NJ Supreme Court upholds constitution against HOA free speech electioneering violations

Those familiar with rogue HOAs have seen this occur time after time – board control of the electioneering process.   In, Dublirer, a NJ Supreme Court case, [1]

The [condo] Board, citing a ‘House Rule’ that barred soliciting and distributing any written materials, denied the request. On prior occasions, though, the Board had distributed written ‘updates’ under apartment doors throughout the building, which criticized the Board’s opponents. The resident filed a lawsuit and claimed that the House Rule was unconstitutional.”

Finally, a state supreme court said enough is enough and free speech in elections for members dominates the governing documents, and the state constitution prevails (This case was not filed under federal laws).

Under that approach, we find that the Board’s policy violates the free speech clause of the State Constitution. The important right of residents to speak about the governance of their community, which presents a minimal intrusion when a leaflet is placed under a neighbor’s apartment door, outweighs the Board’s concerns. We therefore affirm the judgment of the Appellate Division.

The panel [appellate decision] noted that Dublirer’s expressional activity was ‘political-like speech’ because it related to the management and governance of the common-interest community. The panel found that the restriction left Dublirer without reasonable alternative means to convey his message.”

Thus, even though Dublirer did not run for public office, his message was akin to and should be treated as political speech, which is entitled to the highest level of protection in our society. . . . If anything, speech about matters of public interest, and about the qualifications of people who hold positions of trust, lies at the heart of our societal values.

Essentially, members – and speaking with respect to member-owners — must be given equal access to the membership as long as the campaign does not excessively disrupt the “tranquility” of the community. Suitable means must be given to members to allow for free speech expressions. The HOA had argued, beyond technicalities that were dismissed, that members had no free speech rights.  Imagine that!  CAI’s description of HOAs as democracies was just contradicted!

The Court held,

“On balance, we find that the restriction on Dublirer’s right to disseminate his written materials to neighbors is unreasonable. Dublirer’s right to promote his candidacy, and to communicate his views about the governance of the community in which he lives, outweigh the minor interference that neighbors will face from a leaflet under their door. In short, Dublirer’s right to free speech outweighs the Board’s concerns about the use of the apartment building. We therefore find that the Board’s House Rule violates the free speech guarantee in New Jersey’s Constitution.”

It appears that this Court believes that HOAs are akin to public governments and the election of board members is tantamount to a local public election and must be constitutionally protected.  To ensure that local community government works for the member-owners, don’t due process protections and the equal protection of the laws under the 14th Amendment require judicial enforcement against HOA violations?  And that these rights deserve supremacy over privately drafted contracts that have as their objective the dismissal of constitutional protections?  I think so!  So should state legislators!

As for CAI’s amicus brief, it denied free speech rights to homeowners, declared HOAs are businesses and members are like stockholders during board elections, and other non-constitutional methods were available so forget about applying constitutional law.  Sounds like a belief that HOAs are indeed independent principalities (See Establishing the New America: a new book).

CAI cannot allow HOAs to be treated as equivalent to state entities.  See Commentary posted here.

Note 1.  “BRIEF OF PUTATIVE AMICUS CURIAE COMMUNITY ASSOCIATIONS INSTITUTE – NEW JERSEY CHAPTER,” Michael S. Karpoff, Jan. 3, 2013 (Dublirer v. 2000 Linwood Avenue Owners Assn, N.J. Docket 069154 (2014)).

CAI: the HOA form of government is independent of the US Constitution

In its amicus brief in the NJ Supreme Court Dublirer case [1] involving free speech in an HOA election campaign, CAI clearly makes the point that HOAs are not subject to constitutional protections and elections processes are covered solely by the HOA governing documents.

These rights of members do not arise from the State Constitution but rather from statutes, contract, the association’s and governing board’s fiduciary duties, public policy and fundamental fairness.

In light of these statutory, contractual and common law standards protecting the interests of community association members, they need not claim constitutional protection from the conduct of governing boards to exercise their rights with respect to the associations.

What CAI is saying is that the pro-HOA statutes that it helped write and the adhesion contracts executed under misrepresentation [2] supersede the protections of constitutional law.

Furthermore, CAI attempts a strenuous argument of “the sky is falling” if free speech was allowed in private HOA communities, which would doom the essential private nature of HOAs.

CAI-NJ’s concern is the attempt to convert private communities into constitutional actors and to open such communities to access not only to speakers from within the community but also to the public, while ignoring contractual agreements and non-constitutional protections.

This case did not deal with outside speakers, but a member running for office and seeking equal access to the membership. CAI then raises another of its favorite “cause celebres” — HOAs are businesses.  Read this fantastic argument:

The relationship between the plaintiff and the defendants here is that of a business corporation and so is similar to that involved in any other business corporation. A shareholder who wishes to run for a position on a corporate board has no right to post campaign signs on the corporation’s property. Moreover, if such a shareholder wishes to distribute campaign literature to the other shareholders before the issuance of the corporation’s annual meeting announcement and proxy, such shareholder must do so at his own expense. Dublirer’s position vis a vis the cooperative here is no different. He has no constitutional right to distribute his campaign materials within the cooperative’s property simply because mailing them to the other tenant/shareholders may cost him money”.

This in the trenches argument stands in stark contrast to CAI’s propaganda statements made for public consumption that HOAs are democratic and represent the best town hall democracy in America.  If HOAs are businesses, why is the term ‘community” used rather than “cooperative”? For example, like “building vibrant, harmonious, competent cooperatives.”

And finally, CAI makes its last ditch appeal that there are other non-constitutional protections for HOA members so the court need not introduce the Constitution into HOA-Land.  Let them remain independent principalities where hired-hand stakeholders like CAI can control and dominate.

This is CAI’s most fearful event of all, that the courts will hold HOAs as constitutional actors or state entities and subject HOAs to the 14th Amendment protections.  This state of affairs would be the death knell not of HOAs, but of the need for CAI itself.  And CAI well knows and fears this eventual outcome.

These views by CAI before the courts and not propaganda for public consumption must be made known to the media and to all state legislatures and legislators.  Then the legislators must be asked where they stand? Behind the Constitution or behind CAI?

Notes

  1. BRIEF OF PUTATIVE AMICUS CURIAE COMMUNITY ASSOCIATIONS INSTITUTE – NEW JERSEY CHAPTER,” Michael S. Karpoff, Jan. 3, 2013 (Dublirer v. 2000 Linwood Avenue Owners Assn, N.J. Docket 069154 (2014)).
  2. Misrepresentation: CAI comes with unclean hands.
Published in: on December 10, 2014 at 12:08 pm  Comments (2)  
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Does the Constitution support the will of the HOA no matter what?

A rogue board is operating at Terravita HOA in Scottsdale, AZ. In short, the HOA attorney saw no problem in adding a restrictive covenant that would allow OAH attorney fees regardless of the law that OAH is not allowed to award attorney fees.[1] It was properly passed by the Terravita members. Since the validity of the covenant was not challenged, the following scenario evolved.

Based on the wording of the covenant, the sole target was a resident, Mr. Brown, the only person who meets this classification in Terravita. Section 17.01, Article XVII, of the Terravita Declaration reads,

[I]n bringing claims against Owners or defending claims brought by Owners in an administrative action or proceeding, including but not limited to, proceedings before an Administrative Law Judge, and any appeal thereof; the Association shall be entitled to recover its attorneys’ fees and costs from the Owner involved in the administrative proceeding if the Association is a prevailing party in such action, and the amount of such attorneys’ fees . . . .

The battle between Brown and the board also involved CAI attorney Ekmark, where there is plenty of history, Brown having filed several suits and won them and publicized the amount of HOA funds spent on minor litigation.

In this instance, Brown was seeking access to board minutes at a meeting alleged to be an executive meeting where the minutes are exempt from disclosure. The problem, according to Brown, was that he was not allowed to present evidence that the meeting was not an executive meeting.  The court simply took Ekmark’s word that it was an executive meeting.

Being the prevailing party, the HOA then claimed attorney fees for the OAH appellate costs, the basis of Brown’s current appeal (CA-CV 14-000455, Division 1). (I avoid the other pertinent legal issues involved in this case and focus on the validity of the covenant.)

The question I raise is that the covenant was invalid, being an unconstitutional deprivation of due process and the equal protection of the law. Once again, like the CC&Rs, can a private organization draft a document or rule that conflicts with state law and yet be held legally binding by the courts? (When does it stop?) And since the covenant was enforced by the courts, there are grounds for filing a deprivation of rights suit under 41 USC 1983[2] (“under color of any statute”) and claiming state action by Terravita.

Understand that, in general, court enforcement of a CC&Rs agreement to abide by the majority decision under a valid amendment procedure alone fails to uphold the principals of our democracy.  The Constitution does not say that the majority is always right.  The 5th and 14th Amendments do not contain exceptions like, “

no person shall be deprived of life, liberty or property, without due process of law (5th & 14th Amendments) . . . nor deny the equal protection of the law (14th Amendment) unless approved by a majority or supermajority vote as contained in the governing documents.

The case before us is another example of judicial populism that holds that the will of the majority shall prevail no matter what.  How far have the courts gone in ignoring the Constitution and allowing unrestricted private individual or group “rewrites” of the Constitution to be binding? 

By such court activism, the America of today not the America of your father or your grandfather.

References

[1] OAH, the Office of Administrative Hearings, is an executive agency obtaining it powers and authorities from the legislature’s enabling act.  The statutes (ARS 41-1092 et seq.; 41-2198 et seq.) and Administrative Code (R2-19-101 et seq.) do not grant the OAH the power to award attorney fees.

[2] 42 USC 1983, Section 1983. Civil action for deprivation of rights

 “Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress, except that in any action brought against a judicial officer for an act or omission taken in such    officer’s judicial capacity, injunctive relief shall not be granted  unless a declaratory decree was violated or declaratory relief was    unavailable.”

PA congressional candidate rejects HOA-Land

Congressional candidate Andy Ostrowski posts on his blog,[1]

During my run for Congress, I have met many people with many unique needs for assistance, and government action. None has been as compelling as those Americans who are involved in property ownership in Homeowners’ Associations (HOAs).

HOAs, and their Boards, serve public purposes traditionally reserved for governments, and elected officials, and this reveals one of the true hearts of the problem – there is no accountability to oaths of office to uphold and defend the constitution. People who try to sue these HOAs are told that they are not government entities, and do not have the same responsibilities and duties as do their governments. They are creatures of corporate law, and planned development acts.

This is a true civil rights issue as it involves legislatures across the country enacting laws that cut off constitutional rights, and access to courts for millions of Americans, and I will fight to give government back to the people by fighting for the rights of these individuals.

Is Andy for real? Here’s what he says on his web page[2],

The justice system is broken. Government is not operating according to the founding principle of the Consent of the Governed. It is running according to the will of the one percent – those who can pay for access.

As a lawyer . . . . My life has been devoted to defending the constitutional rights of hard working American citizens. . . . I believe in the equal treatment and equal protection of all. I believe that corporatism [polite word for fascism], cronyism, Wall Street influence, lawyers, and courts are the root causes of our political ills.

Mr. Ostrowski, after elected, should investigate the independent principalities legal scheme of HOA-Land and how it tears asunder the fundamental fabric of our democratic system of constitutional government. (See HOAs violate local home rule doctrine and are outlaw governments).

Mr. Ostrowski should demand an investigation into a widespread pattern of fraudulent conduct and misrepresentation in the selling process and its impact on the alleged, bona fide homeowner consent to be government.[3]

Mr. Ostrowski should require HUD to only support loans to HOAs and homes in HOAs provided that there are state laws that mandate the following to be included as part of the HOA declaration,

The association hereby waivers and surrenders any rights or claims it may have, and herewith unconditionally and irrevocably agrees to be bound by the US and State Constitutions, the 14th Amendment,  and laws of the State as if it were a local public government entity.[4]

Support Andy Ostrowski whether or not you live in his district (11th).  Tell him about the extent of the problems in HOAs not found in the media. Tell him!

I would like to thank Cynthia Stephens for bringing this important event to my attention.

References

[1] Homeowners’ Associations – A Need for Congressional Action,” Andy Ostrowski for Congress.

[2] “Why I Am Running,” Andy Ostrowski for Congress 2014.

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

[4] Homeowner Association Consent to be Governed Agreement: An Act,” (model statute).

Published in: on October 7, 2014 at 7:09 am  Comments (5)  
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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.

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