HOAs are not a club; they are legally binding agreements

HOAs are not a club.  They are legally binding adhesion agreements in favor of the HOA government, the BOD, and seriously detrimental to homeowner property interests and member fundamental rights.   Members are at risk because the private “contractual” CC&Rs have been held superior to the US Constitution by the courts.  The facts are there in the public records and state HOA statutes known as “Acts.”

It is in the best interest of the members not to obediently agree to all the BOD says they should, but to get educated and discover the truth for themselves. If they can handle the truth. Discover for yourselves.

My seminal book, The HOA-Land Nation Within America  describes the collection of HOAs throughout America as “HOA-Land.” It identifies HOA-Land as a nation within America based on its culture, beliefs, values, and commonality of contractual CC&Rs acting as its constitution.

My sequel to HOA-Land Nation, A Plan Toward Restructuring the HOA Model of Governance, another seminal work,  presents the case for the restructuring of the HOA model of governance. It seeks to bring the private government HOA into compliance with and subject to the Constitution as required of all local governments.

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For important information, please see HOA board education in constitutionality

Lost Constitution webinar #3 available

Veritas para justitia

(truth for justice)

The Restoring the Lost Constitution to HOA-Land webinar introductory series has concluded with #3.  The accompanying # 3 script here: here.

The three introduction to the Plan videos can be found here:

#1, https://vimeo.com/421950279
#2, https://vimeo.com/426813340
#3, https://vimeo.com/427795232   

It can be viewed here:  https://vimeo.com/427795232 and

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 propaganda from the Evil Empire. It is an introductory presentation and  required reading to better understand my proposed action plan set forth in A Plan Toward the Restructuring of the HOA Model of Governance, now on Amazon.com[1]

I continue to read that more and more homeowners are surprised why they lose in court, and before their legislature and before their board of directors.  I believe that a good part of these failures is because the issues at hand run very deep and are not the superficial day-to-day operational issues facing homeowners, not that they are not important.  The successful resolution can only come from standing behind the broadest levels of authority and exposing the many violations by our elected officials at all levels: the US Constitution, the Bill of Rights and the Declaration of Independence which constitute the organic laws of America.[2] 

Every argument not raising these democratic principles is a tacit recognition that serves to accept the validity and constitutionality of the HOA legal scheme and governing model, and of the laws in support of HOA-Land.  You lose from the start!

Notes


[1] Visit Amazon. (June 11, 2020).

[2] Organic law is the fundamental basis of a government. The Homes Association Handbook and UCIOA constitute, in my view, the organic law for HOA governed planned communities. In contrast, the U.S. Code defines the organic laws of the United States to include the Declaration of Independence, the Articles of Confederation, the Northwest Ordinance, and the U.S. Constitution. (US Statutes At Large, 1789 –1875, Vol. 18, Part I, Revised Statutes (43rd Congress, 1st session), p. v and vi). The organic laws of HOA-Land are replacing the organic laws of the US as applied to local government.

HOA board education in constitutionality

HOAs have, as local private governments are not subject to the Constitution, created divisiveness and a separation from the greater public community resulting in member confusion regarding the law and their constitutional rights and protections. StarMan Group presents an online educational series, with numerous authorities, to instruct HOA boards in regard to their obligations “in the best interests of the members”.

This HOA educational series to reorient HOA boards and the public in general is available online under the collection, “Restoring the Lost Constitution to HOA-Land”:

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,

3) The Plan to Restructure the Model of HOA Governance that advances an approach to restore the Constitution to HOAs while keeping the desired benefits of the “real estate package,” and

4) Establishing the New America of Independent HOA Principalities,” a history of the HOA scheme.

For a historical perspective of HOA-Land, see: 1) The Homes Associations Handbook (ULI, 1964). (Not publicly available but I have a copy of the 434 page document); 2) Privatopia: Homeowner Associations and the Rise of Residential Private Government (1994), Evan McKenzie; and 3) Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing (2000), Donald R. Stable. (ULI and CAI production).

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.

Reorienting the HOA board and its followers

Mentoring: Reorienting HOA board – mission

Review of StarMan Group Mission

    • 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, and
    • to remove the very strong external influences of the special interest vendors and lobbyists who are the primary causes of this deviation from the general societal norms and values.

In earlier papers I described the Cultural Dynamics[1] of and the domination of HOA-Land[2] by industry “stakeholders” who claim a special interest in your HOA controlled home. I maintained that the Community Associations Institute (CAI) dominates and heavily influences the decisions and functioning of boards (BODs) through its strong influence on state legislatures adopt biased and unjust laws detrimental to the members. CAI’s effect on the BOD, the members — especially the loyal “followers” — and the public in general stems from 45 years of indoctrination by means of the CAI School of HOA Governance.[3]

This series, “Restructuring the HOA Model of Governance,”[4] offers a plan, conforming to the principles of organizational development,[5] to return HOA-Land to democratic constitutional government and cease being a protected outlaw government functioning outside the Constitution and laws of the land. Having introduced my positions on the role of the BOD in its policymaking capacity and the heavy hand of CAI, I now address the need to reorient the BOD with its huge authoritarian[6] powers that would not be allowed under municipal governments.

“HOAs currently engage in many activities that would be prohibited if they were viewed by the courts as the equivalent of local governments.”[7]

I wrote, “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.”

BOD reorientation

Addressing nonprofit organizations, eminent management consultant Peter F. Drucker wrote: “The first job of the leader is to think through and define the mission of the institution. . . . One of the most common mistakes is to make the statement [a series] of good intentions.[8] It has to be operational, otherwise it’s just good intentions. Using my prior example of a large-scale active adult HOA in Arizona, I contrast the mission, goal and values statements that illustrate an effective and productive community.

HOA vision statement: [HOA] is the premier active, age−restricted community in Arizona.

Restructured Vision Statement: To become the premier active, age-restricted community in Arizona.

HOA mission statement: [HOA] provides residents with a high−value community, with resort−style amenities, in which every person can choose to participate and live well, based on their needs and desires. This high standard will maximize our investments and promote our well−being in an active close−knit community.

Restructured Mission Statement: To provide residents with a high-value community with resort-style amenities to maximize our investments.

HOA values statement: In support of our Mission Statement, we hold to these values:

      • We foster relationships built on respect, trust, and effective communications.
      • We listen to understand.
      • We are open−minded, collaborative, and always look for ways to improve our community.
      • We believe in life−long learning and a desire for active well−
      • We are a forward−looking, fiscally−sound community
      • We encourage an environment of empowerment and personal responsibility.

Restructured Values: We believe in a community culture having high standards and principles of conduct and behavior.

These HOA views and attitudes came quite as a surprise considering that it is a $20,000,000 revenue operation, and one would expect it to do better than that. My impression is that they are a prime example of the BOD’s mistake of using lofty, high and mighty statements lacking focus and aimed to give the appearance of good intentions, as Drucker explained above. These HOA statements read very similar to CAI’s propaganda and its advice and training offered by its School of HOA Governance.

The time is well passed for the BOD to drop CAI as an advisor, as CAM and as its HOA attorney. It’s well passed the time for BOD’s to learn about the effective and healthy council-manager form of local government.[9] Not that public government is perfect but it is far better in upholding the principles of democratic government lost under the adhesive CC&Rs “constitution.”

(Part 2 of the Reorienting HOA BOD will discuss BOD failure to attract member commitment as volunteers).

 

Notes

[1] George K. Staropoli, HOA-Land Nation Within America, Part 1, “The Cultural Dynamics of HOA-Land” (2019) and High RWA followers can be found in HOA members. (2019).

[2]HOA-Land is a 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”, Defining HOA-LAND: what it is (2017).

[3] George K. Staropoli, Restructuring HOAs: “CAI School and member benefits” pt. 2 (2020) and CAI School faculty advice – managing HOAs (2020).

[4] George K. Staropoli, Restructuring the HOA model,(2019).

[5] See in general, “Organizational Development,” George K. Staropoli, (2019).

[6] Supra n. 1.

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

[8] Peter F. Drucker, Managing the Nonprofit Organization: Principles and Practices, HarperCollins (1990).

[9] 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.