proposed HOA constitutionality bill

“Now is the time for all good homeowner advocate leaders to come to the aid of member-owners”

 living in HOAs and suffering abuse, financial and emotional distress as a result of BODs being  protected by Arizona laws. These abuses are easy to understand and support! (See HOA Common Sense: rejecting private government and The HOA-Land Nation Within America).

A quick and simple — but highly effective — bill that was proposed in March 2011 and will bring relief to homeowners being treated a second-class citizens by state laws in support of the HOA legal scheme. It was ignored by Arizona advocates and dismissed by the Legislature.

“No provision of any contract or any declaration of covenants, conditions, and restrictions . . . is enforceable in this state unless the party seeking to enforce the provision proves by clear and convincing evidence that 1) the provision being enforced was knowingly and voluntarily agreed to by all parties . . . . Any representation or statement offered as clear and convincing evidence . . . shall include a signed statement containing the following, beginning with “I understand that I can ask that the following be read and explained to my satisfaction.”

“So reads an excerpt from my proposed “Truth in HOAs” statute that should be made law in each and every state. That is, if indeed the legislature stands by the Declaration of Independence and the US Constitution, which we are hearing so much about in the media nowadays.”

The “The Truth in HOAs Act,” as I called  it,  allows each state to modify the proposal in accordance with its state HOA/condo acts — shown in square brackets [].  Also, subsection (3) contains a list of acknowledgements  that can be tailored to each state’s advocate lobbying efforts.  See Arizona Truth in HOAs statute (pvtgov.org).  The essential bill section is contained in subparagraph (4).

“Therefore, in reference to subsection 3(d) above, 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.”

 The real estate subdivision or condominium will not be affected by requiring HOAs to join with other forms of local government and be subject to the Constitution as a home rule entity.  See HOAs violate local home rule doctrine and are outlaw governments.

This 2022 legislative session offers a unique, one-time opportunity to get the message across and to educate the legislators. Remaining silent on the issues only plays into the pro-HOA hands of CAI and offers excuses by the media not to cover HOA abuse.  Not only will you find “ammunition” in support of your arguments as contained in the 2 above publications, but also in my Arizona Supreme Court  amicus brief filed and accepted in Tarter v. Bendt (see note (vi) in Can HOA members expect justice in Arizona courts?).

My arguments are summarized in the Commentary.  As is my approach, my arguments are supported by legal authority and hard evidence documents, which CAI ignores and YOU lose!  They must be exposed if the legislators are to be fully informed on the reality of HOA-Land.  As leaders who are internet publishers,  actions speak louder than words!

 

Legislative dereliction of duty: supporting HOAs

I have strongly and repeatedly argued that the HOA declaration of CC&Rs is a devise — a legal maneuver — by real estate interests to avoid the application of the federal and state constitutions to HOAs.

 The word “may,” as found prolifically in HOA statutes, serves to legalize acts  and powers of the private HOA  entity in a round-about, subtle manner. Without the use of the “may clause,” an act of the HOA can be challenged as illegal even though it is stated in the declaration agreement that is treated as a contract. Thus, state legislatures avoid a constitutionally mandated enabling act that delegates authority to any agency or public-private entity.

The acceptance of home rule doctrine and statutes, by all states, would seem to negate any justification under judicial review for creating special laws for HOAs.  Home rule offers an alternative measure to satisfy any genuine government interest, thus making HOAs unnecessary.

So it appears that businesses can fail as well as cities, towns and states but, heaven forbid, not  the private HOA government.

Read the entire paper here.

HOAs are another form of local government

Listening to the events concerning the shooting in Brooklyn Center, MN I was surprised to learn that its form of government is based on the council-manager system.  We are more familiar with the mayor – council or mayor – manager forms of local government where the mayor is elected and plays a major role in governing the city.[1]

However, in the council-manager form the mayor is a figure head with the powers to rule the city are divided between the elected city council and a city manager  appointed by the council.  Sound familiar?  Many HOA Bylaws follow the council-manager form of local government, except that the Bylaws do provide for corporation laws governing the duties of officers.  This is true of the many large HOAs and the retirement/resort subdivisions.

The division of labor and authority follows the public form in that the council holds ultimate responsibility for the conduct of the government but is restricted to policy issues, while the appointed manager actually runs the HOA. A good example can be found in an Arizona active-adult HOA of some 17,000 people.

“The affairs of the Association shall be managed by a Board of Directors which shall serve as the corporate policy-making body of the Association. . . .  The Board is not responsible for nor authorized to perform day-to-day operations of the Association. The day-to-day operations of the Association shall be carried out by CAM or agents retained by the Association under the supervision of the Board.

“Subject to the Board’s responsibilities concerning operational policies, it shall be the policy of the Association . . . that the Board refrain from unreasonably interfering with the performance of delegated functions by CAM.”

The major difference between local public government Brooklyn Center, MN and the Arizona HOA lies in the private contractual nature of the HOA that absolves it from application of the US Constitution as well as the state constitution. HOA members are, as compared to non-HOA members, therefore second-class citizens lacking constitutional protections within their own state.[2]

The $64,000 question is: So why is there so much opposition to requiring the HOA to be subject to the Constitution like all other forms of local government?  BEFORE you respond, think very carefully with respect to the implication and consequences of your response.

References

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[1] See in general, Roger L. Kemp, “Forms of Governance,” Managing America’s Cities: A Handbook for Local Government Productivity, McFarland & Co., (2007). They are: Strong Mayor, Council-Manager, Town Meeting (direct or representative democracy), and Commission. See also,  Home rule doctrine vs. HOA governments; CC&Rs are a devise for de facto HOA governments to escape constitutional government.

[2] See George K. Staropoli, HOA-Land Nation Within America (2019).

Goldwater Institute ignores HOA unconstitutionality

Reading through the highly respected Christina Sandefur’s paper in the Harvard Law Journal,[1] I was deeply disturbed by the absence of any discussion of similar conduct by homeowners associations (HOAs). Her paper criticized city ordinance prohibitions on short-term home rentals. “These cities treat home sharing itself as the crime.” It is a dangerous proposition that government . . . [to] be able to criminalize violations of that judgment” [“on how to use their properties”].

Yet, in her one single sentence, Sanderfur holds HOAs harmless that, by means of the governing documents, use their “police powers” to prohibit short-term rentals and from criminalizing such acts by their members. “While that may be the role of a homeowner association when people contract to determine to how to use their properties, a city government should not have that power.”

Sanderfur’s arguments against government statutory prohibitions, include in part,

• “Cities look at this as a way to increase revenues” by imposition of fines,
• “They get to outlaw the activity,”
• Intimidate residents [of the city] into giving up their property rights”,
• “This is not only abhorrent public policy, and
• “It is also unconstitutional”.

It seems that these arguments apply to HOAs also, but it appears that nobody is listening. I do not understand and cannot understand this blindness to the constitutional issues surrounding HOAs, especially from the prestigious, defending the Constitution, public interest Goldwater Institute.

What is the rationale behind this blindness when there is substantial legal authority in support of unconstitutionality, from the basic outlaw government of independent principalities that reject the US Constitution,[2] to placing the doctrine of equitable servitudes property law over constitutional law and contract law;[3] to gross misrepresentation in the selling and marketing of HOAs that invalidate and thought of a bona fide consent to be bound.[4]

When will Goldwater question the constitutionality of the HOA model of government? Why is Goldwater viewing an HOA just as a real estate subdivision package of amenities, landscaping, homes and not as a distinct form of local government[5] functioning outside the laws of the land as an outlaw government.

“The policy makers have failed to understand that the HOA CC&Rs have crossed over the line between purely property restrictions to establishing unregulated and authoritarian private governments.” (George K. Staropoli).

 CIDS [HOAs] currently engage in many activities that would be prohibited  if they were viewed  by the courts as the equivalent of local governments.[6]

There is no compelling and necessary justification for HOA special treatment. It’s time to end these outlaw private governments that violate even the most liberal home rule, self-governing provisions of state laws and constitutions.[7]

I do not see Goldwater’s name on the list of Arizona’s Request to Speak positions on SB 1412,[8] a bill prohibiting HOAs from restricting the political free speech rights of homeowners in regard to political issues within the HOA community. California just passed SB 323, a progressive bill supporting homeowner rights, and Florida has SB 623 in the works also seeking homeowner rights and freedoms within the HOA legal structure.[9] This a very good time for Goldwater to speak out on this bill and HOA member rights, freedoms and privileges and immunities as US citizens.

 

The Goldwater Institute, including Sanderfur, has been on my distribution list for some time as well as Victor Riches, President & CEO, whom I met and discussed HOA problems as far back as the early 2000s when he was an Arizona legislative staff analyst. I also met with and discussed HOAs with Clint Bolick, now AZ Supreme Court Justice, who in 2013 accepted my request for legal assistance to sue the State of Arizona. He was preempted by Tim Hogan of ACLPI.[10] It was with Nick Dranias that I had a pleasant Arizona Capital Times exchange on HOA issues.[11] He offered, privately, some advice that I have incorporated into my Truth In HOAs position and Homeowner Declaration.

 

Notes

[1] Christina Sandefur, “Turning Entrepreneurs into Outlaws,” p. 45 et seq., Harv. J.L. & Policy, Winter 2020. Sanderfur is an Exec. VP, Goldwater Institute.

[2] See The HOA Principality (2005); HOA-Land: the product of the decline in democratic institutions in America. (2018).

[3] The Restatement advises judges — and is regarded as precedent — that its collection of laws known as HOA law dominates all others.   Section 6.13, comment a, states: “The question whether a servitude unreasonably burdens a fundamental constitutional right is determined as a matter of property law, and not constitutional law”. Section 3.1, comment h, states: “in the event of a conflict between servitudes law and the law applicable to the association form, servitudes law should control.” See CC&Rs are a devise for de facto HOA governments to escape constitutional government (2015).

[4] See HOA consent to agree vs. “the will of the majority”. (2019).

[5] The four recognized types of local government are : commission, and council-manager, the most prevalent. See in general, Roger L. Kemp, “Forms of Governance,” Managing America’s Cities: A Handbook for Local Government Productivity, McFarland & Co., (2007).

[6] Evan McKenzie, Privatopia: Homeowners Associations and the Rise of Residential Private Governments, Yale Univ. Press, 1994.

[7] See in general, HOAs violate local home rule doctrine and are outlaw governments, concluding paragraph. (2014).

[8] AZ RTS positions as of today, March 4, 2020.

[9] See Toward a democratic HOA subject to the Constitution (2020).

[10] See AZ Attorney General admits SB 1454 HOA to be invalid and without effect (2013).

[11] See Goldwater Institute: regulating HOAs “stands Constitution on its head” (2008).

To be or not to be a mini or quasi government? Hyatt said ‘yes’

The controversy over whether or not HOAs are mini-governments or quasi-governments needs to be fully understood.  While I have written extensively on this topic,[1] allow me to take another peek into the controversy.

As an eye opener to many, I have extensively quoted Wayne Hyatt’s[2] 1976 statement on HOAs as mini-governments, as cited in the 1983 California case, Cohen v. Kite Hill.[3]  (My emphasis).

 

In a thoughtful article[4] . . . Hyatt and Rhoads note the increasingly “quasi-governmental” nature of the responsibilities of such associations: “The other essential role directly relates to the association’s regulatory powers; and upon analysis of the association’s functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government. As a ‘mini-government,‘ the association provides to its members, in almost every case, utility services, road maintenance, street and common area lighting, and refuse removal. In many cases, it also provides security services and various forms of communication within the community. There is, moreover, a clear analogy to the municipal police and public safety functions. All of these functions are financed through assessments or taxes levied upon the members of the community, with powers vested in the board of directors, council of co-owners, board of managers, or other similar body clearly analogous to the governing body of a municipality. Terminology varies from region to region; however, the duties and responsibilities remain the same.”

“Because each owner automatically becomes a member of the association upon taking title … the association has the power, and in many cases the obligation, to exert tremendous influence on the bundle of rights normally enjoyed as a concomitant part of fee simple ownership of property.”

“With power, of course, comes the potential for abuse. Therefore, the Association must be held to a high standard of responsibility: “The business and governmental aspects of the association and the association’s relationship to its members clearly give rise to a special sense of responsibility upon the officers and directors…. This special responsibility is manifested in the requirements of fiduciary duties and the requirements of due process, equal protection, and fair dealing.” [Sound familiar?]

Yet, this recognized international figure’s statements were ignored and not cited in a number of subsequent decisions. Instead, the courts preferred the antiquated, non-HOA decisions of the 1946 and 1948 “company town,” public functions test decisions in Marsh v. Alabama and Shelly v. Kraemer. These decisions predated the current HOA concept and legalities created in 1964 and were relied on.[5]  Like the “walking dead,” Marsh should be shot in the head and put away for good!

Now, to fully understand the issue we need to play the lawyer game and examine and parse the meanings of words and phrases.  Sorry, we must because that’s what HOA attorneys do — they can’t help it.

What is a mini-government? A quasi-government?  Following the recognized common meaning of words doctrine, “mini” means small and “quasi” means like.”  So, are we talking about small public governments? If so, I think this term answers the question that HOAs are small public governments.

Or are we talking about governments like public governments?  “Like” implies not really, but has the feel, or aura, or legalities of a public government.  If so, to what extent does a government become a public government?  How much “likeliness” is needed?  To what extent should homeowners have “like” constitutional protections?  All of them or some?  Or just some that give the appearance of constitutional rights and freedoms?

It seems that HOAs already have a number of “like” protections, but totally deficient and failing to protect the people.  They treat the HOA members as if they are “like” US citizens, having surrendered their citizenship.  This cannot be tolerated in a nation that prides itself as the ideal democratic country in the world.  Not at all!

It’s time to stop playing the HOA lawyer “word games” and accept the reality that HOAs are outlaw governments and must be held accountable under the Constitutional, as is required of all other governing bodies including those under Home Rule statutes.

References

[1] See in general: Do state HOA Statutes Establish HOAs as State Actors? (2007); The Constitutionality of state protected homeowners associations (2009) (Discussion on Hyatt’s view); HOA Case History: state actors or mini/quasi government (2011).

[2] Wayne Hyatt was a prominent figure in the promotion of HOA-Land as well as an important person in creating CAI in 1973, serving as its second president.

[3] Cohen v. Kite Hill, p. 5-6, 142 Cal App 3d 642 (1983), citing Raven’s Cove Townhomes, Inc. v. Knuppe Development Co. (1981) 114 Cal.App.3d 783, 799 [171 Cal.Rptr. 334]). Cohen has been cited in Terre Du Lac Ass’n, Inc. v. Terre Du Lac, Inc., 737 S.W.2d 206 (Mo. App. 1987); Damon v. Ocean Hills Journalism Club, 85 Cal. App. 4th 468 (2000).

[4] “Concepts of Liability in the Development and Administration of Condominium and Home Owners Associations” 12 Wake Forest Law Review at page 915, (1976).

[5] Brock v. Watergate, 502 So.2d 1380 (Fla. 4 Dist. App. (1987) (close nexus dicta); Midlake v. Cappuccio, 673 A 2d 340 (PA. Super. 1996); S.O.C. v. Mirage Casino-Hotel, 43 P 3rd 243 (Nev. 2001); Westphal v. Lake Lotawana, 95 S.W.3d 144 (Mo. App. 2003) (“Mr. Westphal fails to cite any authority to support his argument that the action of a quasi-governmental entity is state action.”)