AZ SC in Kalway holds CC&Rs as “special contracts”

Author’s note:  I make extensive use of direct quotes in order to avoid my interpretations “leaking” through.

The Arizona Supreme Court in Kalway[i] threw some light on the controversy that HOA covenants and CC&Rs are valid contracts and are held as such.   The Court held that, my emphasis,

“CC&Rs form a contract between individual landowners and all the landowners bound by the restrictions, as a whole. . . . in special types of contracts, we do not enforce ‘unknown terms which are beyond the range of reasonable expectation . . . . CC&Rs are such contracts.  Because covenants originate in contract, the primary purpose of a court when interpreting a covenant is to give effect to the original intent of the parties’ with any doubts resolved against the validity of a restriction.”

With respect to the requirement for very important but ignored homeowner notice, the Court continued, my emphasis,

The notice requirement relies on a homeowner’s reasonable expectations based on the declaration in effect at the time of purchase—in this case, the original declaration.  Under general contract law principles, a majority could impose any new restrictions on the minority because the original declaration provided for amendments by majority vote. But allowing substantial, unforeseen, and unlimited amendments would alter the nature of the covenants to which the homeowners originally agreed. . . . Thus, “[t]he law will not subject a minority of landowners to unlimited and unexpected restrictions on the use of their land merely because the covenant agreement permitted a majority to make changes to existing covenants.”

One of the most egregious injustices that I’ve come across is the failure of the courts to apply the full body of contract law to HOA covenants in CC&Rs.  Opinions and dicta refer to the CC&Rs simply as a contract, or an agreement interpreted as a contract — yet in spite of the above opinion — fail to protect the homeowner under contract law 101.  The Cornell Legal Information Institute lists the basic criteria for a valid contract:

 ‘The basic elements required for the agreement to be a legally enforceable contract are: mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality.”

Added to this general description of a legal contract is the Opinion holding that the CC&Rs are special contracts that do not permit “unreasonable  expectations” and that the notice of reasonable expectations is set forth in the CC&Rs “at the time of purchase,” and the law will protect minority owners from any such expectations.   

As I have argued many times,[ii] the boilerplate  amendment process that binds non-agreeing owners solely on the basis of a majority or some super majority renders the original “contract” a meaningless piece of paper. 

Professor Barnett explains,

“A law may be ‘valid’ because it was produced in accordance with all the procedures required by a particular lawmaking system, [the HOA amendment procedure, for example] but be ‘illegitimate’ because these procedures were inadequate to provide assurances that a law is just.”[iii]

Conclusion

It should be evident to all that this constitutional issue of “signed the agreement” and are thereby bound to obey needs further thought. As it stands, homeowners in HOAs are subject to special laws, the numerous state HOA/Condo Acts, for special entities allowed to function as de facto private governments outside the protections of the US Constitution.

Notes


[i] Kalway v. Calbria Ranch, CV-20-o152-PR, ¶ 13 -16  (Ariz. March 22, 2022).

[ii] See HOA consent to agree vs. “the will of the majority”,  Contracts, the Constitution and consent to be governed and HOA Common Sense, No. 4: Consent to be governed.

[iii] Randy Barnett, Restoring the Lost Constitution, Princeton Univ. Press, (2004).

The roles of the Supreme Court vs the Legislature

At today’s Senate confirmation hearings of Judge Jackson, an intriguing dialogue took place between Jackson and Senator Lee (Utah).  The topic raised by Lee focused on the role that the Supreme Court is to say what the law is, and the role of Congress (or state legislature) is to say what the law should be creating public policy. The Court deals with the policies set by Congress.

The role of homeowner rights advocates is to say  to the legislatures what the law should be with respect to HOA-Land.  It is not to say that this happened to me and it’s wrong, or my HOA does so and so, which does not rise to the level of setting policy for all HOAs/condos  — no special laws for special entities.

And that’s another area where reform legislation often fails — too local.  Reforms must be broad as to have general concern for the state; as the courts have held from time to time, “This case Involves legal issues of statewide importance.”   And it must be explicitly stated or  implied.

Public policy today is harmful to the private property rights of HOA owners, and to a denial of due process protections and violations of the equal protection of the laws, treating HOAs as if they were independent principalities.  These policies and attitudes have created unjust, bad laws enforced by the courts, and used as precedent for more bad laws.

The cycle ends by advocates addressing the root cause of pro-HOA laws that treat HOA members as second-class citizens, which they are not!

Donie Vanitzian’s murderer  still waiting trial after 4 years

Three days after Xmas on Dec. 28, 2017, L A. columnist and strident homeowner rights activist Donie Vanitzian died at the hands of her husband of 35 years, Tom Foster. She was 67. It was a murder-suicide incident according to the police. Foster was charged with murder and plead “Not Guilty By Reason of Insanity.” The case is still pending with a series of pretrial conferences scheduled for a number of years now, which I believe must be related to his insanity plea.

Please note that criminal court records are accessible by the public either at the courtroom or remotely by means of computers at the courthouse.  This April 22 another pretrial conference is scheduled and I am hoping someone can drop by the courthouse and access the minute/orders and bring us up to date.

The January 2018 British Daily Mail article, describing Foster as “a former British nightclub tycoon,” depicts their relationship.

Many long-time advocates will remember Donie Vanitzian (1950 – 2017) and her strident, outspoken activism displayed in her emails, in her L. A. Times column, Associations, and in her texts: Villa Appalling!: Destroying the Myth of Affordable Community Living, Vanitzian and Glassman (Villa Appalling Publishing 2002); California Common Interest Development — Homeowner’s Guide,  D. Vanitzian (Thomson-West Legal Publishers, Series: The Expert Series (2006).

* * * *

I worked with Donie from 2006 – 2016 on CLRC ‘s rewrite of the Davis-Stirling Act and in defending her, when she called from time to time at wits end,  against attacks by the Evil Empire attempting to remove were LA Times column and to discredit her in general. We fought like hell, along with Elizabeth McMahon (AHRC), to get a member’s bill of rights included in the rewrite but failed. I admired her and had respect for her knowledge and energizer bunny activism.  We chatted in private. She had a JD but kept on failing the Bar exam and I understood why. She did not accept the establishment’s version of justice and the judicial process.  She had those to-the-point views and criticisms of the Evil Empire and its loyal followers.

In 2006 with her help pretending to be doing research as an adjunct professor,  I was able to get a copy of the 400+ page, 8 ½ x 11 The Homes Association Handbook, TB #50 at a cost of $180.  We split the cost. You will not find this document anywhere, not even on Amazon.

You can read the Jan. 7, 2018 L.A. Times tribute to Donie by Andrew Khouri.  Champion of Homeowners’ Rights

In memory of Donie’s dedication to justice, fair play, and to protecting homeowner rights, I would like to list a number of events that I had recorded as a Commentary over the years, and  revealing a number of incidents that I had occasion to record.

·         Realtors: Are they protecting buyers or the HOA? (May 2006)

·         Common Interest Developments – Homeowner’s Guide (Thomson-West) (Oct. 2006)

·         Homes in HOAs are Lifetime Collateral for HOA Survival (Oct. 2006)

·         AB 1921: The CLRC recommended HOA special interest bill (Jan 2009)

·         Why is CAI member firm of Adams Kessler allowing criticism of LA Times HOA column? (Oct. 2011)

·         Is there a CAI game plan to rewrite HOA CC&Rs to restrict member voting powers?  (Feb. 2012)

·         LA Times column: protecting your HOA property (Nov. 2016)

AZ GOV committee hears the voice of HOA members

The Arizona GOV committee meeting on HB 2158 yesterday heard the voice ot the HOA homeowners  — the HOA citizens — on the need for HOA regulation and control of rogue boards. The members heard the horror stories, and were made awareof lack of free political speech as enjoyed by non-HOA members.

The bill passed 7 – 0 with 131 owners submitting their support for the bill, using the RTS (Request to Speak) procedure, while just 3 RTS submissions were against the bill.  This procedure allows the public to submit a short statement for or against a bill, with the option of speaking at the meeting.  All submissions become part of the public record and are accessible by the public.

Here is a sample of the FOR submissions at both  the earlier House (195 FOR; 31 Against) and Senate hearings, by the owners themselves and not just board members:

  • This bill is necessary to prevent the abuse of fundamental rights or free speech and assembly. Please support it.(WD)
  • Homeowners should be able to use all the facilities of the HOA to express their concerns and ideas abou8t HOA business.  Please support this bill. (PF)
  • Please protect homeowners rights to voice their opinions without fear of retribution (KHW)
  • This bill seeks to protect homeowner’s ability to participate in the governance of their communities and to express their support or opposition for board candidates or community ballot measures in an attempt to influence the outcome. (D Legere)
  • It is criminal how HOA Boards are allowed to infringe upon one’s right to assemble/speak and impose their beliefs. (LN)
  • HB2158 will allow homeowners to engage each other over concerns for the betterment of their communities. (SP)
  • Please vote to protect the homeowners right to show support or opposition to HOA Board candidates.  The suppressive measures that our board takes is board line criminal.   (RW)
  • This bill will help empower homeowners to fight against overbearing board of directors. (KC)
  • We need to pass this legislation to protect the right of assembly and to redress the government for those who live in HOAs.  Vote yes for this bill.  (JR)
  • HOA’s should not be allowed to restrict a home owner’s freedom to assembly or free speech. Regardless of which side of the ballot the home owner votes on. (LS)
  • Homeowners are handicapped from effective political participation in HOA governance and fair elections will make a difference. (yours truly)
  • It prohibits HOAs from infringing on Constitutional rights of owners during HOA elections.  Two thumbs up!  (CS)

Yes, ’n’ how many times can a man turn his head Pretending he just doesn’t see?

The answer, my friend, is blowin’ in the wind The answer is blowin’ in the wind

HOA “bible” ignores members’ property rights

An excerpt from the HOA “bible” that was the source of the HOA legal scheme and structure, and included appendices on model CC&Rs and bylaws (Appendices F, G, and H, pages 384 – 402). While over time minor changes have appeared in governing documents, they are for the most part, and in particular on fundamental issues, boilerplate covenants contained in the Handbook.

Note that no mention is made of the homeowner, the HOA member, whose property interests are at stake and the subject of the legal scheme. “Association officers,” as we have discovered, represent the association and not the personal property interests of the members. The members are there, it seems, to fund the HOA. It is a top-down governmental structure with little concern for protecting principles of democratic government.