Article I. Section 1, of the US Constitution states that “All legislative powers herein granted shall be vested in a Congress of the United States” and nowhere in the Constitution is there any mention that Congress can delegate its exclusive law making powers to any other branch of the government or to any other organization. State constitutions have similar wordings like that of Arizona, “The legislative authority of the state shall be vested in the legislature, consisting of a . . . .”
The legislative authority and powers of the state are past down to subdivisions of the state known as cities, towns, counties, taxing districts, etc. These powers are said to be delegated from above to the subdivision, and it is common sense that if an entity does not have the power then it cannot delegate that power to anyone else.
This delegation of authority is carried out through a state’s municipal corporation and county laws (and to executive agencies by means of enabling acts of authority). Reading the municipality laws reveals authority for a defined territory, large or small and often referred to as a community, to elect a governing body, establish courts, make laws and ordinances (rules and regulations), enforce laws, have courts, have a police department, establish fines for violations, have a jail, and to assess residents and collect taxes. All under the approval and oversight of the state legislature. These subdivisions are also known as state entities, public bodies or arms of the state.
We must first, once again, decide if HOAs are state actors and arms of the state like any other municipality, or are they just private nonprofit corporations. If found to be a state actor, the 14th Amendment applies and no further investigation into the constitutionality the delegation of legislative authority is necessary.
HOAs as state actors
Let’s start anew and compare state constitutions and city/town charters with the duties, powers and functions of the homeowners association governing body widely set forth in its declaration of conditions, covenants and restrictions (CC&Rs). The CC&Rs declares and defines the authority for the HOA to act in certain manners. We can easily see almost identical powers and duties with municipal corporations, far more so than can be found in a business charter, as CAI like to argue, or in a nonprofit charitable organization, or in a professional association, or in a trade association, or in a union charter, or in a for profit property management service business.
Seeking, attaching and using special meanings to common everyday words and concepts to fit a square peg in a round hole, as the pro-HOAs forces have made an art form, flies in the face of reality. CAI likes to argue that assessments are not like taxes, that fines are not penalties for violations, rules and regs are not ordinances, etc. Dismissing these special definitions, HOA CC&Rs are almost identical to municipal charters of authority, which becomes quite apparent when we strip away these contrived definitions of words and look and the total picture that reveals the entire intent of the CC&Rs. And that’s to govern the subdivision or community, to regulate and control the people within the subdivision.
In effect, HOAs are de facto political governments. I choose the description of HOAs as a political entity and not a quasi or mini-government, because it more accurately describes the nature of the governing body – ruling over people in their homes. As I recently wrote,
The policy makers fail to understand that the terms and conditions of the HOA CC&Rs cross over the line between purely property restrictions to establishing unregulated and authoritarian private governments.
The argument has been made that HOA governments are equivalent to municipalities with respect to powers, duties and authority and as such are indeed state actors subject to the 14th Amendment’s restrictions.
Unconstitutional delegation of legislative powers to HOAs
We must now address the argument that HOAs are not state actors, but private actors or entities not subject to the 14th Amendment. We need to determine the legitimacy and constitutionality of these private actors, these private corporations formed under a private agreement. This takes us back to the question raised in the beginning of this paper of the constitutional delegation of legislative authority and powers not to agencies, but to private entities.
(The case where it is believed that there was no delegation to HOAs at all will be addressed below.)
This question of delegating legislative powers, or the non-delegation doctrine, has, like constitutional questions, undergone multiple court opinions resulting in a complex web of: what is the law? To make things short, my layman’s summary comes down to deference to private entities, because they know better about their business or corporation than does the court. And if the owners have elected a governing body, then that body speaks for the owners. A prime example of this judicial philosophy that should be familiar to most homeowners is the business judgment rule. The board knows best, unless it can be shown that it has acted unreasonably.
Sadly, the courts have shown less and less concern for constitutional intent and values or in protecting individual rights in favor of a money oriented practicality of efficiency of government — one that favors the privatization of legislative authority. Yes, I know, confusing and unbelievable, but remember the quote from the Forward in The Restatement, “Therefore this Restatement is enabling toward private government.” Private actors (unlike the executive branch) have virtually no public accountability, and legislatures may be too busy to address their misdeeds by repealing legislation. Checks and balances and government oversight are of little concern as we are quite familiar with their absence in HOA state laws.
I can hear CAI shouting, way over here, that there is no delegation of legislative powers to private HOAs! Precisely! There are no enabling acts granting HOAs such legislative powers. That makes CC&Rs and HOAs an unconstitutional usurpation of legislative authority. If municipal corporations, agencies and private entities must have delegated authority to act, no matter how broad or detrimental to individual rights, then how can HOAs not be outside our constitutional system of government? Even a state’s most liberal adoption of the home rule doctrine requires allegiance to the state and US constitutions. (See HOAs violate local home rule doctrine and are outlaw governments).
Our government cannot look aside and ignore this assault on the foundations of our system of government! We cannot tolerate everything goes, especially self-anointed political governments.
In defense of this unacceptable attitude by elected officials, it can be argued that even though there may not be explicit delegation there is an implied delegation of legislative powers, based on the nature and intent of the state’s HOA acts and statutes. These state laws permit those functions and powers of a municipal government, as stated in above, that regulate and control the peoples within a subdivision, large or small.
(Some states do have a statement of general government interest to overcome any judicial scrutiny as to constitutionality under the 14th Amendment, which can be challenged. The basis is that the statutes also contain serious harm to others. In Shelly, “the States have denied petitioners the equal protection of the laws and that, therefore, the action of the state courts cannot stand” and that constitutional rights were denied.)
US Supreme Court to address delegation to private entities
The question of the delegation of legislative powers to private entities is now before the US Supreme Court in DOT v. Association of American Railroads. Stephen Wermiel writes that “The Solicitor General argues that there is no unconstitutional delegation to a private entity because government officials retained control . . . We know this is not true with HOA statutes.
The Supreme Court must decide if the delegation of authority to Amtrak is an unconstitutional grant of legislative powers to a private entity. To reach that decision, the Justices must decide if the authority given to Amtrak by federal law is legislative in nature, and whether Amtrak is a private corporation or a public entity.
Either way, whether HOAs are de facto political governments and state entities, or are an unconstitutional delegation of legislative powers, they can only legally function as an arm of the state under the restrictions of the 14th Amendment.
References and authorities
 Restatement Third, Property: Servitudes (American Law Institute 2000). The full statement reads, from the Forward: “Professor Susan French [Reporter (chief editor/contributor) for this Restatement] begins with the assumption . . . that we are willing to pay for private government because we believe it is more efficient than [public] government . . . . Therefore this Restatement is enabling toward private government, so long as there is full disclosure . . . .”
 Shelly v. Kraemer, 334 U.S. 1 (1948).
 Stephen Wermiel, SCOTUS for Law Students: Non-delegation doctrine returns after long hiatus. (SCOTUSblog Dec. 4, 2014)