Evan McKenzie on HOA consent, disclosure and realtors

“The typical homeowner has no idea what he is getting into — or what kind of HOA leadership he will be dealing with — when he signs a binding contract to move into an HOA-governed subdivision.”

So spoke internationally recognized and outspoken advocate for HOA reforms, Professor Evan McKenzie (author of Privatopia: Homeowners Associations and the Rise of Residential Private Government (1994) and Beyond Privatopia (2012)) in an interview for the Evansville Courier and Press (“Woman says HOA demanded microchip in her dog”).  And with respect to consent and the inadequacy of state mandated disclosure documents, McKenzie calls them “hopelessly inadequate.”  He is quoted as saying, “If (realtors) cared about this, which they don’t, they would be establishing policies.”

I’ve written on the topic of why people choose to live under HOA regimes and who remain silent. As a sample, there is the  oppressive structure of the HOA (Why do people harm others in HOAs?), the “unspoken alliance of no negatives about HOAs” (Good night and very good luck – the unspoken media HOA alliance, CA court upholds HOA suit against real estate agents), and the failure of state legislatures to uphold constitutional rights (Proposed “consent to be governed” statute, the “Truth in HOAs” bill).  One can conclude that the HOA institution is basically corrupt (as defined: impairment of integrity, virtue, or moral principle; perversion of integrity).

I have repeatedly argued for the education — the enlightenment — of the public, the media and state legislators as to the truth of the matter, understanding that the unspoken alliance is still at work.  Where there is a lack of understanding, actual or pretended, then educate as to the truth. Help others to understand.  And this enlightenment requires that advocates challenge, confront and expose the non-truths being continuously aired by pro-HOA special interests (Path to Victory at the Legislature).

Thank you Evan for your effort to enlighten others as to the reality of the HOA concept and its defects.

 

Read this highly informative article at CourierPress.com.

HOA board mentality: ‘because we can’ and ‘because we don’t have to’

How many times has a board member come up to you and say, “Hey, see you’re building an addition?  You know, you need to submit a request for approval before you do anything.  Come on down and let’s talk about it?”  Or, “Our landscapers will be coming by on Thursday to reset the sprinkler timers.”

Why not?  Because it’s the board’s mentality: “Because we can” and “Because we don’t have to.”   This mentality develops, based on my long history in seeking justifications for many outrageous acts by HOAs, from long term indoctrination into hair-splitting the laws and covenants, a parsing of the laws, in the best interests of the HOA.  Of course, coming from the HOA attorneys.  And there are no other rational and legitimate reasons for doing so, or not doing so, especially when good faith conduct is required of officers and directors.

What ever happened to “HOAs create pleasant, harmonious, carefree living, and democracy at work?”  What ever happened to social graces?  Good neighbors?  And common friendship?  I think that the problem lies with recourse to the CC&Rs that must be enforced at all costs got in the way. 

HOAs create an unhealthy climate.  See, Why do people harm others in HOAs?,  The HOA apathy affliction: a political dynamic

 

The role of the HOA apathy affliction in circumventing public policy

In my prior Commentary, See The HOA apathy affliction: a political dynamic, I wrote about the HOA attorney driven recourse to complete rewrites of the CC&Rs that works because of the apathy affliction that is thriving in HOA-Land.  I would like to now add that this approach, in general, is an intentional violation of your state’s public policy.

Public policy is expressed in many ways by the actions or inactions, and statements or non-statements by government officials in the executive, judiciary and legislative branches. What bills are made law or not passed, and the intention of the legislature, when and if explicitly stated, makes public policy. 

In Arizona, for instance, HB 2441 (2011 session) was submitted and aggressively supported by the CAI chapter. It contained, among other things, a provision for the minority control of the CC&Rs amendment process by allowing as low as 33% of the all members to approve an amendment. While the Apache Wells rewrite contains a very vague and loose requirement for amending the CC&RS in contrast to the detail by-laws amendment process, it lacks homeowner protections.  There are no requirements for notice, meeting at which the voting is to take place, no approval requirement, etc.  (The prior 1987 CC&Rs required a majority approval of all the members).  The 50% vote is misleading as to homeowner protections without all of the above in place, as has occurred in the Fourth Amendment rewrite with respect to the minority approval of special assessments (See below and the prior Commentary link)..

10.4. Amendments. At any time this Declaration may be amended by an instrument in writing, executed by the then Lot Owners of more than fifty percent (50%) of the Lots in the Project.  Any amendment approved pursuant to this Section 10.4 of this Declaration shall be signed by the President of the Association and shall become effective upon recordation of the same with the County Recorder of Maricopa County, Arizona. Any such amendment shall certify that the amendment has been approved as required by this Section 10.4.

 

But, when it comes to approving special assessments (Section 7.5 of the CC&Rs), which could be almost any amount like the assessments to pay off an $8.5 million loan for a suspect administrative building in 2007, the rewrite allows for a 25% approval of any special assessment. (The prior 1987 CC&Rs required a majority ratification of the special assessment by all the members).  The point that I wish to make is that the special assessment rewrite is only one example of how minority control fails to protect the homeowner.

Another example is the attorney self-interest covenant, 10.2, Administrative Law Proceedings, which states in part,

In the event the Association is required to incur any expense, including attorneys’ fees and costs, as a result of the direct or indirect actions of any Owner, the Association shall be entitled to recover all such expenses incurred, including all attorneys’ fees and costs, against the applicable Owner, regardless of whether formal proceedings are actually filed, pursued or awarded . . . .

 The public policy of the State of Arizona was made clear in 2006 when ALJs were permitted to hear HOA disputes, and no attorney fees were allowed to be awarded in these hearings. The CAI attorneys managed to have the law declared unconstitutional, which resulted in a reaffirmation of the legislative intent in 2011 to provide for ALJ adjudication without attorney fee.  The intent of the legislature was explicitly stated in the new bill.

 The inclusion of section 10.2 in the Apache Wells CC&Rs rewrite can only be viewed as another intentional slap at Arizona public policy, and one in the best interests of the HOA hired-hand attorney.  The covenant for minority approval of special assessments, given the history of special assessments at Apache Wells, is another act of bad faith and disregard for public policy. 

 The recourse to CC&R amendment rewrites with the reality of the apathy affliction so prevalent in HOA-Land is a devise to circumvent public policy in order to achieve goals and objectives not in the best interests of the homeowner.  The Restatement of Property: Servitudes, Section 3.1, Validity of Servitudes,    “A servitude [covenant running with the land] . . . is valid unless it is illegal or unconstitutional or violates public policy.”  It is only the acts and actions of the people within HOAs that can return them to the American way of life.

 Read the related Commentary, Why do people harm others in HOAs?

Beware the folly of eliminating supermajority voting for amending the HOA CC&Rs

The latest drive by pro-HOA attorneys and lobbyists has been to seek legislation to do away with supermajority amendments to the CC&Rs.  If approved, the very foundation of majority rule in a democracy, and our long standing requirement that fundamental documents must have supermajority voting in order to be amended,  would be destroyed.  The argument is, Gee, because of the apathy, we can’t make important amendments to the CC&R.  

In the 2011 Arizona legislative session, HB 2441 was defeated at the last moment.  It would have allowed for minority – as low as 1/3 of the members — to amend the CC&Rs.  The CAI lobbyists fought hard for this bill, even telling the committee that although  it was governmental intrusion, the legislature always did that. 

Think for a moment.  If a minority can control the amendment process, it can control the HOA by enacting amendments that further strengthen the powers of the incumbent board.  Given the fact that the rogue boards are dominated by their HOA attorneys, minority control solidifies the political machines as the power elite. 

Think about it!  Under a political machine minority vote regime, the regime can eliminate all and every need for member approval, except, of course, voting for directors.  And, all future amendments will have this acceptable ground for the amendment — the apathy of the membership demands minority control.  Nobody cares, so what!

However, in spite of this persuasive argument, the infinite wisdom of the California legislature shines brightly when it enacted laws in the Davis-Stirling act permitting just such amendments as valid. Section 1356 addresses minority control of an HOA.  This section 1356 is an oxymoron and is an unreasonable and illogical intrusion on the private contract and to our fundamental belief in majority rule in a democracy.

Section 1356 allows for less than supermajorities where the governing documents require more to amend the governing documents.  So a 60% voting requirement would allow for minority control.  There is no restriction in the law on the lower limit for approval except to appeal to the judge that “this ain’t right.”  In other words, like the failed Arizona bill, 1/3 can be acceptable, and even a 20% requirement would be acceptable.

The lunacy of this law is that a majority voted amendment to reduce supermajority voting requirement is valid, if approved by a judge.  Go figure!  The law has circumvented the CC&Rs private contract putting the cart before the horse!  That the members have spoken is the basis for this requirement, in spite of evidence of psychological indoctrination to obey and legal pressures of financial harm for not obeying. (See Why do people harm others in HOAs?)

But if a supermajority was needed, as currently required by the CC&Rs, the amendment to amend before the court would fail. I mean, isn’t that why the HOA is before the court?  They can’t get anything done with a supermajority! 

How to get a supermajority vote?  It’s done every day, everywhere.  The content and need for the amendment must be conveyed to the membership in an open forum, an open meeting, and be debated before the membership.  And not in some one-on-one private meetings or phone calls. 

There is no requirement in the law to hold an open meeting of the membership to debate the amendment before approving the elimination of supermajority voting.  A requirement that is found in all legislative and state agency rule-making procedures – public input.

 

In the recent court opinion (Quail Lakes Owners Assn. v. Kozina (2012) 204 Cal.App.4th 1132), the homeowner does not challenge the validity of this law, but advances procedural arguments under the law.  That was a big mistake (he lost), as I’ve repeated argued, of not seeing the ugly forest through the trees. The mandatory requirement under § 1356(c)(5), that “the amendment is reasonable” was never argued as I’ve argued above.  In fact, my arguments above were made loudly and clearly in defeating Arizona’s HB2144, and that defeat went to the very last vote.

This decision is another example of bad law becoming a detrimental precedent against homeowners.  If you think you have problems now, wait until your HOA blindly obeys the board and allows for  a minority controlled HOA.

This work by George K. Staropoli is licensed
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Attribution must be made to George K. Staropoli as author.

HOA Gestapo tactics — the slippery slope steepens

In California there is the report of a midnight raid on HOA members to forcibly evict them. The Courthouse News Series reports (The Foreclosure From Hell) that

“Nine condo residents claim Taser-toting private security guards burst into their homes at 3 a.m. and assaulted them, forcing them into the street in their underwear, in a foreclosure the residents had never been informed of.” 

The security organization for the HOA and the HOA are being sued.  The complaint alleges, among other things, that

“During this approximate two-hour ordeal, the armed men threatened arrest and incarceration, menaced the plaintiffs with weapons, engaged in intimidation, positioning themselves immediately in front of and/or behind the plaintiffs, glaring at them menacingly and invading the plaintiffs’ space.” 

The plaintiffs seek damages for trespass, extortion, assault and battery, false imprisonment, invasion of privacy, conversion and intentional infliction of emotional distress.

In the highly public Travon murder case in Florida questions of HOA negligence are being raised.   In Arizona, for the 5th year, a bill that  re-asserts that public streets within HOA subdivision territories are regulated by the local government and not the HOA was again defeated.   In Illinois, however, the court did put a stop to HOA security people stopping and detaining people on the roads.

The question before us is:  what are the factors, the causes that lead HOA boards to act in such an uppity, defiant manner against their members and the public, as if they were indeed independent principalities?  The simple answer is,  because they can!  Is it the culture within the HOA that is too similar to the experimental conditions of the Milgram and Stanford Prison experiments? (See Why do people harm others in HOAs?)

Is it the public policy that the HOA must survive at the expense of individual rights and freedoms, with members’ losing the privileges and immunities guaranteed to all citizens?  Is it the pro-HOA laws that do not hold the HOA accountable to the state, that presumes that the HOA can do no wrong?  There are no penalties against HOA law-breakers, but there are plenty of state supported penalties that make HOA attorneys rich and force hardship and the loss of one’s home for trivial fines.

With this sentiment, this bias in our culture and society, HOAs have no restraint on running amuck, and on intentionally running amuck as witnessed here with the Gestapo raid.   I wrote about this dangerous slippery slope path in The public policy of the states with respect to HOAs.  In Legislative protection of HOAs: replacing US organic law with HOA organic law I wrote about the disappearance of the social contract and a return to a state of nature, to anarchy.

It is not too difficult to realize that this country has been on a regressive, slippery slope path to a governmental system very much like the rejected Articles of Confederation of some 225 years . . . . And it appears, with the rhetoric abounding here and elsewhere on other constitutional issues, we are rejecting the social contract and returning to a state of nature.

 Yes, each day, little by little, more and more such acts that were once unthinkable occur as this country speed us along the slippery slope to disaster.  I’m waiting for the knock on the door.  I have my papers ready.