Request for Consultation

Homeowners Bill of Rights
Be Sure To Read Between the Lines

Comments of Beth A. Grimm, Attorney

There are many versions of Bills of Rights for Homeowners who live in common interest developments in California and elsewhere. Other seniors groups than AARP have weighed in. Lois and Sam Pratt have been around a long time with their Bill of Rights. And CAI (Community Associations Institute ??? a national trade organization) has a version. I studied this issue a few years ago looking at these and others, comparing the terms to California statutes offering rights to owners. And now it is time again to visit this issue because staring us in the face is a proposal that apparently is slated for possible introduction in many states into legislation. In many ways, it outlines basic and reasonable rights. However, in some ways it suggests a rather seismic shift using language and concepts that are disturbingly vague and unrealistic; it presents untenable hurdles for association leadership, and it exhibits a disregard and disrespect for the need for effective and efficient management and administration of affairs. While it touts individual rights as being tantamount, it gives short shrift to the need for a reasonable balance between leadership authority and constituent rights. As for existing propounded Bills of Rights, the best I have seen is that found in the Public Policy Manual published by CAI. It is the only one that balances the idea of rights and responsibilities. The worst I have seen is the short one set forth below (short maybe, but not so sweet).

This proposed AARP Homeowners Bill of Rights seems very innocuous if you just read the headings. And unless you are versed in reading between the lines, you might miss some of the things that are important to note. In many ways it mirrors some existing laws. In other ways, it exemplifies the need for more balanced thinking about rights vs. responsibilities.

John F. Kennedy said most eloquently:

"Our privileges can be no greater than our obligations. The protection of our rights can endure no longer than the performance of our responsibilities."

Contrast that line of thinking with this so-called "Homeowners Bill of Rights" found on the web (which exemplifies how attitude is a factor to be considered in granting "autonomy").

"Here is my Homeowners Bill of Rights!
It is my home, not anyone else's, so bug off !!
My home is mine and my castle !!
Stay the hell out of my home and it's business.
You don't like my grass, my bushes, my play set, don't look !!
If you have a complaint, keep it to yourself.
If you think that you can control my home and it's environs,
then you pay the mortgage, the taxes, the utilities and my food bill.
And if you think that you can control me, you can talk to my
2nd Amendment rights and see how much further you can go.
Ian in Florida???

I don't know about you, but I do not want to live next door to "Ian in Florida".

Conceptual Discussion. If one purchases a ranch in Montana or lives in the backwoods of Virginia, there are very few rules and regulations imposed by local authorities. As one moves closer to town, perhaps into a county-regulated area, there is a layer of restrictions added, simply to allow property owners to coexist with a few reasonable rules on things like property use restrictions, zoning, tax levies for infrastructure, utilities systems, septic/leach field restrictions, grading and drainage restrictions, etc. When one moves into a City, there is another layer of restrictions added, including zoning ordinances, tax levies, street widths, setbacks, building height restrictions, sign and poster ordinances, nuisance ordinances, etc. When one moves into a Common Interest Development, is it unreasonable to expect additional restrictions? The denser the housing gets, and the more amenities that are offered, the more people are responsible to each to act reasonably, to pay their fair share, and the more reasonable it is to have a tighter "code" to live by. It is true that rules are more abundant and rights more limited in each new layer of structure. In a perfect world with a society sharing an "one-for-all-and-all-for-one" mentality, these restrictions would not be needed. Everyone would pay their fair share voluntarily. Everyone would bring their garbage cans in at night and park their vehicles in their garage instead of the neighbor's home on the street. Everyone would drive slowly in busy neighborhoods and watch out for children. Everyone would not attempt to impose their values (or lack thereof) on the neighbors. Everyone would be cognizant of their neighbors' right to enjoy their own property and nuisances would be minimized. Everyone would be neighborly, friendly in their approach of others rather than demanding, condescending, or selfish. But society does not operate that way. Rules and regulations of property are sorely needed.

As society leans more toward selfishness, autonomy, a "leave me alone" and "my home is my castle and you can do nothing about it mentality", and life becomes more difficult because of rising costs, higher taxes, and having to work harder to maintain the same status, it makes sense that people are going to become more focused on themselves and less focused on the comfort of their neighbors. It makes sense that there needs to be a reasonable mechanism for balancing rights with responsibilities to those living in close proximity and sharing expenses.

In order for one to accurately assess the cause and effect of the proposed AARP Homeowners Bill of Rights, and overreaching, one needs to analyze the pros and cons, and look at the potentially seismic shift away from a balanced approach to what is needed, what is wanted (and by whom) and what already exists. This chart relates to comparisons of pros and cons, and how the suggested BOR comports with existing California law.

PROS / Discussion
CONS / Discussion
The Right to Security against Foreclosure. An association shall not foreclose against a homeowner except for significant unpaid assessments, and any such foreclosure shall require judicial review to ensure fairness. (1) No one will lose their home for a minor debt. (2) Makes it more difficult to collect and to pursue foreclosure for the debtor (pro for debtor, not for all association members.)

Says $ paid toward delinquency should be credited to assessment first. Says should be extra 30 days to establish payment plan for hardships. These are reasonable factors and closely consistent with California law. Installment payments are common.

Comments: Agree that foreclosure rights should not be added to governing docs without approval of all owners.

(1) Judicial foreclosure is often more expensive than NJF and forces HOAs to incur the upfront costs (requires attorney), and (2) Bigger burden on debtors to bear reimbursement costs raises the stakes for both sides. (3) Making it harder to collect delinquent assessments puts a burden on the owners who are paying assessments.

Comment: raising the board vote needed to authorize foreclosure unnecessarily complicates Board actions.

CC 1367 and 1367.1, 1367.4 require a multitude of notices and thresholds of $1800 in assessment debt or 1 year in delinquency before foreclosure. This qualifies as significant unpaid assessments. Proposed bill calls for right of redemption. California law allows redemption for judicial and NJF foreclosure.

Comments: Language calls for court procedure allowing for at least 3 months to pay debt. California NJF law allows more than 4 months before scheduling sale and more time after that.

The Right to Resolve Disputes Without Litigation. Homeowners and associations will have available alternative dispute resolution (ADR) although both parties reserve the right to litigate. (1) ADR is always better than litigation (in my opinion) - if it resolves the dispute. Of course, both parties have to be fairly reasonable people for this to happen. It does not always work and sometimes more direct and expeditious remedies are needed (like a court injunction). (2) ADR generally less expensive than litigation.

Comment: The ombudsman provisions relate only of there is a state program and that has issues of its own.

(1) Adding ADR can add a layer of cost in time, energy and dollars to any dispute that goes on to litigation. (2) Trying to force ADR to address a blatant building restriction violation or ongoing nuisance (where injunctive relief is needed) is not always feasible. The exception for "emergencies" is too narrow. Forcing the HOA to bear the entire expense of the ADR procedures is too one-sided and leaves the HOA subject to frivolous demands, and less likely to "step into the ring" in those cases. CC 1363.810 et. Seq., 1365.1, 1369.510 et seq. all propose various forms of required meetings and ADR processes. Interesting that in foreclosure option litigation is encouraged, in fining processes, litigation is encouraged, and here, it is discouraged.
The Right to Fairness in Litigation. Where there is litigation between an association and a homeowner, and the homeowner prevails, the assn. shall have to pay attorneys fees to a reasonable level. Of course this makes sense, except that the attorney fees provisions are lop-sided. Lessening the risk for homeowners in dispute with the association of having to reimburse attorney fees when they do not prevail may trigger unnecessary litigation at the expense of their neighbors who have to contribute to cover the expenses of the litigation. This is only fair if it is reciprocal, in other words, if the prevailing attorney is entitled to recover fees. Without this protection, the balance is skewed. This already exists in CC 1354, and furthermore, if either party refuses to engage in ADR for certain disputes pre-litigation, a judge can take that into consideration in awarding Atty Fees. CC 1369.510.
The Right to Be Told of All Rules and Charges. Homeowners shall be told - before buying - of the association's broad powers, and the association may not exercise any power not clearly disclosed to the homeowner if the power unreasonably interferes with home owner-ship.(1) Providing information to purchasers about CID living and the regulatory documents is a plus, and every owner who goes through escrow, if existing legal procedures are followed, gets a stack of papers to read about living in the CID, but you can only lead a horse to water...... (2) Plain English docs would be a pro. However?....

Comment: requiring plain English operating rules is not a bad idea... however, most legal documents are full of legalese simply because they reiterate statutes in many cases and those statutes are not written in plain English. The lack of plain English is apparent in most real estate documents, deeds, leases and other regulatory documents. (Is legislating plain English even realistic?) Is it legal? What about the complaints sure to arise from the portion of the population that does not understand English very well. (3) To the credit of the author, the specifications about owner obligations and association obligations to provide sale documents is relatively consistent with CC 1368.

Who is to do the "telling"... the realtors? The developers? Those who sell the properties? That's where it should start. The seller?

Why are associations being blamed for not telling purchasers "what is". And who is to regulate the reading of the docs by the buyer? The title officer who is sitting during the signing? Not being able to exercise rules just because an owner says they were not told about them is bordering on ludicrous. Anyone could claim this. This kind of regulation would trigger a disclosure to be signed in escrow that the buyer read all the governing documents. And neither party would be better off for invoking this right. Expecting a state ombudsman to write plain English rule books and the "information statement as a stand-alone [plain English] document" is just not realistic - at least without a high cost to the consumer - and expecting a volunteer board member to translate the legalese in the declaration restrictions into plain English is equally infeasible.

In California, the Dept. of Real Estate has a brochure explaining CID living that is available for free. (Perhaps realtors should be required to provide it in all CID sales.) The DRE also requires a Public Report outlining CID living for sales in new developments. All CC&Rs are public docs that one could pull and read before sitting in escrow signing docs. There are a myriad of financial and other disclosures required by CC1368. The question is: who reads them?

Comment: Having a requirement that all implied, default or inherent powers of a board be put in writing is infeasible as no one can identify or name every possible power in any fact specific circumstances.

The Right to Stability in Rules and Charges. Homeowners shall have rights to vote to create, amend, or terminate deed restrictions and other important documents. Where an association's directors have power to change operating rules, the homeowners shall have notice and an opportunity, by majority vote, to override rules and charges.This seems fair, except see Cons. Preventing discrimination (more appropriately called inconsistent treatment) in use of facilities, signs, etc. is a laudable goal but is already covered if it is truly discrimination in the Constitutional sense of the word (at least in California) because of statutes prohibiting discrimination. The model statute language admittedly tracks California law but removes any protections that the Association can invoke based on reasonable time, place and manner (and inherently bad conduct and lack of moral compass in some personalities.) It goes beyond Constitutional standards, hence upsetting the balance due neighbors. Legislating the ability or right to make neighbor contacts is over-reaching. If neighbors are amenable to visits, they will receive them kindly. If they are not, they will not. Human nature will prevail here and this cannot be legislated or defined.The procedures in this model relating to the approval of rules in a manner that involves owners in the discussion exists in California, CC 1357.100 and following. California law also prohibits discriminatory language in any governing documents and requires HOA Boards to remove it and re-record the documents.

Comment: Granted there are cases where rules are inconsistently enforced, and language in a Bill of Rights should address this. However, trying to legislate conduct and motive is a different ballgame. If it is legislated, it should also be consistent, meaning that legislation should be considered regulating owner conduct such as if a person moves into a CID, they are required to follow the rules and regulations. Owners are also capable of very bad conduct and that is hard to legislate away.

The Right to Individual Autonomy. Homeowners shall not surrender any essential rights of individual autonomy because they live in a common interest community. Homeowners shall have the right to peaceful advocacy during elections and other votes as well as use of Common Areas. It is good for owners to have rights to participate in the local government of the Association, and to peaceful advocacy. However, it is important to recognize that apathy reigns rampant in HOAs and so most decisions are made and votes hinge on the perspectives of a few, generally those who are serving on a volunteer basis and those who are fighting the volunteers. (1) One man's junk is another man's treasure. (2) One man's peace found in a hot tub is another man's insomnia. (3) One man's poorly installed skylight or broken appliance line is another man's damaged furniture and floors. (4) One man's army of children is another man's dread. (5) One man's display of a swastika is another man's trigger for violence. "Not surrender any essential rights of autonomy" is a matter of subjectivity and degree, and not realistic. CC 1363.03 et seq. in California has a whole set of elections rules that is intended to bring fairness, secrecy and equal access with regard to advocacy to HOAs in California.
The Right to Oversight of Associations and Directors. Homeowners shall have reasonable access to records and meetings, as well as specified abilities to call special meetings, to obtain oversight of elections and other votes, and to recall directors. Reasonable oversight is fine. Records access and the right to attend most meetings is fine. None of these specified rights is a problem, except that the model statute allows recall of directors by member petition and this is not a means of secret ballot, again, exhibiting an imbalance in the logic of the "elections" process. California has detailed rights with regard to records inspection (CC 1365.2), attendance at meetings (CC1365.05 et seq.), and elections (CC 1363.03 et. seq,) guaranteeing secret ballots and equal access to association facilities and media.
The Right to Vote and Run For Office. Homeowners shall have well-defined voting rights, including secret ballots, and no director shall have a conflict of interest. These rights seem fine except see Cons. Sometimes there is a benefit to using someone on the board's services and expertise - so long as there is a contract defining the relationship and disclosure to owners, why not allow the members to get an advantage? Proxy voting as suggested placing measures for choices on the proxy contradicts the provisions for secret balloting. CC 1363.03 has defined voting rights as do governing docs. CC1363.03 leaves a lot to be desired in its practical application but its there and addresses what this right demands. The Corp Code has defined requirements for proper disclosure of conflicts of interest.
The Right to Reasonable Associations and Directors. Associations, their directors and other agents, shall act reasonably in exercising their power over homeowners. It is fine to have this expectation stated, however, the supporting verbiage is extreme. Attempting to enforce this encompasses a lot of possible actions coming from either side of the table and it would be impossible to anticipate all possible scenarios. However, this is just a restatement basically of the requirement that a Board exercise its powers as a prudent man in the same or similar circumstances, but with a higher duty of trust when it comes to the financial end of things (hence :Fiduciary Duty). Comment: Even suggesting doing away with the "business judgment" rule, which is a long established standard found in case and statutory law for analyzing board decisions, creates another imbalance - an assumption that any and all Board decisions deserve judicial scrutiny on a case by case basis. Case law defines "fiduciary duty" and "negligence", intentional torts, etc.

Comment: forcing an association to have to get a court order to fine a homeowner will result in one of two outcomes (as there will be no "deterent? value; (1) Violations will go untended. Or (2) Associations will be driven to court remedies at material expense in attorney fees, which will be sought from owner. This is overkill for day to day violations and it is inconsistent with the language in this proposed model that suggests many other remedies before seeking court adjudication.

The Right of an Ombudsman for Homeowners. Homeowners shall have fair interpretation of their rights through the state office of Ombudsperson for Homeowners. The ombudsperson will enable state oversight where needed, and increases available information for all concerned. It would be a positive to have an ombudsman available to help resolve every dispute in HOAs in California or anywhere else. (However, cost and the level of knowledge, expertise, and integrity of the Ombudsperson are of utmost importance. One bad apple can truly spoil the whole bunch.) (1) The cost is high and those not in dispute (the vast majority) end up paying what is equivalent of a tax for setting up an entire agency to support an ombudsperson. solving the disputes of a tiny minority. (2) Beauracracies and politics in appoint ments abound in State agencies - maybe education should come first. That is more straightforward and not subject to manipulation. Ombudsman bill (AB 770) passed by both houses but was vetoed in 2006 by Governor.

Comment: The State of California does not need another agency nor the cost that comes with it, unless it is an agency to educate the masses in CID law and living. The education should be offered for free, because the cost of ignorance is very high for all "sides".

Summary/Conclusion: It seems to me that the CAI model in the Public Policy Manual or existing California statutes would be better models for the AARP Homeowners Bill of Rights. The statutes have been chewed up and spit out with a modicum of their value tied up in balanced limits on the rights. They are difficult and indicative of state micromanagement, and probably go too far, but they are much more balanced than the "Model Statute" proposed, and they apply to all common interest developments, not just a small percentage. The proposed AARP statute applies only to common-interest communities that are single-family detached homes. These are further differences/comments:

1. Attempting to legislate "plain English" written rules and documents while providing statutory language peppered with phrases like "burdened by servitudes" and "property rights of an identical or similar kind held by the homeowners as appurtenances to their individually owned lots or units" is hypocritical and unfair, and it illustrates the illogical thinking of how to get from point A to point B. It also might possibly incense the component of the population that does not read or speak English very well and might trigger demands for other mandated "translations".

2. Trying to legislate what homeowners are to be "told", yet leaving developers, realtors, lenders, title company officers and others out of this loop, is also hypocritical and unfair as these are the parties that have access to and should be educating purchasers in CIDs prior to ownership about the quirks, rules and regulations, and unique characteristics of purchasing a home in a common interest community. Granted, the real estate and community association management professions do not seamlessly integrate or communicate very well in many respects, and there are many disputes over purchases and failure of adequate disclosure. However, the homeowner associations do not meet with or have any legal relationship with purchasers so if there is any mandated "telling to be done", all responsible parties need to be kept in the loop of responsibility.

3. This is perhaps the most disturbing of the Bill of Rights suggested to AARP: "The Right to Individual Autonomy". The phraseology offered illustrates the intent to put the interests of an individual over and above the interests of the whole community and that kind of thinking presents many societal and other issues. This is a pervasive theme and the common thread found in the suggested AARP Bill of Rights that should not be ignored.

There is merit to many of the things discussed in this proposed model statute and many of the concepts mirror, parallel or track existing California law which was passed within the last 5 years. My concern about this as a model is the overreaching, the shifting of the "balance" of interests, the misguided (in my opinion) presumption that the Association, since it is the stronger of the advocates in a disagreement with an owner, should somehow be "handicapped" and less likely to recover and be made whole in resolving any demands of owners, justified or not. Supporting that type of thought process creates an imbalance and bias that adversely affects all of the owners who do not violate the governing documents, who want them enforced, and who pay their assessments. One could write a Homeowners Bill of Responsibilities that parallels this Bill of Rights but that is not likely and might be seen as spiteful - still, it is fair to note that responsible Owners do not generally buy into the position that Boards need to be tethered or hindered in carrying out their duties because they are unable to think like rational people. To the contrary, the vast majority of people living in homeowner associations do not complain and seem very happy to share the amenities and reap the benefits. The very vast majority seem to be able to live with any of the inconveniences and "burdens". This form of housing and sharing of amenities creates a resource for home owners who could not otherwise afford to even buy property, or have amenities, and it comes with a price that most are willing to bear without complaint. What good thing doesn't?

Beth Grimm is a California attorney who is very active in CAI and ECHO, and also a prolific writer, speaker and educator on CID issues and laws.

[***Note that CC stands for California Civil Code.]

copyright 2006, Beth Grimm, all rights reserved

By Beth A. Grimm, Attorney. A "service oriented" attorney and member of ECHO and CAI and various other industry organizations in California and nationally, host of the website www.californiacondoguru.com; two Blogs: California Condominium & HOA Law Blog, and Condolawguru.com Blog, and author of many helpful community association publications which can be found in the webstore on her site.