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Friday, February 29, 2008

Property Rights Hell - Homeowner Associations

No, this isn’t about the subprime housing finance fiasco. It only relates in that some people are happy to let someone else pay for their responsibilities. This is about the dastardly institution known as the homeowners association. Mutual benefit corporations are formed and owners within a subdivision pay a membership fee for their equally shared benefits.

I bought a home in such an association five years ago. Okay, these arrangements are socialistic at best, but I wanted to be a good immigrant and go with the flow, as long as the association was meeting it’s obligations. We have 2 benefits in our association. 1. Use of the common owned recreation areas and 2. road maintenance. The Association claims 42% of our dues go to road maintenance.

So what is the problem, you ask? At our last yearly meeting, many of us were surprised to find out that only some of us actually get road maintenance. We purchased our land with the promise of ‘road maintenance’, often from a realtor who is a board member of the HOA. Half the roads in our rural community are paved and maintained by the county, not the HOA. The HOA only maintains gravel roads. This is a farce that has been perpetrated and kept quiet for decades. The original developer simply set up an HOA in order to force homeowners on county roads to pay for repairs on those on gravel roads, relieving the developer of his obligation. The board members, many with conflicts and on gravel roads have no intention of being fair about this situation.

At our yearly meeting, a motion was made to dissolve the corporation. The board, who by majority vote has the ability to dissolve the HOA, refuses. They also insist it takes 100% of the membership to dissolve the HOA. Not true, and the majority by survey has expressed the desire to dissolve.
NOTE: The law # 1900. (a) Any corporation may elect voluntarily to wind up and dissolve by the vote of shareholders holding shares representing 50 percent or more of the voting power.

(2) If the election [to dissolve] was made by the vote of shareholders, the
number of shares voting for the election and that the election was made by shareholders representing at least 50 percent of the voting power. See Calif. Code: http://law.justia.com/california/codes/corp.htm

HOAs are governed by the Attorney General’s office, who refuses to look at this, and by the Davis Sterling act. According to that law,

California code states 7132. (a) The articles of incorporation may set forth any or all of the following provisions, which shall not be effective unless expressly provided in the articles.
(3) The classes of members, if any, and if there are two or more classes, the rights, privileges, preferences, restrictions and conditions attaching to each class.


CORPORATIONS CODE SECTION 9330-9332
9330. A corporation may issue memberships having different rights, privileges, preferences, restrictions, or conditions, as authorized by its articles or bylaws.

9331. Except as provided in or authorized by the articles or bylaws, all memberships shall have the same rights, privileges, preferences, restrictions, and conditions.

Clearly, when there is only one class of membership, all members are afforded the same benefits for the same membership dues. This HOA is operating illegally.
Our HOA bylaws:

The OA handbook states:
Ar. IV Section 2 Members pg. 18
The Association shall have but ONE class of membership. Members shall be entitled ot one vote for each lot owned in the subdivision as hereinabove stated.

ART III Pg. 18 - The primary purpose of the Association is to own, promote, improve, and maintain the property of the Assoc. for the USE, pleasure, recreation, enjoyment of ALL of the members....In carrying out such purpose, the Assoc. shall be empowered to construct, repair, improve and maintain streets, roadways, and easements......

The mention of road maintenance: Articles of Incorporation 2.
(c) To maintain the roadways in said real estate development, including the access road to the main highway. (Note: all access roads are paved & maintained by county)

This ongoing deception is clear. Most of us get no benefit, but are forced to pay for those that do. The board considered dissolving if the owners on paved roads gave up their interest in the common areas in favor of gravel road owners getting the proceeds for future road maintenance, again outside boundaries of law.

As stated in the By Laws on page 31 Dissolution
"In the event of the dissolution of the Association, each member shall receive his pro rata portion of the Association's property and assets after all of its debts and liabilities have been paid or provided for."

THE LAW- 1362.
Unless the declaration otherwise provides, in a condominium project, or in a planned development in which the common areas are owned by the owners of the separate interests, the common areas are owned as tenants in common, in equal shares, one for each unit or lot.

-CORPORATIONS CODE SECTION 9680
(1) Except as provided in Section 6715, all of a corporation's assets shall be disposed of on dissolution in conformity with its articles or bylaws subject to complying with the provisions of any trust under which such assets are held.

If you have never had to deal with one of these associations, count your blessings. Those who have been using the rest of us to pay for maintenance of their property have no intention of letting go of this gravy train peacefully. I am reminded of the words of Ralph Waldo Emerson in 1838, who was dealing with a much more serious subject, but the sentiments are the same. Some property owners need to read Emerson on 'Self Reliance' as well.
" Then is this disaster of Cherokees brought to me by a sad friend to blacken my days & nights.

I can do nothing. Why shriek? Why strike ineffectual blows? .........

It is like dead cats around one's neck.......

It is like School Committees & Sunday School classes and

Teachers' meetings & the Warren Street Chapel & all the other holy hurrahs........

I stir in it for the sad reason that no other mortal will move

& If I do not, why it is left undone.”
PS!! If any of you have any ideas, other than spending a fortune on a private attorney, let us know!

4 Comments:

Blogger Poindexter P. Parkenfarker said...

I wish I had a good idea for you.
I bought my property back in 1989.
New people moved into the area and on itty bitty lots. (my grandpa who owned 2 sections of land would turn over in his grave to think that I own as little as just over 1 measly little acre.)

Anyway, these new folks formed a water association out of what a few of us shared a common well system; it has expanded. 5 years ago, the folks who bought into the system voted to make it an official water association. Now they are campaigning and getting a petition together to change the name to a homeowners association.
When they came to my front door uninvited and asked me to sign on to the name change, I told them it was fine as it was and leave it be.
They responded by saying that how else could they insure that we all approved of new building permits and design of houses, or stop small business from starting in their neighborhood if we didn't have a homeowners association.
I got real ignorant real fast and suggested that their "association" stopped at my propertyline, and they were not welcome to step on my property again if they ever brought up that communist idea in front of me. My chopped Bike building and machine shop operation legally existed before they moved in and it will continue long after they move out. (New Wine tasting shop good, bike builder bad.) they can KMA!

I couldn't hear the rest of their seagull like chattering, 'cause I kicked over the engine on my bike and the lovely sound it made set off their car alarm that was parked in my driveway. I think they heard me suggest that they could pack sand somewhere and I sprayed gravel all over their car that was in my way in my driveway as I took off for a leisurly scoot to clear my head. They haven't talked to me in over six months now and for some reason go the other way when they see me in public. Good for them.
As I said, I can get real ignorant real fast when someone decides to mess with my personal life, liberty, or property!
Wish I had a suggestion for you.
These associations are hogwash at best, and usually run by amateurish petty tyrant wannabes.

6:54 PM  
Blogger TheTownCrier said...

"amateurish petty tyrant wannabes."


Exactly poindexter!!!

8:38 AM  
Blogger Dave Port said...

Sounds like PPP had it right! I often tell people that with all the pussification of America these days, I gain more understating every day...of why some men join outlaw motorcycle gangs.

I am a breeder of working line German Shepherd Dogs, and will not tolerate that "homeowners association" foolishness when I finally am able to get land in the country. I intend to move out there so people won't have to listen to/smell my dogs (some things about dogs are just unavoidable). But I KNOW that some moron will move across the street, then complain about it.

Incidentally, I'm hoping for 5 acres, so I can build my home and kennel smack in the middle of it. That way, there will be no question that these idiots are trespassing if they ever come back.

8:35 PM  
Blogger Dave Port said...

That should have been "underSTANDing," not understating.

8:37 PM  

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