for RCSC to qualify for common area real estate tax treatment, all owners “must be obligated to pay mandatory assessments to maintain and manage the common areas.”    Consequently, to accomplish this reduced tax basis without having to be subject to state planned community laws, a separate agreement is required to be signed by the owner agreeing to pay, not the HOA, but RSCS dues.  This is extraordinary, since the deed itself could simply require mandatory payments to a bona fide HOA that would own and manage the common areas, as is the case with a genuine HOA.

The strong desire to independent of state laws, yet to use them as above, required an amendment to the common area valuation statutes, ARS 42-13402 et seq., adding the “must be” clause above in 2000 (Ariz. Sess. L. Ch 196; HB1251).  What could have possibly been the intent of this statute other than to bestow a gift upon Sun City, an unincorporated community, tax benefits amounting to an estimated $113,000 per year, or $1,130,000 over the past 10 years?

Today, the residents of this independent “principality” are coming once again before the legislature, with the SCHOA attorney (a member of the national pro-HOA lobbying group, CAI), to deny the state its legitimate right to regulate and control the public streets within Sun City (HB 2153).  Suddenly, parking has become a safety issue in spite of the fact that, from the very beginning, the county planning board approved these alleged unsafe streets, and legal mechanisms are available to SCHOA to obtain variances on a case-by-case basis.

Don’t buy it!  Sun City is demanding complete freedom from the state with no interference into the “internal affairs” of their principality.  State cooperation, provided it is consistent with the aims and goals of Sun City, however, is acceptable and welcomed.