With all the controversy and flap in Washington about the Constitution, I realized that I never really defined the term. I have been using the term “HOA-LAND” as far back as 2007 and continuously since. (Homeowner Associations: ex post facto amendments, consent to be governed, contracts to avoid the Constitution (Oct. 24, 2007)).
Definition of HOA-LAND:
HOA-Land is a collection of fragmented independent principalities within America, known in general as “HOAs,” that are separate local private governments not subject to the constitution, and that collectively constitute a nation within the United States.
A nation consists of a distinct population of people that are bound together by a common culture, history, and tradition who are typically concentrated within a specific geographic region. The common, binding element of HOAs is its organic law foundation that is based on The Homes Association Handbook of 1964, and from which flow all state laws and the declarations of CC&Rs boilerplate.
An HOA is the governing body of a condominium or planned unit development (PUD) functioning for all intents and purposes as a de facto local political community government, but not recognized as such by state governments.
An organic law is a law, or system of laws, that form the foundation of a government, corporation or any other organization’s body of rules. A constitution is a particular form of organic law for a sovereign state. The US has indeed a set of documents constituting its organic law.
HOA Constitutional Government 
So basically we are in a No Man’s HOA-land? We are registered as a business but we have no owners and no accountability? We are formed for the public interest but the public has nothing to do with it. We are under contract law but contract law is not followed..ie adhesion and only one side has to preform.
The only ones who benefit are the developers , the governments making tax money, and the vendors. The vendors write the laws to enrich themselves, the legislators pass the laws because the vendors donate to their campaigns, and anyone who objects to paying for all this is called a troublemaker.
Got it!
ALass alack! So it is. I keep asking myself why is it so?? All I get is silence from the malefactors of HOA-LAND and the usual, “You agreed, so there!”
George, you wrote “not for beneficial third party “members” who are not legally owners of the HOA or common properties.: I thought as stockholders of the corporation they are indeed business partners with their neighbors and are owners of the corporation in proportion to their interests. Not so?
Good question, and one of the more important misrepresentations in HOA-LAND.
We commonly speak of owners as if they are owners of the HOA and/or common property, but in reality they are owners of a lot or unit within the subdivision or condo. Read your title. If your name does not appear on the title to the PUD common property you don’t own any part of the common property — don’t look too hard you won’t find your name. As for condos, you own a percentage “interest in the total horizontal regime.” Your CC&Rs will have something like, “The percentage interest which each unit bears to the entire horizontal regime [condo], which interest shall constitute an undivided interest in the Common Elements• which is appurtenant to each such Unit, shall be two one-hundred-twenty-secondths (2/122) . . . . ” In short, you have a pro rata interest in the common property and not title.
As for the HOA corporation itself, did you get a stockholder certificate evidencing ownership in the HOA? Of course not, since the HOA is a non-profit membership organization that has no stockholders. It’s a big con that CAI has not bothered to clarify in all its indoctrination seminars and materials, many of which are promoted and encouraged by local governments.
I believe the notion of HOAs as business corporations is misleading, and that it comes from indsutry stakeholders who tend to operate homeowner or condo associations as if they were for profit entities. For example, a resort-style condominium or villa community in a popular vacation destination, a seasonal active adult community, or a lakeside or mountain retreat planned community of detached single family cabins or cottages. Many of these early types of common interest communities were designed by and for real estate developers and brokers, with an eye toward future revenue streams from amenity memberships and vacation rentals. Sometimes the developer’s own company manages these communities following turnover. To designate these associations as non-profit was deceptive from day one.
Later on, when the industry started to build residential bedroom communities (with or without fancy, but rarely used amenities), the concept of HOA as business persisted.
Condominiums continue to straddle the thin line between being residential and being de facto apartment communities or AirBnB substitutes for hotels.
But, if you notice, lately CAI has backed off of their stance that “community associations” are businesses and should be operated as such. Try to find recent quotes to that effect, or try to locate older articles and news releases with that stance. You cannot find them anymore.
Now CAI seems to be acknowledging by their behavior that HOAs operate as if they were substitute local governments — or at least alter egos to local government — without saying so directly. After all, CAI is now pushing for income tax relief for homeowners, by making assessment payments tax deductible. CAI is pushing for FEMA disaster relief assistance, because owners in private associations also pay taxes and purchase flood insurance. Some HOAs now want to enforce parking restrictions on public streets, and impose fines (de facto traffic tickets) for running stop signs or even exceeding speed limits.
Most members of these association-governed communities are more akin to silent benefactors to a non-profit. That means they share costs and liabilities. There is no profit to be shared, and no real equity accumulation upon their share of the common property. The association is not even legally obligated to provide a fair value for assessments! Profit potential is shared only by the “insiders” in this real estate game – developers, bulk investors, professional landlords, community managers and attorneys, and the various service providers.
This is so interesting. and you are right–I did not know the difference! I am ashamed of myself. I looked up the definition and it is eyeopening:
“This type of corporation is different from a typical for-profit corporation or S-Corporation. Those have shareholders (owners). A nonprofit corporation has no owners whatsoever, only stakeholders. A stakeholder is not an owner, but rather someone who has a stake in the successful operation of the organization. Stakeholders could be members of the nonprofit, or even beneficiaries of the nonprofit’s activities. One thing stakeholders have in common: they have no legal ability to profit personally…hence, nonprofit. A nonprofit corporation is formed to carry out a public purpose, whether that be religious, educational, charitable, scientific or whatever. It is prohibited from acting in a manner that results in private inurement (profit) to individuals (for more information about inurement, please refer to our post about “Avoiding Conflicts of Interest).
How can that be? Someone has to own it, right? No, not really. The nonprofit organization is not “owned” by the person or persons that started it. It is a public organization that belongs to the public at-large. The parties responsible to operate the organization for the stakeholders are the members of the board of directors.
Also, a nonprofit corporation cannot be sold. It is simply not possible. If a nonprofit corporation were to “close down”, or dissolve, the board of directors of the nonprofit must distribute all of the nonprofit’s assets to another nonprofit corporation after all debts have been settled.” https://www.501c3.org/who-really-owns-a-nonprofit/
So a non-profit is formed to carry out a PUBLIC purpose. So can the public look at the records? If it belongs to the public at large–why can’t the public oversee it? Why is it always called a civil matter? Seems to me it is not a civil matter if a non-profit for the public good! What am I missing?
Great column today! I am learning a lot.
Good comments, Shelly!
It is the CC&Rs that grant the HOA its powers to rule the members of the condo/subdivision who are automatic members by virtue of their ownership of a lot or unit. The CC&Rs obligate the HOA to act in the best interests of its members as a whole, thereby making the members third-party beneficiaries. I use “third-party” since the members are not HOA owners and do not have a contract with the HOA. The HOA simply publishes and files the Declaration and subsequent amendments agreed to by the members, but not countered agreed to by the HOA board itself. There is no provision for that to take place, as we see with the signing of the US Constitution.
Am I right?
George you need to spell this out to us a little clearer. I know it makes perfect sense in your head but not mine. When I read your message above, all I get out of it is that “we’re doomed as HOA Members”. It doesn’t seem that Legislators listen or care. Gov Ducey has a mind-set of no new laws. Since we can’t remember the ones on the books now, that mind-set makes sense. Except it makes MORE sense is HO’s had American Constitutional rights and that shouldn’t create a new law that should mean that Gov Ducey’s staff should find the law that stripped us of our rights and remove that. How would any HO know that the private contract they sign at closing strips them of their constitutional rights UNLESS they have a strong education in law?
Further HOA Lawyers should protect the interests of the HOA Members 1st and then the board second.
Have a nice Memorial Day.
I can understand the frustration and anger by you and others regarding the shameful and unconscionable conditions that homeowners face in HOAs.
I don’t know how to make myself much clearer than what have been doing for years. The silent majority of owners doesn’t make me wrong and doesn’t make them right. A majority just gives power, rightly or wrongly. What you expressed in your comment is a growing awareness that my comments over the years were and are a correct description of the status quo – the way things are and not the way we would like them to be. It is very hard for those who believed in the goodness and benefits of HOA-LAND to accept the fact that they were fed and happily accepted a line of propaganda consisting of half-truths and misrepresentations. You know — they wouldn’t do that . . . the state will protect us under the Constitution . . . etc.
Now, some are beginning to see that after a long line of opposition from the Evil Empire, backed and supported by our elected representatives, how bleak their position is. The ‘game’ has been rigged for a long, long time. Yet, many advocates still sally forth hoping that the Evil Empire is really on their side and will do good by them, and so too they believe the legislators will see the light and bring back the America of yesteryear. Not so! After 44 years you would think the legislators would see through the propaganda and years of failing to fix HOA problems — as I have described elsewhere — which was the reason for forming CAI in 1973. But no!
Homeowners, especially homeowner rights advocates, must look into the mirror and wash away their misconceptions and wishful beliefs that right is might. Not so! Then, how hateful it is for some of them, unite and form an national organization with funding to do battle with the Evil Empire. And seek federal intervention as the last resort for reforms. That’s reality!
BTW, HOA attorneys are for the corporation and not for beneficial third party “members” who are not legally owners of the HOA or common properties.
Dear Wendy, there’s really only ONE WAY to “spell this out […] a little clearer” and that is to perhaps state it another way. See if this works, “don’t make an offer, don’t write the ernest money deposit check, don’t purchase, don’t apply for a mortgage on ANY property that has ANY restriction on its deed. In other words, DO NOT purchase deed-restricted property.” There. That’s all the buyer needs to know, anything else is a waste of time and functions as an excuse to justify the buyer’s self-defined coping mechanism of being in denial that they are purchasing a jail cell where absolutely nobody gives a damn if they rot in it as long as those in control can keep the intravenous withdrawal needle in the owner’s bank account.
Yep!
I am in totally agreement with all the comments here. I work as hard as I can to bring the reality to buyers. Libertarians are perhaps the worst since they actually believe in a private contract. Well NOT THIS PRIVATE CONTRACT. I agree that we need a national organization, someone please who responded in this thread bring it together for us. I am not a leader and I wish I was.
George I wish you would do a blurb on HOA attorneys bc indeed they are for the trade and they will mislead any HO, taking their money but never working for the Member. I love my home, I love my location, I love the renovation that I’ve done for 11 yrs, but oh how I wish I knew then what I know now. HO’s who are in conflict with their HOA cannot just get up and move … that’s called running. The best I can do for the time being is to help alert homebuyers to HOA tyranny. If they purchase with their eyes wide open then that’s fine. Realtors need to help inform buyers. Thanks for all you and the others who have written in do to bring this ugly contract to the public’s attention.