CC&RS: exculpatory contract & “inconspicuous nature”

The Indiana appellate court in McAdams v. Foxcliff  Estates[1] is another sad decision against plaintiff homeowners. The Court relied on the generally accepted public policy view that HOAs are good for America.  And any problems are totally the homowner’s fault.  Ignoring other questionable views by the Court, I will focus on the “inconspicuous nature” placement  of these clauses in the CC&Rs.

As a background, the question in the case was the use of an “exculpatory clause” placed in an alleged inconspicuous location in the CC&Rs.   Such a clause holds the HOA and its agents harmless from any wrongdoing – the HOA can do no wrong. In general, exculpatory clauses have been found to be against public policy:  it invalidates the agreement by making the agreement a one-sided agreement.

It’s hard to believe that the Indiana courts accept exculpatory clauses on the basis that “the contracts represent the freely bargained agreement of the parties.”  Unless the “the parties have unequal bargaining power, [or] the contract is unconscionable.”  And in further hard belief,  the Court argued that CC&Rs “are sensible to a person not under any delusion or distress”, and “one that [an] honest and fair person would accept.”

In regard to “inconspicuous nature,” which addresses the placement of very important and meaningful covenants favoring the homeowner.  They are placed in CC&Rs covenants where a knowledgeable person would not expect to find such words.  In other words, an effort by the HOA attorneys writing the CC&Rs to make these covenants almost hidden and secret from the homeowner.

The Court rationalized that inconspicuous nature did not apply to a knowing and willing contract, but relative bargaining power prevailed.  (You just can’t win against the Court’s rational in defense of the HOA.)

He court concluded, arguing the that there is no public policy to prevent HOAs from agreeing not to sue the HOA:

there is no public policy impediment to the parties agreeing that the not-for profit HOA, a volunteer entity comprised of other Foxcliff Estates residents, cannot be sued for damages ‘for failure either to abide by, enforce or carry out any of the Restrictions.’

For more information see Deborah Goonan’s post[2]

Reference:

[1] McAdams v. Foxcliff Estates,  No. 55A04-1707-PL-1707 (Ind. App. ), 2018.

[2] HOA Issue #5: Is your HOA legally obligated to maintain the common areas?

 

Published in: on December 31, 2018 at 4:54 pm  Leave a Comment  

When will HOAs be regulated to protect homeowners?

Deborah Goonan[1] speaks out:

“As explained in a previous post Recipe for HOA abuse: too much power, no accountability, across the nation, housing consumers are fed up with HOA bully boards, often driven by predatory management agents and community association attorneys, all under the guise of “protecting property values.”

Notes:

  1. See Deborah Goonan, Independent American Communities, Time to Deregulate HOAS.
Published in: on December 29, 2018 at 4:39 pm  Comments (2)  

Fragmented HOA owners continue into the new year

HOA owners, advocates and activates still don’t understand that they are and remain a fragmented group of individuals with similar HOA issues and problems, up against a united opposition headed by CAI. They stand, as a group, in the same shoes as employees did at the turn of the 20th century until the Feds stepped in and legalized opposition groups of employees into unions.

Some still believe unions were and are bad, but that is beside the point. HOA owners need federally protected rights to oppose the HOA corporations. Let’s use the term, ”HOA Homeowners Community Association.” But, that won’t happen until owners can unite at least for the purpose of federal protection. Otherwise, the good efforts of the many who publicize are just spinning wheels – the decision makers are well aware of the many, many, common problems.

See my 2013 post, Organize, organize, organize, but organize your local HOA, on organizing at the local level – the HOA. Just expand that into a federally protected right to organize. See also, my 2014 post, Proposed US Constitution amendments will help HOA reforms on Supreme Court Justice Stevens’ proposed constitutional amendments.

Published in: on December 9, 2018 at 12:41 pm  Comments (1)  

Another year coming up for HOAs

With the new year looming, and the Imperial Trump controlling the Republican party, and the Republicans controlling the US Senate, nothing new will  occur.  No charges against Trump, or new HOA laws of substance will occur without the Senate’s approval.

Just the facts.

Trump-henry8

 

Published in: on November 29, 2018 at 7:30 am  Comments (1)  

Can the HOA sue in a voluntary HOA?

Deborah Goonan, in her blog post, Independent American Communities by Deborah Goonan, quoting the article, Do Voluntary Civic Associations Have Authority to Enforce Their Covenants and Restrictions Over Real Property? raises a very important subtle issue of distinction —  powers of voluntary HOAs over nonmembers.

While homeowners with a voluntary HOA well understand that they are not required to pay assessments, they presume that they are not subject to the enforcement of CC&Rs by the HOA. Deborah quotes from the article, my emphasis, Usually when an association is labeled “voluntary” it means the payment of dues and assessments by its members is voluntary, not the obligation of owners to abide by the covenants and restrictions.

The article makes the argument that the voluntary HOA, where given power by the state, can enforce the CC&Rs, not its rule and regulations or fines, or anything else pertaining to its members.  In order to enforce its “rules” on nonmembers, the HOA must first amend the CC&Rs, which requires a vote of all the homeowners. Nonvoluntary HOAs use the term “members” since all lot owners are members, while the amendment procedure for voluntary HOAs usually refers to all “lot owners.”  Big distinction!

SO, if the HOA comes knocking, check these requirements out. If the HOA does not meet these requirements, any legal suit can be denied as having no standing, or legal right, to sue.

Published in: on October 22, 2018 at 10:08 am  Comments (1)