Will the real CAI standup: its contradictory beliefs, pronouncements and goals

With respect to my Commentary, Misrepresentation: CAI comes with unclean hands, this paper contains quotes by CAI leaders, state chapter leaders and CAI attorneys – in 20% of the states – made to the public in general in its advertising and communications, to state legislatures, and to the courts in its amicus briefs. All in support of my arguments of misrepresentation.

They are often contradictory as suited to the purpose at hand; or rejecting principles of democratic government and the US Constitution; or declaring, like fascist principles, that the objectives of the HOA (state) come first and individual freedoms are subservient to the HOA.  And, as is true of fascism, the HOA serves the trade group ‘stakeholder’ entities (corporations) while giving the illusion of democracy because the members can vote.


Looking at the history of CAI we discover that CAI was formed in 1973 by ULI and FHA to deal with the HOA legal scheme as found in the HOA “bible,” The Homes Association Handbook (1964). Its mission, then, was to educate HOA managers and directors. Some 20 years later in 1992 CAI became a business trade group to deal with criticisms of HOAs by political scientists in various research journals and books. 

We can conclude that, over the 40 some years of CAI’s existence and the continuing legal issues with HOAs, that 1) the HOA legal scheme is fundamentally flawed and beyond repair like the Articles of Confederation, and/or 2) a concern that CAI’s educational materials and instruction are also flawed and are contributing factors in the continuing existence of 40 years of HOA problems.

Furthermore, CAI is a business trade organization, a tax exempt 501(c)6 nonprofit serving its members to better serve the public, not an educational 501(c)3 nonprofit.  CAI does not inform subscribers or viewers of this fact.  A business trade group does not educate the consumers of its members’ services, which would constitute a conflict of interest and a violation of its tax exempt status.


Read the entire Commentary with a list of evidence that includes incidents/events from 20% of the states here . . .

Published in: on September 7, 2014 at 9:48 am  Comments (3)  

Misrepresentation: CAI comes with unclean hands


I argue that  CAI exhibits a pattern of misleading advertising, at the national and state levels, intended to induce the public to buy HOA controlled homes and to attain favorable support from the media, the legal-academic community, and state legislators.  In other words, it appears that there is misrepresentation in its advertising.  Here are some examples at the national level and a few CAI state chapters. (Note that I include dates with my quotes as web pages change from time to time.)

CAI Central

“CAI provides information and education to community associations and the professionals who support them. Our mission is to inspire professionalism, effective leadership and responsible citizenship.”  (Building Better Communities, http://www.caionline.org/Pages/Default.aspx, Aug. 28, 2014).


“An international organization dedicated to building better communities, CAI provides information, education and resources to all community association stakeholders, including community managers and homeowner leaders.”  (Who Are We,

http://www.caionline.org/about/who/Pages/default.aspx, Aug. 28, 2014).


“Providing respected professional education remains one of CAI’s core missions—and thousands of managers continue to take full advantage of these opportunities.” (Core Mission, http://www.caionline.org/about/who/Documents/Annual_Report.pdf, Aug. 28, 2014).

Nowhere does CAI mention that it is a business trade organization, a 501(c)6 tax-exempt nonprofit, whose purpose is to benefit its members.[1]  Rather, the impression given above is that it is an educational organization to help HOAs and their board members.  However, HOAs are not CAI members and only 60% of CAI’s members are HOA members called individual “volunteers. However, the dominant factions are the attorneys and management firms who are the vendors to HOAs. Only 2 seats on the 14 member CAI Board of Trustees are for these “volunteers.” (Note that the above term “stakeholders” as commonly used with HOA means the vendors and does not include HOAs).

As a business trade organization, isn’t it a conflict, a violation of its trade group status, to speak for, provide education, and guide the consumers of its members’ services, the HOA?  Shouldn’t that be the job of a bona fide HOA association? A true association of HOAs, consistent with other industry or professional associations, would consist of HOA members who are allowed to vote.  It would allow the vendors or stakeholders – CAI, other management firms or associations and attorneys – to be non-voting associate members. 

As I see an attempt to get around not having HOAs as members, CAI’s volunteer application offers discounts for multiple board members who join.  Page 2 is titled, “Membership Application for [association name]” if more than 1 director is signing up. (http://www.caionline.org/about/benefits/Documents/cavl_application.pdf). A 2005 complaint was filed with the IRS  charging CAI with violating its trade group status by having consumers, HOAs, as members.  The result was that CAI dropped HOAs as members and apparently got around this restriction by introducing “volunteer” members. As the application shows, CAI offers inducements in order to influence an entire HOA’s board, a consumer of its members’ services.

“While joining CAI on your own is important, having your entire board connected to CAI is the best way to ensure you are making informed decisions—and an excellent way to help your board members achieve the results, respect and recognition they deserve.”  (Benefit for

Homeowner Volunteer Leaders,

http://www.caionline.org/about/benefits/Pages/VolunteerLeader.aspx, Aug. 28, 2014).

Furthermore, it is unconscionable that CAI advertises and speaks before the policy makers and legislative bodies claiming to speak for HOAs and their members.

“LACs prevented the enactment of flawed legislation while working to ensure that other bills reflected the interests of homeowners, associations and the industry professionals who serve them.” (CAI 2013 Annual Report, State and Federal Engagement,

http://www.caionline.org/about/who/Documents/Annual_Report.pdf,  Aug. 28, 2014).

Let’s examine this preposterous claim even if CAI indeed had HOAs as members.  By its own data, CAI states that 60% of its membership is volunteers[2], and if each were in a separate HOA CAI would have representation of, at most, some 19,200 HOAs.  That would make CAI representation equal to a paltry 6% of all HOAs.[3]   What a blatant misstatement of representation!


Selected state chapter advertising – no mention of business trade group or 501(C) 6 tax-exempt

Arizona Central -

“The Community Associations Institute national chapter was founded in 1973 as a multi-disciplinary non-profit alliance serving all stakeholders [does not include homeowners] in community associations. It provides education and resources to America’s 315,000 residential condominium, cooperative, and homeowner associations, and to the professionals and suppliers who serve them.” (http://a.mwapp.net/p/mweb_ws.show2?

xpod_id=77805054&xcanvas=&xid=79759889, Aug. 28, 2014).

New Jersey –

“The New Jersey chapter of CAI (CAI-NJ) is dedicated to enhancing the quality of  community association living, through education, legislative advocacy and  professional development. . . . The Community Associations Institute (CAI) is a national, non-profit organization dedicated to providing the education and resources necessary to foster vibrant, responsive, competent, community associations and helping them promote harmony and responsible leadership.” (http://www.cainj.org/about/about-cai-nj/, Aug. 28, 2014).

Florida central chapter –

An education and resource institute dedicated to the 7,500+ HOA & Condominium Associations in Central Florida, their volunteer leaders, and the business partners who support them. (http://www.caicf.org/, Aug. 28, 2014). For more than 30 years, CAI has been the leader in providing education and resources to the volunteer homeowners who govern community associations and the professionals who support them. (http://www.caicf.org/site_page.cfm?pk_association_webpage_menu=446&pk_association_webpage=470, Aug. 28, 2014).

Orange County, CA chapter –

“The Orange County Regional Chapter of Community Associations Institute (CAI-OCRC) provides education, networking, resources and advocacy for community associations and the professional and volunteers who serve them. . . . Members include condominium associations, cooperatives, and homeowner associations . . . .” (http://www.caioc.org/, Aug. 28, 2014).


When CAI goes before the policy makers, government officials or legislative committees, acting as modern day Philosopher Kings,[4] but raising questions of candor to the tribunal, advocates must speak out loudly.  Any such statements must be confronted, challenged and exposed before the audience addressed by CAI.  Speaking to one another is an empty exercise, unless to exhort others to act.  And after repeated confrontation as above and the recipient fails to act, then challenge the policy maker, the government official or the legislative committee – Why are you doing nothing?  Tell them that you have provided documentation that any reasonable person would agree reflects the unethical and illegal conduct of the lobbyists.  Why are they not acting in a responsible manner?

“In every stage of these oppressions we have petitioned for redress in the most humble terms; our repeated petitions have been answered only by repeated injury.”  (Decl. of Indep.)



[1] “IRC 501(c)(6) provides for exemption of business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues (whether or not administering a pension fund for football players), which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.” (http://www.irs.gov/pub/irs-tege/eotopick03.pdf). (Contrast CAI with “real estate boards,” more commonly known as the association of realtors, realtor education is focused in its professional members and not on the homebuyer who is a consumer of the services of its members.  Realtors do not lobby for home sellers/buyers, but for its agent members.)

[2] From CAI miniscule minority dominates public policy (2007).

[3] CAI’s Industry Data (http://www.caionline.org/info/research/Pages/default.aspx) shows 326,000 HOAs and states that it has some 32,000 members (http://www.caionline.org/about/who/Pages/CAI40thAnniversary.aspx). That’s a 32/326.6 ratio of 9.8%.  My best estimate from note 2 above is that volunteers make up just 60% of the members, making HOA representation at about 6% at most.  “At most” means that there is just one volunteer from an HOA, which we know is not true. 

[4]Until philosophers rule as kings, that is, until political power and philosophy entirely coincide…cities will have no rest from evils…there can be no happiness, either public or private, in any other city.” Republic, Plato.  (In other words, “the key to the notion of the ‘philosopher king’ is that the philosopher is the only person who can be trusted to rule well.”

Published in: on August 28, 2014 at 11:01 am  Comments (16)  

HOA attorney seeks homeowner arrest for not attending attorney fee meeting

In this instance, how does the court, in its obligation to do justice, determine if there has been dishonesty or grossly negligent behavior without an opportunity for the homeowner to examine the HOA’s affidavit?  Here, both judges protected the HOA as incapable of doing any evil, sua sponte (on its own).

Essentially, in my view, failing to allow the homeowner to question the signed affidavit of an HOA manager is not conducive to homeowner justice.  The liberal interpretation of the business judgment rule taken here is that, as I’ve indicated elsewhere, the board can do no wrong because average people become angels when they become an HOA board member.[1]

In order to understand the events in this situation leading to the request for the arrest of the homeowner for failing to attend a meeting, you need to understand the background of the case.  It’s lengthy, but needs to be read through.

Case History

The Arizona ALJ (Brian Brendan Tully) at OAH granted summary judgment (October 2012) for Terravita in regard to a request for minutes to an alleged executive meeting.[2] The order further states that the judge “concludes that . . . there are no issues contained in the Petition that require an evidentiary hearing.”  However, without an evidentiary hearing, where the homeowner could contest the allegation that it was indeed an executive meeting, the judge essentially took the word of the HOA’s attorney, the CAI member, Curtis Ekmark. In his discussion, the judge once again assumes the validity of Ekmark’s assertion that it was indeed an executive meeting, and argues that the homeowner did not show he had a legal right to executive minutes.

In Arizona, the court operates on a notice basis, that is, just give sufficient information that the complaint is valid, and then present your detailed evidence before the court.  That was not allowed in this case.

Homeowner filed superior court appeal[3] contesting the ALJ’s decision as “contrary to law, an abuse of discretion, arbitrary and capricious.”  

6. Administrative Law Judge Brian Brendan Tully’s October 4, 2012 Decision in 12F -H 12120 14-BFS, based exclusively upon certain “statements, claims and contentions (sic)” made by Respondent, Terravita Community Association, Inc., in its pleadings, denied Petitioner (Plaintiff) a hearing which would have brought forward the facts of the contested matter based upon evidence, witnesses’ sworn testimony and argument upon the merits of the matter’s facts and the planned community statutes relevant to those facts, instead, Tully vacated the matter from the calendar of the Office of Administrative Hearings.

 The homeowner further argued

 Plaintiff [homeowner] will timely request this Court hold an evidentiary hearing that will adduce evidence, present sworn witness testimony and offer argument in furtherance of the Court reversing the decision in 12F-H1212014-BFS and the agency’s action based upon the Court’s reviewing the administrative record (no hearing/no transcript) and evidence to be presented at an evidentiary hearing denied Petitioner at the OAH

Terravita’s relevant Answer was a reliance on the business judgment rule, which states that the court will defer the judgment of a corporation’s board as they know more than the judge.  In its reply to a request for an evidentiary hearing, Ekmark says homeowner must show the evidence that was already rejected by the ALJ as irrelevant.  (Remember the issue was a declaration that the meeting was an executive meeting and the ALJ didn’t want to hear anymore).   Ekmark concludes with, “Mr. Brown [homeowner] has had ample opportunities to present facts contrary to the Association’s position; yet, he has completely failed to do so.”  Did he???

Brown’s reply, beyond a criticism of Ekmark’s arguments about new evidence and failure to show evidence, got to the obvious legal question of the faithful acceptance of a statement without the right to a hearing on the validity of the statement:

[T]he presentation of evidence is necessary to the Court’s findings of fact and conclusions of law in furtherance of a just decision to include, but not limited to, the veracity of the affiant’s affidavit, an affidavit prepared under the supervision of  the Defendant-Appellee’s attorney, submitted with the Defendant-Appellee’s Answer (Pollock, a credentialed community manager, PCAM, CAAM, attended the March 27, 2012 meetings [Executive Session and Regular Meeting] of the board of directors and knew, or should have known, the “e-session” violated the planned community statutes).

However, the superior court appeal found no error and upheld the ALJ’s summary judgment decision.  “TCA has provided to this Court authorities and arguments in support of its position. This Court concludes the authorities and arguments provided by TCA are well-taken, and this Court adopts those authorities and arguments in support of its decision.”  (Judge McClennen of 11-22-2013). The judge apparently, like the ALJ, ignored the homeowner’s allegations.

Under R  Civ. P. 43(a), an affidavit is a written statement by a witness in lieu of the witness appearing in court in person. The opposing party must stipulate to the acceptance of an affidavit to be accepted by the court as evidence.  Rules of Evidence, Rule 609, allows for the impeachment of a witness. This did not allowed to occur here.

An appeal was filed by Brown on 7-14-2014, CA-CV14-0455, Div.1.

Arrest Warrant

Apparently, the HOA attorney firm of Ekmark & Ekmark wants their fees paid as per the court ruling. On August 8, 2014 it filed several documents with Judge McClennen for contempt of court for failing to submit to a subpoena to attend a debtor’s meeting (to discover how the attorney would collect its fees), and the arrest of Mr. Brown for contempt.  All over a question of the legitimacy of an executive board meeting.

According to the homeowner, who apparently did get access the Terravita’s financials and moneys spent on attorney fees for this litigation, the attorney fees amounted to $57,344.10.  Of course, the HOA has no cause for alarm since it won the case and does not have to pay this amount.  But, if it loses in the appellate court, what then?  HOA litigation is a gamble in favor of the HOA, and joy to the attorneys cause they get paid win or lose.

BTW, Judge McClennen washed his hands of jurisdiction on August 11, 2014 after receiving the filings from Ekmark.  “This Court no longer has jurisdiction and will take no further action in this matter.”


[1] Business judgment rule misinterpretation. In my commentary on the business judgment rule, Illinois appellate court awards punitive damages for reckless indifference by condo, I quoted the court’s reminder about what this rule means:

 “The rule protects directors who have been careful and diligent in performing their duties from being subjected to liability for honest mistakes of judgment. . . . [But where there is] evidence of bad faith, fraud, illegality, or gross overreaching, courts are . . . at liberty to interfere with the exercise of business judgment by corporate directors.”

 [2] Brown v. Terravita, No. 12F-H1212014-BFS, Administrative Law Judge Decision, Office of Administrative Hearings, October 4, 2012.

[3] Brown v. Terravita, LC2012-000699, Maricopa County.

The failure of the HOA to protect against obsolescence

Tyler P. Berding, CAI and the Foundation for Community Association Research (CAI affiliate) member, has come to realize that HOAs will become obsolete for a variety of reasons and property values will plunge. His “exit strategy,” as stated in his article, is unclear.  He writes (my emphasis),

The challenge is . . . formulating an appropriate exit strategy that will protect the individual’s investment when the inevitable occurs. At present, no appropriate strategy for preserving individual interests in the face of an obsolete community exists. It should be a legislative priority to find one.

The individual owner is trapped in this cycle. He cannot ‘opt out’ of the system. His only choice is to vote for increased assessments or not, or to sell. If he sells, his successor will be given the same choices. If the community fails, the owner’s interest will be lost. There is no present means by which an owner can salvage his separate interest in a failed community.

To better understand HOA obsolescence, think of your car. You bought it and it depreciates or becomes obsolescent over time.  Most people cannot buy a new car until the sell their old one, or trade it in; but, there are no “home dealers” to make home selling a relatively quick and easy process like car buying. As your home grows old, like the HOA’s common areas, repairs and maintenance demands continuously pop up.  Your property value drops – forget about the HOA’s common areas – your home value drops.  The obsolescence of the common areas does not help your home value. In a non-HOA subdivision, the county pays for the neighborhood maintenance.

Berding does not address what I call your home’s architectural obsolescence; that is, the layout, floor plan, or design of your home, which may no longer be fashionable as people’s tastes change. What the HOA can try to do, which would be a value of HOA living, is to mandate special assessments for repairs and maintenance.  It can do it simply by amending the CC&Rs since there is no protection in the HOA constitution against ex post facto amendments as in the US Constitution.  But, then again, was this part of “the deal” when you bought your home?

What if a homeowner has the cash to remodel his home to make it ‘fashionable’?  Would he get ACC approval? Fat chance!  Would the HOA revise its character of the community and allow homeowners to remodel and create more fashionable homes?  I mean, doesn’t that help maintain property values?  Fat chance!

But wait Berding, what about government intervention to preserve the HOA as quoted above?   What do you think that legislative priority will be, as the state faces a multitude of HOA communities becoming blighted areas?  My guess is that a law will be made mandating the payment of special assessments into reserve accounts to prevent HOAs from becoming obsolete.  Don’t think so?  Have you heard of Obama Care?

In this lengthy article Berding rambles and introduces aspects but fails to tie them all together, like, “It [the HOA] is more than a quasi-governmental agency” and “It is a multidimensional mix of principles” (referring to special or sui generis laws).   Is Berding saying below that the homeowners alone are responsible for the financial condition of the HOA, and individual rights get in the way (my emphasis)?  You know, you’re on your own. Judge for yourself.

In America, individual self-determination usually prevails, and that basic truth illuminates the fundamental flaw in the common interest development concept. In CID living, the success of the group is wholly dependent on the voluntary contribution of capital by each owner.

A community association in trouble cannot simply close the doors and walk away. The ‘village’ [note the reference to public governance terminology] has to pay the utilities, remove the garbage, and maintain the buildings if the owners are to have shelter. This cannot be effectively done without a consensus of the owners, because without owner approval, the association cannot raise sufficient funds to operate.

And in the absence of a consensus?  We know about consensus and member involvement in HOA matters, don’t we?  It seems obvious that the state must intervene, right?

Berding does make the important point that is essential for a healthy community – it’s up to the members to “do right.”   However, the mass merchandising of the HOA concept has worked against members pitching in to maintain property values, because that’s the HOA’s job, that’s why they bought into an HOA – them, not us.  Faulty indeed, but if the financial aspects of a close corporation where financing must come from the limited membership were disclosed, including the joint and severable liability of the members, who would buy an HOA home?  The home would lose all its traditional humanizing, family aspects and become just another dehumanizing material asset.

There’s much more to Berding’s article, which unfortunately gets bogged down in too much irrelevant detail.


See, Tyler P. Berding,  “The Uncertain Future of Common Interest Developments,” August 10, 2014.

Can the HOA legal scheme survive constitutional due process?

Bob Frank, a Commissioner on the Nevada Commission for Common Interest Communities and Condominium Hotels, asked in the LinkedIn group, Condo Association (and HOA) Network, Should States Pass “Due Process Regulations” Along The lines of The Following Draft?

My comment follows:

Bob, an excellent in depth presentation of HOA due process procedures. Allow me to provide the authority for your proposal. Judge Henry Friendly in his well-regarded article, “Some Kind of Hearing,”[1] generated a list that remains highly influential, as to both content and relative priority (my emphasis):

  • An unbiased tribunal;
  • Notice and grounds for the proposed action;
  • An opportunity to show why the proposed action should not be taken;
  • The right to call witnesses;
  • The right to know opposing evidence;
  • The right to have the decision based only on the evidence presented;
  • The opportunity to be represented by counsel;
  • A record of the proceeding;
  • A statement of reasons;
  • Public attendance; and
  • Availability of judicial review.


As you will note, the first listed item above requires “an unbiased tribunal.” What would you add to your proposal to further protect the integrity of your HOA due process procedures? Obviously some sort of code of conduct for those sitting on the “hearing tribunal” is in order. Following are the four Canons taken from the American Bar Association’s Model Code of Judicial Conduct[2].


A judge shall uphold and promote the, independence, integrity, and impartiality of the judiciary, and shall avoid impropriety and the appearance of impropriety.


A judge shall perform the duties of judicial office impartially, competently, and diligently.


A judge shall conduct the judge’s personal and extrajudicial activities to minimize the risk of conflict with the obligations of judicial office.


A judge or candidate for judicial office shall not engage in political or campaign activity that is inconsistent with the integrity, or impartiality of the judiciary.

I would think that third-parties with some legal background would be the way to go, but this would run into the dogmatic “the HOA members shall judge their ‘peers.’” But, then again, is that possible?

You have touched upon one of my 5 HOA substantive reforms arguments, “Fair and Just Hearings,[3] the absence of which is a clear indication of the oppressive and authoritarian nature of the HOA legal scheme.  If it is possible to obtain fair and just hearings, would this move toward democratic reforms cause the HOA legal scheme as it exists today to collapse, or can the real estate package governed by an HOA government survive governed by a true democracy?[4]


[1] Judge Henry Friendly, “Friendly, Some Kind of Hearing,” 123 U. PA. L. Rev. 1267, 1279-1295 (1975).

[2] American Bar Association’s Model Code of Judicial Conduct (http://www.americanbar.org/groups/ professional_responsibility/publications/model_code_of_judicial_conduct.html).

[3] See “HOA Common Sense, No. 6, Fair and Just Hearings”.

[4] See “Would the HOA legal scheme collapse under a democratic form of government?



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