Restoring the lost Constitution to HOA-Land

Some 23% of Americans live in HOA-Land, that collection of fragmented independent principalities known, in general, as HOAs. Overwhelmingly their members swear by the HOA as the next best thing to Mom’s apple pie. It is hard to accept this undying loyalty to the HOA and its board of directors in view of the fact that their acceptance of HOAs is the result of an intentional indoctrination by national lobbying, business trade group that, in my mind, does not know how to spell “constitution.. Obviously then, those CAI surveys are suspect.

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.”

“Public policy today rejects constitutional government for HOAs allowing them to operate outside the law of the land. 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.”

To provide the ignored but important and substantial aspects of the HOA legal scheme I have designated three books by StarMan Group under the collection, “Restoring the Lost Constitution to HOA-Land.” They are 1) HOA Common Sense: rejecting private government, a summary of 6 constitutional defects, 2) The HOA-Land Nation Within America, presenting the scope of outlaw private governments that deny constitutional protections to HOA members, and 3) The Plan to Restructure the Model of HOA Governance that advances a plan to restore the Constitution to HOAs while keeping the desired benefits of the “real estate package.” (All the above can be found on Amazon.com).

For a historical perspective of HOA-Land, see:

  • The Homes Associations Handbook (ULI, 1964). Not publicly available but I have a copy of the 434 page document).
  • Privatopia: Homeowner Associations and the Rise of Residential Private Government (1994), Evan McKenzie.
  • Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing (2000), Donald R. Stable. (ULI and CAI production).

(All the above, except for the Handbook,  can be found on Amazon.com).

Reorienting the HOA board: business judgment rule

Mentoring: Reorienting HOA board – business judgment

consulting SIG image1HOAs love business judgment rule (BJR) that can be found in too many court opinions including, as a prime example, the infamous NJ Supreme court opinion in Twin Rivers.

First, the business judgment rule protects members from arbitrary decision-making. . . . Our Appellate Division has uniformly invoked the business judgment rule in cases involving homeowners’ associations.[1]

In CAI’s amicus brief in the above case, argued that “the settled legal principles” of the business judgment rule

permit community association trustees to fulfill their fiduciary duties and to exercise judgment in balancing the needs and obligations of the community as a whole with those of individual homeowners and residents, without undue judicial interference.[2]

As can be noted, the CAI brief equates the HOA interests with the members’ interests and that it is acting in the best interests of the members subject to “the needs and obligations of the community.” Sort of confusing doubletalk me thinks.

Wayne Hyatt is quoted (p. 9) that the business judgment rule

defends the procedure under which the board has acted and the right of the board to be the sole arbiter of the issue involved. The result is that if the procedure is valid, the court will not second guess the substance of a board’s action. Consequently, the court upholds the decision without subjecting the wisdom of the board’s action to judicial scrutiny.[3]

In California’s Lamden v. La Jolla,

[A] hallmark of the business judgment rule is that, when the rule’s requirements are met, a court will not substitute its judgment for that of the corporation’s board of directors. . . . [A]nyone who buys a unit in a common interest development with knowledge of its owners association’s discretionary power accepts ‘the risk that the power may be used in a way that benefits the commonality but harms the individual.’ “[4]

I cannot overstate the profound damaging effect by the courts as they continue to ignore HOAs as de facto governments and treat them as a pure real estate corporation. The School has performed an excellent job in creating a supportive mindset. Their demonstrable ignorance can only stem from the thorough indoctrination by the CAI School of HOA Governance that flows from the HOA “bible,” The Homes Association Handbook (cover page link).[5]

The BJR serves to protect the BOD from member lawsuits where the issues center on the BOD’s broad discretionary powers. Essentially the basis of BJR presumes that the BOD knows better about managing the HOA than the judge and, after all, the members chose the directors. In a cop-out not me attitude the judge simply goes along with the BOD’s position. YOU LOSE!

It is a very effective argument, tactic, because the homeowner and his attorney do not challenge this view that the BOD knows best. There is no rebuttal arguing that the BOD is practicing bad management, or is acting inconsistent with their obligation to act in members best interest – not in the best interest of the HOA. There is the presumption that the members’ interests are totally found in the governing documents and none other exist. It is an attitude in contrast to our Bill of Rights, Amendments 9 (enumeration clause) and 10 (rights delegated to the people).   Under the HOA “constitution,” any non- specified prohibitions or rights belong to the HOA and not its members.

Once again I’m touching upon a defect in the HOA legal scheme. Under corporation law the BOD is responsible to the HOA association. True! But the CC&Rs override that law. Why?  Let’s not forget that we have a PRIVATE contract agreed to by the members requiring the BOD to function in the best interest of the members.[6]  The private contract defense works for the members and not the BOD What’s fair is fair! Right?

In order to move past many of the persistent HOA problems and issues the BOD, as well as the legislators and courts, must adjust their views and mindset with respect to the HOA scheme. To restore equality before the law HOAs must be viewed as another form of local public government. The reorientation of the BOD comes first. There are ample materials, courses, seminars and public education, a substantial precedents and history on how to function as a public government and still protect and retain the private nature HOA community.

Notes

[1] CBTR v. Twin Rivers, 929 A.2d 1060, II, (N.J. 2007).

[2] CAI amicus brief, CBTR v. Twin Rivers (N.J. Super. App. Div. Docket C-121-00 2004).

[3] Id.

[4] Lamden v. La Jolla, 980 P.2d 940, Calif. 1999).

[5] The Homes Association Handbook, MARYJO CORNISH, Editor, Urban Land Institute, TB#50 (1964). Its Foreword omits any concern about the homeowners or constitutional government. See cover pages that provide evidence of lack of local government concern as part of the purpose of TB50. See Analysis of The Homes Association Handbook.

[6] See “HOA contractual mission” in Restructuring HOAs – intents and purposes.

The intent of the HOA “bible”, the Homes Association Handbook

I have quite often made reference to the 424 page Homes Association Handbook of 1964 as the HOA “bible.” It provided the fundamental basis for the mass marketing of HOAs and as the legal basis for the common place boilerplate CC&Rs.  It has everything for everyone except the HOA lot owners, the mandatory members.

The following is an excerpt from its Foreword by the ULI president says it all.

It is our firm belief that the information and recommendations contained in the handbook will be of major value to land developers, planners, home builders, appraisers, mortgage lenders, realtors, attorneys, association officers, and public officials concerned with the planning, development, and operation of stable and attractive residential areas for the home owner and the community.

See the cover pages here.

As can be noted from the above, the CAI brief equates the HOA interests with the members’ interests and that it is acting in the best interests of the members subject to “the needs and obligations of the community.” Sort of confusing doubletalk me thinks. Once again I’m touching upon a defect in the HOA legal scheme. Under corporation law the BOD is responsible to the HOA association, but we have a PRIVATE contract agreed to by the members that the BOD functions on the best interest of the members.

 

 

 

 

HOA political dynamics: totalitarian democracy

HOA political dynamics: authoritarianism & totalitarian democracy

First, allow me to clarify some important concepts and definitions that I have employed to help in understanding my positions and views.

  1. The term “HOA” is commonly used in 2 different aspects. While commonly used to refer to the alleged community, in reality the “community” is a real estate “package” of homes, landscaping, amenities, and rules.
  2. “HOA” more aptly applies to the association itself, which is the de facto – in fact – political governing body of the subdivision or real estate “package.”
  3. “Government,” meaning political government, is defined in its general sense as “the person or group that controls and regulates the people within a territory.” Since your subdivision is a territory, that makes the HOA a truly political government.
  4. “Private government” is a de facto government as defined above not incorporated under municipal statutes but under nonprofit corporation statutes. As such, it is a functioning government unrecognized by the state as Cuba had been for years.
  5. “Quasi-government” simply means for all intents and purposes having all the attributes of a municipal government, except the names have been changed to mislead the innocent public.
  6. “HOA-Land” is my descriptive term for “the collection of fragmented independent principalities within America, known in general as “HOAs,” that are separate local private governments not subject to the constitution, and that collectively constitute a nation within the United States.”
  7. “Structured tribalism.” Tribalism is a term currently in vogue to describe divisiveness in America. “Structured tribalism” extends that view to describe the intentionally planned policy for the acceptance and control of HOA-Land.[1] It views the fragmented HOA-Land as distinct villages and clans.

While the CC&Rs and declarations contain abundant boiler plate, each is a separate legal agreement and as such  the HOA can be viewed as a village.  The conglomeration of master planned communities or HOAs developed by the same developer can be seen as a clan.  All stemming from the HOA “bible,” the 1964 Homes Association Handbook.[2]

In an earlier editorial on civic responsibility,[3] I questioned the allegiance, the loyalty, and the obligations of HOA members.  Was it to the US Constitution or to the HOA “constitution,” the governing documents?  I answered that it appeared to be the HOA first and foremost – secessionist — creating division within the country.

This was followed up by the editorials[4] where I examined the attitudes, beliefs, and values of the HOA members themselves.  I focused on the aspect of long-term indoctrination by the HOA School of Public Enlightenment and Propaganda, my categorization. The question yet to be addressed was: What role did the members play themselves in terms of a predisposition to accept authoritarian, private governance?

By serendipity, or by destiny, I just received an email discussing authoritarianism and totalitarian democracy.[5] It argued that Americans were accepting authoritarian control, which seemed  to be a cause for the behavior of cult-like, dogmatic member acceptance of the HOA board’s (BOD) actions and attitudes.  It seems that the more predisposed to authoritarian control the more the member acted as a diehard, dogmatic, true-believer in the BOD.

“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.

“These “authoritarian followers,” as social science labels them, are also highly ethnocentric, thus frequently racist, nationalistic, deeply partisan, and threatened by “the other.” . . . Other testing shows these people are also highly defensive.”

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.[6] The authoritarian nature of HOA-Land is masked by a thorough indoctrination[7] that the real estate subdivision is a democratic community (although the HOA is not a municipal entity but a private nonprofit association)  because the members are allowed to vote, as meaningless as it is.

But the HOA is truly a totalitarian democracy.  To paraphrase the founder of fascism, Benito Mussolini, “All within the HOA, nothing outside the HOA, nothing against the HOA.”   The marketing and promotion of the HOA model of governance has been conducted in a very smooth manner: no negatives, “carefree living,” playing to the emotions and desires of the members, misleading statements to induce buying, and empty promises of “maintaining property values, ”etc.

Here’s are some of J. L. Talmon’s views of totalitarian democracy as found on Wikipedia (my emphasis):

“A totalitarian democratic state is said to maximize its control over the lives of its citizens by using the dual rationale of general will (i.e., “public good”) and majority rule. An argument can be made that in some circumstances it is actually the political, economic, and military élite who interpret the general will to suit their own interests.

“A totalitarian democracy . . . retains full power of . . .  the right of control over everything and everyone. Maintenance of such power, in the absence of full support of the citizenry, requires the forceful suppression of any dissenting element except what the government purposely permits or organizes

“It is [the member’s] duty and responsibility to aid his compatriots in realizing [this right of control]. Moreover, any public or private activities that do not forward this goal have no useful purpose. Citizens of a totalitarian democratic state, even when aware of their true powerlessness, may support their government.” 

Getting back to HOA-Land, it becomes disturbing that the application of authoritarianism and totalitarian democracy philosophy seems to fit quite well. Too well at that!  But these views of HOA-Land are a valuable enlightenment because it takes HOA-Land out of the hands of the propagandists, out of the shadows, out of the darkness of Plato’s cave.[8]  It reveals reality.

 

References

[1]In short, CAI has been setting itself up as the national private authority, a sort of Board of National HOA Governors,”  CAI manifesto: CAI’s plan for HOA-Land in America, 2016.

[2] See my 2006,  Analysis of The Homes Association Handbook.

[3] Civic responsibility vs. HOA member responsibility.

[4] HOA social dynamics.

[5] Verdict” email from Justia.

[6] “Authoritarian” can be defined as “a form of government characterized by strong central power and limited political freedoms. Individual freedoms are subordinate to the state and there is no constitutional accountability and rule of law under an authoritarian regime.” Wikipedia.

[7] Supra n. 2.

[8]In the Allegory of the Cave, Plato distinguishes between people who mistake sensory knowledge for the truth and people who really do see the truth.” (See Philosophyzer).

Would the HOA legal scheme collapse under a democratic form of government?

The HOA legal scheme as a nonprofit form of government chartered under corporation laws cannot be held in the same light as a democratic public government chartered under municipal corporation laws.

We use the term HOA quite loosely as I have in many of my posts.  However, the HOA is 1) the legal governing body of a 2) planned unit development or condominium, which is a real estate ‘package’ of amenities, landscaping, etc.  It is a de facto – it exists and functions – government, but unrecognized by the state as is Cuba.

Can we get rid of the ‘package’?  I don’t think so for reasons that I’ve stated  — too big.  Can we get rid of the oppressive authoritarian governing body known as the ‘association,’ home or property owners associations, etc.? Definitely yes!  Or can we?

Questions for study and thought!  

 1.    Will the ‘package’ collapse if we remove the oppressive authoritarian governing body and substitute a more democratic regime?

2.    Why didn’t the promoters of the current HOA scheme (in their seminal publication, The Homes Association Handbook) present the HOA as a municipal corporation rather than a nonprofit corporation?

In regard to question 2, is it because the promoters knew that the HOA would be subject to the Constitution and restricted by state laws?

A hint is given, even in the Handbook, with the discussion of ‘free riders’ and the need for mandatory membership and compulsory dues.  (A ‘free rider’ is one who benefits from the efforts and money of others as in the case of unions, as would be the case with voluntary HOA memberships.)  The other hint is how does one maintain property values, that huge appeal to the masses, without strict enforcement of many specific rules and regulations? If people were free to do as they please, what is the value of the HOA?

Apparently, local ordinances did not satisfy the promoters of the HOA scheme because they were too broad and didn’t represent the membership, but somehow top-down, take-it–or-leave-it CC&Rs do.  And to be sure, make it an adhesion contract that favors the HOA and prevents the practical and effective voice of the people. Apparently our system of government failed to satisfy the promoters, and their need for a better form of government was sought – one better suited to the goals of the promoters.  A fascist form of government (or if that offends you, a corporate oligarchy where the objective of the state is to satisfy not the people, but the government) did the trick quite well.

The answers will illuminate the fundamental problem with HOA reform and the resistance to substantive reforms.