CA bill AB 1410 –  a step backwards for HOA homeowner rights

In 2018, California Civil Code §4515 was a major step in restoring fundamental protections for free speech by members with respect to HOA governing issues.

“(a) It is the intent of the Legislature to ensure that members and residents of common interest developments have the ability to exercise their rights under law to peacefully assemble and freely communicate with one another and with others with respect to common interest development living or for social, political, or educational purposes.”

AND JUSTICE FOR ALL

Now, AB 1410 seeks to restrict these rights under the guise, it seems, that the HOA website is private and therefore it can adopt restrictive rules legally. In a typical “what you see is not what you get” maneuver, the bill would grant the HOA the power to moderate message content in strict opposition to legal holdings — that content based free speech is protected and any editing must be unbiased.

The bill sections start with §4515,

“(b)  The governing documents, including bylaws and operating line 4 rules, shall not prohibit a member or resident of a common interest line 5 development from doing any of the following:”

But watch out, what is granted is now removed under (b)(6) subparagraphs (B) and (C), and especially (D). In a “flip-flop,” designed in my view to confuse the average homeowner, it then informs the homeowner that he is still protected because the HOA must follow the rules it is attempting to circumvent. (pp. 93-94).

What’s the point? To make  it difficult for homeowners to understand the legislation and their rights all well knowing that those in power will only cite the pro-HOA points and omit the pro-homeowner protections.

GOTCHA AGAIN! Don’t fall for it!

This attempt by Rep. Rodriquez feels like an anti-slapp move if it were in the courts — an action to stifle free speech. Marjorie Murray presents 2 instances of where an anti-slapp motion can and should be used against the HOA. Contact Murray (info@calhomelaw.org) for more information.

Center for California HOA Law opposes the bill and urges Californians to contact their representatives and Judiciary Chair by phone. The committee will hear this bill this week.

AZ HB 2158 fair elections goes to Governor for signing

The AZ Senate passed HB 2158, the fair elections in HOAs bill sending it on to the Governor for signing. I congratulate all advocates who supported this bill and the Arizona Legislators coming to understand the need to stop board of director’s abuse under authoritarian private agreements.

This is a major step forward to the equal protection of the laws and proper due process as guaranteed to all US citizens. Under this bill, effective and meaningful opportunity for Arizona members to participate fairly and in an equal manner in the governance of an HOA.

It starts with the ability to campaign and discuss governing issues with the members on the same level playing field. All the members seeking change have to do is to get involved knowing they won’t be “fighting city hall” without legislative support.

The positive effect of this bill includes the need for a rewrite of the governing documents in many areas for many HOAs, removing covenants not complying with the new state law in.

See bill summary: AZ GOV committee hears the voice of HOA members

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!

America’s homeland: HOA law vs. Home rule law

Why are there private HOA governments when there are home rule, charter governments?

Getting down to the issues of state laws relating to local governments, let’s examine the doctrine of home rule. Under the home rule doctrine local communities are permitted a large degree of independence even to the extent that state legislative action is not necessary. What is home rule? In simple terms, it is a grant of authority and power — of independence — from the legislature to local communities.  (See HOAs violate local home rule doctrine and are outlaw governments; AZ Supreme Court, Tucson v. Arizona, CV-11-0150-PR (2011).)

 All the states have a version of home rule that varies in the degree of independence granted to a local governments and under what terms. Check your state laws under home rule or charter government. Strict states treat the home rule powers strictly as set forth in the statutes, like agency enabling acts. Most states have allowed for wider freedoms to local home rule governments, with some allowing for local government charters functioning as a local constitutions.  In all cases it’s a grant of independent governance from the legislature on local matters.

As an example, Arizona’s Constitution allows for home rule charter governments.

 “The purpose of the home rule charter provision of the Constitution was to render the cities adopting such charter provisions as nearly independent of state legislation as was possible. . . .  ‘[A] home rule city deriving its powers from the Constitution is independent of the state Legislature as to all subjects of strictly local municipal Concern.’”

The masquerade

Given this existing legal mechanism for strong, independent  local control, why was there a need for the creation and approval of, and the support for, private government HOAs?  Could it be as Prof. McKenzie stated in his 1994 book, Privatopia? “CIDs [HOAs/POAs/RCAs] currently engage in many activities that would be prohibited if they were viewed by the courts as the equivalent to local governments.”

It’s obvious that it was not to create healthy, productive communities.  Was it a business venture from the start to make profits for the originators masquerading as a public serve and benefit?? Was it for the real estate agents and the home builders, and to cut state government costs?

HOA associations are political bodies

The effective management of a political community, as are HOAs, and remain part of the greater political communities of their state and federal government, necessitates a rejection of the HOA legal scheme and its protectives laws.    There are no legitimate reasons why HOA governed communities cannot exercise effective and productive self-government while  being subject to constitutional law under home rule statutes.

Home rule doctrine existed long before the advent of the HOA legal structure in 1964. That is not to say that it would have solved all problems and be a perfect government, but it would be a government under the Constitution, part of the Union,  like all other forms of local government.  

If the initial 1964 HOA concept had included home rule provisions, then there would be no need for a restructuring.