Competitive HOA private governments appealed to CAI founder

My reading of David B. Wolfe’s (a CAI founder who is not an attorney), Condominiums and Homeowners Associations That Work[i], was very disappointing with respect to his treatment of HOAs as mini-governments.   Only the four-plus pages of Chapter 1, out of the 136-page, nine chapters, discuss the mini-government controversy. The remaining pages of this “handbook” are devoted to the paperwork to set up and operate an HOA:  the CC&Rs, the bylaws and the Rules & Regulations, including sample forms.  My attention, consequently, immediately turned to an attempt to understand the out-of-context purpose of Chapter 1, which was titled:  “An Introductory Question”, but was ignored throughout the remaining pages of the handbook. 

Wolfe’s opening comment on government reflects the impact of HOAs on the American scene:

The Community association is coming more and more to resemble a new, more local form of government.  As such, it has the potential of noticeably altering the structure of American life.    

He quotes Lewis Mumford (a utopian community idealist) faultfinding of the Constitution: “The greatest defect of the United States Constitution was its failure . . . to make this democratic local unit [the New England town meeting] the basic cell of our whole system of government.”  A sort of a “bottoms-up” approach of individual small communities independently doing their “thing”.  Perhaps his quote of a 1978 mayor’s comment sheds some light on Wolfe’s motive:  “traditional local government is finding, for the first time, a major competitor in the delivery of public services.”   

It seems, from a reading of this chapter, that Wolfe, as the owner of a property management firm, was taken with the thought replacing and “out-doing” local municipal governments, at least in the services arena.   Wolfe raises the question of constitutional requirements and protections by quoting Wayne Hyatt’s (1975) reference to Marsh v. Alabama’s[ii]  “company town” decision (1946): [that] “makes compelling the conclusion that the association’s action’s are ‘public’ in a constitutional sense.”  However, he refutes this view and makes his pitch that maybe, you know, HOAs are governments, but a special private, corporate form of government to be treated differently from public government, evening acknowledging the social contract theory of governance.  Wolfe grabs onto this social contract theory and argues that that’s just what HOAs are all about: 

Through a formal compact, diverse owners of properties within a defined area [read, ‘a territory’] assure protection of each other’s interests by reciprocal obligations imposed upon and subscribed to by all owners.


This quote ignores the background of HOA formation and consent, which is not at all a group of informed buyers, themselves, defining the “compact” to which they will be bound.  The buyers in the real world are not the utopian true believers as suggested by the quote.  And, apparently, Wolfe, and CAI, sees this compact as one purely in terms of services, and not in terms of usurping bona fide functions of government — legislative and judicial due process under the Constitution. 

This is the chief failing of CAI’s arguments, then and now, that HOAs are not governments, but maybe, entities that require special treatment because they are corporate, not constitutional,  “animals”.  It ignores questions of the Constitution as the supreme law of the land, and implies, falsely, that the HOA will abide by the constitutional requirements as pertaining to public entities, with its restrictions on government and protection of member-citizen rights.  This appeal for “special treatment” and the fact that HOAs are private contracts permit the HOA to escape constitutional obligations, and explains why homeowners have for these 46 years been attempting to restore lost freedoms and liberties.

The reader should ask himself, “Is this the real motivation behind the rejection of the Constitution?”  What is the purpose of the national social contract, the Constitution, if local groups can draw up their own “formal social compacts” and claim separation from constitutional obligations and responsibilities?  Did the Founding Fathers intend that private contractual obligations permit secession from the Union?

See also,

 In 1978, CAI was concerned about HOAs as mini-governments.

Government is defined by a “social contract”; HOAs by the new social contract, the CC&Rs.


[i] Condominiums and Homeowner Associations That Work on Paper and Action, David B. Wolfe (ULI & CAI, 1978).

[ii] Marsh v. Alabama, 326 U.S. 501 (1946).

Published in: on February 15, 2010 at 11:26 am  Leave a Comment  

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