The use of the words “shall” and “may” have generally accepted meanings in state laws and statutes. Their use in bills and laws relating to HOA-Land raises the highly controversial question of: Are HOAs state actors? Wayne Hyatt — former CAI president – wrote in 1976 that HOAs were mini-governments. In general, a state actor is an entity that is functioning as “an arm of the state” or “in place of the state.” Does the use of “shall” that is defined as “mandatory” make the HOA an arm of the state?
In sum, the US Supreme Court criteria for classification of a state actor can be found in Brentwood:
- From the State’s exercise of “coercive power,”
- when the State provides “significant encouragement, either overt or covert,”
- when a private actor operates as a “willful participant in joint activity with the State or its agents
- when it is controlled by an “agency of the State,”
- when it has been delegated a public function by the State
- when it is “entwined with governmental policies,” or
- when government is “entwined in [its] management or control.”
In regard to the institutionalization of HOAs, or as I refer to it, HOA-Land, the above tests 1 – 3, and 5 -6 would provide clear and convincing evidence that the policies of state legislatures, as demonstrated by the enacted pro-HOA laws, have created HOAs as state actors who willingly undertake state actions. Review your state laws for the use of “shall” and the consequences of that mandate on your individual property rights.
The pro-HOA laws enacted by state legislators, aside from other constitutional concerns with respect to the 14th Amendment protections of the equal protection of the law and valid due process, use “may” and “shall” that are permissive and mandatory obligations upon HOAs (and condos). “May” is commonly found as “the board may set the time of the annual meeting,” or “may charge . . .” The overlooked impact and consequence of this word is to legalize activities and actions that were all-to-fore not legal rights granted to the HOA.
They are now made a legal activity, if your BOD so chooses. Prior to a statute using “may” the action or activity had to be granted by the governing documents. If so, by including it in a statute lends “officialness” to the action, and a very difficult process to declare the statute invalid. It protects the governing documents if so permitted.
The right granted by the use of “may” to HOA boards (BOD) to fine or monetarily penalize members and filing a lien with the right to foreclose, for example, makes it a legal action not granted to other nonprofit organizations. Can you imagine PBS or United Fund placing a lien on your failure to not pay your pledge to support their existence? No way! Why allow HOAs this legal right? Which of the above criteria does it violate?
Now the heart of the matter focuses on the use of “shall” that is a mandatory order to the HOA to act on behalf of the state — fine those members and collect costs including attorney fees, etc. Not only is it a legal requirement for the HOA to act as ordered, the BOD has no choice, no discretion to do otherwise, nor can the members reject a potential amendment or rule change. So much for democracy at work in HOA-Land! Which of the above SC criteria does it violate?
It is well beyond the time for those public interest nonprofits touting their support for the Constitution and democratic values to get involved and stop this disgraceful and unconscionable legislation. Stop the legislation that coerces, encourages, and supports private government, authoritarian HOAs. Legislation that advances the view that the HOA “constitution” is a better deal than the 232-year-old US Constitution. Shameful!
The American experiment in democracy, as the youthful America was described by Alexis de Tocqueville, is being subverted by the HOA legal scheme supported by elected officials and academics parading as the nouveau Philosopher-Kings preaching to the elected government leadership. In 2009 I commented:
“I explore this failure of the American Experiment and the rise of independent HOA principalities in Establishing the New America of independent HOA principalities (see New America).”
 Read his 1976 statement in To be or not to be a mini or quasi government? Hyatt said ‘yes’.” (2015). Wayne Hyatt was a prominent figure in the promotion of HOA-Land as well as an important person in creating CAI in 1973, serving as its second president. I believe he had strong influence in drafting the Del Webb Declarations still in use today.
 In general. see arguments for state actors: HOA Case History: state actors or mini/quasi government (2011); Do state HOA Statutes Establish HOAs as State Actors? (2012); Judicial error regarding HOAs as mini-governments and state actors (2015), “This commentary, somewhat technical at times, demonstrates the failure of the courts to address the fundamental issues that HOAs are mini-governments, and that by the collective functions and actions of HOAs there is clear and convincing evidence to make the case that they are indeed state actors. The whole is greater than the sum of its parts.”
 Brentwood Academy v. Tennessee Secondary School Athletic Ass’n, 531 U.S. 288 (2001).
 Democracy in America, Alexis de Tocqueville (Vol. 1, 1832; Vol. 2 1840). Printed by Alfred A. Knopf (1972).