CAI Reinvents Democracy

The latest response to advocates' criticism of the Common Ground article, Critical Mass, and of CAI and HOAs in general, comes in another Tom Skiba, CEO of CAI, BLOG entry of May 22nd. So, allow this humble advocate who, in Mr. Skiba's words, "revolt[s] at democracy at its most local form" to shed some light on these "word games" -- you know, It depends on what the meaning of “Is”, is.

The CEO goes on to make contradictory statements, talking not about democratic governance, but about the business needs of associations,

What we cannot support are situations that compromise the financial health and well-being of associations, place an undue regulatory burden and cost on associations, or treat associations differently than any other type of business entity. Because that is what associations are - businesses.

They aren’t governments, they aren’t personal private clubs, and they certainly aren’t fascist states created to deprive poor, unsuspecting homeowners of their rights. They are businesses that need to be run in a professional and business-like manner.

Why, then the statements about democracy and the will of the people as stated in the BLOG? Because CAI needs the statutes and support of the legislators to sanction the unconscionable provisions of these CC&Rs; and for the enforcement of these contracts that are not understood by many homeowners, who are not asked to even initial no less sign them as must occur in a bona fide contract; and many other reasons, some mentioned here, and too many to list here.

Mr. Skiba's BLOG simply reflects the "gotcha" by advocates, and the realization that there is no valid reason to restrict fundamental freedoms and liberties except to coerce compliance with the "laws" of defective, authoritarian regimes.

Read the complete response.

And the Land Shall Be Made Good Again: a poem

In the beginning
There was the land,
And the land was good
And the people were happy.

Soon upon the land
Came the moneychangers
In the guise of builders
Of the community.

And the moneychangers said
Behold, the covenants, conditions and restrictions
Were sacred and holy works,
And the people shall flourish and prosper.

Read the complete poem here.

Hold the Developers Accountable for Unconscionable Adhesion CC+Rs

Arizona bill HB2824 will provide for due process protections by means of administrative law hearings (OAH). The bill is stalled by recent amendments that remove an exclsuion regarding developers, which has invoked the ire of the builders who feel that they will lose control of their income stream. Paragraph (B) lists exclusions to OAH adjudication that included (3):

"3. Any dispute that arises during the period of declarant control as defined in sections 33-1250 and 33-1812."


In order to get the bill accepted, we need to convince the powers that be at the legislature, that to reject the bill would be the granting of "special dispensation" to the profiteer developers who are chiefly responsible for the problems. It's the developers who stuff the onerous CC&Rs down our throats that take away our constitutional rights. And now they want absolution from any accountability or restraint. This cannot be tolerated, and Arizona still be called a democracy.

Write the leadership and key legislators that the developers must also be held accountable. If not, then we want tradeoffs with a bill of right put into the CC&Rs. It's that simple! Let the builders come back next year with a bill of rights and we, the homeowners, will decide whether or not its acceptable to us and maybe we will permit their exclusion. But, it must be down next year and not now!

HB2824 must pass this session!

Realtors: Are they protecting buyers or the HOA?

Excerpt from L.A. Times column, Associations, May 21, 2006, with permission of the author Donie Vanitzian, relating to the sale of an HOA property. A writer asks:

Finally, I supplied an interested buyer with the association's pro forma budget and some other papers the management company gave me. The buyer was unimpressed and refused to sign the offer to purchase without writing contingencies into the contract.


The buyer reserved the right to renege on the sale without penalties or forfeiture if the following contingencies were not met:

• The buyer's acceptance of all of the association's governing documents with copies of every amendment, rewrite and restatement.

• A forensic audit conducted by the buyer's attorney or accountant of the association's books, records and banking, at the buyer's expense.

• An independent investigation of the association's management company and personnel directly responsible for managing said association.

• A minimum of three years of final — not draft — board meeting minutes.

• Copies of all correspondence from seller to the board and from board to seller.

Here's my problem: I'm moving because our association has a history of tyrannical boards and overspending without accountability. If the buyer learns of this, there goes the sale. Do I have to accept all these contingencies?

No remedy in the event of HOA violations

Why can't homeowners withhold assessments until their dispute is resolved?

Looking at the larger picture that withholding assessments is attempting to solve, there is no "remedy in event of default by HOA" provision in any CC&Rs that I've seen. Some might have such a contractual CYA provision, but just for the HOA. It's here where the unconscionable adhesion contract once again works against homeowners.

In my opinion, shouting for a "fix", like "no proxy voting", is not the way to go. Only when you place the fix into its proper place in attaining justice, will you succeed. You must argue unconscionable adhesion contract. You can argue due process concerns only if you argue that there is an imbalance of power as a result of the adhesion CC&Rs.

To offset the legalized extortion of HOA boards, there are no remedies in the CC&Rs that specify the right of the homeowner to escrow payments, or some other similar method, as is the norm with any creditor/debtor issue. Simply shouting "escrow the money" does not present a justification to the politicians, the legislators, to take up the cause.

Advocates must link this requirement to fair play and a balance of powers between the HOA and the homeowner.

Another look at the history of HOAs

"Community Associations", a term still in use by CAI, originated in the first half of the 20th century and reflected a land use/planning policy of a managed community, a planned community, above and beyond simply laying out streets, utilities and homes. The term of choice was the concept of "community" since,

The innovators of CAs were entrepreneurs . . . . The dilemma [as far back as the 1930s] was how to ensure their widespread acceptance among government agencies, builders and developers, and prospective home buyers.¹

The initial trade organization behind HOAs was the National Assn of Real Estate Boards (now the National Assn of Realtors) that in 1936 split off its research function to the now known Urban Land Institute, to promote the better planning and development of urban areas. In 1944 it create a Community Builders Council to promote CAs. The Council published its first views on the need for homeowners associations in its 1945 Technical Bulletin #1 a mistake made by the Council's chair with respect to his initial development of a community. That started the momentum for the institution of authoritarian private governments: a concern for profits that resulted in the necessity to create a corporate form of governance without concern for the protection of constitutional and civil liberties of the homeowners.

Just one year later ULI began urging developers to put HOAs in place with restrictive covenants attached to the subdivision. Next year came ULI's comprehensive manual for HOAs, The Community Builders Handbook, which contained detailed and specific requirements and that the covenants run with the land. The authoritarian aspect of HOA governance was urged by including provisions for "The enforcement of covenants . . . or else covenants may become ineffective through nonobservance and violation. "² But no Homeowners Bill of Rights was required simply because ULI was a business trade group and not a governmental agency, and there were no homeowner voice to protect constitutional rights.

Parallel to ULI's activities, the FHA set up its own land planning and usage division in 1938. NAREB (NAR) "had a large influence on the formation of FHA." In 1963, Byron Hanke, an FHA employee later to be the primary founder and promoter for the creation of CAI in 1973 as a result of problems with accepting HOAs, participated in a Brookings Institute study funded by ULI. Part of this study was released at the National Association of Home Builders (NAHB) convention. This brochure, Planned Unit Development with a Homes Association, described "a cluster of subdivisions . . . combined with effective common land use." Stable writes, "Using CC&Rs to organize an automatic [read mandatory] membership association, developers could meet competition from older forms of housing . . . ." ³ In order to get FHA insurance, the brochure specified the needs for automatic membership and a homes association, and the only acknowledgment of a voice, not necessarily a democratic voice, was a requirement to have a voting membership.

In 1966, this brochure was expanded to the infamous, Homes Association Handbook, Technical Bulletin #50, published by ULI, from which all else follows.

For more information, see History.

Other sources are: Privatopia: Homeowners Associations and the Rise of residential Private Government, Evan McKenzie (1994); Neighborhood Politics: Residential Communitiey Associations in American Governance, Robert Jay Dilger (1992),



Notes:
1. Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing, p. 68, Donald R. Stabile (Greenwood Press 2000). (A book partially funded by ULI and CAI).
2. Supra, p. 77
3. Supra, p. 90