Bill Tracking - 2009 session > Legislation:SENATE BILL NO. 1489
Offered January 22, 2009 : "A. An association may petition a court of equity in the county or city wherein the development or the greater part thereof is located to reform a declaration where the association, acting through its board of directors, has attempted to amend the declaration using provisions outlined therein to resolve (i) inconsistencies in the declaration that are the source of legal and other disputes pertaining to the legal rights and responsibilities of the association or individual lot owners; (ii) scrivener's errors, including incorrectly identifying the association, incorrectly identifying an entity other than the association, or errors arising from oversight or from an inadvertent omission or mathematical mistake; or (iii) an ambiguity in the declaration with respect to an objectively verifiable fact."
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Shu Bartholomew sent me the link to a bill in the VA legislature that would allow the board of directors of an association to ask a judge to rewrite a declaration, if they can't get the members to make the changes after three attempts. I need to learn more about this bill, but it certainly undermines the industry rhetoric about local democracy in action.
19 comments:
This is an example of governance of the board, by the board, and for the board. It is also an example of boards not listening to the voice of the owners/members.
Broadly, democratic governance is of the members, by the members and for the members. Democratic governance is more than just elections of directors. I have identified about 20 principles of Democratic Principles that we mostly take for granted and assume they are present in owners associations, which they are not.
For an eye opener on "elections are not enough", search the internet with that phrase in quotes. I get over 37,000 hits. Many of the results are papers on evolving democracies in third-world countries. That may be a good description of owners associations.
Don Nordeen
Governance of POAs
Don--it is true that elections are not a sufficient condition for democracy, but it is pretty much universally agreed that they are a necessary condition. So, you need them, but you need more. Show elections, or demonstration elections, are used by authoritarians like Saddam Hussein.
With this bill, you have elections, but no matter how many times you say no, the leadership can just go to a judge and get a big fat yes. So it seems to me that VA may be moving toward sham elections for CIDs in that state. I need to learn more about it, but this is really a strange proposal at first glance.
This proposal gives me chills.
I'm also confused about why they would need a special law to correct scrivener's errors. Wouldn't scrivener's errors already be ignored? Did they just throw in that item to make the other two look more palatable? "Oh, this isn't really overlooking the will of the homeowners, this just lets us correct mistakes."
The CCRs for my own community refer to builders that are not associated with our community in any way. But I don't think we'd be able to claim that we have no hoa just because some clerk somewhere made a copy/paste error.
Dr. McKinsey — I didn't make my point very clear. Of course, we need elections. But we need much more.
The VA bill seems to be moving the opposite direction.
SB1489 should call into question the sanctity of a member’s “contract” with his/her association, the illegitimate thwarting of the democratic will of an association’s members and the unwelcomed invitation for judicial activism in Virginia’s associations’ governance.
Could there be a nexus respecting this proposed amendment to Virginia’s Property Owners’ Association Act and Community Associations Institute’s national headquarters located in Alexandria, VA 22314?
That such legislation has been proposed reflects the underlying systemic weakness of private local HOA government.
Its proponents and apologists like to characterize it as a "close to the people" and more participatory democracy that gives property owners a stronger voice over their community than they would have with city councils and county boards of supervisors. Such a measure would hardly be needed if that were truly the case, especially for the kind of nonsubstantive technical clean up amendments that are the subject of this bill.
This bill was first introduced during the emergency session last spring when the legislators were looking for money to build roads. By all accounts, the reason this bill was introduced was to influence pending litigation.
The way I understand this is that two developments in VA that do not fall under the VA POAA but would like to enjoy the powers granted to HOAs that are covered, have been using the provisions in the POAA. One of them is Dogwood Valley and the other Lake Holiday. When these associations (boards, industry) acted like they qualified for all the powers under the POAA, the homeowners went to court. The individual homeowners had greater freedoms and protections by NOT being under the POAA and they were not about to give up those protections very easily. The Dogwood Valley owners won their case. Lake Holiday is still in litigation. This bill was intended to influence the decision.
Although legislation is supposed to regulate HOAs what it really does is empower them, giving boards, and ultimately the industry greater powers and unfettered access to the owners' wallets/property/assets.
What is incredible about all this is that despite the fact we are told HOAs are contractual and they are democracy up close and personal and that the owners have greater influence on shaping their "Kommunities". this bill would erase all that. The "Kontract" says it takes a % vote of the owners to amend the Declaration, this bill says, "If the owners fail to amend the docs" the board can get a judge to make those changes for them. This is AFTER the owners have said. "No, thanks you" - not once, not twice but THREE times! Democracy up close and personal? What have they been smoking? Greater Kontrol over your Kommunity? By having the board (industry) be able to run to a friendly judge and change the rules over the owners' wishes?
I had been trying to get a copy of this bill BEFORE it was filed, however, Bob Diamond who is said to have authored this masterpiece, did not answer my emails and Sen. Jill Vogel answered my email 2 months after I sent it to her telling me she thought it best that it gets filed first. So much for sunshine!
Be forewarned, if this passes here in VA, CAI will be trotting it to a state legislature near you to get them to pass a similar bill. After all, it is working so well in Virginia!!!!
For more information and more comments on this and other Virginia madness a great web page is www.richmondsunlight.com. To read about this bill and vote on whether you support it or not, got to http://www.richmondsunlight.com/bill/2009/sb1489/#comment-3
If this measure is in fact intended to affect the outcome of a single litigated case, the Virginia Legislature should leave it to the judiciary to resolve the matter and respect the separation of powers.
Moreover, the legislature should be wary of legislation framed in the broader public interest but having a narrow objective.
Mr. Nordeen,
Google "homeowner association hell," in quotes! Google says 163 results, and then, for some reason only 18 can be viewed. The pages keep disappearing! Then, google: homeowner association hell, without quotes. I get 142,000 results, and it is interesting many are very legitimate bloggers and sources! I am surprised there is not double this number, though!
Hopefully, the first Board that tries to get away with this will be met with a lawsuit that goes all the way up to the United States Supereme Court.
Perhaps, Evan will comment on the prohibition, in the U.S. Constitution, of the State doing anything to interfere with one's private contractual rights?
As those who introduced this idea last year at a Law Seminar acknowledged publicly (when questioned about the Constitutional issues that arise) -- "WELCOME TO THE SLIPPERY SLOPE."
This sort of legislation should be challenged by the industry, not promoted by it. The private property owner stakeholder group might soon be insisting on legislation that penalizes Board Members PERSONALLY who become involved in this intentional breach of anyones contractual obligations.
Thanks to Shu for explaining the context of this bill. She also sent me links to some other articles that I will be posting.
As far as I can see at this point, this really looks like a law that was drafted to favor one side in a particular ongoing civil suit. State Senator Jill Vogel's denials don't make sense to me.
However, beyond that apparent injustice, it looks like this law could have much broader application in the future.
I think Beth's point is well taken: there should be no need for legislation, let alone emergency legislation, to give judges the power to interpret a contract so as to correct scrivener's errors (for example, a situation where everybody knows the declaration was supposed to read "there" instead of "their"). This is done all the time and has been for hundreds of years.
The potentially limitless power is that last clause, about a judge being able to reform the entire declaration because of "an ambiguity in the declaration with respect to an objectively verifiable fact."
This is over the top. If the owners three times said "no" to a proposed document amendment that their BOD favors, that should not give rise to a cause of action for the judge to impose the BOD's amendment on the membership. It should not be possible for a judge, at the request of the BOD and their attorney, to ignore the declaration's amendment provisions, and the power that places in the owners' hands, and reform their declaration in accordance with whatever the judge decides is "objectively verifiable fact."
And what the heck is that supposed to mean, anyway? Since when is that a legal term? And what are the limits to that extraordinary power?
It is obvious that creating such a cause of action worsens the existing imbalance of power between associations and owners. Boards are the ones with the (owners') money to spend on lawyers. The owners have to fund the case against them, then individually find a lawyer who will represent owners, knows CID law, and works cheap. Good luck. Most specialists in this field won't represent owners at all, ever.
I welcome comments from somebody who wants to present the other side and defend this law, but absent being persuaded to the contrary, it sounds like a bad idea. This top-down, command-and-control philosophy was supposed to have been left behind by the industry a long time ago. CAI should speak out against this law because it undermines whatever democratic, consent-based rationale lies behind association private government.
Evan, you said:
"CAI should speak out against this law because it undermines whatever democratic, consent-based rationale lies behind association private government."
CAI WROTE this law, they aren't going to be speaking out against it any time soon. The industry members are all for it and have been testifying in favor of the bill.
Once you peel away all the layers of nonsense in this bill and you get to the heart of what this bill would do, you realize that only the industry would benefit from it. Deception and underhanded tactics would not be necessary to pass a law that was on the up and up. This bill, first as SB 6016 and now as SB 1489, was introduced in emergency session last spring, "to be effective immediately" in the hopes of getting it passed under the radar. We missed it!
I have been trying since November to get the "improved" version both from Bob Diamond who was supposed to be tweaking it and Jill Vogel and neither responded to my emails. Jill finally did a few days ago and said she would wait till it was finalized.
What is even more interesting is that there are no changes between the two bills, except for the number. I wouldn't put it past them to swap out the bills at the last minute as they did with the other masterpiece they worked on last year.
Most boards are not politically or legally sophisticated or savvy enough to think of this on their own, or use it unless they were being advised by "experts" in the field - for a fee!.
None of the members of the HOA will benefit by this bill. If they wanted to amend the docs to empower the HOA, they can do that now. This comes into play when the owners choose NOT to amend their docs.
Shu--when you say "CAI wrote the bill" do you mean that literally? What did CAI do, and who did it? Did they write the bill and give it to Vogel? Did Bob Diamond--one of the attorneys on the lawsuit--write it and give it to Vogel?
By CAI, I don't mean the organization obviously, but the CAI affiliated attorneys did.
Bob Diamond allegedly "tweaked" SB 6016. Although I have not spoken to or corresponded with Bob, I have it on good authority that he was involved in coming up with SB 1489 which is unchanged from the original. I don't know who wrote the original bill. Bob certainly testified FOR it in front of the housing commission last spring, as you can see from the minutes of that meeting. http://dls.state.va.us/GROUPS/VHC/meetings/2008meetings/commoninterest/062608/sm062608.pdf
I had Pia Trigiani on the show a few weeks back. She confirmed that Bob was rewriting SB 6016 and seemed surprised that I opposed the bill. She said she favored judicial reform and felt it was needed. The show is in the archives on my web page. www.onthecommons.us
Pia is a member of the Housing Commission board and was appointed chair of the Common Interest Community Board which was formed as a result of sweeping changes made to the POAA last year .
I intend to cover this but have been waiting for the new and improved version. Looks like I waited for naught. I would love to have people on who are both FOR and AGAINST it.
So yes, I think CAI members are behind this bill and I doubt seriously that they will speak out against it any time soon.
Their alleged concern is the "poor association" that can't collect unauthorized assessments, fine and foreclose because they don't fall under the POAA. If the owners choose not to amend the docs then the courts should.
Shu Bartholomew
I think it would be helpful to consider the opposition to the bill as a consumer protection issue and try to get the "consumer protection" committees in the legislature involved. The CAI lobby and CID lobby may be less effective in the consumer protection arena.
The quality of legal opinions is also raised given the questions about constitutionality. Legal opinions from attorneys of POAs and from CAI are typically advocacy for the POAs and boards of directors. That is what attorneys do — advocate for clients.
Because of the lack of standards for legal opinions, boards sometimes act on the advocacy legal opinions. The attitude seems to be "stop us if you can". The economics of litigation make stopping impractical. Another subject for which there may be good legislative solutions.
Perhaps one of the members of the Virginia legislature interested in consumer protection could be persuaded to ask for a legal opinion re constitutionality from the VA AG, who would likely use the appropriate standard.
"The US Constitution's "contract clause" prohibits states from making laws that impair the obligations of contracts" (according to comments of a brilliant Professor who teaches Constitutional Law at the University of Illinois).
If the AG for Virginia has a different opinion, it is probably later than the homeowners think, and they might want to consider simply walking away from their properties now, before their Board does to the with whatever they wish.
Reformation requires a mistake. Here it appears the mistake was the purchase of real property in a CID in Virginia.
What we have here is clearly an attempt to consolidate more powers into the hands of the Board and weaken the member’s rights. In addition this makes the judges essentially a Board member with veto powers with the authority to change the contract without the participation or vote by the largest stakeholder group in the CID. By doing so the industry retains even more control over the CIDs since Boards are not as autonomous as they should be given their historical record that reveals their inability and unwillingness to manage responsibly, ethically or legally.
Finally remember the word Masquerade. It’s the CID industry marketing policy used most often in almost everything they do and say when it’s in their best interest by masquerading legislation as being for the benefit of the members. The old term is a wolf in sheep’s clothing and State legislators have been mislead to often as evidence by most POA/HOA legislation passed.
Don,
In Virginia we seem to have a long tradition of viewing the HOA as the consumer, NOT the individual owner.
It tends to boil down to the individual vs. the association(read the industry). While it is true that some board members are absolute martinets, most are completely clueless and march to the manager/HOA attorney's beat.
Anonymous, you said: "Reformation requires a mistake. Here it appears the mistake was the purchase of real property in a CID in Virginia.
I agree with you. I really don't think you will ever make HOAs work, no matter how much tweaking you do. As I always say at the start of all my shows, "Living in a homeowners' association means leaving the American Zone."
Shu
Shu Bartholomew is right on target; however, Virginia is not the only state where the homeowner has been stripped of rights in many of these communities. It has not always been like this though. I speak from experience, as a former board member. Something crept in to our community. Through another board, I suspect. In my opinion, this "influence" were/are fraudulent activities, a "communistic state" of living, lying, harassment, discrimination, terrorizing, targeting of vulnerable families, and stealing of whatever they could/can get away with and absolutely no respect, or, consideration for the RIGHTS of others, or what the law is. There became no "sense of community," no honesty, decency. I will let you consider what may have crept in !
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