Why do we still have conflict within HOA communities?

A short history

The current version of a utopian community, homeowners associations, has it origins in 1964 with the release by the Urban Land Institute (ULI) of The Homes Association Handbook.  In 1973 the Community Associations Institute (CAI) was formed by the HOA promoters to deal with a variety of persistent problems with HOAs.  In 1992 CAI stopped being an educational nonprofit (501(c)3) tax-exempt organization and became a business trade organization (501(c)6) (which is not readily evident from perusing its web pages — only its Research Foundation is indicated as an educational organization) to deal with continued problems and to promote the business interests of it members.  In 2005 CAI dropped its HOA category of membership since HOAs are consumers of CAI services from its vendor members, which raised  questions about its tax exempt status.  Its new “volunteers” category are HOA board members whose dues are paid by the HOA, with discounts depending on the number of members joining CAI.

 

CAI continues to advertise: We are the recognized experts for community association governance and management and the first and only national organization created specifically to meet the needs of all community association stakeholders.  (Member Benefits web page).

 

 

Yet, today, some 36 years later, CAI still feels the need to address conflict within HOAs. (See its 9/08 webpage below, “Conflict”).  Why 45 years of continued conflict?  Why has CAI failed to bring about its mission of creating healthy, vibrant, responsive and competent communities (see last paragraph of Conflict)?  Apparently several states and cities don’t seem bothered by this failure by CAI.   Florida, and recently Virginia, have chosen CAI to educate HOA directors and to license managers. And a coalition of cities around Phoenix, AZ are providing education by CAI members (The Learning Centre, the HOA Academy).

 

In order to answer this question of continued conflict we need to look deeply into the fundamental legal scheme or concept of planned communities with their HOA form of authoritarian government, and “constitutions” that deny homeowners the rights and freedoms available to them outside the HOA.  We need to examine this legal scheme to determine what systemic factors (those factors built into the very structure of the HOA concept) that have proven, after 45 years, incapable of being solved by CAI, or any state legislature.

 

 

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Note: Black type is the original CAI statement.  Blue type are my comments.

Community Association Conflict

 Rather than David-versus-Goliath conflicts, as occasionally portrayed in the media, disputes in community associations are disagreements among people. Differences of opinion among homeowners, or between individual homeowners and their community associations, often reflect the challenge of balancing the preferences of the individual homeowner with the best interests of the community as a whole. Managing this critical and delicate balance is often the essence of effective community leadership and frequently the greatest challenge facing volunteer boards.

Under the HOA governing documents, the HOA has all the powers and is required to maintain property values, and they say nothing about the civil rights and protections that our Constitution offers citizens when they do not live in an HOA.  The courts look to any such “Bill of Rights” wordings in the governing documents, and when not finding any, side in favor of the board.  “Balancing the preferences”, as mentioned above, is not legally binding on the board.  If the board seeks to function with concerns for the  individual rights of homeowners, a legitimate concern of public government, it is prohibited by virtue of the governing documents.

 

Community association governing documents – typically bylaws or convenants, conditions and restrictions (CC&Rs) – protect all homeowners. People living in an association-governed community have contractually agreed to adhere to the rules in that community. CC&Rs are created to maintain community standards, protect property values and encourage a sense of community stewardship. They would cease to exist if the majority of residents did not want them.

The basic legal structure of the HOA is the governing documents that are held to be a binding contractual agreement between the HOA and homeowner, although this “binding” by constructive notice fails all tests under contract law for valid contracts.  There is no signature, no “give and take” since the CC&Rs are a “take it or leave it” adhesion agreement; no meeting of the minds; and contains vaguely worded “agreements to agree” that are not valid contracts, like any and all amendments bind the homeowner without his consent even when depriving him of his property rights. 

There are no state agency warnings or notices highlighting the loss of rights and protections within the HOA, as we see with truth in lending, truth in advertising, etc.  Rather, HOA defenders resort to a public government analogy by declaring that the fact that the homeowner remains in the HOA is an implied consent to be governed.  But, surrendering one’s rights requires explicit consent with full understanding and knowledge.

 

The importance of complying with association rules cannot be overstated. They are developed and enforced so associations can meet the established expectations of all homeowners. At the same time, we advocate open, constructive and respectful dialogue and urge all parties to be reasonable, flexible and open to compromise when disagreements do arise.

Once again, the documents by which the HOA board can legitimately act are contained in the HOA’s “constitution”, the governing documents.  There is little room to compromise and be flexible on the part of the board while adhering to its obligations to protect property values.  And when disagreements arise, the homeowner must face only “an opportunity to be heard” by the HOA powers that be, since the governing documents do not provide homeowner due process protections as found in the public arena.  There is no independent tribunal with the opportunity to confront and question witnesses.

 

Communication and education are critical elements of successful homeowner-community association relations – and the best way to minimize misunderstanding and uncertainty. Education involves making every effort to convey timely, understandable information about codes, policies and procedures to all homeowners and non-owner residents. Open communication, both to and from association leaders, is the best way to identify and resolve issues before they become open conflicts.

Such education by CAI educated groups focuses on how to live within the oppressive regulations and covenants of the authoritarian HOA regime.  Homeowners are told this is the law, and there is no mention of the injustice and loss of rights resulting from living in an HOA.   This form of “education” reminds me of the mandatory totalitarian indoctrination classes designed to influence the mindset of the masses, and especially of the children.

For example, homeowners are not told that they have unknowingly pledged their homes as collateral in order for the undemocratic, authoritarian HOA regime to survive.  Just stop paying your assessments, or try to put them in a trust fund while waiting to resolve a dispute with the HOA, and see what happens.

 

Rather than taking sides in individual disputes, CAI’s mission is to foster vibrant, responsive, competent community associations. One way we do that is by encouraging homeowner involvement. Whether a community is self-managed or able to hire professional management services, active homeowner involvement is essential. We reap from our communities what we are willing to put into them, in terms of both quality of life and our financial investment. Volunteer to help, serve on a committee or run for a seat on the governing board. It’s your home and your neighborhood!

Here we have the practical fallacy of homeowner involvement that involved homeowners will make things all for the better.  It presumes that the volunteers are first indoctrinated into the “HOA is good” mindset.  It also ignores the fact that the  level of involvement required in an HOA is not attainable in public elections. 

CAI falsely states in the second paragraph of its Conflict that the CC&Rs would disappear as a result of the democratic voice of the majority. Well, CAI knows that super-majorities are needed to amend the CC&Rs, and not a simple “voice of the people”.  And what if the members what to dissolve the HOA entirely, they must have a super-majority that can be as high as 90%. Or, maybe the voice of the people want to dissolve the HOA prior to a 25 or 30 restriction on termination of the HOA?  I can hear the board saying, “Gee, we would like to do that but, you see, you agreed not to do it.  See, right here it says so.”

 

There are no provisions for fair elections or the distribution of member lists for contacting the voters.  Yet, the HOA has all this available to it, as well as using HOA funds to advance its positions.  Volunteering in this corporation authoritarian environment presents a major problem for reforms. 

 

 CAI media contact: Frank Rathbun

 

 

Conclusion

Unless these systemic problems are corrected we will continue to have conflict, homeowners will continue to return to their legislatures seeking to restore lost rights, and this HOA-land form of independent governance will continue to erode the America of our Founding Fathers.

(See Establishing the New America).

 

reference:  http://www.caionline.org/searchcenter/pages/results.aspx?k=Community%20Association%20Conflict (Jan. 8, 2009).

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Published in: on January 9, 2009 at 5:14 pm  Comments (1)  

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  1. I am a resident of Montgomery Village, MD 20886 and our HOA is the Montgomery Village Foundation (MVF), since 2005 charted as a 501 4c.

    501 4c’s are explicitly permitted to “lobby for legislation; they may also participate in political campaigns and elections, as long as campaigning is not the organization’s primary purpose”.

    However local MVF rules bar plitical advertising in its MVF Newsletter. The MVF EVP, a paid professional manager when confronted with the conflict between it 501 4c charter and its local policies and rules stated defiantly, “I am going to implement enforce the policies of the MVF Board regarding political advertising and letters to the editor until directed to do otherwise”.

    My question as a assessment paying resident of Montgomery Village is this, Don’t residents of an HOA have a right to expect the administration of the HOA including its rules and polices to be aligned and consistent? Specifically, isn’t it unethical for an HOA to seek registration and charter under one form of 501 and to operate under another.

    Any expert opinion on this would be sincerely appreciated.

    Thank you.

    Don O’Neill
    Montgomery Village
    Maryland 20886


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