Tag: utopian

HOAs operate under a cloak of secrecy

My excerpts from the Abstract of an excellent Memphis Law Review article.

Homeowner associations (“HOAs”) operate under a cloak of secrecy where innocent and unwitting owners have money extracted from their wallets, and then are subjugated to the dominion of potentially wasteful and extravagant expenditures authorized by condescending HOA board members.

In the modern era, HOAs are marketed as establishing desirable communities through the imposition of covenants, conditions, and restrictions (“CC&Rs”) and rules in a neighborhood, with the purported outcome of enhancing quality of life and property values. To help accomplish this unsubstantiated and unproven utopian vision, buildings or neighborhoods controlled by HOAs are subject to the imposition of HOA dominion via CC&Rs upon the underlying property as well as ad hoc rules and regulations.

This exercise of dominion and control, administered by a Board of Directors or Executive Board (“Board of Directors”) is purportedly undertaken in the interest of fulfilling the goals of the HOA. With the powers vested in the HOA Board of Directors to regulate behavior, impose sanctions, and assess fees, the HOA is tantamount to an omniscient, omnipresent, and omnipotent deity.

Source: “The Homeowner Association: A Descent Into Dante’s Inferno Palliated By A Summons To Improve The Hate-Hate Relationship Through Transparent Disclosures,” The University of Memphis Law Review Vol. 54, p.43, Bradford P. Anderson.

Will Transparency Act chill HOA survival – no board volunteers?

Community associations were not given one of the twenty-three (23) exemptions under the Corporate Transparency Act (“CTA”).  CTA requires  businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), providing details identifying individuals who are associated with the reporting company.

CAI filed an amicus brief seeking HOA exclusion from reporting under CTA. (CAI Amicus Curiea, National Small Business United v. U.S. Treasury,  No. 24-10736, 11th Cir. (Ala.) 2024.) In sum CAI argued, “Homeowners will no doubt be reluctant to volunteer in light of the potential Orwellian consequences imposed by the CTA.”

In  researching the CAI brief, I do not address the issue of CTA and HOAs; CAI makes that argument.  My analysis addresses 2 aspects of the CAI brief:

  1. CAI’s candor to the tribunal (Code of Professional Ethics, R 42, E.R. 3.3 violation) in regard to misrepresentations as to what CAI is and what it does (Section I), and as to what HOAs are and do.
  • An implied defect in the HOA governance model relating to the need for unhindered, unpaid, volunteer boards of directors without whom HOA governance fails.

CAI  CANDOR

CAI continues to make broad, unsupported, half-truths as to it nature that can be found in many of its amicus briefs.  CAI claims (my emphasis):

“The Community Associations Institute (“CAI”) is an international nonprofit research and education organization formed in 1973 by the Urban Land Institute, the National Association of Home Builders, and the United States Counsel of Mayors to provide the most effective guidance for the creation and operation of  condominiums, cooperatives, and homeowners associations

“an international organization dedicated to providing information, education, resources, and advocacy for community association leaders . . . . CAI is the largest organization of its kind, serving more than 75.5 million homeowners who live in more than 365,000 community associations in the United States.”

“CAI submits that there [sic] experience in representing and supporting community associations . . . and understand the make and needs of the various community associations.”

“The primary role of community associations is to manage the common areas of the community, i.e. fix the roofs, maintain the lawns, shovel the snow, insure the buildings, etc”

Not mentioned is CAI as an IRS 501(c)6 business trade group that does not and cannot have HOAs per se as members, and was formed to combat growing problems with the HOA scheme back in 1973. In 1992 CAI dropped its education tax-exempt status to become a trade group so it could lobby more effectively. See Stable’s Community Associations and McKenzie’s Privatopia on origins of CAI.

HOA SURVIVAL — UNPAID VOLUNTEERS

“CAI submits this amicus brief on behalf of its members who recognize that the sustained health of the community association form of ownership in the United States depends in large part upon the willingness of owners to continue to serve on their associations’ volunteer boards to make their homes and communities better places to live.” 

“Volunteerism is the backbone of every community association. Board

members are not paid for their service. CAI respectfully submits that volunteer homeowners will be less likely to serve in that capacity if they are required to file a beneficial ownership report with the Government.

“Homeowners will no doubt be reluctant to volunteer in light of the

potential Orwellian consequences imposed by the CTA”

The above is a major defect in the HOA scheme based on an unreal requirement for active volunteerism that is not supported by the lack of involvement in public government.  It’s a call to utopian ideals and behavior.

REALITY CHECK

Question:  If CTA applied to HOAs, would you serve on the board?