Of the

Arizona State Legislature

August 14, 2000

My name is George Staropoli. I’m a homeowner speaking for myself, although I maintain an internet email service called “HOA Network”. I am not here to gripe.

There is no vehicle, no avenue, no means of effective redress of grievances when it comes to a homeowner making legitimate claims that an HOA board has failed to conduct themselves as required by state law:

· To act in good faith,

· As a prudent person would in a similar situation.

· The board has a fiduciary duty to its members.

The homeowner needs an effective mechanism for the redress of grievances. It is for this reason that this committee exists. If there were no homeowner complaints we wouldn’t be here today. The association managers didn’t complain; the association directors didn’t complain; the lawyers didn’t complain.

As I look over the non-legislator members I see the non-complainers, the groups representing the status quo are present. They are representatives of their industry. I have no personal comments to make against any member of the committee.

Yet, I see an attorney who has been president of an association trade group chapter, Community Associations Institute, Inc, and is currently the Chair of their Legislative Action Committee for the Central Arizona Chapter.

CAI started as an educational non-profit firm in 1973, Today, it claims 16,500 members and states that there are some 205,000 homeowner associations in the country. That means, after some 27 years, CAI has only about 8%, at most, of the associations as members. It further states that some 17.8% of member dues are used for lobbying purposes in representing this 8% of homeowner associations. Its own brochures state that they speak for the industry. Maybe so, but they do not speak for the homeowners.

I also see a representative of a homeowners association on the committee. There is no minimum requisite knowledge required for association board members to govern the citizens of the State of Arizona. There are no licensing requirements for either board members or management personnel / firms to protect the citizens of Arizona.

And then there is the developer. The structure of the homeowners association is designed to protect the property values for the developer while the project proceeds to completion. When the developer leaves, and turns the association over to homeowner members to serve on the board, the structure remains the same. It does not convert to an American form of government with its inherent civil liberties and other protections provided under the laws of the land.

I posed the following question to the association directors and management firm subscribers on my internet network:

Do you feel that giving back civil liberties to the citizens of Arizona who live in your association would harm the association’s property values?

There was no response from the 8 or so subscribers identified as management or association director subscribers. Why? Because there is no valid YES answer. America grew in just 225 years from a rag-tag collection of colonies to the greatest and richest nation in history with the Bill of Rights in place. There is no YES answer.

So the makeup of this committee reflects the reality of the homeowners associations. The moneyed, powerful organizations, including their attorneys, are here to be judges of themselves. The two homeowner representatives, representing the reasons for this committee’s existence, must once again do battle with the same elements as found in dealing with homeowners associations. And with the same expectations of results.

Let me make a few points about the role attorneys for homeowner associations. They are very influential, because they do not have to worry about the State Bar’s enforcement of Ethics Rule 1.13, dealing with “Organization as Client”, which is not addressed by your committee’s mission.

Lawyers, we are told, represent the association and not any one party. Yet, if a member complains to the attorney about violations of the governing documents by the board, you will most likely meet with, “I don’t represent you since you are in conflict with the association”. Under the rule, however, the attorney is required to advise the board accordingly that its acts are illegal and if the acts don’t cease the attorney is to resign. The attorney has no fear of complying with or being sanctioned by the rule and in realty, then, the attorney represents the board.

There is no appeal of the State Bar’s lack of enforcement of this rule to the Chief Justice. I am told by the Chief Justice’s office that the Chief Justice does not get involved and that I can sue the State Bar if I wish. Once again a citizen’s only real alternative is begin an expensive legal suit at his expense, while the wrongfully acting board can use homeowner dues to oppose the homeowner.

It is unconscionable that the board is allowed to use homeowner’s funds while opposing the homeowner, and that the homeowner must dig into his own pocket for expensive legal fees in order to seek justice. Something is seriously wrong here!

I believe that this committee will come to the appropriate decisions necessary to alleviate the plight of homeowners living in homeowner associations.

Thank you for listening.

Contact: George K. Staropoli

StarMan Group / HOA Network

602-228-2891

starmangroup@cs.com

http://starman.com/HOA