Supreme Court says corporations cannot be used to evade Constitution

The recent non-HOA decision by the US Supreme Court in DOT v. Assn American Railroads[i] has a direct bearing on the constitutionality of the HOA legal scheme.   This case dealt with the legal status of AMTRAK — is it or is it not a government entity — and was there an unconstitutional delegation of legislative authority.  While I have argued that HOAs are de facto private governments based on their powers, authority and functions, I now make the argument that as a de jure (according to the law) private corporation, HOAs have been unconstitutionally delegated legislative powers. “[R]ecognizing that the power to fashion legally binding rules is legislative.”[ii]

Implicit delegations of legislative powers are described in The Restatement Servitudes[iii] and numerous state statutes carry implicit delegations of legislative powers.[iv]

With respect to violations of the Constitution, the Supreme Court decision in DOT  held 1) that private parties cannot draft agreements to circumvent the Constitution by declaring that an entity, specifically a corporation, is a private organization, 2) that such a determination is made by the courts based on the corporation’s functions, powers and authority, and 3) that in order for a private entity’s delegation of legislative authority to be constitutional, there must be control, supervision and accountability to the state.

I have presented my case that, in the absence of explicit enabling acts, there is implicit unconstitutional delegation of legislative power to private HOAs, particularly in regard to legally binding rules, without accountability.

Read the complete paper at Delegation.

[i] Dept. of Transportation v. Assn American Railroads, 135 S.Ct. 1225 (2015)

[ii] Supra 1, p. 17.

[iii] Restatement Third, Property (Servitudes), Susan F. French, Reporter, p. ix (American Law Institute 2000).

[iv] For a sample of implied rulemaking statutes by state, see:  Arizona: ARS 33-1803(A) and (B) for HOAs; 33-1242(A)(1) for condos. California: Civil Code §§ 4340-4370 (Part 5, Chapter 3, Article 5, Operating Rules). Florida HOAs:  Title XL, § 720 et seq. do not explicitly address rules per se, but speak to enforceable “guidelines” and “standards”; Florida Condos:  Title XL, § 718 et seq. (in particular, § 718.1035, the general statement on “association rules”). Nevada: “NRS 116.31065  Rules.  The rules adopted by an association” (with 5 “musts” imposed on the HOA).


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10 CommentsLeave a comment

  1. […] See corporations cannot be used to evade Constitution and CC&Rs are a devise for de facto HOA governments to escape […]

  2. […] argued this issue in regard to HOAs in general in Supreme Court says corporations cannot be used to evade Constitution and Regulatory agency enforcement of […]

  3. Thanks George. Great insight. I noticed the links to your citations link to a login page instead of the actual citations.

    • The only links there are, except for my PDF file, are links to footnotes at the end of the post. Don’t know why there are these links.

  4. This is a very significant case, indeed, Ward. Thank you.

    • Oops, I’m sorry, I said Ward, not George. My apologies.

  5. […] Read the rest of George Staropoli’s insightful blog post, entitled Supreme Court says corporations cannot be used to evade Constitution here […]

  6. George thanks a million for you excellent “watchman on the tower” lifeguard service for all of us homeowners who are held in bondage as slaves to the HOA “scheme” which by any stretch of the imagination is unconstitutional. Roena Cole RBVSHOA San Tan Valley, AZ Date: Sat, 13 Jun 2015 16:34:30 +0000 To:

  7. Such an insane HOA world out here! Thank you for being the voice of reason. I’ve done all I can to change my HOA, but it’s been a huge waste of my time. Still, it’s nice to know I’m not alone.

  8. Excellent. You are a great eagle eye for every HOA. Thank you for your constant and continuing research. I’ve forwarded this to my attorney.

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