Will AZ real estate dept protect the interests of the general public?

The following is a copy of my follow up correspondence with ADRE Commissioner Lowe regarding ADRE’s failure to protect the interests of the general public by 1) not removing CAI and AACM from its lists of resources and 2) misinforming the public that OAH will address corporate law disputes.  The two referenced messages can be found at AZ Case Reviews.

 

August 16, 2017

Commissioner Lowe, ADRE

Re Message Id: 230332, incorrect listing of corporation law

Dear Commissioner Lowe,

I have not received a response to my correspondence of July 28th regarding the misleading mention on ADRE’s web page that Arizona corporation law applies to OAH dispute process. Your quick reply of the 28th simply provided the canned we are looking into it response.

I do not understand this 19-day failure to correct a black and white incorrect implication that OAH has authority to hear corporation law HOA disputes.  I even provided the exact statute for your convenience.    What “adjusting” does it take beyond the removal of a one-line entry on the web page?

When can the general public see this error on the part of ADRE corrected?

While I have your attention, when can the general public see the removal of the two private organizations who opposed OAH due process and the application of constitutional protections for homeowners members?  I provided details as to why CAI and AACM should be removed from your recommendations as resources.  I also asked, in my correspondence of August 8th, why other private entity websites by homeowner rights advocates – that provided documented and authoritative information – were not included in ADRE’s list of resources.  I suggested that they be added in all fairness and in keeping with ADRE’s mission to protect the general interest.

When can the general public see an unbiased list of resources for HOA home buyers on ADRE’s website?

 

Respectfully,

George K. Staropoli, Citizens for Constitutional Local Government

Published in: on August 16, 2017 at 3:36 pm  Comments (2)  

The mystery of the non-repeal of AZ 33-1258 and 33-1805

Yes, Arizona’s statutes 33-1258 and 33-1805 dealing with HOA record inspections were repealed way back in 1999 by HB2357 (AZ. Sess. L. CH 23). Yet, they were still later amended in the same session by HB 2237 (AZ. Sess. L. CH 297).  Go figure! Both became AZ laws.

Looking to inform the Arizona pubic on the origins of its HOA laws, I discovered a puzzling discrepancy relating to the repeal and sudden re-appearance of ARS 32-1258 and 33-1805.  I cannot find an intervening bill that restored these statutes. The later bill, HB 2237, did not; it just amended them as if had nothing occurred.

(The source of the following information was ALIS, the Arizona Legislative Info System with public access, and the AZ Secretary of State who is responsible for updating ARS.)

In the beginning, Chapter 310 of the AZ Session laws of 1994 created the condo and planned community statutes (chapters 9 and 16, respectively), and created 33-1905 (now 33-1805 in a renumbering of ARS).  In 1996, Ch 236, amended both 32-1258 and the renumbered 33-1805.  This revision stated that Title 10 nonprofit, member corporation law under 10-2325 would also apply to nonprofit HOAs.  I found no 10-2325 in ARS for 1999 nor any bill adding 10-2325.  A mystery, itself.

In 1999, we come to the mystery in question regarding these two statutes.  Sec. 4 of AZ Session Law Ch. 23 (HB 2357) repealed these two statutes.  “Sections 33-1258 and 33-1805, Arizona Revised Statutes, are repealed.”  Yet, it amended ARS 10-11602 that required members of HOAs get special permission from the board in order to inspect HOA records.  The bill was signed by the Governor on April 18, 1999.

However, now comes HB 2237, a bill “relating to business entities” with extensive amendments that included amending 32-1258 and 33-1805.  It was signed by the Governor on May 18, using the “senate engrossed” version, and became law under Ch. 297.  It did not reinstate these 2 statutes, but deleted the mysterious 10-2325 and applied Title 10 requirements for records under ARS 10-11620 and 11621. It also allowed 10-11602 to remain valid law.   So, it appears that all 3 Title 10 statutes now applied to HOAs:  11602, 11620 and 11621.

A mystery exists as to what happened.  Did both the repeal and the amendment bills have effect and CH 297 “wiped out” the repeal?  How could a repealed bill be modified, even in the same session without reference to the bill that contained the repeal?

(In a more complex situation in a later session, several bills modified the same statute in different manners resulting in 3 versions of the statute to exist on record.  They were time dependent, where at a subsequent dates the earlier applicable statute ceased being effective and the second version became effective.)

However, this mystery disappeared and is mute; ARS 10-11602 has been subsequently amended and Ch. 23 Title 10 applicability has been replaced with subsection 10-11602(G) nullifying the applicability of Tile 10 to record inspections?  (Your elected representatives hard at work!)

But, CAI has been arguing Title 10 applicability at ADRE’s OAH due process hearings, and in civil court.

Published in: on August 10, 2017 at 3:55 pm  Comments (1)  

Florida’s HOA ‘Crime Bill’ HB 1237 should be emulated by other states

Finally, a strong HOA enforcement bill, HB 1237, has come law in Florida this July 1, 2017.  Penalties and fraud charges against the HOA, its directors and offices, and HOA managers became real. Sadly, the bill only pertains to condominiums.

In short, among other things, the new law allows for:

  1. Fraud charges for misuse of association credit cards;
  2. Civil and criminal penalties for director, officer and manager ‘kickbacks’;
  3. Civil penalties for destroying or failing to maintain records;
  4. Not allowing officers and directors charged with criminal acts to hold office or be elected, and the removal from office directors and officers charged with certain crimes;

While the bill is some 51 pages, you need only read the underlined — parts added to the statute and the strike-outs – parts deleted.  By law, the entire section must be included in the bill if any part is modified.

According to the Miami Herald (as reported by Florida’s advocacy group, CyberCitizens for Justice), this bill originated with investigative stories by two newspapers, el Nuevo Herald and Univision 23:

 

“The proposal came one year after el Nuevo Herald and Univision 23 published a series of investigative stories on condo abuses in South Florida, like electoral fraud, falsification of signatures, conflicts of interest, embezzlement and cases of fraudulent bidding.

“The series also exposed the lack of enforcement by authorities, from local police departments who refused to investigate allegations of fraud, to widespread negligence at the state agency in charge of enforcing condo laws and regulations and investigating complaints.”

The investigative reporting and publishing of HOA problems by these news media must be emulated by the media in all states. Rather than treating news stories as simply local neighborhood problems, the deep, insidious HOA social, legal and constitutional issues would also be addressed by state legislatures as in Florida this year.

As it stands, the media is cooperating in the public deception of serious HOA abuse by ignoring and treating the abuse superficially.

 

I take my hat off to el Nuevo Herald, Univison 23, the Miami Herald, CyberCitizens and the sponsors and supporters of HB 1237.

Published in: on August 6, 2017 at 12:16 pm  Comments (9)  

Understanding the reality of HOAs and their functions

What is an HOA in reality? ” I mean in real, understandable terms and not legalities.

A common statutory definition of an HOA includes a governing body that owns common areas, and has mandatory membership and dues based on CC&Rs.  So, if the community doesn’t have common areas, or is a voluntary membership entity, then it is not an HOA according to the above definition.  However, the members are still bound to the CC&Rs, but state HOA statutes don’t apply.

A better understanding for the average resident is to look at the attributes and characteristics of HOAs, because they are not monolithic and vary according to size and primary function.  First, let’s understand what we mean by HOA (applies to PUDs and condos). My CCLG webpage contains this definition of “HOA”,

If we are to make progress, we must distinguish the concept of a planned community, which is a real estate “package” of homes, landscaping, amenities, and rules, from that of the HOA, which is the undemocratic governing body of the planned community.

In my proposal for the “muni-zation” of HOAs (as compared to nationalization), I further clarified what HOAs are:

Let me clarify at this time, that there is an important distinction between the HOA and the subdivision real estate “package” known as a “planned community”.  HOA supporters continually cloud this distinction, because a planned community can exist without the private, undemocratic governing body known as the homeowners association. “Doing away with HOAs”, as sometimes seen in the media, falsely implies doing away with the planned community real estate package.  No, it doesn’t. But the HOA special interests want you to think so. There is no need to impose undemocratic private governments over these communities of Americans that operate outside the 14th Amendment and the Constitution.  (“Proposal for Muni—zation of HOAs,” email letter to AZ Legislators, August 23, 2004.)

HOA types by function

Now that we have better idea of HOAs are all about, allow me to further categorize the above general description of an HOA into types by function. In my Analysis of 2005 CAI HOA survey, I wrote,

I classify planned communities as either Residential, Resort or Retirement. With the last two categories, home buyers have a higher acceptance of rules and regulations, and the obligations to conform in these “institutionalized” settings. With respect to Residential, buyers’ expectations can run from “just buying a home” to “a property value protection association”, as the proponents argue as a reason for choosing HOAs.

Note that the “Resort” and “Retirement” types can easily be viewed as a 365 day, annual, timeshare or “vacation ownership” (in today’s terms) HOA.  The only difference is the length of time ownership.

CAI in its 2016 report on “Large Scale Associations” (News and Information From CAI, “LARGE-SCALE COMMUNITY ASSOCIATIONS REMAIN POPULAR WITH HOMEOWNERS AND LOCAL”) included “private clubs” as a category.  This category doesn’t really fit as an HOA type, since nothing about the tradition understanding of a private club concerns CC&Rs and mandatory memberships. However, some residential HOAs function as a private club when the HOA provides for a pool, tennis court or golf club for the HOA members only.

Why is an understanding of functional types important to HOA reformers?  Because of their size, and size means money $$$$$. And money means influence, especially in regard to state officials and legislators.

HOA size

An important question to ask is: What is the distribution, the breakdown, of HOAs by size?  Are large HOAs dominant or are smaller HOAs dominant?  The only info that I could obtain on HOA size distribution is from a 2011(?) Nevada CAI LAC document entitled,Why Legislative Advocacy Matters.”  The left-hand column reveals the following breakdown (“CIC” means HOA):

Percent units (total of 2,837 units; % rounding error)

Less than 200              78.5%

201 – 500                      16.5

501 –  1,000                    3.5

1,001 – 8,000                2.0

If Nevada is representative of other states, this is a startling piece of information!  Almost 80% of HOAs have less than 200 units, and a whopping 95% are under 500 units!  This is very important because we know that “HOA-Land” is highly fragmented, which means lacking in political clout unless strongly organized.  Consequently, the miniscule large HOAs are largely unopposed and have the clout.  For example, my master planned HOA of some 9,000 units has annual revenues around $20,000,000.

It is easy to understand why CAI and its LACs are focused on what CAI refers to as “Large Scale Associations” (see above). I now also have a better understanding why 1,000 is the arbitrary number that CAI uses to categorize HOAs. Its LSA report sets a limit at 1,000 units and in Arizona, for example, HOA statutes contain this arbitrary boundary of 1,000 units in applying certain statutes to HOAs.

Where is the justice for the 95% HOA members?  Or, don’t they count because money speaks in this society.  Shame, shame!

 

Published in: on July 27, 2017 at 12:30 pm  Leave a Comment  

Trump presidency prime example of rogue HOA presidencies

Observing the continued behavior and actions of Emperor Donald The Trump, I began to realize that there is no difference between the Trump presidency and that of rogue HOA presidencies.  In fact, Sir Trump proudly admits that he is a rogue president operating as he feels without restraints.

Consider the following behaviors:

  1. Lies, misrepresentations, half-truths and flip-flop statements;
  2. Pursuing personal agendas;
  3. Failing to produce documents as requested violating ethical and legal duties;
  4. Failing to respond to queries from those he represents who have the right to know;
  5. Defending his actions as “saving the nation;”
  6. Attacking, slandering and vilifying those who criticize him and his views; and
  7. Generally exhibiting a defiant and uncooperative attitude in response to the people he represents.

Sound familiar?  So sad, so sad.

In May this year I wrote (“HOA-LAND, a lesson for politicos surprised by Imperial Presidency“),

Why are the politicos so surprised at this inevitable turn of events with Imperial President, Donald the Trump, here in the bastion of democracy?  Maybe because they have long ignored the fact that 23% of Americans live in HOA-LAND, where authoritarian governments rule the people outside the fundamental social contract known as the US Constitution.

Now, do you still want to believe that in this New America state legislatures will do the principled thing and stand by the values, ideals and principles of the Constitution, the Bill of Rights, and the Declaration of Independence?

Published in: on July 14, 2017 at 2:33 pm  Comments (5)