Does Anybody Remember Frances T.?
Regarding the previous post, one more thing: Hello, Mr. President of Sunrise Villas Homeowners Association, and members of the Board of Directors. I have some light summer reading to suggest for you. It's an opinion from the California Supreme Court in the case of
Frances T. v. Village Green Owners Association, 42 Cal. 3d 490 (1986). It's all about how the association and the individual directors can be held liable for injuries to a unit owner after making her take down the lights she put up to keep crooks away. She did as the board ordered and that very night was raped and robbed. And then she sued.

Oh, sure, you are in Nevada, not California, but as far as I know there is still tort law in Nevada, so if I were you I'd read the opinion in Frances T. before making this owner take down her shutters. And if you do make her take them down, maybe the board members should take turns keeping watch outside her unit 24 hours a day. It might save you some money.

When Will They Ever Learn Dept., Installment No. 2653...

Woman vows to keep her security shutters
Homeowners association says 70-year-old has to play by rules

By Jen Lawson
LAS VEGAS SUN

After burglars ravaged Mae Roy's southeast Las Vegas home several years ago, she saved up her money to get security shutters installed over her back sliding glass door.


But her homeowners association is insisting that Roy remove the shutters immediately, despite a new law making it illegal for associations to keep residents from installing the shutters.


The impasse has resulted in controversy at Sunrise Villas IV, a quiet, 62-unit community near Desert Inn Road and the Pecos-McLeod Interconnect.


"I will not take them down until they take me with them," the 70-year-old Roy vowed.


Lacey Casagrande, president of the homeowners association, said: "We certainly don't want her not to feel safe. ... (But) these are the rules and if you don't abide by them, there are consequences."


Read the whole thing and you'll see I'm not making this up. Thanks to Monica Caruso for passing this story along.

Link to full story.

At my condo law class last night I had a wonderful guest speaker, attorney Herbert Fisher of Chicago, who knows more about the law of housing cooperatives than just about anybody. It's natural to compare co-ops with condos. Why are there so many condos and so few co-ops, while at the same time there is so much conflict in condos and substantially less (from what I can see) in co-ops?

There is no one explanation, of course, but I think in a general sense the relative lack of conflict in co-ops and their small share of the housing market are probably explained by the same things: actual choice and real consent. The key reason for all the turmoil in CIDs is the fact that people are drawn by marketing and lack of alternatives into a form of shared ownership that many of them don't understand or like much, without ever really agreeing to live by the rules and accepting a reduced sense of dominion over their property.

If that is true, it suggests that if people had to actually ask to live in the CID and be interviewed by the BOD to get their approval, and had to actually mouth words of understanding and assent, there would be both less conflict and a lot fewer people living in CIDs. The ones who believe their home is their castle would get so angry during the interview ("Who do you people think you are, asking me all these questions?") that they'd either be rejected by the board or they'd qive everybody the finger, stomp out of the room, and cancel the sale. Probable net result: less conflict in condos, but a much smaller market share for condos. You could extend this logic to CID housing in general, including all the townhouse and HOA developments.

Does this mean that the law should give CID boards the power to interview and reject owners? It's not that simple, because there are many other differences between CIDs and co-ops. For example, in CIDs you have individual owners with individual mortgages, and they need to be relatively free to sell them. But it is an interesting thought experiment to engage in if you are trying to figure out why there is so much litigation coming out of CIDS.

HOA-loaded areas lead nation's growth
From CNN: (see quote from Robert Lang in bold at the end)
Arizona town leads nation in population growth
Thursday, July 10, 2003 Posted: 10:10 AM EDT (1410 GMT)
GILBERT, Arizona (AP) -- Searching for an affordable place to open a business and a quiet community to raise his daughter, Darrell Miklos left California a month ago to settle in this affluent suburb.

Gilbert, 20 miles southeast of Phoenix, offered what Miklos felt was a good deal on a house. He also decided to open a new location for his boat manufacturing business in nearby Mesa.

"Arizona is a godsend when compared to California," Miklos said.

Many here in Gilbert would agree. The town had the biggest population jump in the nation between April 2000 and July 2002, according to estimates released this week by the U.S. Census Bureau.

Gilbert has grown by nearly 25 percent in the two-year period, beating out swelling suburbs around Las Vegas, Los Angeles and San Diego for the title of nation's fastest-growing community. It now has 135,000 residents.

The census found that while some of new residents left larger nearby cities, much of the metropolitan growth was attributed to the continued migration to the South and West.

"Most of the places aren't job centers. They are mostly residential, master-planned, large-scale and very homeowners-association heavy," said Robert Lang, a demographer with the Metropolitan Institute at Virginia Tech.

California Appellate Court Rules for HOA in Disclosure Case

The Second District Court of Appeals has ruled that an HOA did not have to disclose to owners that it had filed a lawsuit against its insurance carrier. The plaintiff sold his condo before he found out about the lawsuit, and when the suit settled for $20 million the new owner of plaintiff's unit got a payment of $180,000. Not bad for a unit they bought for $53,500, eh? Read the whole thing here.

AP does story on HOAs
And if you follow the link to the whole story you will find yours truly quoted...

Homeowners following house rules
Associations becoming norm across nation

By Jim Wasserman, The Associated Press
July 6, 2003

GOLD RIVER -- As the war in Iraq became imminent, emergency room doctor and Vietnam veteran Bill Durston protested by taking down his American flag and raising his United Nations flag.

Citing its rules, his neighborhood homeowners association told him to take it down. Citing the Constitution, Durston refused.

The flag remains, as does the dispute between Durston and the association. It's one of many in the growing conflict between the nation's fastest-growing way of life -- life inside a homeowners association -- and traditions of liberty and free speech. Tension among the estimated 8 million Californians and 50 million Americans living under rules of a private residential government has lawmakers across the nation dealing with residents' rising unrest.

In a country founded on private property rights, homeowners associations, practicing what some call "micropolitics," increasingly dictate the nation's home colors, landscaping, pet sizes and placements of satellite dishes. They also restrict many forms of political expression Americans take for granted, even, until recently in many parts of the nation, flying the U.S. flag.

Experts call this still-accelerating trend one of the most stunning transformations in how Americans live, rent and buy homes.

Twin Rivers Complaint On Line Courtesy of AHRC
The American Homeowners Resource Center has posted on its web site the complaint in the case of Committee for a Better Twin Rivers v. Twin Rivers Homeowners' Association here.
The major dispute in this case is whether the actions of homeowner associations are subject to the requirements of the New Jersey state constitution. It is, in other words, the main case in the nation on whether some HOAs should be viewed as quasi-governments for some purposes. This case is filed in Mercer County, New Jersey, and is now at the stage where cross-motions for summary judgment have been filed, and the judge will rule on them perhaps as early as this summer.
I am the expert witness on liability for the plaintiff, Committee for a Better Twin Rivers. The lead plaintiff counsel is Frank Askin, of the Rutgers Law School Constitutional Litigation Clinic, who is one of the nation's leading civil liberties attorneys. His summary judgment brief is a masterpiece. Also representing the plaintiffs is Steven Siegel, who wrote the best law review articles I've ever seen on this issue ("The Constitution and Private Government," 6 William and Mary Bill of Rights Journal 461, published in 1998).
I will keep you up to date on this case as events unfold. This is the one to watch.
Thanks to the folks at American Homeowners Research Center for posting the complaint.

Un-Neighborly Actions
Flag Falls Victim to Tyrants of Taste

Commentary
By John Stossel (from ABC 20/20 web site)



July 4— It's gotten this bad. One man was so angry with his homeowners' association he burst into their meeting in Peoria, Ariz., three years ago and began firing.

Read the whole thinghere.

ABC 20/20 to Broadcast Flagpole Saga Friday, 7/4
From Barbara Walters:
"My partner, John Stossel, has a red, white and blue holiday story
about a flagpole and a Vietnam veteran. The former soldier ran
afoul of a homeowner's association rule, wound up in court, lost his
flagpole -- and got stuck with legal fees of $150,000. To that,
John says, "Give Me a Break!" Please be sure to watch 20/20
on Friday at 10 p.m. (9 o'clock Central),
and also be sure to let us know what you think. My address
is BarbaraWalters@abcnews.com"
(Thanks to Fred Pilot for passing on the message from Babs.)

I have received some thoughtful responses to my post on the HOA activist movement.
I think conventional political activity--organization, marshalling information, using the media, lobbying, finding allies in the short and long term, lawsuits, etc.--are the way to go. I think a number of state legislators are starting to catch on to these issues, and see the potential for abuse as never before. Many in the media are starting to listen. But some others, not satisfied with all the signs of progress, seem to think the proper course is to vilify people and organizations on the internet, scream about "conspiracy," and claim with a straight face that their lives in a CID are just as bad as life in Stalinist Russia or Nazi Germany. I am concerned that the HOA activists who do such things could lose all credibility with the media and policy makers. That would be a very unfortunate thing, because these groups are critical to the prospects for reform. They need to be perceived as credible. This dilemma confronts all social movements. To get attention, they need to say and do unconventional things, but to get anything changed, they need to be credible. It isn't easy bringing about change from the outside. I hope that people can keep this in mind.
Thanks for your posts, everybody. I won't quote anybody by name without your approval, by the way.

Here's a contribution from Fred Pilot, including an article and his commentary on it, for your consideration. He's pondering the impact of the California budget crisis (something we see in smaller scale in other states as well) on the future of residential private government. One possible response to fiscal crisis is more privatization. Another response would be to strengthen the financial position of local governments. Here's Fred's take on the article that follows, and he highlighted in bold the text that I have also bolded for your convenience:

Fred says: "This proposal, being floated in hopes of getting both Republican and Democratic support for passage of an overdue state budget, would provide local governments greater property tax revenue from housing and thus reduce their need to privatize residential development as common interest developments governed by private homeowners associations."

Now, you may want to read the whole thing, but here's the top half of the Sacramento Bee Article:,

State extends its hiring freeze
The move, paired with a purge of vacant jobs, may save $550 million.
By Alexa H. Bluth and John Hill -- Bee Staff Writers - (Published July 2, 2003)
As California's fiscal year began without a budget Tuesday, Gov. Gray Davis issued dual orders aimed at trimming costs from the state's work force.


Davis also predicted a quick end to the legislative budget standoff as the outlines took shape of a possible deal to finance a chunk of the state's deficit without raising taxes.


"While everyone else prophesies doom and gloom ... I continue to believe that we will see action by the end of this week," Davis said after signing the pair of executive orders.


One would chop $250 million from the budget by eliminating 20,000 vacant government jobs.


The second would extend for at least two years a hiring freeze first imposed by Davis in October 2001 when the state's fiscal slide was becoming apparent. The governor said the savings would amount to about $300 million.


The hiring freeze does not apply to public health, safety and security personnel, including those hired by the California Highway Patrol, the Office of Emergency Services, the Military Department, and some Department of Health Services offices, according to Davis' order.


Davis urged the Legislature and the judicial branch to join the halt in hiring.


The move is designed to reduce California's payroll costs, but Davis administration officials also are attempting to persuade state workers' unions to agree to salary or benefit reductions, or face layoffs to achieve $855 million in payroll cuts.


In the absence of a spending plan and a deal with workers' unions, the Personnel Department has issued 9,000 notices warning state employees they may lose their jobs. But Davis said Tuesday's move might spare some from losing their posts.


Legislators failed to pass a budget by the midnight deadline Monday. State Controller Steve Westly has warned that state cash will soon dry up and he will begin halting payments to state vendors, community colleges and schools.


Lawmakers have for weeks been frozen in disagreement over raising taxes to help fill a budget deficit expected to reach $38 billion by the end of this fiscal year. Democrats have put forth several plans that contain program cuts, borrowing, and sales tax and other tax increases. Republicans have called for deeper cuts and rejected tax hikes of any kind.


Legislative leaders, however, talked informally Tuesday about a possible compromise that includes financing $10.7 billion of the state's deficit over several years using complicated maneuvers that avoid a tax increase.


"The key sticking point upstairs is how in fact we are going to sell current-year deficit bonds," Davis said. "One reason for my optimism is that I do see the sides narrowing on that issue."


The complex deal would work something like this, several sources said Tuesday: The Legislature would repeal a half-cent or a quarter-cent of the sales tax now dedicated to local government, replacing it with a sales tax increase of the same amount for the state. Consumers would pay the same tax on purchases, but part of the revenue that used to go to local coffers would instead go to the state treasury.


To compensate local governments for lost revenue, the state would give them the same amount in property tax. In effect, that would reverse the change that occurred in 1992, when the state shifted property taxes from local governments to schools to reduce its own costs during the last fiscal crisis.

I am increasingly convinced that the trend toward privatization of local
government will continue and even accelerate for the forseeable future. Problems that people keep pointing out with homeowner association private government will continue to receive increased media attention. This will lead to increased regulation by state governments in California, Texas, Arizona, Virginia, Maryland, New Jersey, Illinois, and other places where over half the new housing in major metro areas is in HOAs. There will also be more fiscal problems in under-reserved associations.

But those who advocate doing away with CID housing, or who think somehow the whole phenomenon will just go away, are wrong, I think. The mortage banking industry is quite happy with CID housing; municipalities and counties will continue to favor it due to fiscal
constraints that are only getting more acute; builders will continue to profit
from it; and most people will continue to buy it. The bottom line is simple:
there's no alternative yet that satisfies all these incentive structures as
well as CIDS. So the only responsible course of action is to find a way to
make it work, unless and until something better comes along--something that is
supported by the mortgage bankers, cities, builders, and consumers.

Right now the Community Associations Institute and other influential groups are trying to fix some of the problems with existing association governance. Whatever CAI does won't satisfy the HOA activist groups, of course, and it shouldn't. The condo
commandos have the potential to be a force for positive reform and they need to have their own agenda and advocate on behalf of the CID homeowner.

But I am increasingly concerned that some of these folks are teetering on the edge of being permanently dismissed by the press as neighborhood kooks and chronic malcontents. When you read the posts on the various newsgroups of HOA advocates, you find people railing against CAI, the Urban Land Institute, lawyers in general (well, I guess that isn't so unusual), politicians, the media, and everybody else with any professional credentials.

Personally, I am just sick and tired of hearing this sort of thing. It's a shame that they can't see what harm they are doing to their own cause, because it is a valid cause. But reading some of their posts reminds me of the one and only SDS meeting I ever attended back in 1968. I heard people screaming about how everything is bad, everybody is corrupt, the whole system has to be scrapped. I left the room just shaking my head in wonderment at the pure recklessness of the entire group. I was against the war in Viet Nam then, but I certainly didn't want to trash the entire country and vilify all it's institutions. But with SDS there was no middle ground. That mindset is very dangerous.

Now, in the debate over CID housing, we are talking about a couple of trillion dollars in home equity representing most families' only significant investment, and more trillions in mortgages. I have no problem with strong criticism--I've done plenty of it myself. But criticism needs to stay within certain bounds or it becomes nihilistic. Criticism should be aimed at making things better, not tearing them down and hoping that whatever arises from the ashes is better than what went before. Critics need to give some serious thought to the stakes ordinary people have in the status quo, and what the alternatives are.
People who want to smash the status quo without much thought to the consequences should read Edmund Burke's "Reflections on the Revolution in France". It was written in 1790, and it is still true today.

Colorado Supreme Court says HOA can force people to join and tax them
Here's a summary of the case, from Patrick Randolph's DIRT-L list:
Supreme Court of Colorado,
En Banc.
EVERGREEN HIGHLANDS ASSOCIATION, a Colorado non-profit corporation,
Petitioner,
v.
Robert A. WEST, Respondent.
No. 02SC242.
June 16, 2003.

Subdivision lot owner sought declaration that amendment to restrictive
covenants requiring membership in homeowners association and assessing
mandatory dues was invalid. The District Court, Jefferson County, Tom
Woodford, J., entered judgment for homeowners' association. Owner appealed.
The Court of Appeals reversed and remanded, 55 P.3d 151 (2001). After grant of
certiorari, the Supreme Court, Rice, J., held that, as a matter of first
impression: (1) modification clause in covenants which stated owners "may
change or modify any one or more of said restrictions" was expansive enough to
allow adoption of new amendment, and (2) homeowners association, as common
interest community by implication, had implied power to collect assessments.
Reversed and remanded.

This looks like a major case and I will have more to say about it after I have read it more carefully.

Florida: Alliance forming between HOA activists and a fair housing group
This is from the Cyber Citizens for Justice website:
"The Florida based grassroots organization Cyber Citizens for Justice, Inc. is proud to announce that another great consumer organization, FHC (Fair Housing Center of the Greater Palm Beaches), is joining their growing consumer alliance. Both organizations pursue many common goals, especially the improvement of housing conditions in the State of Florida. While CCFJ, Inc. is more specialized in pushing for necessary legislative reforms regarding mandated properties, FHC is a "Private" Enforcement Agency with the mission is to ensure equal and affordable housing opportunities for all people by promoting culturally diverse communities through open housing and the elimination of all barriers to that goal.

"Vince Larkins, President/CEO of the FHC, says that phones are ringing off the hooks at the FHC offices from residents who live under Condo and Homeowner Associations. 'We are excited about the great opportunity we have to come to the needs of residents under assault by unscrupulous individuals at the helm of many associations in Palm Beach County and throughout the State'."

Add this sort of alliance to the Nevada idea of an owner-funded oversight commission and you have the potential for a framework that could protect homeowner rights. That would be good for everybody--owners, boards, professionals, and developers.

HOA Oversight Commission for Nevada Becomes Law
From the Las Vegas Sun of June 13:
--quotation begins here---
Homeowners with complaints about their homeowners associations -- ranging from missing funds and kickbacks to harassment of residents -- now have a place to turn.

With the signing into law this week of Senate Bill 100, a state commission will be established to hear complaints about association boards of directors. The law goes into effect Oct. 1.

"These are governments and they have the power to tax and fine," said Sen. Mike Schneider, D-Las Vegas, who sponsored SB100. "And we have got to get them under control."

Eldon Hardy, ombudsman for the homeowner association, says his office receives 1,500 telephone calls a month from dissatisfied homeowners who feel they are abused by the elected board that rules the units.

Hardy, with his staff of three, try to mediate some of the complaints but there is no enforcement power.

"Big changes will soon be available to the homeowners," with the bill, Hardy said.

Schneider said SB100 will level the playing field and serve as a model for the rest of the nation.
--end of quotation---
Read the whole thing here. This could turn out to be a major event. If the commission proves to be more effective than the ombudsman's office has in curbing abuses by HOA boards, it could be a significant step toward a working reform model. Senator Mike Schneider has taken the lead on HOA issues in Nevada for a number of years and has a lot to be proud of. Congratulations, Senator Schneider!

Watch for Bankrate article on HOAs
Bankrate will have an article about homeowner associations sometime in July. Their website gets about 3 million hits per day. I expect a balanced treatment of the issue from the consumer's perspective.

O'Reilly Irritates the Blogosphere
Fox News host Bill O'Reilly is whining about the internet. As usual, it's all about him. Somebody somehow erroneously reported that some radio station dumped his show. Nobody would have known without O'Reilly screeching about it, of course. It wouldn't matter to anybody except that now this is the occasion for him to fulminate about how awful it is for a medium to exist that allows people to speak without their words being screened by a corporate editor. This, from a person who brags constantly about how the great Himself cannot be controlled by the "mainstream media," and how great that unfettered competition has been for America. On that point, he may be right. But when this freedom trickles down the food chain to people like Matt Drudge and a million other people, and somebody occasionally has the temerity to do to O'Reilly what he gleefully does to the broadcast networks and CNN, suddenly the internet is the end of civilization. That sounds pretty much like what the major media have said about Fox News, doesn't it? I have enjoyed O'Reilly's bombastic style and often intelligent treatment of issues, but he's losing his perspective. Equating a fairly technical mistake about his radio show (which is in fact not doing well here in the Chicago area) with child pornography and using that false equation to lambaste the entire internet is, itself, irresponsible, and I wonder where his editor is.

The internet is making it possible for people to connect with each other who in the past would probably never have known of each other's existence. The impact of blogs and other internet publications on politics is enormous and overwhelmingly positive. Three refutations of O'Reilly's screed can be found at Lileks, Instapundit, and The Volokh Conspiracy.

And that's the memo.

So now we hear from Norway:
"A homeowner in the southern Norwegian city of Kristiansand is seeing red because his front door is green. His family of four now faces eviction because their green door doesn't satisfy the board of his homeowners' association. The board of the Brattbakken homeowners' association (borettslag) only allows doors to be painted blue, red, gold or white. Green isn't an approved color, and thus has unleashed the eviction threat."
Read the whole thing here, and thanks to Fred Pilot for the pointer.

Co-housing is an alternative to developer-created private communities. The people who find it co-housing attractive tend to be white liberals, and they are trying to diversify themselves a bit. This week the National Co-Housing Conference is taking place in Boulder, Colorado. As an article on the conference observes, "Planners brought the biennial event to Boulder because Colorado is one of the hottest co-housing markets in the country. Colorado and Washington state share the distinction of having the second-largest number of completed co-housing communities in the nation, with nine each. Only California has more, with 14 finished projects." The plus side is said to be a stronger sense of community and lots more personal interaction with neighbors. As one co-housing consultant said, "Instead of going next door and asking for a cup of sugar, you go next door, open the cupboard and get the sugar."
In some neighborhoods, that could get you shot.

What is the trend line of privatization? Should we expect the number of private communities, for example, to continue to increase, and for how long? And what about the rate of increase? Should we expect CID housing to constitute an increasing share of the new housing stock, and for how long? I'd say both the number and the rate will increase for the forseeable future. If I'm right about the reasons for the CID revolution, there are three incentives: 1.) Rising land costs lead developers to seek ways to make high density palatable to middle class consumers; 2.) Fiscal problems affecting local governments lead them to permit high levels of CID construction as a "cash cow," because CIDs generate high property tax revenues without demanding much from those revenues in return; 3.) Some consumers like the idea of private government and local control. You can read about this in my article that appeared in Urban Affairs Reveiw. It is located at this link.
I see all of these incentives becoming more powerful. Sprawl, the budget crises affecting many states, and the popularity of gated communities seem to be driving this form of privatization to unprecedented levels.