AZ court ends open-ended "ex post facto" HOA amendments

Dreamland subdivision homeowners protested amendments requiring them to become mandatory dues paying members of a county club, which was turned into an HOA. This opinion put to rest several conflicting court cases in Arizona and in other states, dealing with the validity of what I have called, “ex post facto” amendments to the CC&Rs. In short, the strict contractual provision that the CC&*Rs could be amended by a majority vote and be binding on all dissenting members has been upheld the courts. Certain cases raised the important issue of the extend and impact of these amendments understanding that many of them were beyond any reasonable expectation of the member at the time of buying into the HOA.

Excerpts:

It is not reasonable to use the amendment provision to direct that one group of lot owners may, in effect, take the property of another group in order to fund activities that do not universally benefit each homeowner’s property or areas owned in common by all.

By contrast, the court determined that “[i]n those cases where courts disallowed the amendment of covenants, the impact upon the objecting lot owner was generally far more substantial and unforeseeable than the amendment at issue [in the case before it].”

We agree that these cases tend to support the homeowners, in that each refuses enforcement of a new covenant that markedly changed
the obligations of the implicated lot owners.

Congratulations to Cheifetz Iannitelli Marcolini, PC attorneys, Steven W. Cheifetz, Stewart F. Gross, and Matthew A. Klopp.

The case: Dreamland Villas CC v. Raimley, CA-CV 08-0388, AZ App. Div. 1, Mar. 16, 2010 at VICTORY!

My commentaries on this substantive issue:

“There are two important factors in this decision to be noted that have a tremendous impact on constitutional protections, and reflect a government not subject to the Constitution. First, implicit in the above decision by the court is the legality of “ex post facto” amendments: amendments to the CC&Rs that alter the homeowner contract and bind the homeowner without his consent to the new contract.  An action that is not permitted under the Constitution for government entities.”   The extent of HOA intrusion into a member’s life.

“Wow!! HOAs escape ex post facto restrictions and eminent domain protections — no compensation was offered homeowner. Welcome to the HOA-land of independent principalities with their own multiplicity of protected private “constitutions.”

“The argument advanced for amending those so-called contracts, and upheld in the courts, is that they contain an amendment procedure, and so long as the procedure was followed they are valid. So argue the “expert” CAI attorneys. But, they want you to ignore the other side of due process — substantive due process where the HOA “law” is itself a violation of our system of government.

“And forget about any question of a buyer’s “reasonable expectation” as a requirement for a valid amendment. Or that there is no explicit waiver of the surrender of any property rights. Or, that under contract law a CC&R amendment easily falls under an “agreement to agree” (“A-to-A”), and is not binding. An A-toA is an enforceable document if the specifics are sufficiently definite, as well as compensation, but some details are to be worked out. In a valid A-to-A, parties cannot bind themselves to negotiate to reach an agreement on some issue or important detail. (See Black’s Law Dictionary). What is an amendment? It is not a negotiation between the HOA and every individual homeowner, especially if not 100% approved! It can be a very important issue (detail) not heretofore contemplated or envisioned by the buyer.

“How then are they valid? Because the courts have treated this CC&R “contract” not strictly in terms of the words contained therein, but quite liberally by ascribing public government attributes to the HOA, far and above any reasonable interpretation or construction of the CC&R “contract”, and beyond any reasonable or “buried” intent to form a de jure government.”

HOA principalities where there’s no ex post facto or eminent domain protections

 

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Published in: on March 16, 2010 at 4:28 pm  Leave a Comment  
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