HOA Private Government

Earlier I presented demographics from a 2007 CAI study in HOA satisfaction that alluded to the homeowner association resident population being significantly different from the general  population[i].    From the survey, the demographics showed that HOA residents are non-minority, educated, well off seniors.   Either the CAI – Zogby sample was biased or it was representative of the general HOA population.

Being curious as to whether HOAs admit to a segmentation of the general US population, I conducted a non-scientific, “take a peek” analysis of my own. My methodology selected 25 HOAs at random in Maricopa County, AZ, and to look at the single issue of Hispanics living in HOAs.  Because of the lack of accessible data, I relied on subdivision lot ownership records with Spanish surnames as my criteria for Hispanic ownership.  I obtained data on the 8 city/towns represented by the sample HOAs, as well as state and county data[ii]. 

The table below compares the city/town Hispanic percentages, based on the 2000 Census,  with the results found from the HOA county records.

The 2000 Census showed a population of 25% Hispanics in Arizona and the sample shows 24%.  The 2008 update gave a 31% Hispanic population in Maricopa County. 

Now, seeking an explanation for this result, I reasoned that this smaller population figure could be the fact that Hispanics in Arizona own a smaller proportion of the homes than non-Hispanics.  In fact a study by HUD based on 2000 Census data revealed about a 50% reduction in ownership of homes for Hispanics:  24.8% for non-Hispanics vs. 12.4% for Hispanics (see Ownership, n. 2).  Even with this substantial reduction in the number of Hispanic owners expected to be found by this analysis of county ownership records, the sample still reflects a significant difference from the Census data.

This question of HOA demographics needs to be given serious study and appropriate research conducted, since there is the implication that HOAs are a vehicle for class structure within the US.  Local governments increasingly support, and even mandate, an  HOA for all new home construction.  And, additionally, that the HOA form of government repudiates the US Constitution, and denies homeowners the equal protection and due process of law in pursuit of an empty statement of maintaining property values.

Notes

[i] See 2010 US Census ignores HOA demographics.

[ii] Ownership in Maricopa County, http://www.huduser.org/Publications/PDF/hisp_homeown7.pdf; population data from http://quickfacts.census.gov/qfd/states/04/0412000.html.  The data was based on the 2000 US Census and 2008 interim data.

With an estimated 20% of the population (based on industry data) residing in homeowners associations,  a percentage higher than either that of Black of Hispanic categories, the demographics of HOAs remains a mystery.  Who lives in homeowners associations?

The only hint at HOA demographics comes from the 2007 industry survey on HOA satisfaction, sponsored by the Community Associations Institute (CAI) trade group[i].  This sample of some 709 phone calls revealed a significant difference between the sample and the 2000 US Census data[ii]. 

This difference can be explained by one of two alternatives.  One is that the sample is biased in order to bring about the most highly favorable results for CAI.  The other is that the sample does reflect the norms of  homeowners associations, and reveals that the HOA population represents a distinct class or subset of American society: the senior, educated, white, well-off segment of America. 

The demographics of this survey should be of concern to the policy makers.  If the sample demographics are representative of HOAs, then the claims of HOAs as “affordable housing” should be replaced with the more accurate description, “discriminatory housing.”   Then the public policy that requires only HOA subdivisions for all new housing in an increasing number of towns and cities is discriminatory.  Unless, of course, the above demographics are not representative of homeowner associations.

It would seem that the time has come for “the acceptance of a quiet innovation in housing”[iii] to be exposed to the sunlight, and that a more thorough survey of homeowner association demographics is in order.  Who lives in HOAs?  Are HOAs, aided and abetted by local government mandatory HOAs for new housing,  establishing a class division within America?  

Notes

[ii] See Who lives in an HOA? Public officials take notice  (Jan. 2008).

[iii] Taken from the title of the CAI co-funded book, Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing. Donald R. Stabile (Greenwood Press 2000).

I have argued that HOAs are a second form of illegitimate and unlawful, de facto local political governments.  Randy Barnett, a constitutional scholar, wrote: “Only if it is legitimate can an existing constitutional system issue commands to the citizenry that bind individuals in conscience.”[i]   The HOA government legitimacy rests on just “laws” respecting the rights and privileges of the people without violating the rights of others; that their member’s acquiescence to obey these unjust laws and covenants cannot be misconstrued and interpreted as having consented in good conscience to have so agreed.                                                                                    

I have also argued that, under “government”, Black’s Law Dictionary offers the simple definition:  “The structure of principles and rules determining how a state or organization is regulated.” And, to clarify by what is meant by a “state”, Black’s speaks in the same terms of the differences in function that distinguishes an association from that of the state, and of the need to determine the “essential and characteristic” activities and purposes of a state. A state, according to Black, is a community of people established for “securing certain objectives  . . .  a system of order to carry out its objectives.” Nothing-new here, but Black’s then goes on to say: “Modern states are territorial; their governments exercise control over persons and things within their frontiers” (emphasis added).  And Black cautions not to confuse the “state” with other communities of people in other forms of organizations designed to accomplish other objectives.

What has come to light since these earlier Commentaries, is the US Supreme Court interpretations of “state” and “government” in a question of the legitimacy of the secessionist State of Texas, in regard to the sale of  bonds by Confederate Texas.)

The Court reasoned (emphasis added),

It [a state] describes sometimes a people or community of individuals united more or less closely in political relations, inhabiting temporarily or permanently the same country; often it denotes only the country or territorial region, inhabited by such a community . . . .

The people, in whatever territory dwelling, either temporarily or permanently, and whether organized under a regular government, or united by looser and less definite relations, constitute the state . . . . A state, in the ordinary sense of the Constitution, is a political community of free citizens, occupying a territory of defined boundaries, and organized under a government sanctioned and limited by a written constitution, and established by the consent of the governed.[ii]

This 142 year-old opinion supports Black’ definition and the essential characteristic that makes an entity a government:  a government is the person or group that controls and regulates the people within a territory.  While the functions and services provided by a government are shared with many other entities, such as businesses per se and nonprofit organizations, this definition “separates the chaff from the wheat.”[iii]  HOAs are the governing body of subdivisions that are subject to covenants;  subdivisions are territories, plain and simple.

The Supreme Court further held, with respect to lawful and legitimate actions by de facto governments, and  Confederate Texas was so considered,

It may be said, perhaps with sufficient accuracy, that acts necessary to peace and good order among citizens . . . which would be valid if emanating from a lawful government, must be regarded in general as valid when proceeding from an actual [de facto], though unlawful government; and that acts . . .  intended to defeat the just rights of citizens, and other acts of like nature, must, in general, be regarded as invalid and void.

In other words, the acts and actions by a de facto and unlawful HOA political government have validity to the HOA “citizens,” unless these acts and actions defeat the rights, freedoms, privileges and immunities of the people, the HOA members.  The people are still subject to the Constitution in spite of all those arguments that the Constitution is negated by private contracts.  This view is consistent with Barnett’s arguments for obedience in conscience.

Unfortunately for our “Modern Times,”  there is a great division within this country, not this time between the Blue and the Grey, but between the Blue and the Red — the major political parties.  This great division, this Second Civil War as author Brownstein titles his book[iv],  is a war of ideology and dogma — as in the case with HOA “true believers” —  coming before “for the good of the county” and the people.

Notes

[ii] Texas v. White , 74 U.S. 700 (1868).

[iii] Government is defined by a “social contract”; HOAs by the new social contract, the CC&Rs, George K. Staropoli (included as Part III, “American Political Governments”, in The Foundations of HOAs and the New America.

[iv] Ronald Brownstein, The Second Civil War: How Extreme Partisanship Has Paralyzed Washington and Polarized America (Penguin Books 2007).

Some sense is finally being displayed by Cal. courts in support of the Constitution against the second local,  de facto  governments — HOAs.   Homeowners require protection to speak out, since HOA issues can be public issues.  Many states have an anti-SLAPP statutes.  

A SLAPP suit (strategic lawsuit against public participation) is a lawsuit brought primarily to chill a party’s constitutional right of petition or free speech. The anti-SLAPP statute was enacted to prevent and deter lawsuits that chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances and provides “an efficient procedural mechanism to obtain an early and inexpensive dismissal of nonmeritorious claims” arising from the exercise of those constitutional rights. (Martinez v. Metabolife Intern., Inc. (2003) 113 Cal.App.4th 181, 186.)

Section 425.16, subdivision (b)(1), states: “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”

The Signs Are Speech Protected by the First Amendment

The Signs Are Not Defamatory

The Signs are in a Public Forum and Concern a Matter of Public Interest

No Probability of Success on the Merits Nuisance

Slander of Title.  The Beach Club asserts that it has stated a cause of action for slander of title because the signs disparage and impair the marketability of its property.

 
HOLDING:  Beach Club action was SLAPP.

SANTA BARBARA BEACH CLUB, LLC, v. FREEMAN, No. B212972 (Cal. App. 2 Div. May 3, 2010).  

http://www.leagle.com/unsecure/page.htm?shortname=incaco20100503008

Dear Committee members:

I am providing a copy of an email from a NC homeowner that exhibits her frustration and inability to deal in a fair and equitable manner with her HOA board.  If you believe that homeowners openly and freely agreed to be subjected to this type of treatment by de facto private governments, then I have a bridge in Brooklyn that I’d like to sell you.  Homeowners need to be protected like any other segment of the people from abuse by any group or organization. To say that a homeowner can go to court for a redress of grievances, would be like saying that there was nothing wrong with the 1950s Poll Tax abomination, used as an effective, legal at the time, devise to stop voter registrations.

 Please see my earlier post to concerned parties pertaining to recent NC Supreme Court decisions regarding HOAs.

Please restore constitutional protections for homeowners, along with the respect and dignity that they deserve, and provide penalties against abusive boards for violating NC laws.

 Respectfully,

George K. Staropoli

Pres.

Citizens for Constitutional Local Government

Audited Consolidated Financial Statements
and Other Financial Information
COMMUNITY ASSOCIATIONS

INSTITUTE & SUBSIDIARY
June 30, 2009

L. ACCUMULATED DEFICIT

 
As indicated in the accompanying statement of financial position, CAI has reported recurring losses which have generated a deficit in undesignated net assets of $611,972 and $395,589 as of June 30, 2009 and 2008, respectively. Continued deficits threaten to undermine CAI’s  ability to continue its current level of operations in the future. The consolidated financial statements do not include any adjustments that might be necessary in the event that CAI is unable to continue its current operations.

Management’s plan to alleviate the deficit includes supporting and advancing manager licensing legislation in more states expanding and creating new international partnerships; developing a new virtual membership category and reducing personnel and overhead costs.

In accordance with the approved three year financial plan, the Board of Directors has approved a budget for the year ending June 30, 2010, which projects net income of approximately $42,000. However, there can be no assurance of the success of these efforts.

In response to a homeowners complaint, the AG’s office, Consumer Protection and Advocacy Section, replied,

Unfortunately, the problem you complained about is not within our jurisdiction.  Our office enforces the Consumer Fraud Act, however, the Act does not allow our office to pursue private disputes. Our office represents the state of Arizona and cannot act as a private attorney for individual citizens.

Understand that under the legalities here, the AG’s authority to deal with fraud is limited to “consumer fraud”.  Carefully reading the AG’s authority on its website[i], I found that fraud is defined solely in terms of the “selling or advertising“, which precludes its involvement in many of the HOA offenses and abuse.  Fraud, itself, is basically defined in terms of misrepresentation and false statements.[ii]  Consequently, homeowners must look elsewhere within the Attorney General’s Office for possible assistance. 

The Criminal Division[iii] has authority to  “protect the citizens of Arizona by successfully investigating and aggressively and fairly prosecuting criminal cases within the State of Arizona.”  Its Criminal Prosecutions Section contains the Fraud and Public Corruption unit, which “prosecutes white collar crime and fraud by individuals . . ..”  (Nothing further is mentioned of white-collar crime on the AG’s website). Note the distinction between “white collar crime” and “fraud”.  White-collar crime, as stated by the Gillespie Law firm, is a broad label, 

White-collar crimes typically refer to a type of financial, corporate, or economic crime often committed by employees or professionals using deception, as opposed to violent crimes that involve force. Most people who think of white-collar crime think of stock market and business fraud cases. However, white-collar crime involves a wide variety of criminal offenses.[iv]

Gillespie then lists the following as white-collar crimes:

1.      Bribery A.R.S. §§ 13-2601, et. seq. 

2.      Embezzlement, Theft, and Larceny A.R.S. § 13-1802 

3.      Extortion A.R.S. § 13-1804.  “Extortion” is a type of theft involving taking property or services through the use of a threat.  A person commits extortion when they knowingly 1) obtain or try to obtain something by threatening to: Cause damage to property, 2) Expose a secret that will subject anyone to hatred, contempt, or ridicule, or to impair their credit or business, or 3) Cause anyone to part with any property.

4.      Fraud Schemes A.R.S. § 13-2310[v].  A person commits a “fraudulent scheme” if, through the use of a scheme, they knowingly obtain any benefit by using false pretenses, representations, promises, or materials omissions.

In order to get the Attorney General to take your case, you need to file a complaint according to the above, with  evidence that can be taken to court.[vi]  Will he take your case?  In spite of the fact that he’s running for Governor, based on his prior unwillingness to defend homeowners against HOA abuse, and his failure to defend the OAH adjudication of HOA disputes, not very likely.  The AG has the discretion to declare, and will most likely do so, declare your complaint a private matter, a tort — a civil, not criminal wrong.[vii]  And asked if his office is to do justice, unlike the Dept. of Justice, he will probably say, no, it is to defend the state government. 

The AG will once again say  (paraphrasing), “Go ye unto the legislature, the sovereign of the state, and seek redress of your grievances.”   We must reply, “Will you come forward and support our cause against HOA abuse and injustice?”  And we must remind him that, “In every stage of these oppressions we have petitioned for redress in the most humble terms: our repeated petitions have been answered only by repeated injury.” [viii]

 Notes

[ii] “A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his detriment“, Black’s Law Dictionary.

[iii] http://www.azag.gov/criminal

[iv] ARIZONA THEFT / WHITE COLLAR CRIME, The Gillespie Law firm; the law firm is a criminal defense firm  (http://www.craiggillespie.com /theft.html).

[v] “Any person who, pursuant to a scheme or artifice to defraud, knowingly obtains any benefit by means of false or fraudulent pretenses, representations, promises or material omissions is guilty of a class 2 felony.”

[vi] “Fraud must be proved by showing that the defendant’s actions involved five separate elements: (1) a false statement of a material fact,(2) knowledge on the part of the defendant that the statement is untrue, (3) intent on the part of the defendant to deceive the alleged victim, (4) justifiable reliance by the alleged victim on the statement, and (5) injury to the alleged victim as a result.” The Free Legal Dictionary,  (http://legal-dictionary.thefreedictionary.com/fraud). 

[vii] Viewing HOA injustice as a civil matter sets public policy against the homeowner in that the state is not interested in violations of the law with respect to HOAs. In general, a crime is an offense against society, whereas a tort is a civil wrong against a person. See Tort Law for Legal Assistants, Edwards & Edwards, eds. p. 6 (Thomson 2004).

[viii] Declaration of Independence.

Ever wonder if the CAI member HOA attorneys are worth their fees? How good are they? What’s their Win – Loss stats? This data is very difficult to come by from the trial courts, and even from the appellate courts where records are kept. Of course, we wouldn’t want to get these stats from CAI unless their source data is provided for independent inspection, which is a problem based on the recent CAI “satisfaction surveys” lacking in such material disclosures.

Fortunately, detailed records are available from the Arizona Office of Administrative Hearings (OAH) where proceedings are recorded and decisions posted on the internet. For the short period of 28 months (from September 2006 to February 2009), this state agency was permitted to adjudicate HOA disputes, and decided 52 out of 66 petitions.  Although this is a limited sampling not related to civil court cases — where the Rules of Civil Procedure come into play against the Pro Per — these OAH hearings present a leveling of the litigation playing field. An analysis of these cases will provide a good clue to the litigation value of an HOA attorney, and to whether or not engaging a CAI member attorney resulted in improved success.

A colleague gathered the data, which showed the following prevailing party percentages:

HOA                    53.8%
Homeowner   40.4%
Split                      5.8%

This is quite surprising given that in almost all the cases the homeowner was a Pro Per and the HOA was represented by an attorney; and given the fact that the state laws are clearly pro-HOA, and the governing documents amount to an adhesion contract in favor of the HOA. What the percentages seem to be saying is that “black letter” provisions of the statutes or governing documents — it’s right there, in black and white — were violated by the HOA. That an unambiguous provision had been violated and yet the HOA and its attorney failed to “own up” and voluntarily correct these obvious violations. That it took a hearing by the victimized homeowner in order to obtain justice.

The question before us to be answered is: did using a CAI member attorney improve the stats? Roughly 38% of the petitions, 20 out of 52, involved one of four CAI member attorney firms, with

CAI prevailed                            55.0%
Homeowner prevailed           45.0%

Intuitively, and supported by statistical analysis, engaging CAI member attorneys had no impact on the outcome of the hearings. We then ask: What role, if any, do these attorneys play in HOA disputes? And the answer, partly addressed in the highlighted sentence in the earlier paragraph, and from the prolific advisories from one CAI member firm, Carpenter Hazlewood, is: to seek and promote loopholes and technicalities in the law and governing documents that would lead to adversarial litigation.

This law was introduced, I firmly believe, as a result of my repeated chastising of our elected officials, over the past year, for their failure of to defend the constitutionality of the statutes that permitted the Office of Administrative Hearings (OAH) to adjudicate homeowner association disputes.  I take it as a feeling of guilt that this bill was introduced.

The adjudication of HOA complaints by OAH had leveled the playing field somewhat, providing attainable —”affordable”, to use a term used to defend the state’s protection of HOAs — justice, where the homeowner could go before an independent tribunal, without a lawyer and without the need to know the 100 odd rules of civil procedure contained in some 200 pages of “legalize.”  The constitutionality of the statute was not defended by the Attorney General, or by the legislative leadership, resulting in a superior court disgraceful default decision. A homeowner has no place to go, not even to the OAH where he could once hope to have found justice.  In the short history of OAH, pro per homeowners won 42% of their petitions against their HOA and its attorney.

This total disregard of my letter follows a flat denial, without explanation, of my February 11, 2009 Motion to Intervene, which was an abuse of discretion by Judge McMurdie.  Perhaps it was because I had included the Attorney General’s defense of the constitutionality of the statute in a prior case which would have caused a trial and an embarrassment to the AG), LC2007-00598 (Waugaman), given that the AG and Legislature now failed to defend the statute in this case. (See The State of Arizona will not protect buyers of HOA homes!, Feb. 29, 2009).

Ariz. Sess. L., Ch 105 (2010).
HB 2774 addition:

ARS 12-1841

D. THIS SECTION SHALL NOT BE CONSTRUED TO COMPEL THE ATTORNEY GENERAL, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES OR THE PRESIDENT OF THE SENATE TO INTERVENE AS A PARTY IN ANY PROCEEDING OR TO PERMIT THEM TO BE NAMED AS DEFENDANTS IN A PROCEEDING. THE ATTORNEY GENERAL, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES OR THE PRESIDENT OF THE SENATE, IN THE PARTY’S DISCRETION, MAY INTERVENE AS A PARTY, MAY FILE BRIEFS IN THE MATTER OR MAY CHOOSE NOT TO PARTICIPATE IN A PROCEEDING THAT IS SUBJECT TO THE NOTICE REQUIREMENTS OF THIS SECTION. 

Arizona CAI is at it again, fighting every little “turf war” to control the powers and authority over the members of the community, regardless of what the common law, real estate law, or constitutional law may hold.

HB2345

We go from controlling parking issues on public streets to restricting access to one’s home. Under the law, every owner has the right to ingress and egress to his home, and the right of visitors and family members to have access to his home.   Under the right to advertise the sale of a home, Scott Carpenter has spied a loop-hole in the new HB 2345 bill signed into law, where is advises his faithful followers that, you know, you can prevent open houses in gated communities. He is cautious to state, “But nothing in HB 2345 requires an association to provide access to potential buyers when the access protocol in place would not permit their entry.”   And he stops there without qualifying things like, signing in, like placing a sticker on the dash, etc., but leaves readers to the false conclusion that they can stop open houses in some way. 

This is an outright failure to recognize the intent of the legislature, and to “stir up the pot”, knowing full well that any such harassment of potential buyers and visitors would be seen as an outright “restraint on alienation” under property law –  a clause that seeks to prohibit the recipient from selling or otherwise transferring his interest in the property.

HB 2768

Here, Carpenter attempts to muddle the waters with respect to transfer fees.  He says to the HOA boards, go forth and amend your CC&Rs (and we will be glad to show you how), at our usual fee) to make the fees for reserve purposes a “legitimate” covenant. “By virtue of the exception, HB2768 will not prohibit the enforcement of “transfer fee covenants” in governing documents if the fee or charge is to be used “exclusively for the purpose authorized in the document”   And Carpenter also points, hey guys, collect these fees for recreational purposes, which the law still allows.  Once again, ignoring the intent of the legislature on behalf of their separatist, secessionist private principalities.
 

These “turf wars” will continue  until the legislature finally takes a strong hand to properly restrain these lawyers and HOA boards, and assert the supremacy of civil government over contractual, private governments that reject the Constitution.

Source:  http://blog.carpenterhazlewood.com/scott/ HB 2345 and HB 2768.