Charlestown IN eminent domain lawsuit update, implications for HOA residents?

By Deborah Goonan, Independent American Communities

City of Charlestown officials are attempting to downplay an Appellate Court ruling in favor of the Pleasant Ridge Neighborhood Association Corporation.

Since 2014, Charlestown Mayor Bob Hall has been making grand plans for redevelopment of Pleasant Ridge, a neighborhood of small homes, most of them owned or leased by low-income residents. Developer John Neace, of Pleasant Ridge Development, LLC, acquired 100 neighborhood properties, many of them in poor condition.

According to the facts of the case, in 2001, the city adopted Indiana Unsafe Building Law (UBL). In 2008, Charlestown later enacted, by Ordinance, its own Property Maintenance Code (PMC).

After enacting the PMC, according to a news release from Institute for Justice, City officials began selectively enforcing code violations upon many of the 50 remaining homes that are not currently owned by Neace. According to the terms of its PMC, Charlestown imposes hefty fines on private property owners in Pleasant Ridge, while allowing developer-owned properties to deteriorate without proper maintenance.


IN Judge rules in favor of HOA, says City of Charlestown’s fines are unconstitutional

Attorneys from the Institute for Justice (IJ), representing homeowners from a voluntary membership Neighborhood Association, say that the City’s actions were intended to exert a great deal of financial pressure, essentially forcing homeowners to sell their homes to the developer. Homeowners had asked the lower court for an injunction, to stop the abusive code enforcement process.

Last December, the lower court concluded that, because of Home Rule authority, the City of Charleston  was not required to enforce state UBL, and then granted an injunction that prevented the City from enforcing its PMC.

The City was prevented from enforcing any of its own building codes, and imposing fines, against properties in Pleasant Ridge, even in the case of genuinely unsafe living conditions.

Both parties appealed, for different reasons.

Property rights quote

The City sought to regain its authority to enforce both state (UBL) and City (PMC) building codes.

The Neighborhood Association sought the court’s judgment to limit Charlestown’s rights to enforce its own PMC, without any regard for the state law’s limitations upon allowable fines imposed for violations to the Unsafe Building Law.

The Appellate Court unanimously ruled that, because the City has opted to adopt UBL, it must abide by the constraints of state law. In short, the City’s PMC must be enforced in a way that does not contradict state law (Unsafe Building Law). Notably, the City of Charlestown must not impose fines that exceed the maximum level allowed by state law.

The case will now return to trial court, where federal and state Constitutional issues of Equal Protection and Privileges and Immunities are to be considered.

City: Ruling removes handcuffs in fining low-income neighborhood

Matthew Glowicki, Louisville Courier Journal Published 7:37 p.m. ET Sept. 10, 2018 | Updated 7:53 p.m. ET Sept. 10, 2018

A Southern Indiana city claimed victory in a nationally watched property-rights dispute Monday, saying an appellate court ruling lifts restrictions on its ability to inspect homes and issue fines in a low-income neighborhood.

But the Pleasant Ridge Neighborhood Association, which alleges in a lawsuit that the city of Charlestown has conspired with a developer to run residents out, also said it had won, pointing to the court’s ruling that the city needs to follow state law when it enforces its property maintenance code.

The ruling is the latest development in the lawsuit filed by the neighborhood association in January 2017 alleging that city officials had used a “code enforcement scheme” to levy fines and force property owners to sell.

As it levied fines against residents of the Pleasant Ridge neighborhood, Charlestown cited both the Indiana Unsafe Building Law and its own property maintenance code.

While some of the law’s and code’s provisions were the same, others were different, leading to confusion.

In a unanimous ruling, the Court of Appeals of Indiana found that the city’s code still has legal force but cannot be enforced in a way that’s inconsistent with the state’s building law.

Read more:


Bill of Rights US Constitution

Implications for residents of HOAs

Notice that, because Pleasant Ridge is not governed by a mandatory, private homeowners’ association, the courts are willing to consider the injustice of selective enforcement in terms of residents’ Constitutional rights.

If Pleasant Ridge were an association-governed community, as opposed to a Neighborhood Association, under current housing and corporation policies, the issue of selective enforcement would be treated as a violation of contract law based upon Covenants, Conditions, & Restrictions (CC&Rs).

Likewise, with rare exception, state laws, including Indiana’s Unsafe Building Law (UBL), impose no legal obligations upon private association-governing communities to limit fines, penalties, or attorney fees in connection with enforcement of its restrictive covenants, rules, and regulations — the functional equivalent of municipal and county code enforcement.

In essence, HOAs are private governing entities enabled by Home Rule on steroids. As outrageous and selective as Charlestown’s code enforcement policy is alleged to be, association-governing communities commonly engage in even more outrageous and selective enforcement of restrictive covenants, virtually unregulated at the local, state, or federal level.

HOA powers to fine, file liens on property, and foreclose on those liens — in many cases without judicial intervention, and subject to priority lien over a first mortgage — are unchecked perversions of government powers. Opportunistic governing boards, community association management companies, collection companies, and attorneys engage in precisely the same abusive behaviors that IJ and Pleasant Ridge homeowners describe in their legal complaint against the City of Charlestown.

But, so far, there’s been no similar Constitutional or Home Rule challenge brought against any association-governed community, or its agents.

If policy makers and American voters continue to ignore this blatantly unequal treatment of residents and homeowners governed by HOAs, and if local, state, and federal governments continue to funnel Americans into association-governed housing in common interest communities, a small elite group of real estate stakeholders will soon “own” housing in America, and fully succeed in circumventing the U.S. Constitution.

Unless concerned Americans and advocates for individual rights unite against this abuse of power and violation of fundamental individual rights by private HOAs and similar quasi-governmental entities, we may soon face the total demise of our Democratic Republic.

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