The need to regulate CAI monopoly

To answer to the question I raised, Is CAI a coercive HOA monopoly?,” required further research and analysis, which resulted in  finding extensive and strong evidence, gathered from over the years, that CAI is definitely acting in violation of the anti-trust statutes; steps need to be taken to break up the monopoly.  Below are my recommendations to regulate CAI’s activities to allow for the voice of others to be heard, especially from owners of HOA homes who suffer under the monopoly.

A.       Regulations on CAI monopolistic activities

1.       CAI to cease all references and implications that it represents HOAs before the legislature, all government bodies, before the courts and including amicus curiae briefs without express consent to do so;

2.      Require CAI to state that it is a business trade nonprofit, explicitly a 501(c)6 and not an educational entity;

3.      Inform readers that it cannot have HOAs as members since HOAs are consumers of the services provided by the trade group members;

4.      It is actively engaged in lobbying state legislatures on bills favorable to the HOA  and not necessarily to the membership;

5.      Inform owners and the public in general that its attorney members represent the HOA personified by the Board of Directors and not the member.

B.    Regulations on HOA activities in support of CAI monopoly

1.       Similar to representing employees in bargaining with management, propose federal laws that permit and protect HOA members to organize its membership to bargain in good faith for amendments to the governing documents and Rules changes;

2.      Propose legislation that allows for the creation and protection of a national HOA Homeowners Coalition, similar in intent as the National Labor Relations Board (NLRB);

3.      To restrict the HOA from interference with the newly established  organized national and state  member entities;

4.      Quarterly inform the membership of the number of directors, officers, managers, and attorneys who are members of CAI;

5.      Publish the total annual amount of spending for CAI dues paid for any HOA members, donations, other fees, and expenditures paid for by the HOA;

6.      Inform the membership that all communications with their attorney are not exempt from disclosure by state law,

7.      and all communications with the HOA attorney constitutes corporate documents that are accessible to the members, unless explicitly exempted under  “Pending or contemplated litigation” apply;

8.     The CC&Rs or Declaration for any planned community, condominium association or homeowners association shall state that, “The association hereby waivers and surrenders any rights or claims it may have, and herewith unconditionally and irrevocably agrees to be bound by the US and State Constitutions and laws of the State as if it were a local public government entity.”

Is CAI a coercive HOA monopoly?

Community Associations Institute (CAI) dominates themarket for HOA educational services and controls the market around it by means of its extensive lobbying of state legislatures and by holding seminars, conferences and publications extolling its self-serving agenda that promotes the HOA legal structure and scheme; by the support  of state agencies that sponsor CAI seminars and classes, and by private entities trained under the CAI education program – ECHO in California and CALL in Florida, as examples. It has become successful in lessening competition as a result of its “improper conduct.”

A quick review of the internet postings shows (emphasis added),

“[The]  courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident. In the end, courts will decide whether the monopolist’s success is due to ‘the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.’”

“Coercive monopoly” is defined as:

A monopoly that is created using extraordinary power such as a government or international agency. For example, a government that grants legal protections to firms that create barriers to entry to prevent competition. Firms commonly lobby governments for rules that protect them from competition.”

With respect to CAI, a tax-exempt nonprofit, can it be charged as a monopoly? It is a well-established fact that no state has granted  CAI a protective government monopoly exclusion —  the right to lessen competition. And that includes local governments in several states that openly support and encourage the CAI HOA program; some states have actually employed CAI as its authority to educate the public regarding HOAs.

The  answer is YES according to the following Supreme Court case. The case addresses the instance where  the state assigns a “governmental monopoly” (making it a state-actor) to an entity (which HOAs are not), but must explicitly state that the entity has the right to lessen competition,

“Under this Court’s state-action immunity doctrine, when a local governmental entity acts pursuant to a clearly articulated and affirmatively expressed state policy to displace competition, it is exempt from scrutiny under the federal antitrust laws. In this case, we must decide whether a Georgia law that creates special-purpose public entities called hospital authorities and gives those entities general corporate powers, including the power to acquire hospitals, clearly articulates and affirmatively expresses a state policy to permit acquisitions that substantially lessen competition. Because Georgia’s grant of general corporate powers to hospital authorities does not include permission to use those powers anticompetitively, we hold that the clear-articulation test is not satisfied, and state-action immunity does not apply.”

 (F.T.C. v. Phoebe Putney Health System (133 S.Ct. 1003 (2013)).

CALL TO ACTION

I believe the case can be made for a CAI monopoly and for the Feds to  investigate (Citizens Complaint Center, Antitrust Division, DOJ),  and to file an appropriate antitrust lawsuit ASAP.

Authoritarian HOAs and AZ SOS Fontes on American authoritarianism

In January 2022 I summarized my earlier works on authoritarianism in HOAs as a natural consequence of authoritarianism in America.[1]

I came to the conclusion in 2019 that there was a rise in authoritarianism throughout the world including America. And with HOA-land[2] constituting of some 23% plus of Americans, authoritarianism was also well rooted in the HOA form of governance. 

“The HOA legal structure and scheme is basically authoritarian in nature: strong central power, limited political freedoms, no accountability, and under the rule of man, not law. ‘There are a lot of Americans who do not care for democracy. They do not mind [failing] to follow the Constitution, or that [it] poses a danger to democracy.’ (Authoritarianism in the HOA-Land Nation (2019)).

There is a mass psychology present in HOA-Land. Mass psychology is a study of how your behavior is influenced by large groups of people — “birds of the same feather flock together.” It is the result of the longtime conditioning and indoctrination into identifying with the principles and beliefs promoted by the CAI School of HOA Governance. Mass Psychology and Cult Behavior Within HOA-Land (2020)).

Arizona Secretary of State-Elect, Adrian Fontes

In MSNBC interview on Nov.17, 2022, the Arizona Secretary of State-Elect had the following to say about Americans .[3]

Election deniers . . . we need to call them authoritarians because they don’t believe in the democratic process.  They don’t believe in the consent of the governed. This is  so soundly an authoritarian movement when you look at the people who care about democracy, who care about the function of our government.”

“The people have spoken. There is an authoritarian movement in America, it may be loud . . . but it is dangerous, and we must continue to push back against it with vigor. . . . We have to become better citizens across the nation . . . we have to understand the fundamental structure [of government] better.”

Asked by the interviewer what can you do as secretary of state,  

“I have begun to work with . . . members of the Arizona Legislature . . . we got to be bigger than the problem, we got to be working together, to help people understand that we are all in this together.  You have to set your partisanship aside and work together toward common ends.”

“That’s the kind of leadership that folks like me have to set.   We got to reach out and show the American public that . . . cooperation will open up more avenues of conversation and that’s how we as leaders can set the example.”

Restructure the HOA model of governance

I have stepped outside the box to offer the boards of directors (BOD) a fresh view of the nature and legalities of the HOA legal scheme. StarMan Group HOA Management Consulting believes that the HOA legal model of government must be restructured to establish the climate and culture of the HOA enabling the restoration of the lost constitutional principles of democratic government — individual rights, justice, and fair play — for its members within the confines of a private contractual government.

The HOA model of local government is a fourth type of local government in addition to the public domains of commission, council-manager, and council-mayor forms. I ask: Is there a legitimate, bona fide reason and justification for the HOA to function outside public government?   No, there is none!

It goes without saying that private HOA governments must be restructured to return to the Union and restore member rights, freedom, privileges, and immunities.[4]

The task before the new Arizona administration

In 2006, HB 2824 (Ch.324), sponsored by Rep. Eddie Farnsworth, established OAH hearings of HOA disputes, followed in 2011 by SB 1148 (Ch. 185), sponsored by Senator Andy Biggs to revise HB 2824 to deal with constitutionality challenges by the trade group, CAI, and 11 years later Arizona now has HB 2158 (Ch. 125), sponsored by Rep. John Kavanagh, allowing for a more meaningful, democratic voice of the members in HOA government.

Hopefully, Fontes will apply his concerns about authoritarian America to that 23% of the population directly subject to authoritarian, contractual, private local government known as HOAs. Hopefully, the to-be-elected Attorney General will identify with Fontes, and they will exert strong influence on the new administration to correct the past legislative ills of supporting, co-operating, encouraging, and protecting the HOA legal structure.

Hopefully, the newly constituted Arizona Legislature will  restore fundamental and constitutional protections, especially due process and the equal protection of the law, to citizens living in homeowner associations.

Notes


[1] Authoritarianism in America; authoritarianism in HOA-Land (2022).

[2] Some 23% of Americans live in HOA-Land, that collection of fragmented independent principalities known, in general, as HOAs. HOAs are separate, local private governments not subject to the constitution, and collectively constitute a nation within a defined geographical region known as 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.”

[3] We Must Push Back Against Authoritarians, Says Arizona’s Secretary Of State-Elect – Bing video.

[4] Restructuring the HOA model, George K. Staropoli, StarMan Publishing  (2020).

HOAs: the modern instance of the medieval feudal system

A little bit of history is good for the soul; it puts a perspective on why things are the way they are.  Let’s go back before modern times and the creation of the modern HOAs as outlined in the 1964 The Homes Association Handbook.

Who controls and owns the land? Well, it was he who conquered it and took it from some other governing person or body. In 1077 William the Conqueror from Normandy took control of England from the Saxons, who earlier took it from the Anglos (Anglo-Saxons).

The social/economic system was known as feudalism in which serfs or peasants called vassals, were given  some land called fiefs by the owner, known as the Lord (of the manor). The vassal was to work the land and paid for the grant from the Lord in terms of produce,  services, and money. (It also included serving in the army to defend his Lordship).

In short, William as the “high” Lord gave land to his Nobles who became his vassals. The vassals, in time, “sublet” their lands and created another level of Lord-Vassal relationships, each subservient to the original grant, and so on.

The consequence of the feudal system was the creation of very localised groups of communities which owed loyalty to a specific local lord who exercised absolute authority in his domain. As fiefs were often hereditary, a permanent class divide was established between those who had land and those who rented it.” (Feudalism – World History Encyclopedia).

By this time the parallels can be easily identified.  Follow along with the modernization of feudalism that required changes and additions to real estate property laws and the doctrine of CC&Rs was invoked. As a necessity, the doctrine known as ”equitable servitudes” and was made part of the CC&Rs. Laid out in the Handbook, equitable servitudes replaced the grant from the Lord to his Vassal in such a way as to bind all future owners.   In other words, the CC&Rs enabled perpetual control over the land or subdivision of today. Homebuyers are forced to be bound to this original CC&Rs, as validly amended.

Now to the legality that the owners never signed the CC&Rs created by the developer at the time of initial purchase.  However, the servitudes were hampered by the doctrine of “running with the land” found in your CC&Rs, which proclaimed that the CC&Rs, in order to be binding on subsequent owners, had to be in place at first sale—to the developer. Consequently, from the get-go, homeowners bought into an adhesion contract that did not permit a give and take bargaining  between seller and the new buyer —  you  — as required under contract law 101. I call it a huge GOTCHA!

So, here we are!

The unspoken Alliance: no HOA negatives

In 2010 I raised the question: Are the media and local supporting governments part of “an unspoken alliance of  no negatives about HOAs?”  I avoided using the word “conspiracy” because all it takes is a nod or wink that everybody understands. No written or verbal statement was necessary.

In 2012 I wrote,

It is interesting that the media always fails to mention this affiliation with CAI, as many of these attorneys lecture on how to live happily in an HOA. And they are supported by your local town government through seminars and conferences like the HOA Academy and Leadership Centre programs. 

How about your Attorney General? Your consumer protection agencies? Your real estate department? The Realtors? Heard or read anything of substance  from them against HOAs? Gee, maybe I’m delusional and there are no serious issues of substance after all.

In 2013 when a homeowner filed suit against the AZ legislature challenging the constitutionality of  an HOA bill (HB 1454), not a word or peep from the media or those self-promoting think tanks like The Goldwater Institute, Institute for Justice, and ACLU. And today, not a word or peep from the media or the think tank constitutionalists, about the landmark protected free speech law (HB 2158; AZ law Ch 125 (2022)) concerning HOA governing issues.

It is an unexplainable bias in favor of the HOA model of governance by those in a position to understand and to know better. Sort of a mass group think conduct nationwide. Some may call it a cult where opposing thoughts and information are rejected, ignored, and denied, and the “messengers” are attacked. The silence is so contrary to human behavior — the normal curve — to conclude forces are at work.

A major exception did occur in 2016 when the conscientious reporter, Judy Thomas of the KC Star (KC Star: problem with HOA? Don’t go to CAI ), tried to do what’s right, but ran into the corporate bias wall. It was a unique exposure, standing all alone but nothing was accomplished.