Arizona’s HB 2382 is an unconstitutional violation of eminent domain law

HB 2382[1] deals with valid association covenants and amendments.  The section dealing with valid covenants is severely lacking in homeowner protections, but the section dealing with amendments has substantive, positive reforms, which should be applied to covenants under ARS 33-440. Please bear in mind that Article II, Section 2 of the Arizona Constitution affirms the state’s obligation to defend individual rights. “[G]overnments . . . are established to protect and maintain individual rights.”

Amendments

On the positive side, HB 2382 contains additions to ARS 33-440 (subsection C), and PUD law in ARS 33-1817 (new subsection A), but not condo law. It addresses an aspect of consent of the governed[2].  Under the above subsections, paragraphs 1 and 2 are of interest.

Paragraph (2)(b) requires the actual consent of the affected homeowners, which opens up a bona fide exchange that is satisfactory to the affected homeowners.The amendment receives the affirmative vote or written consent of all of the owners of the lots or property to which the amendment applies.” In short, they can reject the amendment or demand payment from the HOA. However, it applies only to instances where less than all the members are affected by the covenant.

Paragraph (1) provides the right of the board or of a homeowner to propose an amendment provided he obtains the requisite number of votes for a valid amendment. This subsection appears to allow for no board involvement in the amendment process. The “reformer” only needs to get the required valid votes and file a document with the county clerk affirming compliance with the law and CC&Rs.

Still, the vote of affected, non-consenting homeowners is not required and constitutes a private government eminent domain[3] taking.

While this is a major advance for substantive reforms that bring the HOA closer to the same constitutional restrictions and prohibitions as are public entities, unless (2)(b) is made part of paragraph (1), it still is a private government “eminent domain” taking without compensation.

 Covenants

Relating to covenants, upon a close reading of 33-440(A)(2), which has been law since September 26, 2008, the above changes appear to be redundant and not necessary, because in order to be a valid covenant the consent of “the owner of real property affected” by the covenant is required.  This paragraph renders the proposed changes to the HOA amendment process to be unnecessary. It is binding whether or not the covenant affects only some of the members. It applies to existing covenants existing declarations and in any new HOA declaration as well as to amendments.

This law, section 33-440, has been ignored by attorneys for homeowners and, as expected, by HOA attorneys for over 7 years!  I have not seen this law raised in the courts in Arizona.

Could it be because paragraph (A)(3) renders the entire law meaningless as it defines “consent” as set forth by the CC&Rs procedures, which, as we all know, do not require the consent of any affected property owner? They require a specified vote of consent by the members without regard to the consent of affected members. It also broadly presumes that each new purchaser has agreed to the surrender of his private property rights to the whims of other members as set forth in the CC&Rs amendment covenant.

(A test of the weak argument that members have openly and knowingly agreed to be bound at the time of purchase, or now have agreed to be bound, which the leading national pro-HOA lobbying organization, CAI, has failed to adopt, is a poll based on the Truth in HOAs Disclosure Agreement [4].)

These boiler plate CC&Rs amendment procedures, themselves, also constitute an unconstitutional surrender or waiver of property rights that will not pass judicial scrutiny.  Judicial scrutiny relating to constitutional rights requires a compelling and necessary government interest, not a general government interest, to deny protected rights.[5]

Take, as an example of the government’s interest, the defensive arguments that HOAs are justified because they 1) maintain property values and 2) lower municipal costs due to private funding of infrastructure. Are there alternative methods or approaches that can effectively accomplish these goals without a loss of rights?  I think we all would agree that the answer to this question is “Yes.”  These widely accepted government interests cannot be just a preference over other alternatives.

CC&Rs permit HOAs to ignore constitutional protections

I believe that this bill, with all the good intentions of its sponsor, provides an excellent example in support of the argument that these private declarations of CC&Rs are a devise to bypass constitutional protections of the rights of citizens.[6] Paragraph (A)(3) of 33-440 is an unconstitutional statutory violation of the private property rights of citizens living in HOAs. It permits the HOA to alter your CC&Rs “contract” at the time of purchase and remove your rights without compensation.  It’s not the American way!

The most shameful example of this taking involved a homeowner who paid a premium price of some $50,000 for a golf course view that was protected by the CC&Rs from neighbors infringing upon that view. This did not stop the board from amending the CC&Rs to remove that restriction, which allowed a neighbor to so obstruct the golf course view by planting large trees.  The affected homeowner was not compensated for his contractual loss of property rights.

HB 2382 recommended revisions

For the reasons given above, this bill must be amended by deleting 33-440(A)(3) in its entirety, and to include only the proposed amendment subsection with the addition of 1) “notwithstanding any provision in the declaration” and 2) the proposed changes to the HOA amendment process in paragraphs (1) and (2) be deleted in their entirety, substituting the following:

“1. THE DECLARATION MAY BE AMENDED BY THE ASSOCIATION OR AN OWNER OF PROPERTY THAT IS SUBJECT TO THE DECLARATION BY

(a) AN AFFIRMATIVE VOTE OR WRITTEN CONSENT OF THE NUMBER OF ELIGIBLE VOTERS AS PRESCRIBED IN THE DECLARATION, AND

(b) AN AFFIRMATIVE VOTE OR WRITTEN CONSENT OF ALL OF THE AFFECTED OWNERS OF THE LOTS OR PROPERTY TO WHICH THE AMENDMENT APPLIES.”

The legislature cannot allow HOA private covenants to serve to override constitutional law and to bypass constitutional protections of fundamental rights and freedoms of the good citizens living in HOAs.  It must not!

 

References

[1] http://www.azleg.gov/legtext/52leg/2r/bills/hb2382p.pdf.

[2] See HOA Common Sense: rejecting private government, Consent of the governed, No.4.

[3] The 5th Amendment clearly states, “nor shall private property be taken for public use without just compensation”; Section 1 of the 14th Amendment clearly states, “Nor shall any state deprive any person of life, liberty, or property, without due process of law.” (My emphasis).

[4] Truth in HOAs Disclosure Agreement; Homeowner Association Consent to be Governed Agreement model Act (“Truth in HOAs Act”).

[5] “Are the means [the statute] narrowly tailored to accomplish a compelling governmental objective? (narrowly tailored – the means are necessary and there are no equally effective less restrictive alternative means available to accomplish the objective) (sometimes the word necessary is used instead of narrowly tailored, but in the context of strict scrutiny they mean the same thing).” Standards of Review web page, (http://www.wneclaw.com/conlaw/standardsofreview.html.)

[6] See CC&Rs are a devise for de facto HOA governments to escape constitutional government and HOAs violate local home rule doctrine and are outlaw governments.

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Published in: on January 23, 2016 at 9:45 am  Comments (5)  

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5 CommentsLeave a comment

  1. […] Arizona’s HB 2382 is an unconstitutional violation of eminent domain law. […]

  2. […] [3] Judicial scrutiny relating to constitutional rights requires a compelling and necessary government interest, not a general government interest, to deny protected rights.  See, in general, Arizona’s HB 2382 is an unconstitutional violation of eminent domain law. […]

  3. Has anyone redone their HOA laws to bring them up to date with the times? I’d love to get a hold of some that still keep an HOA neighborhood nice, but are easy to read and homeowner friendly. We really need to update our 25 year old one that was written to protect the developer.
    patty_rossi@hotmail.com

    • While not an attorney, my years of experience with HOA issues has uncovered a number of approaches by the HOA’s attorney. The homeowner must pay special attention to the verbiage, the terms, and the structure of the wording in the new CC&Rs. The judicial system presents a legal quagmire for a proper application of the law.
      Under guise of bring the CC&Rs into compliance with the law, I’ve found:
      1. The CC&Rs are a “de novo” rewrite of the entire old CC&Rs; that is, the old CC&Rs are void and not valid anymore.
      2. More changes — new covenants — are included in the rewrite than pertain to compliance with the law.
      Ex post facto & contract impairment issues —
      3. If a new covenant in the declaration violates current law, it is invalid.
      4. If the new law affects an existing covenant, then it may be an “ex post facto” law, which in the private domain would be an unconstitutional contract impairment. Generally, it must explicitly contradict the CC&Rs’ covenant.
      5. Generally, the effective date of a new law is the date it is adopted, but the law can be a retroactive law due to an effective date set some time prior to the date the new law was adopted. The law would have wording like, “applies to all . . . as of . . . date.” The courts have accepted this wording as a valid law so long as no substantial right has been denied because of the new law.
      6. The new law contains the wording “notwithstanding any provision of the declaration to the contrary” invalidates any current CC&Rs covenants so affected by the new law. In my view, this would appear to be a contract impairment, if it affects a substantial right, but I’ve not seen any relevant litigation.

      The HOA lawyers are experienced at these “word games,” and so are the CAI attorneys who lobby state legislatures in regard to HOA bills. Homeowners must be aware of these dangers. Complete rewrites by the HOA attorney are fraught with these dangers to homeowner rights and freedoms.

  4. Once again, I am glad you are watching and analysing what is happening legislatively. More than half the time I do not understand what they are saying. What ever happened to plain English?


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