February 2023 IAC HOA News Digest: Condo, HOA living is getting a lot more expensive
By Deborah Goonan, Independent American Communities deborahgoonan@gmail.com
2022 appears to be the year of the Backlash Against HOAs. IAC is following several new bills with a similar theme: Restore the rights of homeowners and residents, and hold HOAs and HOA-industry stakeholders accountable to the people. One of those bold, new HOA-legislative proposals is a one-page bill filed by Louisiana Rep. Paul Hollis.
Louisiana House Bill 9: HOA documents cannot restrict constitutional rights
As filed, House Bill 9 aims to prohibit HOA-governing documents from infringing on the Constitutional rights of owners and residents.
The relevant proposed amendment to statute reads:
B. Any provision of a community document which restricts a constitutional right of a lot owner or a person residing in a residential planned community shall be null and void.
Louisiana House Bill 9, filed January 2022
Bravo to Rep. Hollis! In a mere 29-words — a single sentence — he has managed to attack HOA abuse by getting at the heart of the problem of HOA Abuse: too much power and too little accountability.
As well documented and discussed at length here on IAC, over-zealous individuals and industry leaders behind HOA regimes of all types and sizes have long abused their powers. For the past 5 decades, the HOA industry has been on a Community Association Control binge, seeking ever more onerous ways to increase the HOA board’s power to spend homeowners’ money and enforce often unconstitutional rules. In essence, property owners’ and residents’ rights are reduced to that of mere feudal serfs, who are expected to put up with all their HOA nonsense, and shut up about it.
HOAs have long defied U.S. and state Constitutions with impunity
In 2017, IAC summarized all the ways HOAs defy the Constitution. From squelching Free Speech with “cease and desist” letters from HOA attorneys, to imposing excessive fines for minor violations. From collecting your tenant’s rent to settle your (disputed) debt to the association, to engaging hostile condo association takeovers and forcing owners to sell their units to investors for pennies on the dollar. By now, it’s common knowledge. There’s no shortage of documented cases of HOAs abusing their power to exploit homeowners and residents.
Illinois case law: condo owners entitled to free speech and due process
In 2018 and 2019, IAC reported on a landmark case in Illinois, where the Supreme Court refused to consider a condo association’s appeal in Boucher vs 111 East Chestnut Condominium Association. In that case, the condo owner, Michael Boucher, was accused of ‘obnoxious behavior’ by his condo association board. Boucher has insisted from the beginning that, as a former board member who once disagreed with fellow board members, the HOA violation citations were retaliatory in nature for voicing his opinions.
At a ‘due process’ hearing, where the owner was supposed to be given the opportunity to face his accusers and defend himself, the condo HOA board engaged in Kangaroo-Court style behaviors. Condo board members refused to provide the unit owner and his legal counsel with concrete evidence of Boucher’s alleged obnoxious behavior. The condo board also refused to hand over a copy of its video recording of the violation hearing, further eroding their fiduciary obligation to provide any semblance of due process.
A lower court found in favor of the condo association, but Boucher appealed, with legal counsel provided by Attorney Norman J. Lerum. The lower court ruling was soundly reversed in favor of Boucher by the Appellate Court. The legal panel acknowledged that condo owners are indeed entitled to Free Speech and Due Process rights, regardless of condominium ‘contractual’ documents and board-enacted rules governing personal behavior.
But the HOA didn’t give up that easily. Shortly after their Appellate Court defeat, the condo association’s attorney appealed to Illinois Supreme Court that the condominium association is a private organization; that the relationship between the association and its members is merely contractual, and that, in the absence of state action, the lower court’s ruling in favor of the association should stand. After the Supreme Court rightfully declined to hear that appeal, Boucher v. 111 Chestnut became binding case law in Illinois.
HOA attorney tells the world that, as an HOA homeowner, “you can contract away Constitutional rights”
In this 2019 report from KXAN (Texas), listen to the HOA attorney explain that, when you purchase a home or move into an HOA-governed community, you agree to abide by ‘contractual’ documents, including the Declarations of Covenants, Conditions, & Restrictions. According to Attorney Gregory Cagle’s opinion, “you can contract away Constitutional rights.” In this case, owners were forbidden by their HOA to park on the public streets in front of their homes — even though city law and traffic safety codes did NOT prohibit parking on the street. The HOA chose to issue parking tickets and fines to enforce their very unpopular parking restrictions.
When HOAs want to avoid transparency, some selectively enforce rules, or sue owners instead
Also in 2019, IAC posted another important article about a Pennsylvania homeowner’s 10-year legal battle with his HOA. The HOA sued a long-time homeowner, Mike Glassic, when he refused to shut down his website. The owner argued he was exercising his First Amendment rights to post facts and opinions about some of his HOA board’s questionable financial decisions in his planned community. The HOA tried to intimidate Glassic with its lawsuit.
But, after a decade of legal maneuvering, the HOA, with its attorneys, failed to make its case that the homeowner stepped over the line with his website. The HOA ultimately withdrew its lawsuit.
With the arrival of the COVID pandemic in 2020, HOAs responded by eliminating in-person meetings and board elections, closing down common recreational amenities and gathering spots, and doubling down on enforcement of HOA rules and restrictions.
COVID pandemic ushers in a new era of non-transparency for HOAs
During the pandemic, HOAs used COVID as a convenient excuse to conduct the rare (often disorganized) Zoom meeting. Two years later, many homeowners say that their HOA is even less transparent than they were in the pre-COVID era of those sometimes contentious in-person meetings.
Then in 2021, several states, including California, Florida, Maryland, North Carolina, and Virginia, amended their HOA, condo, and co-op laws to make online meeting and electronic voting universally legal and business-as-usual. This, of course, was prompted and encouraged by HOA-industry management CEOs and attorneys — creating a captive market for their proprietary e-voting HOA software and communications applications. In reality, what these state laws will do is make it harder for members (property owners) to actively participate in governance of their communities.
Let’s be realistic. The advent of Zoom HOA meetings has created the opportunity for defensive or rogue HOA board chairs to mute owner’s microphones during the comment period, to adjust screen angles, room lighting, and microphone volumes to make it difficult or impossible for owners to see and hear what’s actually going in the meeting room. For annual election meetings, virtual sessions can prevent any board candidates or challengers from getting a clear view of ballot counting. E-voting systems are potentially easy to hack, and difficult to verify e-votes with a paper trail in the event of an audit. (What could go wrong?)
Legislative backlash against HOAs was inevitable!
Highly publicized media reports, recent court decisions in favor of an owner’s Constitutional rights, and residents experiencing COVID fatigue have all contributed to the number of frustrated, fed up owners. It was only a matter of time before an HOA ticked off a State Legislator, one like Rep. Paul Hollis, who would have the courage and the political clout to file a bill like LA HB-9.
Contrary to HOA-industry attorney opinions, an HOA’s governing documents are not a ‘contract’ with which owners freely agree. Most obviously, HOA-governing ‘contract’ terms cannot be negotiated by the property owner, either before or after purchase of their property. Even worse, for non-owner residents who are not direct parties to the ‘contract,’ HOAs commonly fine and penalize tenants, family members, and guests in other ways — such as issuing parking tickets, towing vehicles, or blocking entry to the community pool or park.
By now, most attentive and savvy housing and real estate consumers know that HOA governing documents are written — and often amended several times — by attorneys working for real estate developers. After the community transitions to a homeowner-ruled board, HOA attorneys ‘help’ boards interpret and further amend those so-called ‘contracts,’ working in tandem with the HOA management industry. Homeowners at large play little to no role in the process of changing the terms of HOA-governing documents — other than voting on amendments based upon the limited information they are fed by the HOA board via its attorney.
To anyone with a grain of common sense, the HOA ‘contract’ is completely bogus. And its terms are often onerously vague. By design, these documents lean in favor of HOA control over its members. In recent history, HOAs have been further enabled by state legislation that has handed HOA boards various powers to force compliance of owners and other persons residing in the common interest or planned community.
Ironically, the HOA is rarely held accountable to its own common maintenance or public nuisance rule enforcement obligations, according to the very same ‘contract,’ — at least not without engaging in a legal battle that’s difficult to win. (In many HOA-governed communities, deferred maintenance is the rule, not the exception, and sometimes with devastating consequences.)
The genius of Rep. Hollis’ bill is that, if enacted as state law, it will finally put to rest the HOA-industry attorneys’ tired old arguments that the community’s governing documents can supersede Constitutional rights ‘by contract.’
Reference article:
Do HOAs have too much power? One state lawmaker says yes By David Jacobs, TUESDAY, JANUARY 18, 2022