Saturday, October 09, 2010

Sleazy Real Estate Developers' Latest Scam Could Skim 5 Percent Off Your Home's Value | | AlterNet

Sleazy Real Estate Developers' Latest Scam Could Skim 5 Percent Off Your Home's Value | | AlterNet
And of course they are talking about private transfer fees, as we have been doing here for some time.


Fred Pilot said...

These fees are certain to generate opposition from the National Assn of Realtors.

Fred Fischer said...

What we have before us is the continued erosion of consumers private property rights by temporary or non members which leads to a Pandora's box of endless issues so others may profit. Warning if this legal strategy is allowed to continue then surly many others will jump on the idea and many more similar pillaging CC&Rs will be created.

Corporate governance by housing associations is "fundamentally unworkable" as substantiated by early American history, inequitable and likely unconstitutional. Because it delegates property rights to third parties, through by-passing the property owners themselves. Who had no seat at the table and therefore no voice or vote in the drafting or creation of the charter that they will be bound to into perpetuity. This on the other hand could be remedied if the housing association was instead created after build-out by the present property owners who would then have a seat at the table (meeting of minds), a voice and vote in the housing associations creation and perhaps what CC&Rs would be acceptable !

Freehold Capital Partners may have invented, the fee covenant legal strategy but it doesn't make it legal or constitutional and that's my point. Those non members and others are using the CC&R's to do many different things, beyond their original intent to profit for themselves and others in violation of 'Ultra Vires."

A good example is a recent California ruling in, Treo @ Kettner Homeowners Assn. v. Superior Court, 166 Cal. App. 4th 1055 (2008) ("Treo"), that denied binding arbitration clauses.
.... The Treo court found that CC&Rs are not a permissible means of enforcing judicial-reference clauses because neither the association nor the homeowners have actual notice or meaningful reflection to accept or reject such a clause given that clause was drafted by the developer and imposed upon the association before the homeowners took control of the board. The court noted that this problem is particularly concerning with respect to later purchasers who are not original homeowners under the CC&Rs. As successor owners, these homeowners certainly have no opportunity to meaningfully reflect on such a provision and choose to accept or reject it.... From Berding -Weil Newsletter Issue # 51

What is significant about the courts ruling is that their argument also applies to many other aspects of the corporate product that we typically call privatized housing, planned developments or Common Interest developments when governed by HOAR/POA/Condominium associations. Which brings into question their very constitutionality or if they are an "unconscionable contract." Why again it goes back to the issue of, original intent, adhesion contracts which housing associations are through declarations were never originally intended to manage housing, peoples lifestyles and private property. Because "no meeting of the minds" between the developer and eventual property owners ever occurred when the housing association was created, registered and in force before the first property buyer ever existed. In other words as the Treo court stated, it was "imposed upon" not just the association but the members themselves. Who didn't have any say in how the association was drafted concerning it's by-laws, voting standards, CC&Rs and other provisions.

Finally what the courts and State legislators don't understand about private housing associations is that they cannot and do not truly represent the members even after being taken over by the Board. Because the associations foundations, duties and responsibilities where all ready set in stone by the original declaration creators. Therefore the members cannot reasonably or realistically change it's provisions because they were written to protect and preserve the goals and best interests of the original and exclusive declaration creators and the others who they represent, EVERYONE EXCEPT THE MEMBERS !!!