Monday, May 07, 2007

Libertarians Cry Out For Government Action!

I'm going to have to write about homeowner associations again; it's amazing the vehemence that it brings out in people, especially considering how in the 1990's these private institutions were going to end municipal government as we knew it, that local government was a dinosaur that soon would be extinct as the more fleet-footed, mammalian HOAs took over the governance ecosystem. Yes, we decided to empower private individuals to control their own community's destiny--and who could have predicted that the people getting that power would use it as well as, say, they can drive cars? I think next week's column is how we gave the power to homeowners to control their neighborhoods, and look how that's turned out; now we're going to have the very same people carry guns and we're going to be safer? Can't wait for that.

My suggested title was "HOAs: Threat or Menace?" but the editor didn't get that joke. And for those of you who know my father-in-law, you know that he's a man who really does need no introduction.

WHEN IT COMES TO HOA REGULATIONS, FATHER-IN-LAW KNOWS BEST
East Valley Tribune, May 6, 2007

Extracting the U.S. from Iraq is child’s play compared to a political debate raging in my world. On one side are my editorial overlords at the Tribune, scourge of homeowner associations everywhere. On the other side is a HOA finance committee member who happens to be my father-in-law. It’s not hard to guess where I come out.

Today’s issue involves whether HOA assessments should be limited by the homestead exemption. HOAs get their powers from recorded declarations, the all-powerful Covenants, Conditions and Restrictions incorporated into every deed to property in the subdivision, and which every purchaser is deemed to accept. Nobody has to buy property in an association, but if you do, you’ve agreed to be subject to the HOA. It’s a private arrangement, it's more efficient, government shouldn’t interfere -- all that libertarian right-to-contract stuff.

In 1996, the Arizona Legislature attempted to rein in HOAs by, among other changes, capping annual assessment increases -- but also confirmed that association liens weren’t subject to the homestead exemption, which prohibits the forced sale of a residence valued under $150,000. People can waive the homestead exemption, and many CC&Rs provided for such a waiver; the statute confirmed such waivers’ validity.

Subsequent legislatures restricted HOA lien foreclosures to assessments (plus collection charges and expenses) only; other liens couldn’t be foreclosed and only could get collected when the property got sold. But -- contrary to Tribune senior opinion writer Le Templar’s brief summary in last week’s column -- the series of amendments over the past decade makes clear that the original 1996 amendment wasn’t a broadening of HOA power, but rather just confirming what existed at the time, and the validity of those CC&Rs that people accepted when they purchased.

It’s the latest attempt to curb HOAs where Templar gets crosswise with my father-in-law. Templar believes that HOAs shouldn’t be able to enforce their liens, whether for assessments or otherwise, despite the homestead exemption; HOA liens shouldn’t be treated like taxes or mortgages, but rather like other non-favored creditors, and debtors shouldn’t have to give up their homes to pay delinquent assessments or fines. Templar supports SB1330, which would not just bar foreclosures, but also make any HOA lien unenforceable unless the homeowner’s equity exceeded $150,000 -- even at the sale of the property.

My father-in-law, however, argues that preventing HOAs from collecting on liens unless equity exceeds the homestead exemption shifts the burden for operating the association to those owners who pay their assessments on time. He sees the work the HOA does, paid for by the majority of owners, as creating property value -- value in which the non-payers want to share but not pay, even though they agreed to do it. To prevent what Templar sees as abuse would allow deadbeats to avoid their obligations -- and make those playing by the rules pay for their share and the deadbeats’ too.

Those of you without a relative in HOA leadership may come out differently on this issue, but what’s most interesting is that HOAs were once seen as the wave of the future; Edge City, Joel Garreau’s 1991 book, saw privatized organizations like HOAs inexorably taking over from strapped and increasingly incapable municipalities. But now we see so-called conservatives in Arizona using old-fashioned government to limit HOA powers -- and forcing HOAs to act more like governments, with open meeting and free speech requirements.

The HOA world now awaits the decision of the New Jersey Supreme Court, expected later this year, in the Twin Rivers case. An appellate court held that the state constitution’s free speech protections apply to HOAs, which have "a constitutional obligation not to abridge the individual exercise of such freedoms."

In Twin Rivers, the state ACLU chapter sued to overturn the HOA’s restrictions on political signs. In Arizona, Rep. Eddie Farnsworth (R-Gilbert) is leading this latest charge to restrict HOAs. Fast Eddie and the ACLU, together at last, united by shared distrust of homeowner associations. Is this a great country, or what?

3 comments:

Anonymous said...

Subsequent legislatures restricted HOA lien foreclosures to assessments (plus collection charges and expenses) only; other liens couldn’t be foreclosed and only could get collected when the property got sold. But -- contrary to Tribune senior opinion writer Le Templar’s brief summary in last week’s column -- the series of amendments over the past decade makes clear that the original 1996 amendment wasn’t a broadening of HOA power, but rather just confirming what existed at the time, and the validity of those CC&Rs that people accepted when they purchased.

This is blatantly incorrect....the 1996 most definitely did 'confuse' and has been used by the HOA community association lawyer leeches in bankruptcy court to rob homeowners of their equity of hundreds of thousands of dollars. There were many communities in existence prior to 1996 that did not 'waive' the homestead exemption in their documents at all, it was a 'given' at the time when those contracts were written. This was an attempt to build up revenue, first and foremost, on those living in these 'older' protected communities whose owners most likely, if retired or who might face financial difficulty, had equity built up in their homes to enrich the coffers of the management concerns and HOA attorneys, first and foremost.

The Constitution provides that 'no ex post facto' law may be enacted (after the fact). The legislature was 'interferring' in contracts with this provision, robbing thousands upon thousands of homeowners of their 'equal protection' homestead exemption.

This entire statement is untrue.

Anonymous said...

Also, if you carefully check the Arizona statutes, that HOA Boards have been given almost unlimited powers by the state legislature due to lobbying efforts by the feeder industries over the years (the 'safe harbor' statute, meaning they are 'protected' as long as they get professional advice - the ability to buy then also blanket indemnification policies (with Farmers also selling one covering all 'agents' of the association also - management concerns, attorneys, etc.), in essence the Board has unrestrained power due to this insurance coverage, and the 'agents' have no accountability either when they step out of line with the homeowenrs (as the homeowners are paying for THEIR insurance coverage).

It is communism, pure and simple. The homeowner foots the bills even in disputes providing the funding on both sides for any lawsuits, and has given up his 'property rights' in exchange for the fantasy of 'property value' - since some of the restrictions even prohibit property enhancing improvements, and since the market and economy are the primary elements with respect to property value, this is communism at its core, so that the city and state can collect additional revenue, retain lien interests on all municipal private property, skirt around eminent domain using these HOAs as their means and methods.

You are living in a gulag where even the brand of paint you use must be pre-approved. Poland, anyone?

Sam said...

Not only anonymous, but wrong. Here's yet another free-market, sanctity-of-contract conservative mugged by his ideology, begging for government to save him from the consequences of his actions. Save it for health care, fella.