City wants part of the HOA action

Don't know how many of you read the news feeds. But it would appear that La Palma CA is looking at placing an ordinance restricting what color residents can paint their homes.
http://www.ocregister.com/articles/color-palma-city-2137507-want-home
(And to think that some people hate HOA's having such power.)

Personally, even though I live in an HOA and serve on the BOD thereof I would be very opposed to a city level decision on acceptable colors. It just seems wrong to move to that level. Next we could see states deciding on what color is acceptable to paint your house. And while I like that my neighbor can't paint his house purple, I don't believe I should have any input on the guy in another neighborhood.

Historic areas is not what the article is talking about. There is a difference between owning a car that someone dislikes and painting a house a color that is out of character with the rest of the neighborhood. Yes people are too easily offended but that generalization does not negate that some house colors are downright ugly and detract from the value of the house and thereby may affect the value of a community. For example, a buyer may like a house except for the fact that the house will need $10,000 in paint to accommodate the buyer's taste. If that $10,000 is negotiated off the sale price, the house if used in a real estate comparison may contribute towards a lower value of the community. I still say live and let live but can see how owners may not be happy about poor color choice.

Both Mackinac City and Traverse City, Michigan starting looking like Las Vegas some time ago with neon colored restaurants, complete with trim painted another shade of neon, blinking lights and mis-matched styles. Mackinac, especially, got real sleazy looking. Somehow, the merchants got together and approved a "look" - they wanted to have for the city. Today, Mackinac looks like an antique fishing town. Much more pleasing to the eye. I think Traverse City passed an ordinance. I'll check up on it.

Kirk I believe in addition to the signs that mark the beginning of most HOA's there should also be a prominent sign declaring that it is a Covenant controlled community with information on how to view the Covenants. We constantly talk here about legislation to protect Homeowners. I believe the singe greatest piece of legislation for all states would be something like Florida's 720.401 which requires the H/O to be notified prior to closing of the existence of a HOA and the existence of Covenants that they will be bound to. Although I would add one thing to it, that any verbal statements of the seller or agent are non-binding unless included in the contract.

Kirk,

The disclosure info I posted is required, by AZ law, to be provided to a potential buyer -- note potential buyer --. W/i 10 days of receipt of a notice of a pending sale, the assn must provide the disclosure info. It is not supposed to be given at closing!

Although I am aware of the term "adhesion contract" and what it means, I do not regard the CCRs as a contract. To me, they are deed restrictions, plain and simple. Although some courts have referred to them as contracts, when ruling they tend to rule by property law rather than contract law. I think the term contract is used simply because it's easier to understand the meaning. In a sense the CCRs may be regarded as a contract, but legally speaking I don't believe they are. I have had HOA attorney's tell me it is NOT an adhesion contract. So, what type contract is it if you really believe it is a contract?

Unfortunately, what one believes to be the case, and what is actually true is not always the same. State courts have different approaches. Blanket statements are not always wise.

In Hoosierland, declarations are determined to be binding contracts under rules of adjudication set by the Court of Appeals. They are interpreted under usual and customary contract law with some modifications to favor individual property rights.

Because covenants are a form of express contract, we apply the same rules of construction. Renfro v. McGuyer, 799 N.E.2d 544, 547 (Ind. Ct. App. 2003), trans. denied. Construction of the terms of a written contract is a pure question of law for the court and we conduct a de novo review of the trial court’s conclusions in that regard. Grandview, 754 N.E.2d at 557.

Indiana law permits restrictive covenants but finds them disfavored and justified only to the extent they are unambiguous and enforcement is not adverse to public policy. Holliday v. Crooked Creek Villages Homeowners Assoc., Inc., 759 N.E.2d 1088, 1092 (Ind. Ct. App. 2001). When courts are alled upon to interpret restrictive covenants, they are to be strictly construed, and all doubts should be resolved in favor of the free use of property and against restrictions. Renfro, 799 N.E.2d at 547. The covenanting parties’ intent must be determined from the specific language used and from the situation of the parties when the covenant was made. Mayer, 830 N.E.2d at 979. Specific words and phrases cannot be read exclusive of other contractual provisions. Id. In addition, the parties’ intentions must be determined from the contract read in its entirety. Id. We attempt to construe contractual provisions so as to harmonize the agreement, id., and so as not to render any terms ineffective or meaningless, City of Lawrenceburg v. Milestone Contractors, L.P., 809 N.E.2d 879, 883 (Ind. Ct. App. 2004), trans. denied.

http://www.in.gov/judiciary/opinions/pdf/11170605ewn.pdf

Mary,

If a purchaser buys into an HOA, I don't believe they can cherrypick which parts of the docs they accept - it's all or nothing, yes? The docs become part of the sale contract by reference, assuming the docs ARE referenced. If they are not, that's a different can of worms.

John,

You're right, they cannot. Which is why I'm asking George if the courts in IN are calling this "contract" an adhesion contract. I'm not certain that an "express contract" can be negotiated. If it can, and if this is what George is calling our CCRs, then why don't we have the opportunity to negotiate? My personal opinion is that the CCRs are NOT a contract, they are deed restrictions (real covenants).

I've heard from may sources in the legal profession that the CCRs are NOT an adhesion contract. However, I am aware that some judge, attorneys, etc. do refer to them in this manner -- well mostly they say "contract" not specifically "adhesion contract". I'm sure you know what an adhesion contract is. I've also been told by many HOA attorneys that most of the rulings are really based on property law and not contract law, even though the judge may call the CCRs a contract. George tells me I shouldn't make blanket statements; but I don't feel that is what I've done. I've heard this from quite a few attorneys and I would think they know what they're talking about. I know not all states have the same laws but I do think judges look at case law in other jurisdictions when making their ruling.

Mary,

IMO, what we call a contract/agreement isn't the big issue; what the contract/agreement contains is. My understanding is that an express contract means no more than an "expression" of what the parties have agreed to. Adhesion aka Boilerplates do the same, although tend to favor the rights of one party over another. In all three cases, the parties have to agree or there is no contract.

In the case of HOA docs, they tend to favor the HOA so it can operate under an "expressed" set of rules and guidelines. This is a good thing for the HOA and hopefully for the purchasers who should benefit from order and enforcement.

We could call the HOA docs "Our Happy Face Rules" but they are not and should not be subject to negotiation by an individual purchaser as the result could lead to anarchy, which is a bad thing for an HOA. If individual purchasers want something(s) changed, the docs probably provided a method to pursue those changes - changes that will aply to all members, not just them.

If a potential purchaser does not want to be bound by the docs (known by any monicker), they can simply refuse to buy and go elsewhere.

George,

I understood you to say the court had ruled the CCRs were a contract. I missed the fact they were explicit in saying "express contract". I find this ruling very interesting. From what I read I thought an express contract can also be an adhesion contract. If the IN courts have ruled this way then, as you say, that's the way it is, unless of course the St. Supreme Court were to overrule.

I think it is the other way around. Cities have long been involved in issues such as long grass and weeds, and making rules about fences.

For instances, in my city a car that is on open display to a public street (in a drive way or on private property) must be properly licensed and operable. The law keeps junk cars from being collected on the front lawn.

Homeowners associations are muscling control away from government, creating private psuedo-governments, often without adequate safeguards such as separation of powers and effective right of appeal.

I think you are right on that. But why?

A few comments,

The ServiceMaster survey quoted in the NY Times was done on their web site, sort of a "click here" whether you're happy or not. Not random, not scientific. Like it or not, CAI's survey was a least done independently, with a random selection of owners. Yeah I know, write the questions correctly and you can get the survey to say anything you want it to. But I don't think that their basic 73% are "relatively satisfied" was wrong. Yes you have angry owners, but they rarely make up the majority of owners in an association, and when they do, things eventually get changed. The problem is, and always has been, that you only hear from, or about, the angry ones. Content owners don't call the local news media. In our state, the number of issues that arise, or go to court, is miniscule, in comparison to the number of owners in associations. Even if you take all of the posts here, on AHRC or complaints to the various ombudsmen and courts, the number would be a minor percentage of the total owners in community associations. Doesn't mean it can't be done better, just that we've only been doing this for a relatively short period of time and are still trying to figure it out.

Also, homeowners haven't brought about the change to HOA's. The major impetus for this change began in the late 80' and early 90's, when citizens in many states began capping property tax increases, when home assessments began to boom. Municipalities began to scramble and developers found the pot of gold. They could get significantly increased densities in return for creating HOA's that would pay taxes at the same level, but have lower demand on services. In addition, the cities could unload "protected areas" such as wetlands, which they normally would be responsible for looking after, could now be called "common area" and its upkeep, or responsibility for, would move to the HOA. It was a win-win for the people who develop properties and for the people who approve those developments. Until there is a major change in people's thinking about local taxes, HOA's will continue to dominate development.

Since they are unlikely to go away, we need reasonable, rational, cost-effective ways to help them run well.

Joe

I can tell you that the number one complaint in my neighborhood is lack of information. Nobody knows where the money goes. I am always happy to tell people. And we are starting to spend more of the money. It does occur to me that I should write an article for the next newsletter on where the money goes.