Comparison of Governments

The establishment of a government, according to Thomas Paine in “The Rights of Man”, 1791, is

“that the individuals themselves, each in his own personal sovereign right, entered into a compact with each other to produce a government; and this is the only mode in which governments have a right to arise, and the only principle on which they have a right to exist.”

Non-Profit Corp (HOA)

government: “The activities and AFFAIRS of the corporation shall be managed by a Board of Directors.”

From the following comparison it is easy to see that the HOA is functioning as a government although they are currently legally established as a non-profit corporation. As such, its member homeowners are not subject to the rights and benefits commonly enjoyed by citizens NOT living in an HOA. It’s the result of the courts’ position that HOAs are private contracts that its members are NOT subject to the civil liberties guaranteed by the US Constitution. As Professor McKenzie states, “Moreover, courts accept the legal fiction that all residents have voluntarily agreed to be bound by the covenants by virtue of having bought a unit in the development.”

The HOA is, in effect, a private government placed above the laws of the land since its “citizen” members are denied their civil liberties and protection under the laws of their city, their state and the US government.

Nbr	Item	Non-Profit Corp. Private Gov’t	Municipality Civil Gov’t	Note
1	The Executive	President and officers	Mayor and staff	1
2	Policy Making	Board of Directors	City Council
3	Judicial	None	Court System	2
4	Police Powers	None	Yes
5	Tax / dues	Assessments	Taxes	3
6	Status	Member	Citizen	4
7	Fines/liens	YES	YES
8	Enforcement Code	CC&Rs, R & Rs	City Code	5
9	Right to appeal	NO	YES	6
10	Oversight provisions	NO	YES	7
11	Voting quorum	YES	NO, but	8
12	Right to amend	YES	YES
13	Right to an initiative	NO	YES	9

NOTES:

The characteristics of an HOA indicated above are our views of a representative HOA, since the governing documents vary widely from HOA to HOA.

1. Independently elected in municipality. Generally appointed by BOD.
2. No independently elected or appointed “branch” in HOA.
3. Regressive “taxation” in HOA, since the amount of assessment is not based on income but on the value of the property owned.
4. A distinction is being made here because the appellation ”citizen” carries with it certain rights and privileges. In an HOA, the rights and privileges of a member are either non-existent or are severely limited.
5. The HOA documents severely lack any restrictions on the corporation and its officers and any provisions for remedies as can be found in any City Code or City Ordinance.
6. Our fundamental due process and “equal justice under law” that essential provides the “checks and balances” to restrain the acts of government officials.
7. Provisions to file a complaint and / or investigate the acts of government officials.
8. For general elections in a civil government there are no voting quorums. However, quorums have been established for certain functions aside from meeting requirements of city agencies, such as the number of signatures for a recall or citizens initiative.

For general elections in HOAs there are quorums set at extremely high values even when based on citizen turnout in the general elections, thereby limiting the true exercise of democratic voting as exercised in America. Results of elections in HOAs are based on the total member population and not on the total number of members voting as in civil elections. This is an extremely important and anti-democratic provision.

9. The BOD has the right to vote on any proposed amendments in many HOAs before submitting the proposed amendment to the members for a vote.

THE FALSE ARGUMENT OF A NON-GOVERNMENT

It is important to note that the subject matter of a government is the people, the community, the society and all their complex interrelationships. Webster defines government as, “the group or organization governing a country” and to govern as “to conduct the affairs of a country.” We don’t speak of a board of directors as a government, but of its functions -- the management of and the conduct of the affairs of an organization; not of the affairs of a community or a neighborhood. And we don’t even speak of a Board of Governors of an institution as a government, for it, too, manages the affairs of an institution. Congress, the legislature, the city council and the parliament all refer to government and the rule of a people, of a society, of an extent of land.

The attorneys continue this argument when they look at the legal documents and proclaim the self-evidence that the HOA is a non-profit corporation responsible for maintaining property values, as generally found in most charters or articles of incorporation, although some documents will also contain “to maintain the general welfare of the members”. They will also argue that there is no wording in these documents implying that they are indeed a municipality (couldn’t possible a state), since they have not been voted upon nor met the requirements to become a municipality according to state law (more legalities). Yes, voted upon by citizens to become a town, a village, or to be recognized as an unincorporated town or village, depending upon state law. Therefore, the non-profit HOA is not a civil government, they argue.

We are all familiar now with the court’s question, “What was the intent of the people writing the document?” We know the intent of the developers: a non-private corporation whose purpose is to protect the developer’s property values and not to function as a civil government. This is another argument that HOAs are not a government.

So, how can it be argued that non-profit HOA corporations are indeed private governments? Well, a joint CAI and ULI publication, 1974, states, “By their very nature, associations become mini-governments. They provide services that in many areas of the country have been provided by municipalities.” Professor McKenzie also argues that:

“The lawful powers and activities of CID [HOA] boards of directors fit Lakoff’s definition of a private government. They are limited-purpose associations, … they exist ‘alongside and subordinate to’ public governments; and, most important, they exhibit ‘fundamental political characteristics.’”

“Wayne Hyatt, the most prominent legal advocate in CAI … wrote ‘Upon analysis of the association’s functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, the duties and responsibilities of a municipal government.”

We maintain that the non-profit HOA deliberately and intentionally impersonates, acts and functions as a civil government as is defined in the above paragraph and is illustrated in the above table. Regardless of the legalities, if it walks like a duck and talks like a duck it must be a duck! We must correct this error of treating the HOA as a private government and place the HOA under the category of a civil government, whether under a new form or under an existing form with years and years of legal precedent behind it.

Furthermore, we can ask whether there was an intent to deceive all parties as to the true nature of the HOA when the governing documents were created? Or was this an accidental byproduct of the developers, HUD and ULI when this form of government was created? Did these organizations really give any thought or concern regarding the form of government they established and its effect on the community that they created, narrowly looking only to their monetary interests. Barton and Silverman refer to a 1964 ULI report, saying that it’s quite frank “in suggesting practical strategies and techniques to maintain effective developer control, hopefully without the new homeowners being fully aware of what is going on.” We maintain that regardless of their intent, the effect has been the establishment of a private form government that functions outside the American system of democratic government.

The more one argues that non-profits are indeed not a form of government, but a private “corporate contractual” relationship, in spite of the functions that they perform affect its members in a similar way as a civil government affects its citizens, the more it becomes apparent that HOA members are disenfranchised and second-class citizens, and that the HOA functions as a private government under its own set of rules – the unregulated and non-approved governing documents. According to McKenzie,

“In a variety of ways, these private governments are illiberal and undemocratic. Most significantly boards of directors operate outside constitutional restrictions because the law views them as business entities rather than as governments”.

Barton and Silverman add,

“With equivalents to the power to tax, to legislate, to enforce the rules and to provide community services, the Common Interest Homeowners’ Association closely resembles a local government.”

We must alter this perception of HOA governance. We must put a stop to those who continue to deny this form private government that is un-American and unacceptable to American ideals of liberty, justice and fair play.