Legislative public policy: Protecting homeowners associations

In Florida, the protection of HOAs is reflected in an email by a legislative committee staff director, who wrote,

From an economic and policy standpoint, if associations were to lose the right to foreclose upon their assessments it is believed that many associations would suffer great economic harm and perhaps would be forced to cease operations. Were that to happen, honest owners who had paid their assessment could be harmed when their common areas (roof, building supports, roads, and landscaping) would fall into disrepair.

Most legislative reforms have only resulted in more and more legislative micro-management of associations in an attempt to achieve justice and fair play.  And the more the legislature imposes conditions on the day-to-day operations of the associations; the more and more likely will the courts view these associations as state actors and hold them to the laws of Florida.   

The desire to obtain justice and fairness can only be attained by substantive reforms to the state laws and covenants that have created oppressive regimes, operating under their own “constitutions” – bring them back under the constitution and laws of the land.  For better or worse. Some 44 years of attempting to write a form of governance better than the US Constitution has been a fruitless endeavor and a miserable failure.

As an example of the need for reforms to the legal basis of HOAs is the need to foreclose on “deadbeats”, as people behind in their assessments have been repeatedly stereotyped. The staff director also wrote, “Condominium and homeowner association liens are valid consensual liens on real property, and are subject to foreclosure if not paid.”   

First, the foreclosure is a statutory lien, one imposed by Florida law.  (FS 718.116 “(5)(a)  The association has a lien on each condominium parcel to secure the payment of assessments”). In my layman’s view, the holding that these liens are consensual comes from a statutory redefinition of what a mortgage is, and a statutory provision that the assessment can be foreclosed as a mortgage, so therefore, the HOA can foreclose on the home. (See my Tips for reforms in my materials).

Now, it’s not hard to accept that the state has an interest in keeping associations from failing, but is very hard to accept the state will do so by denying homeowners their fundamental civil rights and liberties, and allow the HOA boards a free-hand without accountability to the state.  And in order to accomplish this, a new set of laws for the governance of a community had to be established by the state just for this category of homeowners.  These condo and HOA statutes created separate and unequal laws within the state.

Why do condos and HOAs need the draconian right to foreclose?  Aren’t there existing, sound AICPA methods for the sound management of these nonprofits?  How do cities and towns manage to survive difficult times?  Surely, they do not foreclose themselves out of existence.  Or is it simply an arbitrary and convenient method to intimidate homeowners into paying without arguing the legitimacy of the right to foreclose?

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Published in: on February 2, 2008 at 8:16 am  Leave a Comment  

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