Tag Archives: HOA Neighborhood

Bombshell Lawsuit in Nevada

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You’d think developers and Homeowner Association boards would think twice about harassing anyone with a Brooklyn accent. If a kid grows up on the mean concrete streets playing stickball with a broom handle and a pink Spaulding ball, you’d think he’d be a good person to stay away from. Make nice. Don’t be a jerk.

Jonathan Friedrich, now a homeowner in Nevada, has filed a humdinger of a lawsuit. It’s got lots of twists and turns, so I won’t attempt to describe it. But here’s his lawsuit for your reading pleasure.

(copy of Friedrich lawsuit)

 

NJ Supreme Court: Upholds Free Speech in HOAs

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guest blog by Deborah Goonan

In the recent landmark victory for HOA residents, Dublirer v. 2000 Linwood Avenue Owners Inc., Amicus Briefs were filed on behalf of both Plaintiff and Defendant. While CAI’s Amicus Brief filed on behalf of the defendant was not considered by the court, due to its late filing date, in this blog, for the sake of comparison, I will briefly summarize the opposing arguments, and offer my analysis.

Note to readers who may not be aware: In legalese, the term Common Interest Community (CIC) is used to encompass what we generically call HOAs: homeowners’ or condominium associations, cooperatives, master planned communities, and the like.

On behalf of Dublirer, Frank Askin, Esq., NJ American Civil Liberties Union (ACLU), argues the Court should uphold appellate court’s ruling in favor of Dublirer because:

· Property rights of a CIC are not absolute, and must yield to “fundamental individual rights.” The CIC is not entitled to dominion over its residents. Askin cites State v. Shack (1971), and this particular passage sums it up quite well:

“Property rights serve human values. They are recognized to that end, and are limited by it. Title to real property cannot include dominion over the destiny of persons the owner permits to come upon the premises. Their well-being must remain the paramount concern of a system of law.”

· Constitutional rights to free speech and expression outweigh private interests of the CIC, particularly with regard to political activity.

· Askin equates a campaign for the Board of a CIC with running for public office, therefore there must be a fair process.

o Each candidate is entitled to equal time and opportunity to campaign, using the same methods.

o Reasonable restrictions with regard time and place are permissible, but blanket prohibitions against a particular type of communication are not.

o Rules cannot restrict “too much speech,” by making it inconvenient, difficult, or unlikely that residents can exercise their rights without breaking a rule.

· Askin also references the Planned Real Estate Development Full Disclosure Act (PREDFDA), a NJ statute that states that CICs must protect the health, safety, and general welfare of its residents. Excessive restrictions to Constitutional rights to free speech and assembly can be legally challenged on the basis of failing to uphold the general welfare of those who dwell within the CIC.

On behalf of 2000 Linwood (Med-South) Owners Association, Michael S. Karpoff, CAI-NJ Chapter, counter-argues that the court should find in favor of the Defendant, because:

· Constitutional rights do not apply to a CIC, considered private property

· Constitutional rights are not necessary, because CIC residents can rely upon statutes, contractual rights (the governing documents), and other protections such as the fiduciary responsibilities of the Board.

· If the court allows dissemination of information and speech within or by way of common areas (such as elevators, meeting rooms, or hallways), CICs will then be forced to allow members of the general public to the same access. CAI fears “that will interfere with a primary purpose of the private community – to preserve the peace, tranquility, and aesthetics of the residences.” Karpoff does not explain how he draws such a conclusion.

The Supreme Court, in a unanimous decision, largely agreed with Askin’s arguments on behalf of Dublirer. The Court made an important distinction between people who reside on the premises of a CIC and third parties who visit, with regard to applicability of Constitutional protections for free speech and assembly. In essence, the Court has concluded that those who reside in the CIC constitute the CIC’s public, and therefore, political speech of its residents cannot be excessively restricted in the common areas. Each resident must have equal access to the political process, and the Board cannot use rules and restrictions to skew the process to its own advantage.

Finally, there is judicial recognition that statutes and governing documents do not necessarily offer adequate protection of fundamental rights, guaranteed by the Constitution, for CIC residents.

I wonder about the Court’s reference to those who “dwell” on CIC property, as that seems to exclude CIC Members that own units, but do not reside on the property. Some clarification may be needed on that point.

But, in general, I think the NJ decision opens the door for similar challenges in other states. The political process in general – not just political speech and free assembly – is often rife with unfair election processes, unequal access to voting rights (based upon share of property ownership), abridgement of voting rights for those who allegedly violate restrictions or fall delinquent on assessments.

And if the political campaign process is to allow free expression, then why not also allow free expression in any process to amend governing documents, which are akin to local Constitutions or Ordinances? CIC residents have complained about this vexing problem for decades – Boards commonly find ways to circumvent input from members.

What of other Constitutional rights to due process, with true division of powers – where hearings are conducted by neutral judicial process in lieu of a Board-appointed committee in what amounts to a Kangaroo Court?

CAI can no longer argue with confidence that the Constitution need not apply, or that contractual agreements trump the rights of residents in CICs.

References: (see also attached)

http://www.caionline.org/govt/news/Political%20HeadsUp%20Public%20Document%20Library/Dublirer%20Amicus.pdf

http://www.njlawjournal.com/id=1202677991358/Dublirer-v-2000-Linwood-Avenue-Owners-Inc?slreturn=20141111144542

http://www.northjersey.com/news/n-j-supreme-court-fort-lee-co-op-board-violated-man-s-free-speech-rights-in-leafletting-case-1.1145408

“That’s One for You, Ten for Me, One for You and Ten for Me.”

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The number of embezzlements by HOA officers is almost laughable. I’d say unbelievable but that’s not the right word. Greed is part of the human condition and has been around since Cain and Able.

Still, you’d think that some embezzlers would feel a little bit guilty.

Enter Elizabeth Mills Wilson, treasurer of the Manor at Harmon Lake Homeowners Association in Forsyth County. Now I’m not saying she’s guilty. That’ll be determined by a jury, or by a guilty plea. Her Sheriff’s booking photo makes her look a little bit arrogant. 

But then, you’d have to be a little arrogant to steal $40,000 from your neighbors. A judge will give her a suspended sentence and maybe a tongue lashing. What this country really needs is some real lashings!

 

Crooked Pennsylvania Judges

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All too often among people who frequent this blog, we’ve seen injustice by virtue of actually having been dragged into a court of law to argue one side or another of an HOA case. I get lots of email from homeowners who feel they’ve been looted, not only by an abusive HOA but by judicial rulings as well. And I’ve spoken with attorneys who feel their homeowner clients did not seem to get fair and balanced rulings from the bench. Indeed, only a tiny fraction of HOA court cases ever come down on the side of the homeowner. Logic would tell you that such rulings would favor approximately half of those who stand before the bar. Instead, rumor has it that homeowners have about a one percent chance in court against an HOA.

The massive impact of the CAI (Community Associations Institute) cannot be underestimated. True, the CAI lobbies legislatures on behalf of Homeowners Associations. This is kind of a half truth, since CAI really lobbies on behalf of the vendors of Homeowners Associations, e.g., the lawyers, the property managers, the suppliers of HOA services. And they blatantly lie when they testify, as they often do, that they represent homeowners. But judges, many of whom, are well-connected and live in Homeowners Associations, cannot possibly be ambivalent about their support of the HOA system. Judges are human beings, and human beings are all ‘little walking bundles of bias.’ And many of those same judges are closely linked to law firms where fellow attorneys make a great deal of money from suing homeowners who live in associations.

So, when our friend in Pennsylvania sent us the following link about the spreading scandal among judges in her state, the immensity of the scandal set us back on our heels. Cash for kids, child porn sent from one judge to another, it just takes your breath away. We, as homeowners, want only to have a chance of fairness when we enter a court of law. If we’re forced to stand before the bench, while feeling contempt for the lack of human decency sitting there in judicial robes, well, it just demolishes our faith in the system.

(link to news story of scandals in robes)

 

HUD’s Push to Privatize Public Housing Parallels Rise of HOA Land

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guest blog by Deborah Goonan

Although not widely reported in the news, Federal and local governments, working with private investors, have created a yet another privatization plan to “save” Affordable Housing in America. The Department of Housing and Urban Development (HUD) has begun a pilot program known as Rental Assistance Demonstration (RAD), which they claim promises to preserve our dwindling, aging stock of Public Housing, much of it constructed in the 1960s and 1970s.

Although affordable housing provides a safety net to over 2 million low-income Americans, it has become politically unpopular in Congress, and Federal funding has dropped significantly over the last 2 decades. Insufficient appropriations to local housing authorities has, in turn, led to deterioration of aging structures, with the loss of over 300,000 HUD units. One recent study estimates an additional $26 million is needed to adequately preserve existing Public Housing infrastructure. Proponents of RAD  (HUD and a group of interested Developers) claim that private capital funding is necessary to preserve the remaining 1.2 million affordable units.

Adopted in 2012, HUD seeks to privatize up to 60,000 existing affordable housing units through 2015. Under RAD, local government housing authorities can now leverage equity in aging multifamily properties to obtain private mortgage funding from investors. You read that right – in an effort to fund expensive repairs and remodeling as a result of years of deferred maintenance from lack of public funding, the government is now willing to allow local governments to take out the equivalent of private home equity loans on Public Housing.

RAD also provides long term rent subsidy contracts to owners to cover the difference between actual operating costs and the amount of subsidized rent paid by low-income tenants. But the local housing authority is not required to maintain public ownership. Certain deals financed through the Low Income Housing Tax Credit (LIHTC) program will transfer ownership from local governments to private, for-profit owners, while also providing tax breaks for private developers.

Note the parallel to HOA-Land: HOAs are supply-side driven by local governments seeking ways to increase property tax revenue through development of private communities. The rise of HOAs is a direct result of underfunded local governments, state-imposed caps on tax increases, and reduction in Federal funding.  Private developer-controlled HOAs, first regarded by local government leaders as saviors, are now seen as indispensable Cash Cows.

Similar Fundamental Flaws

But, in addition to strikingly parallel motivating factors that led to the proliferation of HOAs, the RAD pilot program contains several fundamental flaws.

First, skeptics, myself included, envision that investors will simply cherry-pick the most profitable projects in prime locations. Investors are in business to make a profit, first and foremost. Properties in less desirable locations, or in greater need of renovation, would be least likely to attract private investment.

Second, as currently written, with significant input from Developers and Real Estate Investors, RAD only guarantees Federal subsidy funding of half of all affordable units, unless those units are reserved for elderly or disabled tenants. Critics say that will either lead investors to favor elderly and disabled tenants over families with children, or result in a net loss in affordability of 50% of existing units, as existing tenant agreements expire. The unfunded units are likely to end up with either minimally affordable rates or market-rate rents. Thousands of tenants are likely to be displaced.

Third, because RAD is essentially an equity line of credit for taxpayer subsidized housing, the risk of foreclosure is very real. There are no loan guarantees provided by either FHA or HUD. So if the Federal government shuts down again, as it has in the past, and stops the flow of monthly subsidy checks to the owners, defaults could occur. If the property is not properly managed, and falls into financial distress, it may either be reacquired by HUD – on the taxpayer’s dime  – or acquired by a third-party private bank or owner. That would terminate the subsidy contract and leave the door open for the new investor to convert the property to a market-based or high-end rental property, or possibly even luxury condominiums or commercial property.

Fourth, RAD relies heavily on HUD’s duty to enforce its standards and regulations. But as an executive branch agency, political considerations typically lead to weak enforcement of toothless regulations. HUD has a history of inconsistent enforcement of its own regulations. Additionally, tenant advocates are very concerned about the lack of Constitutional protections that result from private contracts affecting residents.

Sound familiar?

I can say with confidence that the critics are right to be skeptical of privatizing Public Housing.  As we see with the proliferation of HOAs, Developers and real estate investors do cherry pick prime properties, then seek to convert them to higher-profit use, displacing thousands of owners and tenants alike.

Private management of HOAs has resulted in fiscal distress and failure for many communities. The only reason more HOAs have not defaulted is because they are able to assess the owners as needed, and confiscate homes through foreclosure for non-payment of those assessments. Low-income tenants cannot be assessed to make up for a budget shortfall, so poor fiscal management will certainly result in foreclosures in times of economic stress.

CAI has convinced the majority of our Courts that HOAs are private corporations and not state actors subject to Constitutional constraints. States generally fail to adequately enforce HOA regulations, even where regulatory executive-level agencies exist. HOA legislation is scoffed at by corporate interests and merely provides the illusion of consumer protection.

RAD is only an experiment at this point. But so were HOAs before 1973.

References for more information:

Risks vs. Rewards: Inside HUD’s Favorite New Program

http://nextcity.org/daily/entry/public-housing-privatized-hud-rad-section-8

Private Funding, Public Housing: The Devil in the Details

http://www.vjspl.org/wp-content/uploads/2012/06/2.20.14-FINAL-LAYOUT-Private-Funding-Public-Housing_Smetak.pdf