Is the delegation of legislative authority to private HOA entities constitutional?

When it comes to delegating governmental power and authority to state agencies, one only needs to look at the body of law surrounding the grant of authority to a state agency.  The authority for an agency to make and to enforce laws, under the state’s Administrative Procedures Act,  is subject to constitutional law with its requirements and prohibitions.

Please note that, in Arizona, the pro-HOA national lobbying organization (Carpenter Hazlewood law firm) managed to have the Office of Administrative Hearngs (OAH), a state agency, adjudication of HOA disputes declared unconstitutional, thereby depriving homeowners of their only just hearings of disputes, of due process of law. OAH resulted in 42%  of the cases being won by the Pro Per homeowner against the HOA and its attorney.  This alone speaks for the abysmal failure of HOA private governments to operate in a just and fair mode.

Understanding the above, the question arises as to the legitimate grant of governmental powers and authorities to private organizations. While not officially recognized as a de jure (under law) government, the various state HOA statute and “Acts” do grant authority to these private governments to act independent of the state laws and local ordinances.  And many times in many states, these private government arrangements, not approved or subject to review by the state,  are sometimes held superior to or supplement state laws (as when we see with, “unless otherwise provided in the governing documents”). 

The following legal doctrine and holdings apply to any private organization, and not specifically to the HOA, making any defense with respect to not being a mini-government irrelevant.

Under the “delegation doctrine”,  tests of the constitutionality of the delegation of legislative authority took place during the New Deal era of the 1930s.  With respect to the Bituminous Coal Conservation Act of 1935, private businesses were allowed to set standards and rates. Struck down because “the setting of requirements by private producers was an unconstitutional delegation of legislative power to private persons.”[i]  And in Schechter Poultry (1935), the Supreme Court held the National Industrial Recover Act to be “delegation in its most obnoxious form”, as it is “delegation to private persons whose interests may be and often are adverse to the interests of others in the same business.”[ii] 

In more recent times,  a private group controlling its competitors would not be considered an excessive delegation issue, but perhaps a procedural due process issue. The question to be answered is: Are the competitors “being deprived of due process by being subject to the will of entities with interests contrary to theirs?[iii]  This question of delegation to private organizations can be summarized as follows,

While delegations to private organizations may be suspect, they are by no means inappropriate. . . . where delegations in limited and technical areas  . . . are quit useful  [e.g. in setting technical standards and codes for health and safety concerns].  The legitimacy of this course will, however, turn on whether these standards have been formulated by private groups that are  so constituted as to dampen special interests and whether these standards involve limited and technical areas as opposed to broad matters of public interest.[iv]

 

And in particular relevance to the setting of zoning ordinances, we have Eubank v. Richmond, 226 U.S. 137 (1912) and Eastlake v. Forest City Entr., Inc., 426 U.S. 668 (1976) where private parties were  denied the right to set zoning ordinances.  Consequently, the setting of public street parking ordinances by HOAs as private entities, for example, would be an unconstitutional delegation of legislative authority.  And by virtue of the Restatement of Servitudes, § 3.1, Validity of Covenants, any such HOA covenant would be viewed as contrary to public policy and unconstitutional as well.  (See my public statement to the Government Committee).

The pro-HOA supporters object to the above reality and argue that the homeowner voluntarily, knowingly and freely 1) agreed to be bound by the CC&Rs, and 2) to the surrender and/or waiver of his rights and freedoms when he took possession to his deed under servitudes law.  My reply, as I argue my public statement to the Government Committee, is a resounding not so!

Furthermore, the CAI national pro-HOA lobbying group and the “true believer” HOA supporters would have you believe that the HOA is just another nonprofit organization, and like these other nonprofits it’s allowed to set rules and regs, issue fines, withhold benefits in terms of privileges and access to amenities, etc.   But, where can you find another private organization whose governing documents are just about echoed by statute, thereby giving the illusion of legitimacy?  I submit that if indeed another organization can be found that controls and regulates the inhabitants within a territory, then it will be functioning as a de facto private government, or an unincorporated town or village under the municipality laws of this state.

The bona fide government interest to create a better community under local government authority and control, a form of “home rule”, be achieved today under the state’s special taxing district laws. All the private amenities, community ordinances (“rules and regs”), taxes (assessments), and enforcement rights are all doable under special taxing district laws.   What would be gained is the accountability of the district to the laws, ordinances and constitution laws to which all other forms of political government are held.  No more special laws and no more special treatment for HOAs.

Enabling HB2153 to become law will serve to draw a line in the ground.  A line directed at the HOA not to pass.

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Published in: on March 30, 2010 at 1:31 pm  Comments (1)  
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  1. A group in our community have been involved in a lawsuit against the developer/president of the HOA for 4 years now. We are still trying to get her removed. Our court actions found her guilty of violating at least 12 Florida statutes. The court gave her a second chance and she still continues to operate the HOA according to her wishes and not the law. I feel that the HOA of America have too much power over the residents in communities and something needs to be done to limit their power as the sovereign leader. Residents have no control of what happens to them without going through the legal expense of lengthy court cases.l


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