Business judgment rule not right for sui generis HOAs

This examination of the business judgment rule is a supplement to my amicus curiae brief to the AZ Supreme Court (Taylor v. Bendt, CV-21-0049, awaiting decision to hear case) in which I provided guidance in regard to 1) HOAs are sui generis created by rejecting Constitutional protections and instituting and supporting  separate laws for special organizations, 2) HOA-Land has been under the heavy influence and domination of the national lobbying entity, Community Associations Institute (CAI), and 3) as a result of the above a pro-HOA mindset has crept into our judicial system resulting in bad laws setting  bad precedent.

You can read the complete 30 page treatise (15 pages of argument plus apprendices) here .

Lessons from Impeachment trial for HOA-Land

If you wondered why I have posted about the dysfunctional Washington and President, here are some lessons for HOA-Land.

1.  Words spoken and conduct before and earlier in any event or situation can be held against you, or the BOD, HOA attorney, or manager.

2.  Conduct and words over time can demonstrate a pattern of wrongful behavior by HOA and its advisors.

3.  The national pro-HOA lobbying firm has focused homeowner attention on events as isolated events of no major consequence.  In other words, they directed members to look at the trees and not see the repeated pattern of wrongful behavior — forest thru the trees.

RICO is based on a repeated pattern of wrongful behavior.

CAI recognizes HOAs DO have problems

In a recent Associations Now article, “Study: Homeowners Associations Hit New Population Peaks, CAI Skiba is quoted as saying: “‘Not all associations operate as well as they should, and we’re never happy when we see a community in the news for the wrong reasons, but at least we know struggling communities are the exception to the rule,’ CAI chief executive Thomas Skiba, CAE, said in a comment on the study.”  I believe CAI is waking up to the fact that it can no longer hide the real lives of HOA members.  I expect a mia culpa (I am guilty) announcement by a repentant CAI. It has no other choice to stave off being completely discredited if it refuses to come into the light.

To assist CAI in its path to enlightenment, I have prepared another critique of CAI’s views about the HOA legal scheme and operations in reality.  CAI has published its “Community Associations Fundamentals with the stated purpose that “CAI developed the Community Association Fundamentals to foster a better conceptual understanding of how associations function and the roles of residents and association leaders.” I will attempt to “decode” and examine what is really being said or not being said with the understanding that the word “fundamental” has the following generally accepted meanings, “forming a necessary base or core” or “of central importance.

Please read CAI’s HOA “fundamentals” analyzed and “decoded.” You can help CAI in its hour of need — spread the word.


CAI background

In 2006, and followed up in 2012, I published the following analysis of CAI’s membership. In Who controls CAI and its 50 state HOA lobbying committees? I used census and CAI data to show that only 5.9% of HOAs are CAI members, based on all ‘volunteers’ belonging to different HOAs with no duplication. If all CAI members were counted then there would be only 9.8% HOA representation.  Furthermore, a miniscule .6% (.006) of Americans are CAI members. The CAI quoted “63 million Americans” is that number of people, not CAI members, living in HOAs.

On CAI’s 14 member Board of Trustees, HOA ‘volunteers’ (misguided individuals who are mainly HOA board members) hold only 2 positions. Vendor members hold the other positions as HOAs are not allowed to be a member.

In spite of the miniscule minority representation of HOAs and HOA members, CAI Legislative Action Committees (LACs) lobby and dominate HOA legislation in all states.

NC CAI attorney joins Enlightenment Movement

North Carolina CAI attorney Michael Hunter joins the Enlightenment Movement in his Aug. 8 column on, The buck stops with HOA boards, not management companies.

It is necessary to obtain the affiliations of attorneys writing media columns as we know that CAI attorneys are biased toward the objectives of the national business lobbying organization, CAI. Just as people want to know if a person is a Republican or Democrat, or a liberal or conservative, it’s important to know the affiliation of HOA columnists so the message can be properly interpreted.

That is why this article is so surprising. A CAI member attorney dealing with reality rather than in promoting the CAI “party line”! If those homeowners would only follow the rules all would be OK. In his column, Michael Hunter says it’s the boards stupid, not the management companies and not the members, who have the responsibilities, duties and liabilities. He has become part of the Enlightenment Movement, along with several California CAI member attorneys if you read their websites and newsletters.

Advocates like Jim Lane in NC are the causes of this conversion, this acceptance of reality by CAI members. He has provoked, challenged, and confronted the opposition forcing a response or continued silence. The silence tactic is not working any longer, because there are too many outlets siding with Homeowner Rights Advocates for the advocate to be portrayed as a troublemaker or a malcontent as in the past.  The public and the media are realizing that advocates have legitimate grievances that have not been adequately addressed by state legislatures.

But, stand watch advocates, CAI Central is still spewing forth it propaganda, this time to Congress, CAI now seeks to lobby Congress on HOAs. CAI Central realizes it no longer controls the playing field and must extend its propaganda in defense of the growing Enlightenment Movement in the media.

CAI now seeks to lobby Congress on HOAs

Last month  in CAI Reacts[i] I warned about CAI’s long lobbying reach to sway the opinions of state legislators, but now CAI is seeking to sway Congressmen.  CAI is now in a campaign[ii] to influence Congress with its propaganda that HOAs provide an overwhelming public service, are highly supported by HOA members, and are preferred by the public. “Community associations are governed by neighbors and are often misunderstood.”[iii]  If there are no opposing voices, so will Congress be swayed and with join state legislatures in supporting pro-HOA legislation.

In CAI Reacts I wrote about the effects on state legislatures, which is applicable to Congress:

This tactic by CAI has ominous consequences for HOA reforms in every state! It becomes extremely important that advocates and homeowners in every state seeking redress of HOA problems form an advocacy group to inform the public, the media and their legislators of their views. As I have long argued, advocates must, even more so now, confront, challenge and expose CAI propaganda. They must also advance quality reform legislation.

The latest attempt to influence elected officials comes in the form of urging its members to write their Congressmen to support CAI’s FEMA position, which contains a wealth of pro-HOA propaganda from its biased surveys.[iv]  Here are some of the points provided to guide members in their meeting with a Congressman:

Associations ensure that the collective rights and interests of homeowners are respected and preserved. Association leaders seek an effective balance between the preferences of individual residents and the collective rights of all homeowners.  [Do you think that your Congressman would catch the distinction between “collective rights” as in socialism and “individual rights” as in a true democracy?]

 Association homeowners choose where to live and accept a contractual and ethical responsibility to abide by established policies and to meet their financial obligations to the association. [Nothing is said about “free choice” or an adhesion contract with implied and absent waivers of constitutional protections].

Association homeowners have the right to elect their community leaders and to use the democratic process to determine the policies that will protect their investments. [Nothing is said about the appearance and illusion of democratic election procedures and the absence of clean elections protections.]

 Without an organized and strident national voice in opposition, be prepared for a rewrite of “This is America: The New America of HOA-Land.”  Many of my Commentaries can be used to refute CAI’s propaganda. Use them!  For example, earlier this year I wrote here and as a comment on Privatopia Papers,[v]


It’s time to bring unity to this country and end subdivision governance by HOAs that create independent principalities. The planned community development can remain under a democratic form of government subject to the Constitution. And that must come from Washington. It can start with hearings to air those constitutional issues that have been avoided by every state and court for far too many years.[vi]