Do some U.S. homeowners have more private property rights than others?

By Deborah Goonan, Independent American Communities

As we celebrate Independence Day in the U.S., it is the appropriate time to reflect on the status of private property rights in America, especially with regard to homeownership and association-governed communities.

Legal dictionaries define private property as:

The ownership of tangible and intangible goods by an individual who has exclusive rights over it. The transfer of a private property can take place only by the owner’s consent or through a sale or through its presentation as a gift.

Law Dictionary: What is PRIVATE PROPERTY? definition of PRIVATE PROPERTY (Black’s Law Dictionary)

Source: http://thelawdictionary.org/private-property/

Although private property obviously includes residential real estate – whether used as a private home, an investment, or some combination of the two – the definition also applies to intangible rights to enjoy the use of one’s home.

The Fifth Amendment of the U.S. Constitution includes what is known as the “Takings Clause,” emphasized below in bold.

Amendment V

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Source: Cornell Law School https://www.law.cornell.edu/constitution/fifth_amendment

 

State Constitutions also provide certain legal protections of property rights under similar “Taking Clauses,” briefly explained as follows:

Taking Clause Law and Legal Definition

The Takings Clause refers to the last clause of the Fifth Amendment to the U.S. constitution that limits the power of eminent domain. The taking clause requires the entity to pay just compensation on taking private property for public use. The purpose of the takings clause is to ensure that the financial burdens of public policy are shared by the entire public and not unfairly placed on individual property owners.

In the U.S., state constitutions also provide for taking clause. Following is the taking clause of a state constitution limiting the power of eminent domain.

”Private property may be taken or damaged for a public use and only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner.” [Cal Const, Art. I § 19].

Source: https://definitions.uslegal.com/t/taking-clause/

 

Property rights in association-governed communities

So, in theory, the government cannot take away private property except for “public use,” and then only after providing “just compensation.”

But legal gray zones exist. How do we define “public use” and “just compensation?”

In fact, every year, there is a considerable amount of litigation between private property owners and government as to what constitutes a “taking.”

To add to the complex legal mess surrounding property rights, we have more than 300,000 association-governed communities that are not formally recognized as units of government. All of these so-called “private” communities (actually, they are common interest communities with collective ownership) are based upon a set of restrictive covenants, deemed to be nothing more than legal contracts between and among homeowners and their associations.

Therefore, under the law, Constitutional protection against taking of private property is virtually non-existent in HOAs.

 

“All animals are equal, but some animals are more equal than others.”
George Orwell, Animal Farm

 

Hierarchy of power in homeowners, condominium associations

Association-governed communities are also organized by hierarchy. Some people have more rights than others. At the top of the hierarchy is the land developer/home builder, who controls the finances and governance of the community during construction and beyond.

Taking a broad view, local government takes an even higher position in the power hierarchy than real estate developers, because it enacts and enforces ordinances and development plans. Ultimately, it is government that decides if, when, where, and how residential housing will be constructed or redeveloped, and whether or not a mandatory association will be required as part of the approved plan.

When – and if – the developer ever completely relinquishes control of the association to its members, the members of the board of directors or trustees reign supreme over all other homeowners and residents. The board enjoys many unilateral rights to decide how to collect and spend assessments, and can also enact rules and regulations, often without consent of homeowners.  A membership vote is required in some associations if budget increases are proposed to exceed a certain threshold (10 – 20% of the previous annual budget), however, the board retains the power to impose special assessments, to approve emergency expenditures, to borrow money, or to spread out budget increases over more than one year.

Next in order of power and influence is any community’s political faction – be it one property owner or a group of owners  – that holds a majority of voting interests in the association. In this case, majority often rules to the detriment of the minority, even if the voting interest minority is represented by more individual members than the voting interest majority.

If the association has standing committees, those members often enjoy some power and influence over board members.

Way down at the bottom of the hierarchy is every homeowner that is not a board or committee member of the association.

“No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?”
George Orwell, Animal Farm

Power hierarchy and private property rights

Quite often, association members at the top of the hierarchy hold competing interests that are not aligned with the common interests of general membership. This explains why conflict is so very common in homeowners and condominium associations.

In essence, those at the top of the hierarchy have greater property rights than those in the middle or at the bottom of the hierarchy.

As always, I illustrate my facts and conclusions with real life examples.

Various media reports highlighted below are intended to provide just a few examples of the ways that private property rights have been eroded for many Americans, by way of restrictive covenants, ordinances, and enabling statutes that essentially allow a minority or elite group of people to exploit or disregard the private property rights of the majority.

 

Beach Bummed

Brandon Beyer | Leisa Williams

June 28, 2017
HOLLYWOOD, FLA. (WSVN) – Living on the Hollywood Beach Broadwalk is like having your own piece of paradise.

Terry Gold, Sandpiper resident: “It’s beautiful out there. Very tranquil, quiet.”

Terry Gold bought her condo at the Sandpiper 30 years ago, complete with private parking.

Terry Gold: “I bought the apartment with the idea that I have my parking right outside the back door.”

Sandpiper has nine units, with 10 private parking spaces … until now.

That’s because the City of Hollywood is reclaiming five spots to make Oklahoma Street wider.

Read more (video):

Beach Bummed

This appears to be a case of transferring rights of residents of older condominiums to residents of newer, more valuable condominiums.

Woman could face jail time over garden

by: Rikki Klaus Updated: Jun 26, 2017 – 11:44 PM

WSB-TV2

ATLANTA – A woman could face jail time and a large fine over her garden.

Atlanta city code enforcement officers told Lexa King that her flowers are overgrown.

King told Channel 2’s Rikki Klaus that she’s been growing her garden for about 30 years. She beams when she talks about the azaleas in her northeast Atlanta yard.

“And since I pay the taxes and since I pay the mortgage, and since I pay the insurance, I figure I’m the one that gets to say,” King said.

Code enforcement officers see the situation and her garden differently.

Read more (Video):

http://www.wsbtv.com/news/local/atlanta/woman-could-face-jail-time-over-garden/542012882

Note: This report illlustrates why it would probably not be a good idea to declare HOAs mini-governments. Instead, U.S. citizens need to take steps to rein in the excessive power of all forms of government, and to insist upon equal protections of private property rights for all Americans, no matter where they happen to live.

KC urban farmstead fighting to keep its farmers market open after HOA complaint

Josh Helmuth KSHB 41
7:30 PM, Jun 22, 2017
8:26 PM, Jun 22, 2017

KANSAS CITY, Mo. – A family-owned farm in Kansas City has been hosting a farmers market for several years, but since it’s held in a residential area, the homeowners association now says it has to go.

Loud House Farm is located along east 113th Street in south Kansas City. Debbie Borel’s family has owned the farm since the 1970s, around the same time the property became residential. It was after her daughter moved back home six years ago when she decided to keep the farm alive by adding animals, and soon after, a small farmers market.

“It’s very small. I mean it’s really only about four farmers,” said Borel, who has hosted the market at her urban farmstead every Wednesday night for roughly the last two years.

“The people from this neighborhood support this market,” she said.

Claire Walker, Borel’s daughter and co-owner of the farm, even added a small donation-based, farm-to-table dinner group about two weeks ago.

“We know that the city wants to support sustainable food practices,” said Walker. “We think this could be a model for all neighborhoods to support each other and support good food.”

But recently, the homeowners association showed up and called the city to shut things down. A customer shot a video of the encounter on her cellphone.

Read more (Video):

http://www.kshb.com/news/local-news/kc-urban-farmstead-fighting-to-keep-its-farmers-market-open-after-hoa-complaint

The HOA took this issue to the City for assistance in depriving the property owner of her rights. 

Owners face losing condos in Kissimmee

Mary Shanklin Mary ShanklinContact Reporter
Orlando Sentinel

Polk County resident Laurel Harris and a handful of Legacy Grand condo owners — including a few full-time residents — have been put on notice by their association that the Kissimmee property is becoming a hotel.

The main reason the condo association at Legacy Grand is able to transition the condo property into a hotel, against the wishes of some owners, is that an ownership group holds more than 80 percent of the units and controls the association.

The “takeover,” as Harris and her attorney call it, is a new twist on something that has been happening in Florida for years: Investors bought apartments at the height of the real estate market and tried to sell them as condos. But the real estate market crashed and left the buildings largely empty. Throughout the state, investors who accumulated large shares of units have been able to pressure the few remaining owners into selling so they could control the entire property.

Read more:

http://www.orlandosentinel.com/classified/realestate/os-bz-legacy-hotel-kissimmee-20170530-story.html

 

Athens condo owners sue developer and others, alleging violations of state RICO Act

Posted June 28, 2017 04:00 pm
By Jim Thompson news@onlineathens.com

Athens Banner-Herald

Owners of some of the condominiums in Athens’ intown Heritage Square neighborhood are suing local real estate investor and rental property owner Fred Moorman and other Heritage Square condominium owners.

The homeowners accuse Moorman of committing violations of Georgia’s civil Racketeer Influenced and Corrupt Organizations Act in an alleged scheme by Moorman to take over the neighborhood.

Broadly, Georgia’s RICO Act is designed to address “an interrelated pattern of criminal activity motivated by or the effect of which is pecuniary gain or economic or physical threat or injury,” according to the state code.

Specifically, the lawsuit alleges that Moorman and the owners named as defendants are engaged in “a scheme to acquire eighty percent (80%) of the units [at Heritage Square], partition the condominium at a reduced fair market value, and eject Plaintiffs from their homes.”

Read more:

http://onlineathens.com/local-news/2017-06-28/athens-condo-owners-sue-developer-and-others-alleging-violations-state-rico

Both of these last two reports illsutrate how one group of homeowners can trample all over the private property rights of their neighbors. But will the courts rule that any of this activity is illegal or criminal? 

References

U.S. Ranking of property rights by Heritage Foundation is #17, with a score of 75.1%.

Countries that score higher than US include: Hong Kong, Australia, Switzerland, Estonia, Canada, and Chile.

The scoring system used by Heritage Foundation:

The property rights component is an assessment of the ability of individuals to accumulate private property, secured by clear laws that are fully enforced by the state. It measures the degree to which a country’s laws protect private property rights and the degree to which its government enforces those laws. It also assesses the likelihood that private property will be expropriated and analyzes the independence of the judiciary, the existence of corruption within the judiciary, and the ability of individuals and businesses to enforce contracts.

The more certain the legal protection of property, the higher a country’s score; similarly, the greater the chances of government expropriation of property, the lower a country’s score. Countries that fall between two categories may receive an intermediate score.

Each country is graded according to the following criteria:

100—Private property is guaranteed by the government. The court system enforces contracts efficiently and quickly. The justice system punishes those who unlawfully confiscate private property. There is no corruption or expropriation.
90—Private property is guaranteed by the government. The court system enforces contracts efficiently. The justice system punishes those who unlawfully confiscate private property. Corruption is nearly nonexistent, and expropriation is highly unlikely.
80—Private property is guaranteed by the government. The court system enforces contracts efficiently but with some delays. Corruption is minimal, and expropriation is highly unlikely.
70—Private property is guaranteed by the government. The court system is subject to delays and is lax in enforcing contracts. Corruption is possible but rare, and expropriation is unlikely.
60—Enforcement of property rights is lax and subject to delays. Corruption is possible but rare, and the judiciary may be influenced by other branches of government. Expropriation is unlikely.
50—The court system is inefficient and subject to delays. Corruption may be present, and the judiciary may be influenced by other branches of government. Expropriation is possible but rare.
40—The court system is highly inefficient, and delays are so long that they deter the use of the court system. Corruption is present, and the judiciary is influenced by other branches of government. Expropriation is possible.
30—Property ownership is weakly protected. The court system is highly inefficient. Corruption is extensive, and the judiciary is strongly influenced by other branches of government. Expropriation is possible.
20—Private property is weakly protected. The court system is so inefficient and corrupt that outside settlement and arbitration is the norm. Property rights are difficult to enforce. Judicial corruption is extensive. Expropriation is common.
10—Private property is rarely protected, and almost all property belongs to the state. The country is in such chaos (for example, because of ongoing war) that protection of property is almost impossible to enforce. The judiciary is so corrupt that property is not protected effectively. Expropriation is common.
0—Private property is outlawed, and all property belongs to the state. People do not have the right to sue others and do not have access to the courts. Corruption is endemic.
Sources. Sources. Unless otherwise noted, the Index relies on the following sources for information on property rights, in order of priority: Economist Intelligence Unit, Country Commerce, 2009–2012; U.S. Department of Commerce, Country Commercial Guide, 2009–2012; U.S. Department of State, Country Reports on Human Rights Practices, 2009–2012; and various news and magazine articles.

 

Source: Heritage Fondation

http://www.heritage.org/index/property-rights

http://www.heritage.org/index/ranking

 

One of the most important judicial rulings came from the Connecticut Supreme Court in 2005, Kelo vs. New London.

 

Facts of the case
New London, a city in Connecticut, used its eminent domain authority to seize private property to sell to private developers. The city said developing the land would create jobs and increase tax revenues. Susette Kelo and others whose property was seized sued New London in state court. The property owners argued the city violated the Fifth Amendment’s takings clause, which guaranteed the government will not take private property for public use without just compensation. Specifically, the property owners argued taking private property to sell to private developers was not public use. The U.S. Supreme Court ruled for New London.

Question
Does a city violate the Fifth Amendment’s takings clause if the city takes private property and sells it for private development, with the hopes the development will help the city’s bad economy?

Conclusion

5–4 DECISION
MAJORITY OPINION BY JOHN PAUL STEVENS [*indicates Justices in the majority]

William H. Rehnquist
John Paul Stevens*
Sandra Day O’Connor
Antonin Scalia
Anthony M. Kennedy*
David H. Souter*
Clarence Thomas
Ruth Bader Ginsburg*
Stephen G. Breyer*

No. In a 5-4 opinion delivered by Justice John Paul Stevens, the majority held that the city’s taking of private property to sell for private development qualified as a “public use” within the meaning of the takings clause. The city was not taking the land simply to benefit a certain group of private individuals, but was following an economic development plan. Such justifications for land takings, the majority argued, should be given deference. The takings here qualified as “public use” despite the fact that the land was not going to be used by the public. The Fifth Amendment did not require “literal” public use, the majority said, but the “broader and more natural interpretation of public use as ‘public purpose.'”

Source: “Kelo v. New London.” Oyez, https://www.oyez.org/cases/2004/04-108. Accessed 2 Jul. 2017

Bill of Rights Institute (non-partisan), list of important case law

https://www.billofrightsinstitute.org/educate/educator-resources/landmark-cases/private-property-rights/

 

STATE EMINENT DOMAIN LEGISLATION AND BALLOT MEASURES

National Conference of State Legislatures

The United States Supreme Court decided in Kelo v. New London, 545 U.S. 469 (2005), that the “public use” provision of the “takings clause” of the 5th Amendment of the U.S. Constitution permits the use of eminent domain for economic development purposes that provide a public benefit. At the same time, the court noted that “nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.”
Eminent domain legislation and ballot measures adopted in 42 states in response to Kelo generally fall into five categories:
Prohibiting eminent domain for economic development purposes, to generate tax revenue, to increase employment or to transfer private property to another private entity.
Defining what constitutes “public use” to be the possession, occupation or enjoyment of the property by the public at large, public agencies or public utilities.
Restricting eminent domain to blighted properties and redefining what constitutes blight to emphasize detriment to public health or safety.
Requiring greater public notice, more public hearings, negotiation in good faith with landowners and approval by elected governing bodies.
Requiring compensation greater than fair market value where property condemned is the principal residence.

Read more, access links to individual state information:

http://www.ncsl.org/research/environment-and-natural-resources/eminent-domain-legislation-and-ballot-measures.aspx

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