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As homeowner associations have largely developed without any concern for individual rights of homeowners, the Homeowner Bill of Rights seeks to redress that imbalance.
The California Senate Housing Subcommittee set up a task force to study revisions to the Davis-Stirling Act, the central legislative framework of homeowner associations in California.
The following document, REVISING THE DAVIS STIRLING ACT, was presented on July 24, 1997 to the Senate Housing Committe and the Senate Housing Task Force to Revise the Davis Stirling Act by Elizabeth McMahon. She was the consumer member of the task force and the Executive Director of the American Homeowners Resource Center.
The Davis Stirling Act was created by California Assemblymen Gray Davis (currently Governor of California) and Larry Stirling (currently a judge in San Diego Superior Court). They employed Katherine Rosenberry (a litigation industry lobbyist and national director of Community Associations Institute ( CAI) - the trade group of lawyers and vendors for homeowner associations), to write the Davis Stirling Act.
Revising the Davis-Stirling Act
As all legislation takes place against a backdrop of values and the desires of special interests, groups fashioning a legal framework for homeowner associations must take these into account and establish the appropriate order of priority.
1. VALUES
This country has consistently held up the ideals of freedom, individuality and resourcefulness. Hence, both the physical design and legal framework of planned unit developments should embody these concepts in significant and meaningful ways. One example is that planned unit developments should not even be considered where there are single family homes with no common facilities. These, as they already are being taxed for streets and public areas such as slopes, should be maintained by the local municipalities, especially as slopes are not insurable.
Another example is the current, dominant practice of throwing up developments with tasteless, monotonous designs that are an insult to the surrounding environment. These do nothing to promote the values of freedom and individuality. Another example is the current practice of burdening homeowners with oppressive and detailed CCR's. These do not embody the ideals which this country has traditionally espoused.
2. SPECIAL INTERESTS
As a home is where the spirit of a nation is forged, the interests of such vendors as lawyers and management companies must give way to the interests of those people for whom homeowner associations are created - the homeowners. The current Davis-Stirling Act was created by special interest groups of lawyers who saw an opportunity to create a whole new arena of business. But homeowners want to buy a home, not a lawsuit, and most CCR's are designed to maximize the creation of a lawsuit.
CCR's created by lawyers which are unduly restrictive and detailed guarantee future trouble in homeowner associations. The bromide defense that people are free to choose to live in an association is a myth perpetuated by these special interests. The clear reality is that if all 6 million Californians chose not to live in homeowner associations tomorrow, there are not 2 to 3 million homes lying vacant at the moment to accommodate them.
3. HOMEOWNER BILL OF RIGHTS
In light of the above brief comments and extensive discussions with homeowners across the state, I recommend that a HOMEOWNER BILL OF RIGHTS be incorporated as the centerpiece of any and all legislation governing common interest developments.
This is an essential and critical feature of any legislative framework for homeowner associations. This HOMEOWNER BILL OF RIGHTS must incorporate a set of provisions ensuring that the rights of individual homeowners are not trampled upon. The history of homeowner associations on a nationwide basis has shown that abuse is rampant - from boards which misuse their power, from the misuse and theft of association money, from repeated violations both of state law and the CCR's by boards, their lawyers and managers.
The industry defense that these are isolated incidents belies the reality that the current structure is virtually guaranteed to produce trouble. The fact that lawyers preach to homeowner associations that they cannot do without a lawyer contradicts their minimization of the problem. The fact that they make very good livings out of associations, is proof positive and ends debate on the issue. Where there is trouble, there is money for lawyers.
The following specific recommendations are proposed.
Homeowner Bill of Rights
This document is a compilation of ideas and suggestions by homeowners who either live or have lived in homeowner associations.
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1.
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A statement by the Legislature of the State of California that it is the legislative policy of this State to promote the nation's traditional ideals of freedom, individuality and resourcefulness in the design, construction and operation of homeowner associations.
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2.
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CCR's are to be designed from the perspective of the homeowner, and must respect the central role which a home plays in the life of its citizens.
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3.
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All CID's should be under the Brown Act or the Open Meetings Act.
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4.
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CCR's must be easy to read and devoid of obfuscatory technical jargon.
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5.
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CCR's must mandate the right to equal services and treatment for all, and specify significant penalties against board members, managers and lawyers who violate this right.
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6.
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CCR's must mandate the right of all homeowners to complete access to the books and records of the association with significant personal penalties against board members for violations.
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A very clear statement of the restrictive provisions in CCR's and penalties for their violation must be presented to prospective new buyers at the start of escrow. In addition, there should be very clear disclosure of all lawsuits, construction defects and liabilities that affect homes and common property in the association.
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All association elections are to be conducted according to the California Election Code, without the involvement of vendors like association lawyers and managers.
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9.
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There will be a right to cumulative voting in elections - to ensure that minority perspectives have a chance to be heard.
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10.
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An efficient, speedy, cost-effective and non judicial procedure to address violations of the CCR's by board members, lawyers and managers, and a meaningful penalty structure. Where fraud and concealment of information has taken place in homeowner associations, there should be no statute of limitations.
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11.
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Term limits for board members.
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Dues and assessments are to be used only for the purposes for which they were collected - and an adequate accounting and full disclosure to all owners to substantiate this. Owners, upon request, should be given monthly income and disbursement journals and minutes of association meetings.
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13.
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There should be public bids for all jobs, and board members and any others in the decision-making process should give a complete disclosure of any and all personal financial interest. All confirmed vendor contracts should be available for inspection and copy to all owners. There should be significant penalties for violations of the above by board members, lawyers and managers.
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If management companies are used, they must be licensed. Courses to obtain this license should be held at a public educational institution ( e.g. a community college).
Courses taken in a private institution may be vendor-biased, and involve conflict of interest. Management companies should be prohibited from accepting kickbacks and bribes from any and all vendors, including but not limited to lawyers, banks, insurance companies and landscape companies.
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Management companies should be bonded in favor of the homeowners.
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Management companies should only manage. They should not be involved with the accounting - collecting homeowner fees, controlling bank accounts, signing checks or giving legal advice. Managers should not be allowed to charge any legal costs or insurance costs to homeowners.
( Homeowner dues should not be used to pay for managers liability insurance - the current CHUBB Insurance D&O board policies also covering managers for nominal is illegal, a conflict of interest and should be investigated.)
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17.
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Audits should be rigorous and in depth. Current audits are generally perfunctory and meaningless.
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Homeowners should have the right to vote on whether the association may file a lawsuit other than a Small Claims action. There should be limits set on lawyers fees for collections and suits against homeowners.
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Small Claims court should be used instead of non-judicial foreclosure to collect delinquent assessments.
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20.
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Reserves and all other association resources should not be used for legal fees and without an express vote of the homeowners.
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The provision which allows the winner in a suit to claim legal fees should be abolished. This provision encourages suits by boards. If the board sues and loses, board members do not suffer personally. They simply pay the legal fees and costs from the dues of the members.If a member sues the board and wins, the insurance company pays all the legal fees and costs, and charges the homeowners higher premiums. The homeowner, not only is exposed to significant financial risk, but also funds the suit against him/herself.
If the member sues and loses, the insurance company sues the member to collect inflated legal fees and takes away member's equity and home.
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22.
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All association lawsuits (not individual homeowner suits), along with expenditures and settlements should be recorded in the county records along with the CCR's. A record of construction defect corrections made to association common areas should be given to each owner and recorded with the county.
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Directors for Master Associations must be elected by vote of all the homeowners - not, as currently, by vote of the directors of the sub-associations.
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24.
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The control of boards of directors should be limited to common areas only.
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Board oversight of associations which contain single family homes should be confined to the common area only.
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26.
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Homeowners living in association should be relieved of the double taxation burden to which they are currently subjected.
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27.
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As buying a home in an association today is really buying a share in a corporation, those involved in selling these homes as a business should be required to have a stockbroker's license, and be subject to all the stockbroker disclosure laws.
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28.
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There should be government oversight of CID's - an agency to address homeowner concerns and complaints. This should be an elected position funded by homeowners who live in associations.
Appointed positions have become political paybacks by politicians. CAI trial lawyers who create havoc suing homeowners, bankrupting homeowner associations and snatching homes have been vying for this position for decades.
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29.
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As the Davis Stirling Act is critical to the life of homeowner associations, each homeowner should be provided with a copy along with their CCR's and provided with updated versions on an annual basis if there have been changes in the prior year.
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30.
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As public utilities are required to notify their customers of upcoming changes in the rates and regulations, so homeowners should be notified of similar upcoming changes in the Davis Stirling Act.
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31.
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Public and private safety regulations should be enforced in all homeowner associations.
People with disabilities should have the same rights to safety e.g. being able to evacuate a complex as all able bodied persons can.
Susan Marchini
October 6, 2002
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Management firms hired by an HOA, should reviewed annually by both the resident owners -- not just the board of directors.
Susan Marchini -October 6, 2002
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33.
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I am just a townhome owner that is tired of having my life run by a group of class warfare dictators and having my constitutional rights violated, just because we wanted to upgrade our standard of living, and during the extremely trying time of closing on 2 homes we signed the PPCA document!!! Not knowing that my neighbors all grew up as rat snitches!!
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Homeowners shouldhave a board of directors from within the actual homeowners. Developers should not control boards.
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The association lawyer and manager should be required to answer questions of requests of all members on tape and in open meetings.
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HOA "membership" shall never be a mandatory condition for purchasing any home but shall be available on a voluntary basis only. If individuals wish to organize as a community and mutually support one another as such and make rules by which they will voluntarily abide, that is their perogative. However, they should NEVER have the right or authority to compel ANY OTHER homeowner or home purchaser in their neighborhood to mandatory dues-paying membership as a condition of purchasing a home in that neighborhood. ALL existing and pre-established HOAs should offer an "opt-out" for newcomers to the neighborhood as well.
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37.
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Homeowners in associations MUST become familiar with the current laws set forth in their Enabling Declaration and By-Laws, but also their states' laws! We must all join together to fight for our given rights set forth in the US constitution!
Board members MUST be forced to abid by the laws that they are elected to represent and those they are elected to represent.
Management companies MUST be forced to abid by the same laws and both entities MUST be forced to represent the owners as a whole, not just a select few!
Laws, both national and state, MUST be put into place to regulate both entities and stop allowing harrassment and discriminatory acts to take place.
HOA's MUST not be allowed to foreclose on any property for any reason! If an owner is past due on assessments, then the HOA should be able to place a lien against the property but ONLY AFTER it has been reviewed by a higher governing authority!
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If covenants are not disclosed to buyer at closing and if the buyer does not acknowledge, in writing, the acquiescence to covenants, buyer is not bound by them.
It is un-American to restrict someone's property rights (in my case in a $575,000 house) without their prior knowledge.
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#6, Amendment - Additionally, copies of information to include but not limited to bids, receipts, inspections regarding work performed and paid for by the association monies shall be given to a home owner/member upon written request. Failure to do so within a two week period of the written request is grounds for a fine assigned to the management company if one is so hired to represent the association.
#11, Amendment - Each Board member shall serve up to two terms each term consisting of two years and then must wait at least five years before serving again. Once that person has served two terms regardless of whether those terms are consecutive or not the person must then wait five years between each succeeding term of office.
#20, Amendment - Reserves and all other association resources "shall not" (not should not) be used for legal fees and without an express vote of the homeowners. The vote must be by a two thirds majority of either the members: either the member his/herself or the assigned proxy of a member.
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Place limits on powers of homeowner associations. The current abused powers are : a) rule changes to suit discriminatory boards b) restricting enjoyment of the common area c) forcing desired behavior with fines.
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1. Eliminate the non-judical foreclosure powers of homeowner association boards
2. Use the small claims process without involvement of attorneys to collect dues and assessments
3. Allow homeowner association to lien after a favorable small claims judgement and collect on the lien at the time of refinance or sale of home.
4. Reinstate the homestead exemption
5. Re-state that no CID law overrides state and federal constitutional protections
6. Cap attorney fees at twice the amount of the delinquencies
7.. Cap attorney fees for enforcement of ARC regulations to no more than $5,000.
8. Set up a reserve fund to enable the association to meet it's obligations when there is a shortfall due to non payment of dues by members.
9.. Forbid the use of the homeowner association reserves to fund litigation
10. Forbid associations to cover non-association entities such as management companies under any of their insurance policies.
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1. Associations must adhere to the U. S. Constitution and the Bill of Rights
2. Associations should not have a right to prevent you from voting
3. Associations cannot compel a property owner who is th sole owner (not co-owner with association) to pay dues to an association
4. Cannot engage in profit making business. Extra services like golf course, poo, camp grounds, tennis courts, community parks, meeting halls should be self supporting. Parks, beaches, median streets should be exempt.
5. Fees or resrictions cannot be charged for gates and entry to your property/
6, Votes must be sectet and done by independant party.
7. Expendetures over $------------ must be submitted to a vote of the owners.
8. Security should not have power to issue tickets and summons. This should be referred to government authorities.
9. Hiring additional staff positions should be done after a vote of all owners.
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43.
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RIGHT TO OWN
No individual or family shall be compelled to join any association such as a Home Owner Association (HOA), Common Interest Development (CID), or any other type of organization that would have the same effect, as a condition of Home Ownership with regards to purchasing a single-family home or undeveloped land for the purpose of building a home. Any individual or family who presently owns such properties that is currently in an association shall have the option of terminating such membership.
Anyone who is not a member shall neither be liable for any fees nor subject to any rules connected with such associations.
Any individual or family who is buying the property as described above, who desires to be a non-member, shall not have to buy interest in a common area. Non-members may be denied usage of such common areas.
Non-members, who were previous members, may have to sell their interest in and forfeit the use of any common areas.
Common areas shall not be interpreted as the street, driveway, or any other path to and from the home. Associations shall be prohibited from blocking access to and from any home.
Individuals or families who are owners of condominiums, townhouses, or other type of non-single-family homes that are governed by an association shall not be subjected to financial hardship in order to pay for improvements or repairs to the individual units or common areas. Each owner shall be given a reasonable amount of time to obtain such funds. Each association shall be sensitive to their members' financial situation and establish reasonable collection procedures.
Neither the State of [Specify State], nor any of its political subdivisions, or any other kind of governing body, agency, or entity shall pass any law, ordinance, regulation, or anything else compelling or encouraging people to join such associations.
Neither the State of [Specify State], nor any of its political subdivisions, or any other kind of governing body, agency, or entity shall pass any law, ordinance, regulation, or anything else compelling or encouraging developers, or anybody else associated with the building or selling of individual houses, townhouses, condominiums, or any other living arrangements, to set up such associations.
Developers or anybody else associated with the building or selling of individual houses, townhouses, condominiums, or any other living arrangements that are in associations must disclose this information to the potential buyer(s). Each buyer must also be notified of his or her rights in such an association, and where applicable, the right not to join an association.
Associations, new or existing, shall be subjected to the same constraints as state and local governments with regards to individual liberty, due process, and property rights. Associations will not have any foreclosure power nor shall they be permitted to seek foreclosure in any court or any other type of institution. Board Members must be owners of property in the association that they are governing and shall be bound by the same rules as all the other members. All meetings shall be open to the public and subjected to recording. All documents, including financial and other transactions, shall be made public.
Associations shall be prohibited from donating to political campaigns and to political parties.
Each association shall establish procedures that will guarantee their members the right to exercise the powers of initiative, referendum, and recall.
Associations with regards to single-family homes shall govern over common areas only, not the individual properties. Membership may be suspended for nonpayment of fees but no liens shall be placed on the individual properties. Each member shall have the option of terminating membership versus paying any fine.
Associations with regards to non-single-family homes (condominiums, townhouses, etc…) must use the appropriate courts to handle disputes regarding payment of member fees, fines, enforcement of rules, etc… These associations must use the appropriate courts to place liens on properties.
Any association shall be terminated by a simple majority vote of its members. Each voting member must have his or her name listed on the property deed to qualify. (ex: husband and wife on same deed = 2 votes)
Any previous [constitutional amendment,] statute, ordinance, regulation, or any other type of legislation that is contrary to this [amendment | statute] is hereby repealed and has no effect.
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44.
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I propose the Common Interest Developments be totally abolished all together or that they are heavily regulated to prevent what appears to be large problem that affects many people.
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The above list is not intended to be exhaustive. As other homeowners across the State submit proposals, I will bring them to the attention of the California Senate Housing and Land Use Advisory Group. It would be very helpful if all members of this committee requested associations to notify the homeowners of the existence of this advisory group and solicit their suggestions.
REQUEST FOR PUBLIC INPUT
In order to to ensure that the integrity of the American home is enhanced and strengthened, your comments and suggestions are vital.
Please enter your suggestions here: Homeowner Bill of Rights.
Thank you for your contribution.
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