Why the Hands-Off HOAs?

In Contracting Communities(1), the author makes a blunt statement of what really has occurred with respect to the alleged preference for planned communities:

Those seeking to secure premium ambience [the planned development concept] . . . may be motivated by the belief that this local public good will be capitalized into the resale price of their homes. . . . Residents in private developments purchase premium ambience by ceding property rights of their own, both directly through acceptance of reciprocal restrictions on their own land, and indirectly through the installation of a governance regime with the power to alter and enforce the prevailing land use controls.

But this is only one part of the reality that is promoted by the planned community special interests – the developers, the real estate agents, the Community Associations Institute (CAI), the Urban Land Institute (ULI), and almost every state legislator across the country. What has been kept hidden are

1. the questions of informed consent and misrepresentation in the advertising and selling processes,
2. the state’s role in not protecting consumers by warning of the extremely prohibitive governing documents that contain very little homeowner rights protections,
3. the fact that this private contract permits these authoritarian private govenments to bypass the Constitutional protections that would apply if the HOA were a municipal government, a state agency or a state actor.
4. the court rulings that these type contracts have been found to be unconscionable adhesion contracts, and
5. the special interest promotion of the Uniform Comon Intrest Ownership Act (UCIOA), and its various state versions, recognize in Section 1.112 that the governing documents may indeed be found to be an unconscionable adhesion contract, and sets forth limitations as to how the court may proceed and what factors it may consider. (See 2005 NJ bill S2344, page, line 13 et seq.; 1994 draft model at Consumers for Housing Choice, http://www.consumersforhousingchoice.org/UCIOA%2094.htm).

What is the legitimate government interest that would justifiy this treatment of the public? What is the overriding necessity, not convenience,in support of this “hands off HOAs” position by the legislatures?

1. Contracting Communities, Lee Anne Fennell, 2004 U. Ill. L. Rev. 829 (2004)

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Published in: on November 14, 2005 at 11:14 pm  Leave a Comment  

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