The how and why of “boss” HOA presidents

This commentary is a follow up on my review of Kelly G. Richardsons’ article (Dictatorial HOA presidents and silent directors are at risk).

With all due respect to Richardson, his discussion of the role of HOA “boss” presidents and silent boards of directors makes no references to the causes of this common defect in the management of HOAs, or the more relevant, in ruling a community.  As an important CAI (Community Associations) lawyer advising and educating BODs on how to rule a community, we should expect not only answers but solutions as well.  His article does neither.

Richardson does  inform his readers about the makeup of good presidents: “Good HOA presidents understand the boundaries . . . . Good presidents are key . . . .”  He closes with the advice, “So, keep the good ones!”  He fails to address the legal structure of an adhesion contract and the CC&Rs that grant the BOD broad powers and authority. As such, the legal structure would not stand up to constitutional judicial scrutiny if the HOA were an arm of the state and not a private, contractual arrangement.

The legal structure prevents active, meaningful, democratic participation by members in board  elections and in amendments to the governing documents as found with public government. For example, members cannot file a petition, equivalent to a public domain initiative, requiring the BOD to hold a vote of the members on an issue, removing the absolute power to do as it pleases when contrary to the will of the  majority. The members would be able to contest the BOD’s position. Ihe absence of constitutional protections promotes the formation of power cliques that function as authoritarian governments. And so, we have “boss” presidents and silent boards of directors.

As a good lawyer, Richardson would probably say that this is the law, this is the way it is, and if you don’t like it change the laws. And who helped create and shape these pro-HOA laws?   For example, CAI has been involved since the beginning in 1964 in creating those Uniform Common Interest Ownership Acts (known as UCIOA) and adopted  with some modifications by a handful of states.

It’s up to YOU, as it has always been.

“It does not  help the sheep to blame the wolf. The sheep must not fall into the clutches of the wolf “ (Mahama Gandhi, fighting the imperialist British Empire).

Support your legislative HOA champion with legal authorities

Deborah Goonan’s excellent  report on Louisiana House Bill 9, sponsored by Rep. Hollis, simply reads,

 “B. Any provision of a community document which restricts a constitutional 15 right of a lot owner or a person residing in a residential planned community shall be 16 null and void.” 

(“What if homeowners associations had to respect owners and residents constitutional rights?”, Jan. 20,2022).

Fantastic! It shows meaningful reform does not require  complicated mumbo-jumbo. It similar to my proposed 2011 “Truth in HOAs,”

“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.”

However, the bill is only proposed!  Legislators need your active support as well as “ammunition” to support their bill with legal authorities – cases, court filings, correspondence, and posts on this blog and on American Independent communities. 

Send relevant posts to your legislators today!

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).

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.

 

The HOA climate is based on fears and distrust giving rise to strict enforcement as necessary for compliance

 

In the real world of HOA governments, the climate of the community is based on a fear and a distrust of one’s neighbors. This fundamental basis for HOAs is supported by the following commonly expressed objectives of HOAs. We’ve been told, as well as having been set down in the declaration, that the purpose of the HOA is 1) to maintain property values first and foremost, which requires the enforcement of the governing documents, and 2) to provide for the general welfare of the members in terms of rules and regulations for an orderly community.   It implies that the survival of the HOA depends on an authoritarian government to coerce compliance with the objectives of the HOA state.

The climate of the HOA is formed by the attitudes, beliefs and values of its members who distrust their neighbors because their neighbors will,

1.      paint their house pink, or polka-dotted,

2.      repair and maintain their vehicles on their front lawns in front of their $200,000 homes,

3.      not properly maintain their homes and lots as determined by the HOA,

4.      refuse to obey the rules and regulations, which requires the application of penalties, as severe as may be required, to obtain compliance with the rules and regulation, and

5.      refuse to make timely payments of their assessments, for which there are no justifiable exceptions or excuses.

 

What is noticeably absent from the purposes of the HOA government are any references to the establishment of healthy, desirable, and vibrant communities based on the US Constitution with its protection of individual liberties.  Also noticeably absent from the above are any statements to the effect that HOA members are not protected by the application of the 14^th Amendment, as they would be protected if the HOA were a public entity.  However, statements to the contrary have been made giving the appearance and illusion that the HOA provides the same democratic protections as found in the public domain, simply because members can vote for the board of directors.  This is decidedly false!

 Considering the above, the climate of the HOA is one of hostility, distrust, coercion to comply, and the fear of a decline in property values that necessitates an undemocratic, authoritarian government for its survival.   But, it doesn’t have to be this way.  The subdivision real estate package can exist without the HOA form of governance that is based on the distrust of its members.  But, the HOA cannot exist without the covenants running with the land as found in the declarations of covenants, conditions, and restrictions.

See also, Proposed HOA Study Committee issues of substance, and A further explanation of HOA Organizational Development