Death by HOA Foreclosure: Collateral damage of the New Social Order

Not many people knew Sabina Anna Prioletta, a single, 37 year-old female on government disability, weighing some 100 pounds at 5-2. She was trying to survive at the poverty level on the disability payments.

In 2001 she inherited enough money to buy a 924 square foot, 2 story attached home in Phoenix at Camelback and west 41st avenue, built in 1972 (one of the Hallcraft Villas subdivisions). Not the best part of town, but decent, and it was the only thing she could call her own, the only asset she had, her home.

Sabina wanted to be secure in her future and paid full price for home, some $35,000. Unfortunately, it was in a homeowners association.

For more, download this attached sad account (PDF).

"There, but for the grace of God, go I"

Planned comunities and UCIOAs do not protect American liberties

In "Are Your best Interests Served . . . " (1) entry of Oct. 18th I wrote,

"Or, the American system of government must be redefined to include a new form of National Socialism that is not a guarantor or protector of your rights and freedoms."

I chose 'national socialism' to reflect the position of CAI and planned community proponents that UCIOAs (2) are needed to combat the balkanization of America with the ensuing anarchy that we are witnessing as a result of unregulated planned community declarations. These governments will lead to a national confederation of private governments bound by the almost identical UCIOA "charters" or state laws, and "The United HOAs of America" (3) . Chapter 20 of Private Neighborhoods goes even further with its discussion of "Neighborhood Succession" from local government (4).

This new national socialism for planned communities is founded upon neoliberal values, namely, the privatization of government and the private sector can do it better. Other examples are: no government interference and best example of local government democracy, inability of local government to deal with HOAs, and of the need for uniform national laws for HOAs under the UCIOA mantra. (These pronouncements can be found by viewing CAI's public policy positions on its web site). And who else in in a better position for a privatived national agency to regulated HOA?

Neo-liberalism is, simply stated, a privatization of government, reliance on the private sector to solve all our societal problems, and less government involvement. As such, the question for all Americans, as here with HOAs, is:

To what extent should this privatization of government deny Americans their fundamental rights and freedoms guaranteed under the US Constitution?

Notes:
1. http://pvtgov.blogspot.com/2006/10/are-your-best-interests-served-by-hoa.html.

2. See "National Lobbyist . . .", http://pvtgov.blogspot.com/2006/04/nationwide-lobbyist-for-hoa.html, now Part 2 of "The Truth About . . .", http://pvtgov.org/pvtgov/downloads/hoa_truth.pdf.

3. http://pvtgov.blogspot.com/2005/09/united-hoas-of-america.html.

4. See "HOA Succession from Local Government", http://pvtgov.blogspot.com/2005/09/hoa-secession-from-local-government.html.

Homes in HOAs are Lifetime Collateral for HOA Survival

California lawyer and L.A. columnist, Donie Vanitzian, reminds us that:

"It is the titleholder's personal asset that functions as a kind of perverse collateral, requiring the owner to pay assessments to the association-entity or lose his asset. . . . On purchase of that home and without anything more, the titleholder's asset became a personal risk and personal liability for the owner. Instantly, the titleholder's asset also became collateral for the association-entity."

(California Common Interest Developments -- Homeowner's Guide, Donie Vanitzian, p. xviii, xix, Thomson - West 2006).

In other words, that investment in a home that the industry special interests talk about, a home controlled by a homeowner's association, is really the legal collateral provided by a homeowner to insure the survivability of the HOA. Stop paying, and your house is up for foreclosure. And it's a lifetime obligation, even if the homeowner faces his own personal survival conditions due to ill health, death of the breadwinner, loss of job, or any other such personal financial condition. The HOA comes first and foremost if you stop paying your assessments to the HOA.

And that foreclosure is a draconian measure since the HOA need only sell the home for a small fraction of its market value, with the owner at high risk of losing ALL his equity in his home. And that's regardless of how long he may have owned his home. Consider a contract for sale purchase where the buyer makes installment payments over a number of years with complete ownership at the end of the contract. Under this contract, the owner, by law, acquires a pro-rata equity interest in the home which is his money. Not so with the pledge of the home as collateral in an HOA when it comes time to foreclose.

No person in his right mind, and with full awareness, would seriously consider this type of investment, as the special interests like to refer to an HOA home purchase - a business investment -- if he had other alternatives. And when the state government takes away any other alternative, we have coerced housing, a new form of national socialism, not freedom of choice in the land of the free and home of the brave.

No person in his right mind and with full awareness, would agree to the terms and conditions of the CC&Rs, backed by state laws, in any other serious financial commitment.

Give your home as collateral to a group of people you don't know, never met, to whom you gave outlandish and broad powers over your private property, your very own home??

Are Your Best Interests Served by an HOA?

A planned community is simply a real estate package defining a subdivision consisting of landscaping, open areas, curved streets, private amenities and common areas, and a private governing body, called the homeowners association, that regulates and controls the people within the subdivision territory. The goal of the HOA is to maintain property values for the betterment of the community-at-large.

The US Bill of Rights only pertains to that document called the US Constitution. These Rights are AMENDMENTS to the Constitution, that contract between the federal government, the states and the people. The Bill of Rights applies to the federal government, and to state entities only by virtue of the 14th Amendment to the US Constitution. They do not apply to private organizations, such as HOAs, unless the US Supreme Court has declared them so. Any statement saying that the HOA is subject to the US Constitution is an empty statement.

If you believe that planned communities can function and must function under the American system of government in order to best protect your interests, then the same laws and the same American system of government that apply to public government, must apply to HOAs.

If you believe that planned community can only survive and best protect your interests by curtailing the US Constitutional protections that all public governments must obey, then the planned community is an anathema to the American system of government, and planned communities are a defective product forced upon home buyers by the state. They must be abolished.

Or, the American system of government must be redefined to include a new form of National Socialism that is not a guarantor or protector of your rights and freedoms.

In an HOA, you are not protected from the loss of such basic rights as: due process protections against arbitrary and capricious whims of the HOA, and compensation for the loss of property rights that your neigbors took from you without your consent; fair and clean elections; the illegality of ex post facto laws to stop HOAs from holding you liable for your actions taken while under then valid HOA governing documents; and enforceable checkings and balances on HOA actions that penalize and hold the HOA accountable under the law.

Activists Must be Proactive!

A serious problem that homeowner rights advocates and activists have failed to correct over the years is the failure to realize that HOA reforms are not a local problem affecting only them or their HOA, but affect society in general. Homeowner rights advocates are in the business of social change on a national level, whether or not they want to be. Just look at how public policy regarding planned communities, homeowner property rights, constitutional protections, and authoritarian private governments dominate the decisions of the courts and the legislators.

This public policy has not been seriously challenged for over 40 years, since the promotion of the ULI Homes Association Handbook in 1964, and consequently, has been accepted as true, just and proper.

Read more . . . Proactive

That's What You Get When Living in an HOA

The last speaker before the Texas hearing on TUPCA, Oct 2, told the committee, "I will kill myself", reflecting the pain and anguish of not finding anyone to help her fight the abuse from her HOA board. She had sent emails to Texas legislators to no avail, and now she was before the committee in person.

This homeowner, Arshia, was interviewed by Shu Bartholomew host and producer of On The Commons this past Saturday. Towards the end of the interview, Shu asked what did the legislators say to her after the hearing, in person.

Arhisa said, "That's what you get when living in an HOA."

Shu, a bit surprised, asked, "The legislators?"

Arshia replied, "Everybody tells me that."


Now, this attitude that pervades our society and halls of government reflects a malaise, as one former president referred to the problems with American society. It says that hardworking, decent people seeking to do what is right and follow the rules are allowed to be abused by a government that has taken a hands-off view of homeownership with, for example, a "Not my problem" attitude and "No one forced you to agree to the CC&Rs." This is disgraceful and reflects a society turned upside-down to benefit the powerful special interests, and an unethical government abuse of discretion with respect to protecting the people.

The average homeowner is being held to be the expert of all experts in equitable servitudes, contract and real estate law and even constitutional law, while the developers, builders HOA trade groups like CAI with the impressive list of notable attorneys draft documents and laws with the specific intent to benefit the fictitious person, the HOA. And in order to accomplish this, the US Constitutional protections must be disregarded, otherwise voluntary and knowledgeable acceptance with the unconscionable adhesion contract CC&Rs would not happen with any reasonable home buyer with free market forces at work.

Would the municipalities and state legislatures be so willing to protect HOAs if the US Supreme Court ruled that property taxes for homes in HOAs must be offset by the amount of services provided by the HOA that would ordinarily be provided by the government? We all know the answer to that question: NO!

What the bottom-line issue is is simple:

If the HOA can only survive by curtailing the US Constitutional protections that all public governments must obey, then the real estate package called the planned community is an anathema to the American system of government, and planned communities are a defective product forced upon home buyers by the state. They must be abolished.

If you believe that planned communities can function and must function under the American system of government, then the same laws and the same American system of government that apply to public government, must apply to HOAs.

Why is there no Bill of Rights to protect homeowners living in HOAs?

Over the years, several homeowners “bill of rights” have been proposed, the latest being proposed by David A. Kahne and published by the AARP Policy Institute. Homeowner rights advocates debate the provisions of these homeowner's bill of rights, and the industry supporters -- the lawyers, CAI trade group, and HOA management groups -- have proposed their own version of a bill of rights. In the midst of all these proposals, one advocate wrote, "There is only one Bill of Rights, the US Bill of Rights". I ask, "What is the real bill of rights?”

The US Bill of Rights only pertains to that document called the US Constitution. These Rights are AMENDMENTS to the Constitution, period. The Constitution applies to the federal government, and to state entities only by virtue of the 14th Amendment to the US Constitution. They do not apply to private organizations, such as HOAs, unless the US Supreme Court has declared them so.

Read more . . .

Common Interest Developments - Homeowner's Guide (Thomson-West)

Donie Vanitzian's new book is what Hyatt's book is to HOA attorneys, except it tells what the laws are and how to use them for the benefit of the homeowner, not the association. No longer will the legal field be flooded with the views of those who wish to perpetuate the status quo while offering "handout" legislation to placate HOA reformers. No longer will the media be forced to carry just the views of the establishment on "How to be a good homeowner and not cause problems with your HOA."

Now, the laws restricting and obligating the duties and responsibilities of boards are explained for the homeowner's benefit, covering not only condo/HOA statutes, but corporation, contract and tort laws. Here are few examples from the book:

"Proving a director's breach of good faith may be difficult, but not impossible. . . . For anyone to take notice, the description must be graphic [detailed], strong and unrelenting. . . . No one law delineates the fiduciary duty of a homeowners association board of directors." p. 267.

"The burden of proof is on the association [regarding fines] to establish that they followed proper procedures. Unless the association can unequivocally meet the burden, the fine should be challenged as illegal and all monies obtained as a result should be returned to the titleholder [property owner]." p.319.

"Methodically documenting the case against monetary fines or punitive measures is important because the board's decision must stand the test of reasonableness if and when challenged. Watch for board actions that appear to exceed the scope of the director''s duties, or for those punitive measures against association members under which the board has no authority to do so." p. 320.

"Where reserve funds do exist, boards should not withdraw those reserves, however temporarily, for purposes other than those for which the funds were intended. . . . The litigant owner arguing that his board has acted in bad faith and breached its fiduciary duty to titleholders and association by mismanaging assets, should consider initiating discovery specifically aimed at the association's reserve studies or reports." p. 376.

While the book focuses on the California statutes, the Davis-Stirling Act, the materials are applicable to other states. Just adapt the materials to the particular statues, if any, or apply the appropriate precedents.

California Common Interest Developments - Homeowner's Guide, Donie Vanitzian, (The Expert Series, Thomson - West 2006). 1060 pages.

We are a nonlawyer legal services provider. We provide general information about the law. I am not a lawyer nor am I employed by a lawyer. I do not provide legal advice or opinion regarding your legal rights. You should consult a competent attorney or other expert for specific information and advice regarding the law. For more information, see AHLIS below.