Citizens Against Private Government HOAs

5419 E. Piping Rock Road

Scottsdale, AZ 85254

Contact: George K. Staropoli

602-228-2891

pvtgov@cs.com

FOR IMMEDIATE RELEASE

Arizona HOA Study Committee recommendations do not provide for meaningful improvement of conditions in HOAs: enforcement!

To date, I’ve seen the recommendations, presumably drafts, from Senator Smith and Representative Foster. In one month the committee as a whole is to make public its study results.

Mr. Staropoli, president of CAPGH, says that he is disappointed since many of the recommendations already exist in law and several major issues have been ignored. While they reflect an attempt to improve the conditions, and include some meaningful recommendations, for homeowners in those associations whose boards of directors violate state laws, and the association’s governing documents, they do not provide for meaningful relief in a very important area: enforcement.

There are no provisions for enforcement of existing state laws against association boards, directors, and management firms let alone provisions for enforcement to be included in any new legislation. There are no provisions for redress by filing a complaint with the Attorney General or county prosecutor’s office. There are no fines, penalties or suspensions against directors, management firm personnel or attorneys. Mr. Staropoli feels strongly that, ”By failing to provide for effective enforcement of state law, the recommendations of these legislators continue to allow these abusive boards of directors, and individual directors, to act with impunity in total disregard for the laws of the State of Arizona”. Without these enforcement provisions, these abusive boards of directors and individual directors will continue to deprive citizens of Arizona of their constitutionally guaranteed civil liberties.

Furthermore, Mr. Staropoli says, “It is unconscionable that these legislators will continue to allow wayward boards to make use of homeowner funds to defend their illegal acts while the innocent homeowner must use his own funds.” There is no provision to balance the power and might of association boards since they have an unequal and unjust access to homeowner funds. In a civil government, like a city or town, there are means to bring action against illegal and unethical behavior of government officials without expensive law suits that produce no penalties to the offending HOA boards of directors.

Professor Evan McKenzie in his book, Privatopia, states

   
         "CIDS [HOAs] currently engage in many activities that would be 
         prohibited if they were viewed by the courts as the equivalent of 
         local governments." 

Furthermore, associations have been violating the federal fair debt collections act, FDCPA, because courts have upheld this fallacious interpretation that buying an HOA controlled property is a private contract. However, the Federal 7^th Circuit Court of Appeals has held that homeowner associations are required to comply with this act. And in Arizona, in Caron V. Maxwell, 48 F. Supp 2d 932, the court held that HOA dues were “debt” under FDCPA and that clients of attorneys are liable for their attorney’s violations.

Mr. Staropoli is further disappointed because these recommendations fail to acknowledge the validity of the complaints of abuse by association boards of directors and the deprivation of homeowner civil liberties as guaranteed under federal law. These grievances were presented to the committee in person at the hearings or by means of emails or letters. We were told that over 1,200 emails were received by one legislator alone. These legislators have failed to indicate how their recommendations would provide a solution to grievances of these homeowners. And, furthermore, many serious complaints are not addressed by these recommendations.

Hopefully, by the time the committee as a whole makes its final recommendations in December, Mr. Staropoli hopes to see more meaningful recommendations for effective legislation to alleviate the conditions many homeowners suffer under the oppressive government of the association’s board of directors.

CAPGH is currently filing its papers as a non profit corporation whose aim is to the public with information regarding all the factors that can have profound effects on a home buyer’s decision to buy into an HOA controlled property. “We don’t want private governments in our homes and we want to restore the rights of citizens living in homeowners associations across the country” says Mr. Staropoli. Our mission is to inform the public:

1. of the private government nature of HOAs and their governing bodies, the homeowners association;

2. of the restrictions on homeowners’ civil liberties and;

3. of the lack of effective enforcement of state laws and the governing documents under the “private contract” interpretation of HOAs

encl: Sen. Smith & Rep Foster’s recommendations

####

Nov 21, 2000

HOMEOWNER ASSOCIATION

ENFORCEMENT SUBCOMMITTEE

Representative Foster Jay DiBenardo Scott Higginson

Committee Recommendations

A. Enforcement of Open Meeting Laws.

1. Currently there are no penalties associated with violating

association open meeting laws. It would be beneficial to add

some sort of penalty.

2. Change statute to require developer run associations to comply

with open meeting and open record laws.

3. In statute require all associations to hold at least one annual

meeting.

B. Annual Financial Reports

1. In statute require associations to produce an annual report to

be made available at the annual meeting and an executive

summary to be included with the associations assessment

billing statement following the annual meeting.

C. Election Procedures

1. An associations board should be an elected board of actual

residents; not a developer appointed board when a developer

relinquishes control of a planned community.

2. Develop a standard process for removing board members

(recall procedures).

D. Proxy Voting

1. Statute needs to provide a mechanism for overriding an

associations bylaws regarding proxy voting. Members should

always have a democratic method to change the make-up

of the associations board.

E. Statutes pertaining to association

1. This section of statute does not provide for a cap on

increasing association fees. However, most association CC&R's

address the CAP, but for those that do not, this section

of statute should be amended to reflect the cap language

in the Planned Community Association statute.

2. Both the Condo and Planned Community association statutes

need a provision detailing the process for amending an

associations CC&R.

3. Examine use restrictions for all types of associations.

4. Add language that will prohibit an association board from

shutting off a homeowners utilities.

F. Enforcement

1. Private Property Rights Ombudsman

a. Hotline

b. Education Clearinghouse

c. Funding. Look into the possibility of a 90/10 board.

G. Relinquishment of developer run associations

1. Developers control some developer run associations until 100%

of the lots are sold. It would be beneficial to put into

statute a requirement that once 75% of the lots are sold

in a developer run association that control of the association

is turned over to the board.

2. Once the board is turned over to the residents (at 75%), a

one lot - one vote rule should be implemented.

3. End the Class A and Class B voting system.

4. Some developers construct temporary corporation. These

corporations become defunct once the developer moves on,

which limits their liabiliity for any type of defect litigation.

5. Ensure developer run associations fund 100% of an associations

reserve.

6. Prohibit the developer from offering unreasonably low

assessment rates as a marketing tool. This practice

perpetuates under funding association treasuries.