CAI’s early awareness of HOA constitutionality, public mini-government

It appears that CAI has adopted a “see no evil, hear no evil, speak no evil” attitude toward HOA constitutionality and public mini-government issues that are still prevalent today.  And it spread to the policy-makers.

Wayne S. Hyatt’s 1975 Emory Law Journal article, Condominium and Home Owners Associations:  Formation and Development, 2 years after the formation of CAI, presents his highly influential view on HOA constitutionality while recognizing that HOAs are mini-governments.

Wayne Hyatt “the most prominent advocate in CAI” serving as a 1975 “homeowners representative” and a former president (1978-79) (Privatopia, p. 219, 138 respectively). Hyatt  devoted his practice to working with developers of condominiums, master planned communities, resorts . . . to create community governance structures and community stewardship organizations.

While actively practicing law, he was also a member of 1) the American Law Institute (that wrote the pro-HOA Restatement of Servitudes, 2) the College of Community Association Lawyers (CAI affiliate) , the Community Associations Institute (CAI, created in 1973 by the National Association of Home Builders [grant of]  $30,000), and  3) ULI – the Urban Land Institute (sponsor of the 1964 “HOA bible,” The Homes Association Handbook) and served as a ULI Trustee.

He also served as an Advisor 1) to the Restatement of the Law (Third) Property: Servitudes, and 2)  to the Special Committees on a Uniform Condominium Act and a Uniform Planned Community Act of the National Conference of Commissioners on Uniform State Laws (Uniform Law Commission, UCIOA and UCA).  Hyatt received several awards from CAI.

Hyatt developed many of the Dell Webb’s master planned and resort/active adult association CC&Rs over the years.

His 1975 Emory Law Journal article gives readers a good idea of constitutionality and local government concerns that seemed to have evaporated over the years as CAI’s influence increased dramatically.  A few important excerpts:

  • “The California Code provides for an association and affords it the powers and duties of the mini-government.” {T]he [Georgia] legislature has in effect provided a large measure of home rule for what is in essence a category of small municipalities, and each has established a system of officers and directors in the nature of a mayor and council to oversee the exercise of this rule.” (At 988). 
  • “‘Has the state permitted, even by inaction, a private party to exercise such power over matters of a high public interest that to render meaningful’ constitutional rights, private action must be public?”(Footnote 33 at 983). [In simple terms, private government HOAs must be subject to local government protections].
  • “The Declaration is not a contract but, as a covenant running with the land, is effectively a constitution establishing a regime to govern property held and enjoyed in common.  It further sets forth procedures to administer, operate, and maintain the property. . . . the declaration and particularly the by-laws create not only a corporate structure but also a governmental authority that requires and deserves competent, experienced persons . . .” (at 990).
  • “The power of ‘levy’ is a distinctive characteristic of the association and removes it from a mere voluntary neighborhood group. . . . The imposition of penalties, whether fines . . . or a denial of use of facilities enforced by injunction, certainly represents quasi-judicial power to affect an individual’s property rights. . . . The possession and exercise of such power has substantial consequences with clear constitutional implications.  The courts have not yet considered a direct constitutional challenge to an association’s action.” (at 983).
  • “[T]he constitutional issue is most acute in rule enforcement; however the association’s established procedures, declaration, and by-laws should insure compliance with at least rudimentary constitutional principles, and there must be a procedure to protect members’ rights.” (at 984).

Nowhere will you find any equivalent discussion of HOA constitutionality, or HOAs as mini-governments or as a form of local public government. Not in its Manifesto, Community Next 2020 and Beyond (2016);  not in its Public Policies: Private Property Protection, Government regulation of Community Associations, and Rights and Responsibilities For Better Communities (July 15, 2021).

And not in any of its anti-constitution amicus briefs: Twin Rivers NJ appellate (2004), Dublirer NJ Supreme Court (2011);  Surowiecki, WA Supreme Court (2021) (business judgment rule overrides judicial review); Turtle Rock AZ appellate (2017); Foreshee WI appellate (2017).

Desert Mountain opinion (AZ) constitutionality – part 2

Introduction

This 2-part Commentary on the H-O-A amendment boilerplate process entails a number of complex constitutional issues that are interlinked.  Discussing one results in discussing another, etc. in order to fully understand the validity of the H-O-A legal scheme.  [quote — ]You can’t see the forest for the trees[  –unquote  ] is the result of this complexity obfuscated by the Restatement and by the national pro-H-O-A special interest lobbyists.

In Part 1 I discussed 5 selected views by the appellate court that I see as constitutional challenges.   Herein Part 2 I present constitutionality challenges in regard to 1)  the bias found in the  Restatement of Servitudes,[1] a legal authority on court decisions and common law in favor of the H-O-A legal scheme, and 2) the freedom to contract doctrine[2] and its bearing on whether people are truly free to enter an H-O-A private government contract.

The Arizona appellate court ruling in Nicdon v. Desert Mountain[3] with respect to a CC&Rs amendment needs to be appealed to the AZ supreme court. In Part 1,  I raised the question of an on color of law denial of fundamental rights to property; on violations of the equal protection of the laws.   

Disclaimer: Understanding that in spite of my 20+ years reading hundreds of federal and state supreme court and appellate court opinions, I am not a lawyer nor am I employed by a lawyer; I only offer my views.

. . . .

Restatement of Property: Servitudes

In Item 5 of Part 1, I raised my concern that the Court relied on the Restatement of Servitudes quoting, [quote — ]A restrictive covenant is generally valid unless it is illegal or unconstitutional or violates public policy[  –unquote  ].[4]  The Restatement (American Law Institute) is accepted as legal authority even though it seems to be advancing ought to be or societal goals rather than reporting the law and factual court decisions.  

[quote — ]The Institute’s mission is [quote — ]to promote the clarification and simplification of the law and its better adaptation to social needs, to secure the better administration of justice, and to encourage and carry on scholarly and scientific legal work.[  –unquote  ] It achieves this goal through the development of Institute projects, which are categorized as Restatements, Codes, or Principles. . . . Restatements are primarily addressed to courts and aim at clear formulations of common law and its statutory elements, and reflect the law as it presently stands or might appropriately be stated by a court.[  –unquote  ][5]

The opening sentence above is the heart of the problem.  It presumes that justice is accomplished through ALI’s promotion of current court decisions, which in turn, are the reflection of a bias as  to what constitutes [quote — ]a better adaption to social needs.[  –unquote  ]  It flies in the face of  long standing constitutional doctrine on the legitimacy of the law and the consent of the governed.   It opens up to the controversy regarding the extent to which people may associate and establish contracts under freedom to and freedom of contract.

This 2000 update and marked rewrite began in 1987, 13 years ago. It is now another 21 years of substantive changes in the laws and public policy; H-O-As have now been institutionalized and accepted as [quote — ]this is he way it is.[  –unquote  ]  This is quite clear from the Forward (emphasis added):

 [quote — ]Professor Susan French [Reporter (chief editor/contributor) for this Restatement] begins with the assumption . . . that we are willing to pay for private government because we believe it is more efficient than [public] government  . . . . Therefore this Restatement is enabling toward private government, so long as there is full disclosure . . . .[  –unquote  ]

And we know there is an absence of full disclosure that amounts to misrepresentation.  Sadly, there is evidence of contradictory statements aiding and abetting this misrepresentation even in the Restatement that is used as legal authority by the courts. While the Court quoted comment a of §3.1[6] (see [quote — ]Contractual freedoms[  –unquote  ] below), it omitted comment h, which reads, [quote — ]in the event of a conflict between servitudes law and the law applicable to the association form [its private contractual nature], servitudes law should control.[  –unquote  ]

In addition, while the court referenced §6.10 it unbelievably failed to reject §6.13, comment a, which states: [quote — ]The question whether a servitude unreasonably burdens a fundamental constitutional right is determined as a matter of property law, and not constitutional law.[  –unquote  ]

Need I say more about securing the [quote — ]better administration of justice[  –unquote  ]?  Certainly not for the affected people — the H-O-A homeowners.  ALI is guilty of bias against the homeowners, the [quote — ]patients,[  –unquote  ] as analogous to the medical profession with its high degree of specialization where, working on the same body, the left hand doesn’t know about, or doesn’t care about, what the right hand is doing at the same time. 

If it is true and believable that laws are to provide justice, as widely proclaimed, the courts and the lawmakers must consider the effects of both hands on the patient. ALI must adjust its approach and remove these pro-H-O-A views and make references to applicable constitutional law.  ALI must also recognize that H-O-As are another form of local government that is not subject to the Constitution, and remove §6.13, comment a. 

The policy makers have failed to understand that the H-O-A CC&Rs have crossed over the line between purely property restrictions to establishing unregulated and authoritarian private governments.

Section 6 of the Restatement, Part D, Governance of Common – Interest Communities, attempts to deal with the governance of H-O-As in general. Section 6.16 addresses representative government.  It does not read at all like the Declaration of Independence, the Constitution, or the Bill of Rights.

Contractual freedoms and consent to be bound

Let’s begin with the excerpt from Desert Mountain opinion  in Part 1(1) linking the binding of the CC&Rs [quote — ]contract[  –unquote  ] by deed acceptance to the implicit consent to be bound in a single quote (emphasis added),

[quote — ]By accepting a deed in the Desert Mountain planned community, the [homeowner]  became bound by the Declaration, including properly adopted amendments. . . . when [a] homeowner takes [a] deed containing restriction allowing amendment by majority vote, homeowner implicitly consents to any subsequent majority vote to modify or extinguish deed restrictions[  –unquote  ].

By this doctrine, contract law 101 is ignored in favor of servitude law, as the Restatement advises  and an implicit waiver and surrender of a fundamental property right is accepted as valid, thereby treating the homeowner as a second-class citizen.  It does not do justice for the homeowner and should be held as an illegitimate exercise of police power by the legislature.

 In Item 5 of Part 1, I also raised the matter of the freedom to contract doctrine as contained in comment (a) of  the Restatement’s §3.1  that I now discuss in some detail here due to its constitutional complexity.

‘‘In general, parties may contract as they wish [freedom to contract] , and the courts will enforce their agreements without passing on the substance . . . The principle of freedom of contract is rooted in the notion that it is in the public interest to recognize that individuals have broad powers to order their own lives.’[  –unquote  ]   

In opposition to the above, I raised the following questions  years ago in 2005,

[quote — ]When did ‘whatever the people privately contract’ dominate the protections of the U.S. Constitution?  Please state what, if any, are the government’s interests in supporting H-O-As that deny the people their constitutional rights?[  –unquote  ]

I have not received an answer from any party including constitutional think tanks, state legislators, attorney generals, or the media.  It’s obvious that in any reply they [quote — ]would be defending the indefensible![  –unquote  ]

Freedom to contract; implied consent to be bound

The simplistic argument that remaining in the H-O-A implies consent is answered, in general,  by political scientist, professor of constitutional law, and author Randy Barnett,

Simply remaining in this country, however, is highly ambiguous. It might mean that you consent to be bound by the laws . . . or it might mean that you have a good job and could not find a better one [elsewhere] . . . or that you do not want to leave your loved ones behind. It is simply unwarranted that to conclude from the mere act of remaining . . . that one has consented to all and any of the laws thereof.[  –unquote  ][7]

I broadly address the consent issue in H-O-A Common Sense, No. 4: Consent to be governed[8]  (2008).  A deeper discussion can be found in H-O-A consent to agree vs. [quote — ]the will of the majority[  –unquote  ] (2019) wherein I quote constitutional scholars Randy Barnett, Keith E. Whittingham, and Edwin Meese.[9]

The important, selected, noteworthy quotes shown below bear directly on the defects in the top-down, take it-or leave it CC&Rs:

[quote — ]Tacit consent purports to provide a rationale for obligating those of us, by chance or choice, have not made their approval of the government explicit [Whittingham].[  –unquote  ]

[quote — ]The [quote — ]consent of the governed[  –unquote  ] stands in contrast to [quote — ]the will of the majority[  –unquote  ] . . . consent is the means whereby arbitrary power is thwarted [Meese].[  –unquote  ]

[quote — ]A law may be ‘valid’ because it was produced in accordance with all the procedures required by a particular lawmaking system, [the H-O-A amendment procedure, for example] but be ‘illegitimate’ because these procedures were inadequate to provide assurances that a law is just’ [Barnett].[  –unquote  ]

US Supreme Court must decide

I have informed readers about the  sticky-wicket that ties all these constitutional questions together as applied to the H-O-A legal structure and scheme; a sticky-wicket that must be resolved once and for all by the US Supreme Court.

References


[1] Restatement (3rd), Property: Servitudes, Susan F. French, Reporter, American Law Institute (2000).

[2] The question of  [quote — ]legitimacy of consent[  –unquote  ] is explored by Randy Barnett in his publications where he argues that there are limitations.  Restoring the Lost Constitution: The Presumption of Liberty, Randy E. Barnett, Part 1, Princeton University Press, 2004). 

[3] Nicdon v. Desert Mountain, No. 1 CA-CV 20-0129 (April 29, 2021).  

[4] Supra n.1, §3.3(1).

[5] [quote — ]How the Institute Works,[  –unquote  ] American Law Institute (ALI),website (May 3, 2011).

[6] This section of the Restatement, Validity of Servitude Arrangements, speaks to unconstitutional servitudes (§3.1(d)) and servitudes violating public policy (3.1(e)).  Worth reading.

[7] Supra n.3, p.19.

[8] See H-O-A Common Sense: rejecting private government (2008) pamphlet on Amazon.

[9] Barnett, supra n. 3; Whittingham, [quote — ]Chapter 5, Popular Sovereignty and Originalism,[  –unquote  ] Constitutional Interpretation, Univ. Press of Kansas (1999); Meese, [quote — ]What the Constitution Means,[  –unquote  ] The Heritage Guide to the Constitution (2005). Meese was the US Attorney General under Ronald Reagan.

Why isn’t your HOA board supporting AZ HB 2052?

HB 2052 is a big step forward for HOA homeowners in AZ as it restores lost constitutional rights. Why then, isn’t your board supporting this important bill that is unquestionably in the best interests of the members?  If you read your CC&Rs, almost all but not everyone contain a statement of intent and purpose directed toward the members, you will find wording similar to: “shall inure [take effect] to the benefit of the member and be mutually beneficial.” 

Upholding constitutional protections provided by the US Constitution would seem to fit a board’s obligation. However,

“The political and social changes in our society brought about by the adoption and acceptance of the HOA legal scheme has created a new America of authoritarian, private governments known as HOAs. They function as independent principalities.  The values, beliefs, principles, ethics, and morality of today’s America would shock the Founding Fathers.”[1] 

HB 2052 follows in the footsteps of California’s SB 323 and several court opinions upholding HOAs as public forums that provide for protective free public speech on HOA governing matters.[2]  

AZ Senate Rules committee must place  HB 2052 on the COW agenda. This important bill extends constitutional protections to HOA members.  It is awaiting a hearing by the Senate Rules Committee; time is running out! It was not heard on the 15th and today, the 17th. Bills have been killed by being held by Rules, which is a mandatory committee for all bills.

The public in general does not understand the functioning of their state legislature when it comes to its lawmaking powers under our democracy.  Our Declaration of Independence, our ‘social contract’ between the government and the people,  states quite clearly

That to secure these rights [‘among these are life, liberty and the pursuit of happiness] governments are instituted among men, deriving their just powers from the consent of the governed.”

However, in many ways your legislature operates as the sovereign that can do no wrong. Take, for instance, the question of passing laws that are of questioned constitutionality.  Long standing legal doctrine holds that all laws passed by Congress or your state legislature are presumed constitutional.  This doctrine makes the primary function of legislative Rules Committees for checking constitutionality, among a minor formality issue, perfunctory and meaningless.

With the assistance of the Rules attorneys, the committees review the proposed legislation’s consistency with the United States and Arizona Constitutions and Arizona and federal law”[3]

In all my 20+ years I cannot recall any HOA bill being found unconstitutional by a Rules committee, even for one in 2013— by the same sponsor of HB 2052 — that was challenged in court and found unconstitutional.[4]

Members should be urging their boards to speak out.  Members would be protected and enjoy such constitutional freedoms to openly discuss issues of public HOA governance with their fellow members if  HB 2052  becomes law.  Make it a law – write the rules Committee and demand passing on the bill for a debate and a final vote by all Senators.

References


[1] George K. Staropoli, HOA Common Sense: rejecting private government, StarMan Press, 2013.

[2] See Substantive HOA member rights advances in Arizona.

[3] As an example, from the Arizona Legislative Manual.

[4] See AZ Attorney General admits SB 1454 HOA to be invalid and without effect.

Lost Constitution webinar series – #1

I’d like to thank the attendees at this first of a series of seminars on Restoring the Lost Constitution to HOA-Land. It was my first Hosting displaying important documents.

As mentioned in the seminar, I am primarily focused on legalities but also concerned about the lack of ethical and moral values surrounding HOA-Land.  As an update, I had a recent call from a disabled widow who was allowed to have a front gate in her HOA for 23 years.  A new BOD arrived and differences arose resulting in  a citation for unapproved gate.  The BOD said prove the approval by  some prior BOD, and she couldn’t.  What happened to  the attributes of a genuine healthy community of neighbors helping another in distress, who have compassion and a charitable heart, all making for  a healthy “village”?  NADA!

Welcome to the New America of HOA-Land.

I hope you will find the webinar (see link below) helpful and useful in bringing about necessary changes by alerting your HOA BOD and fellow members as to the real nature of HOA-Land; and the private agenda of CAI.  This webinar argued, and provided documentation, that the dominant entity,  promoting its role as an educator, proclaimed HOAs to be independent principalities operating without government and judicial oversight.  And preferred it that way. That is really secessionist if you think about it for a moment. And harmful to our democratic system of government and its values and principals.

I will invite you all again for the continuation of Introduction as I delve deeper into what HOA-Land is all about; and CAI’s role and dominance over the legislators, the media, the BODs  and HOA members.  I am considering having a panel of a few advocates for an interchange of views. Temporary date is scheduled for Friday, June 5th.

I have uploaded the recording for all to see and distribute with accreditation. Look here  https://vimeo.com/421950279.

Lost Constitution Webinar

Veritas para justitia

May 22, 2020 11:00 AM PDT

This FREE webinar dares discuss the CAI taboos!

The overall intent and purpose of this webinar series is the education and reorientation of HOA members, especially the board of directors, to long ignored issues of constitutional validity; issues that the public will not find in the multitude of materials and publications of that business trade group, Community Associations Institute, CAI.

Geo zoom

The reorientation project is the first step toward the understanding and acceptance of my Plan Toward the Restructuring the HOA Model of Governance; it requires an examination of the role and influence of CAI in supporting and promoting the HOA legal concept and model of government.

To participate you will receive an invite with a password giving the time and date of the session. You will need this info when you sign up for the session at webinar time.

To receive an invitation please respond to gks256@NYU.edu with “webinar” as the subject and the email address that you will use to participate