Andy Ostrowski, a PA congressional candidate, writes in support of homeowners with HOA issues. He is a constitutional lawyer and believes that certain HOA issues are similar to the constitutional waiver of rights question as stated in the US Supreme Court decision in Overmyer v. Frick. He wrote:
Principles of freedom of contract must be recognized … but these homeowners, often focused on raising families and building their lives in peace and comfort, and not focused on legalese and boilerplate contracts, must be sure to have known the rights that they are giving up.
If it is an honest system, and the CAI and HOA organizations truly have the best interest of the homeowners at heart, and are not just trade groups serving the big corporate and banking interests, the simple assurance, through full and complete disclosure, and arms-length negotiation, that people are not giving away their constitutional rights for nothing is something that we should, as a society, expect at a minimum,
This entire system of contracting appears to violate the principles of Overmyer v. Frick. At the very least, then, these contracts would be subject to challenge on those grounds, and this could be done across the country.
Overmyer was not an HOA issue but one involving the doctrine of cognovit, which is the surrender of rights in a contractual agreement. In reaching its decision the Court took the following as applicable to the surrender of constitutional rights:
This is not a case of unequal bargaining power or overreaching. The Overmyer-Frick agreement, from the start, was not a contract of adhesion.
[W]e assume that the standard for waiver in a corporate-property-right case of this kind is the same standard applicable to waiver in a criminal proceeding, that is, that it be voluntary, knowing, and intelligently made, or “an intentional relinquishment or abandonment of a known right or privilege,” and even if, as the Court has said in the civil area, “[w]e do not presume acquiescence in the loss of fundamental rights . . . .”
Simply stated, cognovit contracts, or the more general waiver of rights by contract, are not necessarily unconstitutional. However, Evan McKenzie wrote that Ostrowski’s argument was “Interesting theory, but I think it is far-fetched. The problem is that the court ultimately ruled in favor of cognovit.”
In this layman’s view, the argument has merit and is not far-fetched and must be raised in the courts. It can be argued that the CC&Rs are an adhesion contract heavily weighted in favor of the HOA/developer and is of “unequal bargaining power or overreaching,” Furthermore, valid arguments can be attached in regard to the alleged consent to have agreed.
In my view, this is another challenge that strikes horror into the hearts of the pro-HOa forces, especially CAI.