Buyer Beware! HOA’s Deny Your First Amendment Rights

Guest Blog, 09/01/2016

By Mirah Riben Researching, writing & speaking about the adoption industry since 1979. Author of THE STORK MARKET: America’s Multi-Billion Dollar Unregulated Adoption Industry

There are thousands of HOA communities (aka “common interest communities” or ‘’common interest developments” (CIC and CIC) throughout the nation, some with age restrictions, some not. State laws affecting Common Interest Communities vary widely and many are tax tag enforcing the rights of those who reside in these communities.

“HOAs count on the fact that homeowners, individually or even in groups, will avoid the expense and the aggravation and simply shut up and “behave” or move.

Until the 1970’s, homes governed by property owners’ associations were rarely seen. Today, it is estimated that sixty-seven million Americans live in more than 310,000 such subdivisions – including condominiums, coop apartments, town-homes and detached single-family homes, some with fee-simple ownership.

Many are gated communities and provide landscaping and snow removal, exterior upkeep, and a variety of amenities such as pools, clubhouse (some with an exercise room), perhaps tennis courts, etc. All (HOA) communities are corporations run by a manager or management company that hire contractors to provide the services and maintenance. Most are not-for-profit corporations, but that is merely a tax status. The purpose is to remain solvent.

In many communities, maintenance fees include trash and recycling pickup, road lighting and paving which some have argued creates a double taxation situation as owners pay real estate taxes to their township which normally covers such services. Fees are estimated to total $70 billion (with a “B”) annually, cross country.

Many towns and cities welcome and encourage the building of such communities because it’s a financial windfall for them, especially since “over 55” also means taxpayers with no kids in the town’s schools!

Some cities and towns reimburse a portion of such fees used to maintain roads, back to the HOA. Other municipalities are introducing legislation to get at least a portion of HOA fees to be tax deductible. The Community Associations Institute (CAI), an influential trade association and special interest group, dominated by lawyers and property managers, is seeking federal legislation to do likewise.

However, the CAI, with 57 chapters across the country, is also accused of “lobbying every State Legislature to prevent real protections to homeowners and any real enforcement of the laws that do exist.”

The gatekeepers between HOA residents and management are the Board of Trustees (BOT). These are unpaid, volunteer residents, who are elected by the homeowners to oversee the finances and the management of the community. Sounds very democratic….but, HOAs are getting a bad reputation all over the country for lauding their power over homeowners, and many have been called dictatorships. As with any elected office, most people begin with the best intentions. Many, however, seem to find the power and sense of importance it renders intoxicating, and most BOTs have no term limits.

Their power lies in their ability to create and change any rule they – the Trustees – agree to. HOA communities have By-Laws (often set in place by the builder/contractor who created the corporation), covenants, conditions and restrictions (CC&Rs) that give all decision-making power to the (BOT), who can make and change any rule they chose without the consent of the residents because they were elected to do so.

If you have a board that is creating very restrictive or selective rules, you have limited options:

  • You can join a committee and have a limited effect on policy. In my community, all committees serve “at the pleasure of the BOT” who appoints all committee members. Those who “make waves” tend to not get approved when they apply to volunteer for a committee.
  • The other option is to run for a position on the board. This often becomes quite challenging because of the limits to freedom of speech, assembly, and an iron tight control of all forms of communication with fellow homeowners. The Association (read: incumbents on the board) can distribute newsletters and flyers and post messages on bulletin boards, etc. Other homeowners, including those running for a position on the board, face restrictions to their efforts to communicate with one another and to campaign. (See more under “Lose Your Rights” and “Rights to Free Speech and the Right to Assemble” headings below)
  • The final recourse is a civil suit which is very expensive and is often unsuccessful. Such litigation costs homeowners twice as they have to pay for an attorney to represent themselves as the plaintiff. The legal fees for the HOA to defend the suit are also however paid for by the plaintiffs from their monthly fees, which also makes those who go through which such litigation very unpopular with their neighbors to the point of being harassed to move.

HOAs count on the fact that homeowners, individually or even in groups, will avoid the expense and the aggravation and simply shut up and “behave” or move.

Ageism?

Many HOAs nationwide are “age restricted” aka “over 55” aka “retirement communities.” This is allowable because age is not a protected class as race and gender are in regards to discrimination.

While owners in such communities must meet the age requirement, there are additional restrictions on who else can live in the home, which has led to problems for an increasing number of purchasers whose adult child might need to move in due to the economic downturn, or personal tragedy. Some HOA residents have also become guardians of a grandchild, as 5.8 million children under the age of 18 in the US live in grandparent-headed households. The Fair Housing Act, which forms the basis for anti-discrimination law in housing, was amended to include a “familial restriction” that essentially validates senior communities’ right to prohibit minors from living there.

Judie and Jimmy Stottler, of Clearwater Florida, wound up in an eight-year battle – including five-years of litigation – over their need to raise their grand-daughter. The case crawled on for years, with the association fiercely defending its right to enforce its rules. The price of the Stottler home plummeted from $200,000 to $89,000 leaving them virtually unable to move. Fortunately, the publicity the case engendered earned them a pro-bono attorney, saving them an estimated $200,000 in expenses alone.

In the end, a judge ruled that the state Department of Children and Families’ prior order to keep the child in her grandparents’ care “takes precedence over” the association’s rule, but noted that overriding deed restrictions counted in “this case only.”

Move to an HOA – Lose Your Rights?

Homeowner associations have been criticized for having excessively restrictive rules and regulations on how homeowners are allowed to conduct themselves and use their property. Legal scholars and the AARP have charged that in a variety of ways HOAs suppress the rights of their residents. AARP has created a “Bill of Rights” for Homeowners in Associations with ten principles (or “rights”). They suggest it be used as a model for statutory language that states can follow when developing laws and regulatory procedures for common-interest communities.

The full report is available here and states:

“The need for this protection…reflects the nongovernmental roots that associations have in contracts; that is, deriving their power only by consent of homeowners…..The governing documents should be interpreted to give maximum liberty to homeowners. To the extent that associations become “governments,” a broad range of federal constitutional requirements would apply by virtue of the Fourteenth Amendment.

“Even if associations are not traditional governments, the model statute recognizes the need to secure certain vital rights of individual autonomy. These include rights that promote discussion of important issues that no association should compel homeowners to waive.”

Living in an HOA or condo community comes with advantages and restrictions. Buyers expect that they will be limited to what color they can paint or side their house, be limited as to their right to fence their backyard and other such “architectural” design choices, such as doors and windows, etc.

In one NJ HOA community an owner built a back deck, as did many other homeowners. However, this owner neglected to get proper approval from their HOA first and were made to take it down, despite the fact that the home was purchased under the state’s “affordable” housing act which meant the owner suffered serious financial hardship.

Are people who buy a home or condo in such a community notified prior to purchase just how many rights they give up? In most cases they are not.

Some associations are willing to meet prior to closing to answer questions. Some may not until after closing. Some sellers may give documents such as Rules and Regulations to the buyer before closing, or one might ask a friend already living there to see the rules prior to purchasing.

Even if a buyer is savvy enough to ask to see the By-laws of their prospective community, they may not have a “right” to since they are not “members” of the association. They are thus agreeing to a contract they haven’t seen! This is a catch-22 that needs to be rectified in every state.

Dr. McKenzie, a political science professor at the University of Illinois, who has acted as an “expert witness” in HOA vs. homeowner litigation says that, in addition:

‘’The way these governing documents tend to be written, people don’t really understand the extent of what they might be giving up.’’

What of the Rights to Free Speech and the Right to Assemble?

One might assume that the U.S. Constitution which provides these First Amendment rights is the final word. No one purchasing or renting a home in an HOA community would assume that by signing their lease or deed, they are giving up these INALIENABLE rights.

The truth is the U.S. Bill of Rights sets a floor, but not a ceiling, with respect to individual liberty. A state high court can interpret its state constitution to exceed the protections accorded under the federal Constitution. But, it cannot interpret its state provisions as providing less protection.

Yet, HOAs can make rules that even violate of state law. Consider the use of “red light” cameras, a term which applies to cameras at stop signs and RR crossings as well as red lights. NJ had a “red light camera” pilot project which ended in 2014. The state then prohibited their use. However, many HOA communities in NJ use cameras at stop signs and ticket violators. Because HOA communities are deemed private properties, they can make – and enforce – whatever rules they deem warranted, even in violation of state law. Tickets and fines, however, are collected by the HOA and do not go against a resident’s DMV records.

Throughout the nation, disputes between homeowners and the association have led and are increasingly leading to civil suits and as more Baby Boomers reach retirement and choose to live in HOA communities, there will likely continue to be an increase is such challenges. Boomers tend to question why and yield to authority with more resistance than previous generation.

New Jersey – which extends first amendment rights – has witnessed two very important cases. In one lawsuit, the Twin Rivers association was prepared to spend $300,000 of its $3.9 million budget that year on its defense of a lawsuit by a group of homeowners, represented by the ACLU.

The 9-count case was appealed and in 2007 the New Jersey Supreme Court overturned the Appellate Division’s decision and reinstated the decision of the Trial Court, finding that common interest community associations could lawfully impose reasonable restrictions on its members and that such restrictions do not violate the New Jersey Constitution’s protections regarding freedom of expression and equal protection. In other words, the homeowners’ association did not violate the state constitutional rights of homeowners by restricting their ability to erect signs, use a community room, and publish in the community newspaper.

However, Frank Askin, counsel for the Plaintiffs in the Twin Rivers case, writes that:

“…the Court did say that residents of common-interest communities in New Jersey may ‘successfully seek constitutional redress against a governing association that unreasonably infringes their free speech rights’.

“This discussion in the opinion should give pause to the hundreds of other community associations in New Jersey which try to forbid contact among residents by prohibiting door-to-door solicitations and petition gathering.”

In the other notable NJ case, State v Schmid, the court faced the “need to balance within a constitutional framework legitimate interests in private property with individual freedoms of speech and assembly.” The Court crafted the test to be applied to ascertain the parameters of the rights of speech and assembly on the privately-owned property and the extent to which such property reasonably can be restricted to accommodate these rights.

Some argue that common-interest communities and their member-elected boards are essentially state or public actors by setting rules and regulations, but others argue that community associations are essentially private organizations, in which members simply purchase individual homes or condo units.

Residential community unit owners – with or without knowing it – enter into contracts that are private agreements, made strictly between consenting parties and essentially waiving certain rights. The community, or the board that runs it, can dictate—by contractual consent. Those who purchase or rent are agreeing to a contract they are not, in most cases, privy to read prior to purchasing or renting! There need to be laws in very state to require full disclosure. State real estate laws need to require that all HOA rules, regulations and bylaws are submitted with the real estate contract so that individuals and their attorney have an opportunity to review them prior to finalizing the contract.

A community association is not a governmental entity, so its rules are not subject to the same strict constitutional tests.  The Twin Rivers decision upheld that homeowner associations themselves are “constitutional entities.”

Legal experts, however, point out that “housing” is the main difference between condominium associations and other, private organizations or clubs. As such, the federal or state Fair Housing Act and related statutes regarding discrimination are routinely applied, and can override regulations in condo documents.

If HOA boards can make any rule they want, even if it violates state or other laws, where does it end? Could they make a rule that people of certain races are not permitted to swim in the swimming pool….or that women cannot vote in BOT elections??? The answer is that they COULD.

While most communities likely would not for fear it would decrease desirability and thus property value, they certainly could, and have done so. A community in Lakewood NJ in which a majority of homeowners are Orthodox Jews, for instance, set rules for their swimming pool based on religious law. No legal challenge has resulted from fines levied for breaking the rules.

Be forewarned! In buying a home with maintenance taken care of and lovely amenities…you are unwittingly signing away many basic rights that Americans take for granted.

 

Advertisements
This entry was posted in Viewpoints and tagged . Bookmark the permalink.