Do homeowners experience due process in HOAs?

By Deborah Goonan, Independent American Communities

US Constitution (pixabay.com)

Following yesterday’s blog, Legislation should limit power of HOAs, a reader sent the following comment:

This article raises many important issues and misunderstandings about HOA governance. At the Owner level, far too many Owners do not understand their Governing Documents and their rights and duties under those Governing Documents, particularly their due process rights and their duties to elect the Board of Directors. They, too often, don’t exercise their right to vet and choose the Board, and as a result, the Board is populated by unreasonable and unqualified people, including people who serve their own interests before the community’s interests. At both the Owner and Board levels, there is a common myth that the Board can do anything it wants, which is a primary source of conflict between an apathetic Owner and an entrenched, unreasonable Board. Governing documents that I have seen place reasonable due-process restrictions on what the Board can do. If more Owners read their governing documents to understand their due-process rights, there would be fewer foreclosures. If more Board members read their governing documents, they would behave more reasonably.

 

For all practical purposes, is due process adequate in your association-governed community?

One of the biggest myths promoted by the association-governed housing industry is that homeowners have access to due process when faced with violation notices, assessment collections, or disputes over the validity of alleged breaches of contract.

Community Associations Institute claims that due process is satisfied by giving a homeowner the opportunity to be heard by the HOA board selected (hand-picked) violations committee. In their publication outlining Best Practices, Report #2, Governance, CAI provides a list of minimum standards to ensure quality governance of associations. With regard to due process, here is their recommendation: (see page 5)

The board provides for due process (the opportunity to be heard) for owners in association-related matters and the board encourages the use of alternative dispute resolution in appropriate matters.

 

Did you catch that? According to CAI, due process is merely an “opportunity to be heard,” and “encourages alternative dispute resolution” (ADR).

But due process, as understood in the context of the U.S. Constitution and centuries of law going back to 16th Century England, is intended to offer greater protections for the accused, ensuring a fair hearing of the issues before a disinterested third party, and, preferably, a jury of one’s peers.

 

 

LegalDictionary.net defines due process as follows:

Substantive Due Process
Substantive Due Process pertains to those rights not listed specifically in the U.S. Constitution, but which are recognized as an important part of an individual’s liberty. Substantive due process is often related to areas such as voting, minorities, and the rights of children. When determining whether the government has violated a person’s substantive due process rights, the judicial system first determines whether the issue at hand was a fundamental right.

 

Procedural Due Process

Procedural due process protects individuals during governmental proceedings, whether they are civil or criminal. Procedural due process also pertains to parole hearings, governmental benefit hearings, and full criminal trials. The rights afforded in this section include, but are not limited to:

The right to an unbiased trial
The right to be given notice of the proposed trial and the reason for it
The right of the individual to be aware of evidence against him
The right to cross-examine witnesses for the opposition
The right to present evidence and call witnesses
The right to be represented by counsel

 

Prohibition Against Vague Laws

The Due Process Clause protects citizens against laws that are too vague for the average person to understand. If the laws are written in such a manner that an ordinary person cannot determine whether the conduct is expressly prohibited, or that a punishment can be rendered if they carry out the conduct, the court can determine the law to be “void for vagueness.” This prohibition against vague laws ensures that the laws are understandable and that ignorance cannot be used as a defense in criminal offenses.

 

Incorporating Protections into the Bill of Rights

The Bill of Rights was originally intended to apply only to the federal government, but the ratification of the Fourteenth Amendment placed prohibitions on the actions of individual states as well. As time went on, the Supreme Court made a number of rulings that certain state laws or policies violated protections guaranteed by the Bill of Rights, thus “incorporating” those protections, applying them to all U.S. citizens.

 

Source:

https://legaldictionary.net/due-process/

 

Let’s take each topic one by one

Substantive due process is often not met in association governed communities with regard to basic rights, such as the right to vote in association elections and on official corporate issues.

In association-governed communities, voting interests are not rights, per se. Each unit or parcel is allocated its respective share of voting interests as a percentage of the entire association. The votes a member is entitled to cast are determined by the amount of property that member owns.

Units and parcels owned by the developer are often subject to weighted voting interests, for instance, 3, 5, 7, or more votes per unsold unit or parcel. And during Declarant (developer) control, there are generally no HOA board elections, as the board is appointed by the developer.

The person who resides in an association-governed community has no inherent right to vote. Tenants and non-owners are rarely permitted to vote. The concept of one person, one vote does not apply in association-governed communities. The vote is corporate in nature, not Constitutional.

Because of this substantive difference in rights, owners are at a decided disadvantage when it comes to exercising their “right to vet and choose the board.”

 

Procedural due process is nonexistent in association-governed communities. The association provides no opportunity for a trial, either by way of a hearing conducted by a board-appointed committee or by way of ADR.

In fact, both of these processes are meant to avoid a trial!

Can anyone convincingly argue that the HOA hearing is a suitable substitute for a trial, or even the equivalent of small claims or Magistrate court?

Consider that, using HOA internal hearings, the following due process requirements are not met:

  • There is little assurance that the HOA hearing is unbiased.
  • The owner may receive little or no advance notice of the hearing, and no opportunity to schedule a mutually convenient time and place.
  • The HOA may not be able to provide ample evidence of the alleged violation or assessment delinquency.
  • The owner has no right to cross-examine witnesses that allege a violation. In almost all cases, the HOA takes an anonymous complaint from another owner or resident, and protects the anonymity of the person who filed the complaint.
  • The owner has no right to call witnesses as part of defense.

The owner probably does have the right to be represented by counsel, but usually only with advance notice to the board.

As for ADR, depending upon the rules of engagement, an association member’s right to confront and present evidence and witnesses will also be limited. But the most serious obstacle to due process in ADR is whether or not the homeowner has access to a fair and impartial mediator or arbitrator. A second obstacle is that the mediator or arbitrator is not bound by rule of law or legal precedent. A third obstacle is that there is often no right to appeal a decision, and if binding Arbitration is chosen, no right to go to trial on the same issues.

 

Restrictive Covenants and governing documents in association-governed communities are notorious for the number of vague laws contained within. Board enacted rules are even more likely to be vague, and therefore misinterpreted by homeowners. Yet, within the typical HOA hearing process, there is often no protection for association members against these vague provisions. Selective enforcement of rules is a common complaint in HOAs.

 

And, because association-governed communities are private organizations (usually corporations), there is no inherent guarantee of that the Bill of Rights of the U.S. Constitution is incorporated into a homeowners, condominium, or cooperative association.

 

 

For readers interested in more detail, here is an additional due process reference:

https://www.loc.gov/exhibits/magna-carta-muse-and-mentor/due-process-of-law.html

 

References about ADR:

Traditional Litigation versus Alternative Dispute Resolution (in collection cases)

http://www.jdsupra.com/legalnews/traditional-litigation-versus-alternativ-97899/

 

Arbitration Pros and Cons

http://adr.findlaw.com/arbitration/arbitration-pros-and-cons.html

 

Arbitration Pros and Cons

Learn about the advantages and disadvantages of arbitration.

http://www.nolo.com/legal-encyclopedia/arbitration-pros-cons-29807.html

 

Advertisements

8 Replies to “Do homeowners experience due process in HOAs?”

  1. The reader’s comment that is quoted is limited to the concept of due process as defined and contained in the Association’s governing documents. If an individual Owner and/or the Board is ignorant of the due process provisions of the Association’s governing documents, there will be misunderstandings and disputes which could easily escalate to foreclosures.

    Like

    1. I believe you have missed the point of today’s blog. Due process as defined and contained in the Association’s governing documents does not constitute valid due process. As private organizations that have not been recognized by the courts as state actors (at least not yet), residential housing associations are not bound by Constitutional due process.

      See the following abstract with regard to Arbitration “due process” for state vs. private employment disputes

      https://litigation-essentials.lexisnexis.com/webcd/app?action=DocumentDisplay&crawlid=1&doctype=cite&docid=9-231+Labor+and+Employment+Law+231.syn&srctype=smi&srcid=38D7&key=5982a7f8097de53427524c33dfb6697e

      Like

      1. From the abstract:
        The concept of “due process” differs markedly when analyzed vis- xE0-vis the employment arbitration and constitutional law arenas. Specifically, when a public employer disciplines or discharges an employee, “state action” exists, and if the action is improper the employee may have constitutionally protected interests. The U.S. Constitution forbids deprivation of such interests without “due process of law.” This constitutional guarantee exists even when the dispute is being addressed via arbitration, although the specific procedural rights created by the guarantee may vary.

        In contrast, a private sector employer is not part of the government; thus, when a private employer disciplines or discharges employees, there is no “state action” and, hence, no constitutional protections are implicated. Arbitrators have nevertheless applied due process concepts to describe an inchoate notion of fairness, as well as when such due process rights are mandated by contractual relationships existing between employers and employees.

        Like

  2. Thank you for this information Deborah. In CA at one of my rental properties my tenants left the trash cans in front of the garage instead of putting them inside and had a piece of work equipment (a sign) stored for a short time on the side of the house. I received 2 violation notices-1 for each violation. I live in another state so it took some time to get to me, by the time I contacted the tenants the violations had been corrected weeks before.
    I notified the management co and sent them pictures that the 2 violations were corrected before the board meeting. The tyrannical board fined me $200 anyway-because I didn’t fill out the “form” they demanded everyone ‘submit’ with their proof of compliance.
    I appealed this idiotic decision-as I did exactly what their ‘notice’ told me to do-they refused to rescind the fines.
    This type of crap is what makes HOA boards a nightmare and require that we have legislation to correct.
    I do not understand why board members have to be so unreasonable.
    In my case it isn’t about the violations or corrections – it is about their control issues of demanding everyone be in lock step with their demands.
    Total bs now I have to take them to small claims court, spend a fortune to get there etc etc.
    I have researched other options but there doesn’t seem to be anything out there to help hopeless homeowners stuck with unreasonable boards. I will write my congresscritters and file complaints but it doesn’t seem to make any difference.
    Except here in ID where I live we cannot impose fines without a just and reasonable procedure. The laws were changed here and it is basically impossible to impose fines for rules violations.
    Thanks for your articles…

    Like

  3. From the transcript: [beginning July 1, 2014] ” HOA’s will have to give written notice if a resident is out of compliance with neighborhood code, and allow 30 days to let the homeowner fix the problem before fining them. Homeowners can appeal the fine if they’re trying to rectify the problem.”

    The HOA can still impose a fine, but only after a 30-day waiting period.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s