The opinion by the USSC in Knick v. Tp. Scott, PA on state government taking of property[i] is of the utmost importance to HOA members suffering under adhesion contracts, misrepresentation in the sales process, and pro-HOA state laws. It allows an owner who believes his property rights have been taken from him without compensation to bypass the state supreme court before pursuing his constitutionality claim to the federal government.
In effect the USSC recognized its earlier error and sided on the side of the people.
“a state court’s resolution of a claim for just compensation under state law generally has preclusive effect in any subsequent federal suit. [Must get state denial first before going to federal court]. The takings plaintiff thus finds himself in a Catch-22: He cannot go to federal court without going to state court first; but if he goes to state court and loses, his claim will be barred in federal court.”
Chief Justice Roberts then asserted that “the settled rule is that “exhaustion of state remedies is not a prerequisite to an action under [42 U. S. C.] §1983.‘”[ii]
In order to make use of this opinion owners must adhere to the requirements for a “takings” clause challenge. That means, since the HOA is not a municipal government, that a state court must uphold the “taking” or deprivation of the owner’s property or property rights without compensation by the HOA. HOAs do this all the time with their Rules & Regs and bylaws that restrict or mandate changes to owner property.
IMPORTANT. While the HOA will argue that they have the right to do so, you have the right to demand compensation. Example, removing a tree or backyard gym set on your property, as a result of a new rule or bylaw change, without compensation. (This aspect also touches upon another loss in fundamental rights because the Constitution does not apply – prohibition of ex post facto laws or as applied to HOA amendments that negate your contract at closing).
The owner must argue that he was damaged by the HOA’s taking and requires compensation, as there is no covenant or bylaw prohibiting paying compensation. Only after the court rules in favor of the HOA, can the owner the decide on a federal court appeal under 42. US 1983, deprivation of constitutional rights.[iii] Please understand that the federal court opinions have a far wider range of application than your particular state court.
Of course, the CAI legalese people will quickly move to amend CC&Rs and sponsor state laws to prohibit payment of owner compensation. BEWARE! Stand up for your rights!
This Supreme Court opinion is an excellent example of how a successful constitutionality challenge can lead to pronounced favorable effects. It is the very broad range of a constitutionality decision that can lead to trickle-down avenues favorable to substantive HOA reform legislation. It is extremely important that advocates, and especially leaders of advocate groups, get on the bandwagon of constitutionality challenges!
Start with becoming knowledgeable by reading HOA Common Sense: rejecting private government as a summary of several main arguments for reform. Graduate to The HOA-Land Nation Within America (at Barnes & Noble (BN.com); Amazon.com) for a very much needed deeper understanding of substantive HOA issues, issues that CAI and its host of “expert” lawyers dare not open a discussion for obvious reasons.
[i] Knick v. Township Scott, PA, No. 17-647 (June 2019).
[ii] Section 1983 and Civil Rights Lawsuits, Findlaw: “In the U.S., people are guaranteed certain civil rights. In fact, if a state actor uses the legal system to deprive someone of their constitutional rights, the person may have a cause of action against them in the form of a civil rights lawsuit. More specifically, 42 U.S. Code, Section 1983 provides a civil cause of action against the person responsible.”