HOA Nut House

by Donie Vanitzian, J.D.

MARINA DEL REY

• The CAR that doesn't know what lane it's in
• ‘But suddenly CAR and the California legislature want it both ways’

Assembly Bill 2259 is a farce, a contradiction in both terms and alliances.

Yes, it's no secret! I've written my share of letters to the legislature and to the California Association of Realtors (CAR) explaining problems with their sponsorship and introduction of assorted legislation pertaining to deed-restricted residential common interest developments, e.g., condominiums, co-ops, timeshares, and so on. As expected, I'm ignored with equal silence.

I laughed out loud as I read this Aug. 4, 2008 quote from Alex Creel, senior vice president and governmental affairs chief for CAR, a sponsor of Assembly Bill 2259, "This is a straight forward property rights issue."

Straight forward? Property rights? The article's author Gary Quackenbush speaks of "covering disclosures upon sale of property … to provide protection to owners who are opposed to leasing restrictions by giving them vested rights." Gee, I wonder where they all picked up THAT phrase?

Forget for a minute that in 2006, I mailed to the California Association of Realtors and to the L.A. City Council, and hand-delivered to Mayor Villaraigosa, and Congressman Rosendahl's office, a lengthy letter detailing that very problem and noting a decline in available rental properties and the lack of incentives for being a landlord. I demanded emergency legislation to effectively ban restrictions on rentals imposed by homeowner associations, namely prohibiting associations from amending, restating, rewriting or altering their governing documents and covenants, conditions, and restrictions (CC&Rs) in any way that would prevent titleholders from renting out their properties.

The concept of deed-restricted titleholders having a "vested interest" and "vested rights" in their property was first introduced in the book “Villa Appalling! Destroying the Myth of Affordable Community Living,” by D. Vanitzian and S. Glassman, published in 2002. I delineated the "Vested Rights Dilemma" in greater detail in the reference book “Common Interest Developments--Homeowners Guide, Expert Series,” by D. Vanitzian and published by Thomson-West.

In Villa Appalling! authors D. Vanitzian and S. Glassman, posit that "the solution to the tragedy of the commons can be found in what they term the 'Vested Rights Dilemma.' That Dilemma recognizes what the deed-restricted development purchaser believed all along, that is, the titleholder has certain rights which vest upon purchase. That deed-restricted titleholder cannot be deprived of his rights by covenant, rules, bylaws or any other folly of an association’s board of directors or even the legislature. Those titleholder rights were coupled with an interest, bought and paid for with legal tender. [FN1]

"The Dilemma is that the owner living inside the deed-restricted development believed he had all the rights of an owner living outside a deed-restricted development, namely, traditional home ownership. Not only are the rights of the one living inside severely limited or eliminated, those few remaining rights, which he believed were vested when he paid for his 'space,' are revocable at will -- the board’s will, not his.

"What courts and legislatures do not want to recognize is that, at the time of purchase, those 'rights' became vested. The owner bought and paid for them. Either the owner has these rights or he doesn’t. If the owner has them, they are vested and they cannot be 'taken,' either by legislative caprice or covenant, i.e., by any means not applicable to all property interests. And a non-governmental homeowner association certainly could not take those rights away.

"On the other hand, if the owner doesn’t have them, then they also cannot be 'taken' from him by a board or the legislature or the courts.

"That’s the dilemma. Either the owner has them or he doesn’t. Either way, they should not be able to be taken away."

Quite beyond coining the terms, I have fought to have titleholder interests not only recognized and respected but strengthened and codified, in contrast to and against CAR which fights to erode owner interests, to reduce them to pawns in the developer-realtor-management industries’ hegeomony.

Remarkably, Assembly Bill 2259 now contradicts provisions written into Assembly Bill 980 sponsored by none other than the California Association of Realtors (CAR). It didn't matter how many letters I wrote to the legislature and all the relevant committees, and to CAR: all were ignored and none were listed in public Opposition to the bill despite the obligation to do so. Nor did it matter how many treatises I wrote, how much research I did on the laws and crossovers, how many requests I fulfilled to send them the underlying information -- except to maybe "borrow" some of my extensive research that did not appear in any of the earlier legislative drafts -- CAR and the legislature paid attention to none of it.

Thus, CAR excised ALL residential deed-restricted common interest development property transfers from the protections of fee disclosures mandated in Assembly Bill 980. What does this mean? Simply put: ANY property-related title issues for this now inferior sub-group of titleholders is exempt from the laws meant to protect all other "real" property owners. So much for CAR's being "straight forward."

But suddenly CAR and the California legislature want it both ways. They apparently believe that THEY -- not the board of directors -- can decide whether or not a homeowners association can amend, rewrite, and restate covenants, conditions, and restrictions as it relates to renters and rental property. "No" to transparency protecting owners from bogus transfer fees but lots of it lest deed-restricted property not be rentable -- hey, they want us to be able to rent out property out don't they? Gee, thanks for the break that's really no break at all because it conflicts with a myriad of other laws. Just as CAR appeared to have failed in performing the vital due diligence in pushing Assembly Bill 980, so too, they failed to perform the proper due diligence with Assembly Bill 2259. The difference this time? I refuse to tip them off as to what conflicts exist.

Bad law forces consumers to pay higher prices, clogs our court system, and casts a pall over this type of property ownership.

But I digress. Respectfully, it is this author's opinion that the only reason why Assembly Bill 2259 is now coming to the fore despite my years of writing about these problems for at least the past twelve years? Obviously, in my view, it is because of the housing crunch. Agents and brokers are hard pressed for sales. Leases and rentals are the new market. With so much housing now within common interest developments controlled by homeowner association boards of directors who interfere with individual rentals . . . well, you get the picture. Apparently what CAR wants CAR gets, no matter how flipped their flops.

(About the writer: Donie Vanitzian, JD, co-authors the Los Angeles Times’ Associations column and is co-author of “Villa Appalling! Destroying the Myth of Affordable Community Living.” She is author of “Common Interest Developments--Homeowners Guide, Expert Series.” She can be reached by writing to Post Office Box 11843, Marina del Rey, CA 90295.)

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