Court opinions relating to HOAs as mini-governments

Former CAI president Wayne Hyatt, and co-author Susan French, devote chapter 4 of their book, Community Association Law (1998), to the topic of mini-governments.

"The third theory, 'symbiotic relationship' or the ' sufficiently close nexus', are less relevant to the common interest community setting of today [1998] but may have more relevance in the future. State action is found . . . ."

The 1998 or earlier cases presented in this chapter of this pro-HOA book include:

Marsh v. Alabama, 326 U.S. 501 (1946) (the poster case against mini-governments)
Shelly v. Kraemer, 334 U.S. 1 (1948)
Gerber v. Longboat Harbour N. Condo, 724 F. Supp. 884 (M.D. Fla. 1989)
Laguna Publishing Co. v. Golden Rain Found. of Laguna Hills, 131 Cal. App. 3d 182 (1982) (is Leisure World condo a mini-government)
Midlake v. Cappuccio, 673 A.2d 340 (Pa. 1996) (sign restrictions)
City of Ladue v. Gilleo, 114 S. Ct. 2038 (1994) (signs)
Covered Bridge Condo Assn. v. Chambliss, 705 S.W.2d 211 (Tex. App. 14 Dist. 1985) (reasonable covenants are not unconstitutional; age restriction)
Majestic View Condo v. Bolotin , (429 So.2d 438 (Fla App. 4th Dist. 1983) (pet restrictions and notice)
Golden Sands v. Waller, 545 A.2d 1332 (Md. 1988) (assessments and notice)

Planned Community Declarations: A failure in community governance

I've commented several times on the astuteness of the Constitutional Convention representatives who met in Philadelphia in 1787 to rewrite and revise the current federal charter, The Articles of Confederation. It only took these wise men some 11 years to realize that the structure of the Articles was severely defective and a new charter was necessary. The result was the Constitution of the United States of America.

In our times, we have a new form of community goverance, the homeowners association, created by the ULI and FHA with their guidleline, The Homes Association Handbook in 1963. This handbook was motivated primarliy by profit oriented business interests, and not by those seeking to establish a better form of community governance.

Why continue, as evidenced by the mindless struggle of state legislators and some advocates, to try and make this charter, this constitution, for community governance work? We already have laws that apply to all homeowners equally. They've been chasing their tails for over 40 years now, in the misguided attempt that they can write a better constitution than the US Constitution. It's time that they realize that the HOA concept must be allowed to take its destined course, and stop trying to make the unworkable workable for the people of this country.

There are workable alternatives for planned community governance, but would not be acceptable by those whose income stream is derived from HOAs -- the special interests that created planned community governance.

HOAs: communal properties

Let's take a look at this topic from the average home buyer's perspective, and not a legal one. This is a valid approach pertaining to the buyer's lack of legal expertise and understanding.

The legal myth that you own your home in fee simple absolute is false, since the law now talks of property interests separately from ownership or title. That is, you may own the property but have very little property interest rights, as we see with HOA property ownership.

Each homeowner in an HOA has a property interest in the common property as well as in the private prperty of each of the other owners. If you don't believe that, then why are you held to a decision affecting your private property based on a vote, a low as 51%, of your neighbors, that you did not consent to? Similarly, you affect the property interests every other homeowner's private property.

I referred to this as a communal social and political structure -- you all don't need to eat in one big common mess hall to be in a communal society. Look at it this way, the communal interests are very much like community property rights between husband and wife -- what one does affects the other. So, too, with your fellow HOA members.

One homeowner argues that each homeowner within the HOA holds an interest in each of the other owners' private property, but it is not an interest per se as it is an interest in how the properties are maintained and how they appear from an aesthetic perspective. I think the argument can be made that CC&Rs that require the votes of others on how you paint your home or how you maintain your landcaping definitely "touch and concern" your land. Also, being able to park any vehicle on your driveway, would also touch and concern your land.

Such restrictions are covenants and therefore touch and concern your land, making home ownership in an HOA much like being married to your neighbors.

Were you told of this legal relationship? Did you fully comprehend the consequences of your "agreement"? Were you told that the proper approval of an amendment to the CC&Rs can substantially change your property interests, contrary to your wishes, like join an independent country club?

Homeowner Rights are an important issue for California's CLRC

First Supplement to Memorandum 2005-25
Statutory Clarification and Simplification of CID Law (Public Comment)

HOMEOWNER ASSOCIATION AS LOCAL GOVERNMENT

Mr. Staropoli asserts that a homeowner association has much more in common with a local government entity than it does with the typical nonprofit corporation. See Exhibit p. 6. Accordingly, he feels that a homeowner association should be subject to the same constitutional and statutory constraints that govern a state entity:

Our system of government with its checks and balances,
separation of powers, “clean elections” procedures, due process
protections in terms of sufficient notice of violations and hearings
in which the homeowner can confront the allegations, examine the
witnesses, and present evidence must be applied to CIDs.

The issue raised by Mr. Staropoli — the extent to which a CID should be subject to the sorts of constraints that apply to a governmental entity — is an important one. However, it is beyond the scope of the current project. The Commission will consider the issue in a later stage of its general study of CID law.

Brian Hebert
Assistant Executive Secretary
California Law Review Commission

See July 6, 2005 editorial, Property Interests
See March 14, 2005 CLRC letter on Rights.

HOAs cannot be viewed as a property interest only

Excerpts from my July 6, 2005 email letter to the California Law Review Commission relating to Memorandum 2005-25.
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Should public policy uphold the current doctrine that equitable servitudes are binding contracts that are agreed to by a purchaser when title to his home is accepted? Shouldn’t there be legislation to protect average citizens, home buyers and not experienced real estate investors, from this constructive notice binding of a waiver and surrender of rights enjoyed by other home buyers? Shouldn’t there be legislation that calls for an explicit waiver of such rights after being fully informed of the consequences and impact of buying in a CID? Current disclosure laws fall far short of a comprehensive “red herring” warning to perspective buyers.

A waiver of constitutional rights must be voluntary and intelligent, it must have been made knowingly, and with sufficient awareness of the relevant circumstances and likely consequences. Stated otherwise, a valid waiver connotes an intentional relinquishment or abandonment of a known right or privilege. Certainly, a waiver may not rest on mistake or ignorance. 16 C.J.S. Constitutional Law § 82.


“[A]nd upon analysis of the association's functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government. As a 'mini-government,' the association provides to its members, in almost every case, utility services, road maintenance, street and common area lighting, and refuse removal.”
. . .

With power, of course, comes the potential for abuse. Therefore, the Association must be held to a high standard of responsibility: "The business and governmental aspects of the association and the association's relationship to its members clearly give rise to a special sense of responsibility upon the officers and directors.... This special responsibility is manifested in the requirements of fiduciary duties and the requirements of due process, equal protection, and fair dealing." (Id at p. 921.) (See Raven's Cove Townhomes, Inc. v. Knuppe Development Co.,supra, 114 Cal.App.3d 783, 792-799.) [142 Cal.App.3d 652] Cohen v. Kite Hill Community Assn. 142 Cal.App.3d 642 , 191 Cal.Rptr. 209 (1983) (citing Hyatt and Rhodes, Concepts of Liability in the Development and Administration of Condominium and Home Owners Associations 12 Wake Forest Law Review at page 915 (1976)).

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The complete letter can be viewed at Property .