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 (4)  
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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.

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].

CANON 1

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

CANON 2

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

CANON 3

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

CANON 4

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]

References

[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?

 

AZ amicus brief seeking answers to constitutional HOA questions denied

A constitutionality challenge[1] was made to Arizona’s SB 1482 “HOA Omnibus Bill” (ominous bill), the 2014 version of SB 1454 from last year.[2]   Although the law has become effective this past July 24th, the case is still active.  Yours truly filed an amicus curiae brief in superior court on behalf of the Pro Se plaintive, Dave Russell, to which the Arizona Attorney General, lawyer for the State of Arizona, found objectionable. The judge denied my motion to file the brief.

The AG objected under a too one-sided against Arizona argument (complete objection).

Defendant, State of Arizona, opposes George K. Starapoli’s Motion for Leave to File Amicus

Brief in this matter for the following reasons:

  1. There is no authority to file an Amicus Brief in this matter in the superior court.

  1. It would be prejudicial to the State to allow the brief to be filed at this time. The State has responded to the Plaintiffs Motion for Expedited Preliminary Injunction, and that Motion could be considered based on the documents already filed by the parties. To allow the brief to be filed would prolong the process, require additional response, and potentially confuse the issues.

 

I did not refer to the Injunction, but the complaint itself, so what gives??  What does “potentially confuse the issues” mean?  Too much for the AG or judge to handle???

On the 28th, the judge ruled (complete minute entry),

 

On July 11, 2014, George Staropoli filed a “Motion for Leave to File an Amicus Curiae Brief in Support of the Plaintiff”. The Court has reviewed this motion and considered the circumstances. Under the circumstances,

IT IS ORDERED denying the above-identified motion.

What does “under the circumstances mean?????    Was it too confusing for the court to handle????

 

I was informed that a leading public interest nonprofit that has argued before the Arizona Supreme Court has had its amicus briefs to the Superior Court also denied.  I expected as much, but I had hoped for a dissertation as to why the denial beyond “under the circumstances.”

 

The issues that I raised in my amicus brief were:

 

  • Is a bill allowing HOA managers to represent HOAs while prohibiting the homeowner to engage an unlicensed and untrained third-party to speak for them in small claims court an unconstitutional special law in violation of the equal protection of the law under the US and Arizona Constitutions? (SB 1482, Section 7).

 

  • Do the renter documentation requirements and restrictions constitute an unconstitutional interference with private agreements as it creates more harm to the homeowners than the benefits of an unstated government interest?  (SB1482, Sections 11 and 15).

 

The court must still decide on the injunction to not enforce the bill (or the part dealing with HOA managers in small claims court), which it cannot do because Rule 31 of the Arizona Supreme Court forbids non-lawyers from representing anyone in court, including small claims court.  And the Constitution says the SC controls its procedures and not the legislature!  So, folks, what’s the fuss all about?

 

What this incident has demonstrated is the use of the law by the AG and an eagerly cooperative court.  Was my brief so harmful to the State of Arizona’s case that the truth must be hidden?  Or was my brief valid because the overwhelming facts and background presented made a strong case for the tyranny of the legislature that resulted in an unconstitutional law, a law which was motivated by domineering HOA stakeholders, the special interests?

What my little exercise has demonstrated is the silence on the part of our government.  Why?  Because like an HOA they don’t have too!  A law is constitutional because the ‘sovereign,’ the legislature, has spoken and can do no wrong.   Like an HOA, the state well knows it cannot make a valid and compelling justification for the bill in question, SB 1482.  Any such attempt would demonstrate to all that the State of Arizona was defending the indefensible.  So, mum’s the word.

How does a citizen successfully argue his case when the State’s defense is, “Because I can!”

 

 

References

[1] See the complaint, Russell v. State of Arizona, CV2014-093-052 (Maricopa County Superior Court).

[2] See in general: A lesson in HOA reforms and power politics in AZ; AZ legislature fails to remove invalid statutes from its ARS web page.

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