Copyright 2000 The Orange County Register

Concerns about private-property rights resonate in the hearts and souls of all Americans. The preservation of these rights is paramount to ensuring basic freedoms. The Register Opinion pages, writing recently about its Editorial Agenda regarding property rights, said, "With [private] covenants, individuals enter into binding agreement with fellow property owners, whereas zoning rules are only as firm as the latest city council majority."

But in fact these covenants, also known as CC&Rs, are only as firm as the latest on the homeowners association board and are subject to interpretation by a volunteer board of directors who have or no training in handling the corporate formalities of multi-million dollar corporations. Would you invest in a stock option run by volunteers?

Furthermore, a valid contract requires a mutual promise upon lawful consideration and binds the parties to a performance. The subjective interpretation of this "mutual promise" becomes a dead-end street in a homeowners association. Any dispute regarding whose interpretation of the CC&Rs is correct often ends up in court.

Reading the CC&Rs alone cannot possibly enlighten one to the "politics" of a homeowners association - or lack thereof. The bundle of rights and obligations one acquires as a member of one of these corporations includes attendance at board meetings and participation in the politics and legislative affairs of the corporation.

Most people have better things to do than to leave work only to have to go back to work on the home front attending board meetings and becoming political activists. However, a failure to participate in these member obligations leaves homeowners and their investment vulnerable. With regard to the "politics," many homeowners associations have no mandatory term limits. Board members may become emotionally entrenched and soon lose sight of serving their constituents. Random, errant and/or heavy-handed enforcement of the governing documents as well as the making up of rules as they go along can result in violations of homeowners' rights. The original intent of covenants was to protect, not suppress, the best interests of the homeowners and the association in general.

When you buy a home with a homeowners association, you are buying a home in a corporation. Homebuyers do not realize that the civil and corporate codes apply to these regimes and may supersede out dated CC&Rs. The applicable civil and corporate codes are often not included in the mountain of documents one must read in the escrow process.

At least a year's worth of minutes of business meetings and financials should be included but are often not. It is impossible for prospective homebuyers to gain a fair understanding of these "contractual" obligations when such pertinent information is excluded and more important, it raises questions as to the validity of the contract.

When homeowners feel their rights have been violated and/or want to hold an errant board of directors accountable under the law, there is no recourse but to resort to the courts. On the other hand, the association has the option of imposing fines and sanctions against a homeowner for transgressions of the documents - even as the homeowner might be protesting the supposed violation. The decades-old concept of homeowners associations is quickly becoming the black sheep of housing choices.

Attorneys, insurance companies, management companies and contractors seek to make their meal ticket off of the association and the homeowner soon becomes their waste. The homeowners (through their dues) pay for the association attorneys who can turn around and sue them - even for flying the American flag.

Homeowners also pay the insurance premiums for the liability policies that might defend even a rogue board of directors against a homeowner. The homeowners (through their dues) also pay for the management companies - who are not required by law to be licensed and/or certified. The life investments of many homeowners depend upon an unlicensed management company's knowledge of real estate law, financing, accounting, contracts and various governing documents.

The Register editorial said that, "Governments routinely take private property for illegal purposes or restrict an individual's right to use his or her property as desired." It behooves us all to be concerned when governments can take private property or restrict people's right to use their property as they desire. Nowhere else are private property rights being restricted more than in homeowners associations across the nation. Eminent domain by government pales in comparison to the "eminent domain" and micro-management practiced by homeowners associations. Whether such micro-management is necessary to maintain property values has yet to be proven.

The current homeowners association concept is inherently flawed and goes against everything we as Americans hold dear - our home, our privacy, our property, our freedom of expression. None of this was given a second thought when devising this new housing model.

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		For more information regarding homeowners associations in general, read: "Homeowners Associations - a Nightmare or a Dream Come True?" by Joni Greenwalt. The following Web sites are also sources of information: The Common Interest Consumer Project at CIC Project.org and the American Homeowner Resource Center at AHRC.com.
Alisa Ross

For more of Alisa's articles, please click HERE.