You Are Here
If you are
wondering how it happens that the purchase of a home in Shavano Ridge (or any
other common interest development) has cost you many of the civil and
constitutional rights enjoyed by other Americans living outside of a planned
community, here is a brief overview of the problem. Those wishing
to learn more are advised to see the Reading List page. Most of those
books can be checked out from your local library.
began rising in the early 70s, and developers were finding it increasingly
difficult to provide middle to upper middle class housing at an affordable
price. In answer to this problem, they developed the Common Interest Development
(CID). This allowed developers to pack more houses on less land and offer
shared amenities such as swimming pools, tennis courts, and other recreational
facilities that would have otherwise been out of reach to many homebuyers.
Because these CIDs required a great many homes to be built in order to spread out the maintenance
of those amenities to an affordable level, construction in the development might go on
for years. During this extended construction period, developers wanted to
maintain complete control throughout the subdivision. To give them complete
control over the appearance of the subdivision, the developers created deed
restrictions, commonly referred to as CC&Rs, or Covenants, Conditions, and
Restrictions of Sale. In effect, what they did was create their own private
governments. These private governments are set up as not-for-profit
corporations, which allows the developers to sidestep many constitutional and
civil laws. It is a government by contract, not consent.
municipalities did not resist the spread of these private governments because
they relieved them of the responsibility of providing expensive infrastructure
(roads, sewer, lighting, trash disposal, etc.) to CIDs, yet the residents of
those CIDs continued to pay the same taxes to the city. This situation
made it relatively easy for developers to get city approval for CIDs. In time,
this common acceptance of the CID plan among municipalities nationwide led to a
general approval of the CID concept even when the development in question was
not gated and did not offer any recreational amenities.
Covenants, Conditions, and Restrictions (CC&Rs) are a system of deed
restrictions that are written into the deeds of all homes in a CID. They permit
a seller of land to control how the land is used after it is sold. They are
contractual limitations on a homeowner’s property rights.
The CC&Rs are "adhesion contracts."
These contracts do not allow for negotiation — you either take it or leave it.
By purchasing a home in a planned development, you are assumed to have agreed to
the contract whether or not the seller made full disclosure of its contents. The
CC&Rs limit the constitutional and civil rights of the homeowner while
giving the Board of Directors’ powers beyond those enjoyed by local, state,
and federal governments. The CC&Rs also protects board members from any
personal liability, which eliminates the incentive to behave in a fair and rational
manner. There is also a provision in the CC&Rs that allows board members to make up new rules and
regulations, which means that the homeowners
never really know what they have agreed to when they sign the CC&Rs. In the
neighborhood where you live, there are no due process laws, no separation of
powers, no checks and balances, and no bill of rights.
could such a thing be legal? Of course, under U.S. law, it is not. But the
courts view a homeowner’s association as a business entity¾a
corporation. The U.S. Constitution declares that the state cannot interfere with
current literature regarding the CC&Rs recommends that the potential
homebuyer be allowed to read and fully understand that document at the beginning of the home
buying or building process; yet, a recent national survey of homebuyers found
that 86% of the time the seller withheld disclosure of the CC&Rs until the
moment the final documents were signed. In our own March 2004 homeowner survey,
59% of those surveyed said their selling agent did not give them enough
information to make a well informed decision to buy. Again, there is no current
regulation regarding the sales practices used to sell homes in planned
communities. By waiting until the last possible minute to disclose the existence
of deed restrictions, it is clear that sellers are making every effort to
interfere with the buyers ability to fully understand the document they are
being ask to sign and the severe restrictions on the homeowner’s constitutional
and civil rights. It would appear that most sellers think that this deceptive sales
practice is the only way they can sell what many people believe to be a very
developer has sold nearly all the units in a subdivision, the homeowners
association is turned over to the homeowners who elect a Board of Directors.
Although this process may appear to be democratic, the ties to democracy are
extremely tenuous. In many cases, the vast majority of homeowners become
disinterested, and a small clique begins to dominate. In some instances, this situation can work out to the satisfaction of all concerned; in
less fortunate circumstances, it can lead to incidents of misconduct. Problems arise mainly
because homeowner’s associations must rely on untrained, unregulated
volunteers who are
essentially free from public and private (law suit) regulation. All to often,
the lure of a volunteer position that offers power over ones neighbors, makes no
demands for responsible behavior, and no minimum requirements for competency is
just too tempting.
it is this lack of accountability that is the source of most problems between homeowners and board
members. Proponents of homeowner’s associations claim that without this
provision, no one would want to be on a Board of Directors and the planned
community experiment would fail. Detractors say the product is hopelessly flawed
and should fail. In the meantime, without any incentives to act responsibly,
homeowners will have to continue to rely solely on the personal integrity of the
individuals they elect to their board.
of the management company is to bring some level of expertise to a Board of
Directors composed of inexperienced volunteers. In the best of situations, this
arraignment can bring some stability to a community; however, as with all things
regarding planned communities and homeowner’s associations, management
companies in Texas are not subject to any kind of governmental oversight or regulation¾no
minimal level of education or competence is required. Both management companies
and association attorneys have a very clear economic incentive for adopting an
adversarial posture, and therefore, adversarial management companies are not
uncommon. They, along with attorneys, are the only paid actors associated with
the homeowner’s association, and, in their desire to increase profits, they
will can often lead a board into conflict with homeowners.
for a homeowner’s association has only to gain from conflicts between
homeowners and the Board of Directors; once again, due to lack of state
regulation of homeowner’s associations, attorneys can act without fear to
oversight from the state attorney general. Boards of Directors who have access
to association’s funds, and who are personally protected from any liabilities,
are often very free with those funds. Attorneys can charge anywhere from $50.00
to $500.00 per violation notice and will usually handle any litigation that
might result. This is a conflict of interest that would be illegal outside the
realm of the corporate law homeowner’s associations are subject to. Again,
this climate of no regulation, oversight, or accountability is just too much for
some to resist. Often they will counsel a Board of Directors in very
aggressive and adversarial practices for very self-serving reasons.
point, you must be wondering how it could be that, right in the middle of the
United States of America, not to mention the heart of Texas, a homeowner could
find they were living in a community that has more in common with a People’s
Republic than an American democracy? The answer to that question would have to
be the influence of the Community Associations Institute (CAI). The CAI is a
nation-wide trade organization of management companies and attorneys. They lobby
very hard and very effectively against any proposed legislation that would
impose any regulation or governmental oversight upon this industry or create any
common rights for homeowners. They did it just this year in Austin [see The
Community Associations page].
reason You Are Here is because Texas lawmakers hear a great deal from
this group, and absolutely nothing from you.