TB#50: The Mass Merchandising of HOAs by ULI

SUMMARY

The Urban Land Institute Technical Bulletin #50, The Homes Association Handbook, was the vehicle for this mass merchandising of planned communities with influence today on events and attitudes.

The model and concept of planned communities with their mandated homeowners associations has been presented and sold to the legislatures, government agencies, commissions and officials, and to the media and public in general as the unquestionable means to better, healthier, vibrant and desirable communities. And the means to this noble end was the HOA governing body supported by unconscionable adhesion contracts in the form of covenants, conditions, and restrictions, including the HOA bylaws, that would maintain property values for the benefit of all -- the local municipalities, the homeowners, and the real estate special interests.

Sadly, in their effort to sell this concept to Americans, the promoters found it necessary to cast a scant eye on the constitutional protections of homeowner rights. This intentional disregard in the presentation, explanation, selling and mass merchandising of this new order of society -- communal living under authoritarian HOA regimes -- amounts to a con on Americans. The emergence and quiet acceptance of this innovation in housing -- as ULI and Community Associations Institute proudly announced in the subtitle of Community Associations, a book that they partially funded in 2000 -- was accomplished with subterfuge and a disregard for the values and beliefs in the democratic institutions upon which this country was founded.

Read the complete report paper on TB#50.

Analysis of The Homes Association Handbook

Urban Land Institute Technical Bulletin #50 (1964)


OVERVIEW

The reader of this publication cannot but come away with the distinct realization that the authors promoted certain aspects of planned communities while deliberately avoiding a solid presentation of a number of serious concerns. It is a comprehensive manual, except for any discussion of the form of democratic governance of the community, for the mass merchandising of a profit-making business enterprise. Not only does this 422 page publication promote the selling of planned communities to the public, the federal government agencies, local governments, the mortgage companies and to the Realtors, it provides sample Declarations, Articles of Incorporation and Bylaws for use by the attorneys for developers(1). This use of sample forms(2) (similar to the legal forms that can be found in any legal research library) serve as guidelines and is a common practice used by the attorneys, which explains the commonality of many of the most oppressive and harsh terms and conditions imposed on homebuyers.

Yet, the word “democracy” is mentioned only a handful of times, and in the context of democratic form of leadership as with,

The other [as opposed to a bureaucratic style of leadership] requires more participation in order to give members a feeling of satisfaction with association operations; it may be called the ‘democratic style’. (3) [emphasis added].

And, when the Handbook addresses specific covenants for inclusion in the Declaration for the developer turnover of the association to the homeowners,

It is our conclusion, however, that generally it is unwise to plan for the selection of the management of a homes association by something less than a fully democratic process (See Chapter 15).

However, Chapter 15, “Creating the Association and its Facilities”, simply deals with a variety of non-governing topics, and includes marketing techniques as well as weighted voting in favor of the developer and benevolent paternalism by the developer controlled board.

Another example of the complete disregard for the constitutional and property rights of the homebuyers are the guidelines for handling the priority of liens that the authors felt was needed to protect the interests of the developer and the mortgagor, and to insure the continued existence of the corporate entity proposed to manage the planned community, the “automatic homes association”(4) . While this Handbook recognizes the problem with the timing of when the covenants running with the land become binding, at the time the developer sells the first lot, it advises that the states will protect the HOA from any homestead exemption because of this priority of liens(5), but urges the need to insert wording to grant the mortgagor a priority lien before this “developer” lien(6). The home-buying public protections, as was the intention of the various state legislatures when creating the homestead protection, was intentional disregarded by the advertising of this technical oversight.

Over the 42 years since the publication of The Homes Association Handbook, it has become the “bible” for the mass merchandising of planned communities with the accompanying affect on American society, its values and the loss of individual property rights, and the loss of fundamental rights and freedoms upon which this country was founded. The Handbook was supported by several federal agencies and real estate interests(7), and continues to be supported by these same entities along with state legislatures and local municipalities, with the same apparent disdain for the protection of American liberties and freedoms.

The mantra of “less government intervention”, this call for a laissez-faire policy by reputable libertarian public interest firms, masks the prevalent protectionism of planned communities by the states and their failure to protect a segment of society from the predator marketing tactics of the real estate industry.

Notes
1. Appendices F, G, H.
2. Appendices K, L.
3. In Chapter 16, Leadership Style, Skill and Sources, § 16.2, Bureaucratic of Democratic? It May Depend on Common Facilities.
4. Term used for today’s mandatory membership association.
5. “We believe that the lien of assessments will, in all states, be recognized as superior to and unaffected by the homestead exemption”. P. 322.
6. “In absence of an express provision altering priorities, the court held that the lien of the assessments was superior to the lien of the mortgagor . . . a suggested provision dealing with priorities may be found in Appendix F.” p. 321.
7. From the cover page: the Federal Housing Administration, US Public Health Service, Office of Civil Defense, Urban Renewal Administration, Veterans Administration, and the National Association of Home Builders. The Urban Land Institute was formed in 1936 as a research division of the National Association of Real Estate Boards (now the National Association of Realtors) under the name of the National Real Estate Foundation (see generally, Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing, Donald R. Stabile (Greenwood Press 2000).

California’s AB770 & the CID Ombudsman

Without enforcement, just more Smoke & Mirrors


What is the purpose of the CID Ombudsman proposed in AB770? From the wording of the bill, it would be another clerical, paper-shuffling bureaucratic function. CLRC is supposed to be doing research on shortcomings of existing laws. After 40 years of homeowner oppression and abuse, AB770 wants the Ombudsman to now determine just what are the problems? In short, it would merely be a complaint desk to take the heat away from the legislators who continually refuse to sponsor CID reform bills of substance.

Without enforcement provisions in a bill there is no real law, just wishful guidelines to be realistically viewed as mere “policy statements”. This repeated refusal to hold CID boards that violate the law accountable to the state is a statement of public policy. This public policy statement says that it is in the best interest of the State of California not to hold CID board law-breakers accountable and answerable to society. Not answerable to the individual, as is the case with a civil suit, but answerable to the community in general.

Good public policy tells the community what the state believes is good, desirable behavior for the benefit of all members of the community, whether living or not living in a CID. And the current CID policy can only be interpreted that: it is good for California to allow unrestrained abuse and victimization of homeowners by CIDs.

The California Legislature continues to follow a path of protectionism for CIDs at the expense of the constitutional and property rights of individuals. Some may call this a new version of National Socialism where private property rights are extinguished in small communities in an unrealistic attempt to create a utopian society. (See the works of early socialists like Robert Owen, and American community builders like Ebenezer Howard and Jesse Clyde Nichols).

Homeowners need appropriate due process protections backed by enforcement of law-breakers, no matter who they may be. Homeowners need a tough sheriff, not an Ombudsman.

CAI wants Realtors to fully disclose HOA issues

What You Should Know Before You Buy is the last entry in July for the CEO of CAI. It's a response to severe criticism of HOAs and the lack of full disclosure and allegations of misrepresentations in the promotion and selling process. Here's how CAI responds -- it puts the blame on the Realtor organizations.

"But regardless of where you live or what type of home you are considering - you need to be an educated consumer in order to make a purchase decision that is right for you and your family. While some states have very comprehensive disclosure laws regarding the information a seller must disclose to a buyer regarding a home in a community association, other states have very limited or no such requirements. That is why buyers must know what questions to ask of their Realtor and the seller before signing on the dotted line."

Yet, this publication also fails to fully disclose those aspects of loss of rights and homestead exemptions, failing of adequate due process by kangaroo courts, no accountability to the government (purely a civil action and no state penalties for behavior detrimental to society, like abuse of contractual obligations, etc), foreclosure punishments that can be viewed as excessive under the US Constitution, etc. No, nothing at all is mentioned. There is the implication, as above, that the existing state disclosure laws tell all -- not at all!

Consumers must beware. The government is on the side of the developer! And so is CAI.

"Community Matters - What You Should Know Before You Buy". (CAI 7/27/06 publication can be gotten from its web site)

AARP HOA Bill of Rights

David Kahne, a Houston ACLU attorney, who won the notable Brooks v. Northglen HOA case, has written on a HOA Bill of Rights for homeowners. Such a document has been absent from all CC&Rs going back to the Homes Association Handbook, TB #50, for the mass merchandising of planned communities, published in 1964 by ULI with the help of federal agencies.


David Kahne's 69 page report can be found here:

http://assets.aarp.org/rgcenter/consume/2006_15_homeowner.pdf

Many HOA advocates are acknowledged by David. The cover page reads:

A BILL of RIGHTS for HOMEOWNERS in ASSOCIATIONS:
Basic Principles of Consumer Protection and Sample Model Statute

by David A. Kahne,
Law Office of David A. Kahne



The AARP Public Policy Institute, formed in 1985, is part of the Policy and Strategy Group at AARP. One of the missions of the Institute is to foster research and analysis on public policy issues of importance to mid-life and older Americans. This publication represents part of that effort.

The views expressed herein are for information, debate, and discussion, and do not necessarily represent official policies of AARP.