NC reform bills need your support

Three very material and important bills seeking meaningful HOA reforms are before the North Carolina General Assembly (legislature): H311, S312, and H542.  (See ‘There is no oversight’ Proposed bills call for changes to HOAs in North Carolina). These bills address the two categories of reform legislation as I have defined them: constitutional and operational.

It has been my experience over some 23 years that reform legislation falls into two categorical levels: constitutional seeking to change the systemic HOA scheme, and operational seeking to apply the existing day-to-day laws and governing documents in a fair and just manner.

The average homeowner does not quite understand the broader constitutional issues but well feels the effects of the current day-to-day conditions. AN example of operational reform would be to change the time frame or approval percentage of an existing covenant. It’s a procedural change.

H311,

An act to establish a community association oversight division in the office of the attorney general.  In short, the AG is authorized to investigate HOA wrongdoing and to take remedial action including legal action, if so determined. The division is a rulemaking body —  adopt and change rules —  to carry out its authority. It is a constitutional 14^th Amendment due process and equal protection of the laws bill.

S312,

An act that requires notice of liens and the ability to foreclose. A lengthy bill to inform the homeowner that a lien has been placed on his property and the right to work out a repayment plan. While the right to foreclose is removed, the HOA can proceed with legal action to obtain payment of the debt, like garnishment, etc. It has a constitutional aspect in removing the right to foreclose – seen as a special law for a special entity, the HOA – and an operational aspect with respect to the procedures to follow in attempting to collect the unpaid assessments.

H542,

An act placing a limit on foreclosure and notice of a lien. The lien notice is similar to S312. The bill also sets a $2,500 minimum, or 1 year of unpaid assessments not paid within 30 days. It is an operational bill dealing with everyday procedures.

I prefer S312 over H542 since HOA foreclosure rights are unreasonable, against good public policy, and whose purpose is to serve as a punishment.  What right does a private entity, that has not advanced any hard cash like a bank, have to receive foreclosure payments far in excess of the HOA assessment debt that also includes exorbitant attorney payments not found in the public sector?

[Please feel free to repost with proper credit].

North Carolina attempts AG protection of HOA members – HB 311

CORRECTION. This post was mistitled referring to new Hampshire but it is a North Carolina bill, HB 311.

NC State Representative Iler introduced HB 311 granting the AG with powers and authority to investigate HOA violations and to commence legal actions against the HOA if warranted.  It seeks direct state involvement in protecting a class of citizens being denied the equal protection of the laws by amending §§ 47C-3-123 and  47F-3-123.

It may come to a surprise to many who find no ills living in an HOA, but it’s well known that state Attorney General’s offices have shied away from investigating and bringing legal actions against HOA board violations of state laws and their contractual obligations. The general response from a number of AGs has been “no authority to act,” although they have general powers to investigate white collar crimes; “the law needs to be changed, go to the Legislature to change the law.”

Representative Iler can be your champion!  He needs your active support  against a legislature – as are all state legislatures —  that is hostile to HOA owner private property interests. NC citizen involvement is necessary for success!

HOA Homestead Exemption Exclusion (SB1470)

`Please pass SB 1470, homestead protection for the people.

History of Homestead Exemption HOA Exclusion (SB1470)

In 2004 ARS 33-1806(3)(h) was added to the mandatory disclosure requirements, requiring a buyer to sign an acknowledgment that he agrees to the loss of his homestead exemption (now $400,000). Just one year later, in 2005, the statute was again amended to remove any reference to the loss of the homestead exemption.  In 2007 Governor Napolitano vetoed the homestead exemption bill on a flimsy argument – to many subjects.

Today, ADRE (real estate dept)  still does not inform consumers of the loss of their homestead exemption.

In 2007 I wrote, in part,

“They [CAI] raise the issue of a consensual agreement, the unsigned CC&R ‘agreement,’ which, under Arizona statutes, is an exception to the application of the homestead protection.  The author of the S/E amendment to the bill, Representative Farnsworth, made quite clear that ARS33-1807(A), which opens with, ‘The association has a lien . . . .’ (emphasis added), is a statutory lien and not a consensual lien – the homeowner has no choice in the matter whatsoever. 

“Any reference to a consensual lien must come from a voluntarily entered agreement, and, not from a statute. Our concern here is the alleged CC&Rs consensual agreement that may contain a provision for an agreement to a lien for unpaid assessments and the right to foreclose.  No CC&R that I have been made aware of mentions a surrender or a consent to the loss of the homestead exemption.  No real estate purchase agreement that I am aware of mentions an agreement to surrender the homestead exemption. The CC&Rs have been held as binding, not as a consensual agreement per se, but by the application of the doctrine of constructive notice, or the simple posting to the county clerk’s office.” 

This is the Legislature’s second chance to restore the equal protection of the laws to homeowners in HOAs. There is no justification for denying homestead protection when.

Resources

ARS Title 33, -Ch. 8

 33 – 1101. A. Any person the age of eighteen or over, married, or single, who resides within the state may hold as a homestead exempt from attachment, execution and forced sale, not exceeding $400,000 in value, any one of the following:

1. The person’s interest in real property in one compact body upon which exists a dwelling house in which the person resides.

2. The person’s interest in one condominium or cooperative in which the person resides.

33-1103. Homestead exemption; extent of exemption; exceptions

A. Real property that is subject to the homestead exemption provided for in section 33-1101, subsection A is exempt from involuntary sale under a judgment or lien, except in connection with:

1. A consensual lien, including a mortgage or deed of trust, or contract of conveyance.

33- 1256; 33 – 1807. A. The association has a lien on a unit for any assessment levied 14 against that unit from the time the assessment becomes due.

SB1470 (Feb. 13, 2023)

C. Subsection B of this section does not affect the priority of

10 mechanics’ or materialmen’s liens or the priority of liens for other

11 assessments made by the association The lien under this section is not

12 subject to chapter 8 of this title.

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.”

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

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[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).