Eminent domain and HOA common areas

Is a homeowner entitled to compensation for the eminent domain taking of the HOA’s common area? The Constitution states a taking requires compensation, but since the common areas are owned by the HOA, it gets the compensation. What about the homeowner whose property value – market value – drops because of the new common area use by the state? Now, no longer so desirable.

The ruling by the Kansas Supreme Court in Creegan[1] held that the homeowner not only has CC&Rs contractual rights, but property rights also, and can claim inverse condemnation as it’s called[2]. While the defendant was referred to as a subdivision, it had all the criteria that applies to all HOAs — common areas and covenants that run with the land under equitable servitudes real estate law.

So, if an agency takes common area property for a ditch, for a wall or for road expansion and property values drop, the homeowner may have claims for compensation.

Equally important, but not addressed in Creegan, what about a “taking” by the HOA itself, either of common properties or of the homeowner’s private property? Most common would be a change in the use or purpose of the common property, like removing a park or a tennis court, etc. The more unjust taking involves the HOA itself putting up a wall, or ditch, or the expansion of an administrative building. Or the removal of trees or a fence on your property, which are all permitted by the CC&Rs? This does happen. But the homeowner is not compensated for this “taking.”

The HOA and the courts treat this as a private matter all agreed to by the homeowner who unwittingly gave the HOA broad powers when they “signed up.” They hide behind the fact that they are obeying the law. But the law can be unjust, as it is, favoring the HOA in what amounts to an adhesion contract. My response to this view is well stated by a line in the TV series, Madam Secretary, “You can technically obey the law and still be at fault. That’s ethics.”

HOA “eminent domain” is an example of a loss in constitutional protections due to the private CC&Rs contractual nature. It’s another example of special laws to protect the HOA entity, violating the 14th Amendment against the unequal protection of the law and state constitutions.[3]

HOA eminent domain has not been challenged in the courts as far as I know. It should be!

References

[1] Creegan v. State of Kansas, 391 P.3d 36  (Kan. 2017).

[2] “inverse condemnation – n. the taking of property by a government agency which so greatly damages the use of a parcel of real property that it is the equivalent of condemnation of the entire property. Thus, the owner claims he/she is entitled to payment for the loss of the property (in whole or in part) under the constitutional right to compensation for condemnation of property under the government’s eminent domain right.” Law.com.

[3] For example, Arizona Constitution, Article 2, Section 13. “Equal privileges and immunities. Section 13. No law shall be enacted granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which, upon the same terms, shall not equally belong to all citizens or corporations.”

 

Published in: on February 12, 2019 at 11:41 am  Leave a Comment  

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