Local Phoenix Ch. 3, azfamily.com, (HOA forecloses on Mesa homeowner) did an excellent job in bringing out what goes on in HOA-Land where HOAs are protected by public policy. In this incident, a homeowner builds a wall for security, as she stated, and gets fined by the HOA. In a default judgment for an injunction, the CAI HOA attorney obtained some $16,000 in fees for less than 9 months’ work. This incident expanded to the HOA foreclosure for nonpayment of assessments.
In the foreclosure, a simple filing asking the judge to grant the sale — unlike other disputes over nonpayment of a debt, there are no justifiable excuses not to pay HOA dues — the HOA attorneys tacked on another $12,000 in fees, for a total of some $28,000 in fees. The HOA got a total just $3,300, of which $1,700 were for unpaid assessments.
If this was in the public arena, and a fine was permitted, there would be no attorney fees paid. If the state foreclosed for nonpayment of taxes, the equivalent of HOA-Land assessments, there would be no attorney fees. But, the HOA attorneys are allowed to walk away with fees far in excess of the fines and unpaid “taxes.” I call it legalized extortion.
The extortion consists in knowing the homeowner does not have the funds or power to oppose the HOA, and the HOA is not punished under law for any wrong doing. So the HOA sues, knowing that it has an 80% of getting a default decision, or the homeowner pays the money demanded. Any different from banana republic justice? The problem becomes out of control when the homeowner falsely, but innocently, believes the HOA can’t do anything to him. He lets it go until sued for the typical amounts as involved in this incident.
The common pro-HOA, but misleading, argument on the acceptance to be bound to the CC&Rs has no merit. It ignores the questions of fraud and misrepresentation when buying an HOA controlled home. For example, is the buyer told that the “sacred” CC&Rs at his closing can be modified without his consent, making them a meaningless piece of paper? That this ability means that his neighbors control what he still thinks is his private property? Is the buyer told that his house is collateral to the HOA, and he must pay no matter, even if the HOA fails to perform or violates the CC&Rs; or that the CC&Rs are a binding contract whether or not he has signed or read them? And what about the agent who makes the buyer sign the purchase contract and initial all the contract pages, but requires nothing equivalent from the buyer regarding that second, briefly mentioned in passing, CC&Rs contract? Look up the definition of fraud and misrepresentation.
In the above AZFamily.com story, when the homeowner appealed the attorney fees, the judge approved them writing that, “The Court notes in passing that the short answer to defendant’s objection to the amount of attorneys’ fees is that they were caused by defendant’s intransigence.” (Minute entry of 3/5/2012, CV 20120-12322).
“Intransigence” is a loaded word! It denotes firmness and sticking to your guns, even stubborness. What the judge has done here is to punish the homeowner for standing up for her rights and her home against the banana republic justice illustrated above. Dare oppose the Will of the HOA and you will pay for it! Big time! And he rewards the attorney, without any discussion of the role the attorney played in the delays. What about the 3 minute entries over 2 years that basically said, “nothing is happening for the past 150 days with the suit”, about which the attorney could have prevented by seeking a decision. But that would cut his fees, wouldn’t it? The unreasonable prolonging of law suits violates R11(a) of civil procedure.
Is this the public policy of the State of Arizona? Support the HOA and its attorney against the people of Arizona who have been misled about HOA-Land? Four bills that would have held the HOA and its board accountable under penalty, and which would have provided for “clean HOA elections,” failed to become law this past session.