Bills Target Homeowner Associations
In a battle of rights vs. rules, state measures would loosen the grip of community boards on financial data, decision- making and flag flying.
September 1, 2003
Article Courtesy of LA TIMES.COM

A trio of bills in Sacramento would strengthen the rights of people ruled by homeowners association boards in California, the latest sign of a growing rebellion against restrictive codes affecting nearly one in four state residents.

These private neighborhood associations have become the first level of government for an estimated 50 million Americans, regulating such things as how homes are painted, the condition of lawns and the placement of flowerpots.

In California and elsewhere, a growing number of angry homeowners are pushing for legislation to rein in perceived abuses by their associations.

"It's like being under a Gestapo," said Maurice Carmeli of Corona, a townhouse owner who was fined $100 last year for feeding stray cats. "They said they were worried about [attracting] pests but you know, I saw all these cats and they looked hungry, so I fed them It's crazy."

That kind of resentment is sparking action by lawmakers around the nation, said Evan McKenzie, an University of Illinois political science professor and author of "Privatopia," a book about the rise of homeowners associations. "Legislatures are seizing on the issue because it is a hot one." 

In Sacramento, homeowners have made inroads in recent years with laws that limit association powers to foreclose on homes and give members better access to board meetings.

This year, two bills have passed key hurdles in the Legislature and another is awaiting the governor's signature. If approved, they would strengthen homeowner rights to scrutinize association finances, appeal board decisions and fly flags and banners that are usually prohibited in such communities.

Trade groups that represent associations and private community managers companies and individuals hired by associations say more laws will lead to more conflict and litigation. They point out that people choose to live in neighborhoods controlled by homeowners associations and they say the great majority of residents get along. They argue that a handful of high-profile cases have painted a distorted picture of widespread discord.

But critics of the current system say it is ripe for abuse because, unlike government, there is little in the way of checks and balances, even if association directors are elected by homeowners.

Some boards act like military regimes, the critics say, issuing judgments based on whim and fining residents for innocuous violations such as owning oversized pets or flying flags without authorization. The flag issue, in particular, has sparked criticism in many private communities after the terrorism of Sept. 11, 2001.

After the terrorist attacks on the East Coast, some homeowners "found that they could not express their patriotism, and that's ridiculous," said Elizabeth McMahon, director of the American Homeowners Resource Center, a clearinghouse for those battling their associations. "It was a relatively minor issue that helped expose a pervasive problem."

Homeowners associations began to multiply in the late 1970s as a means to maintain the character of each newly minted condo project or suburban tract. Many homeowners like them because they protect property values. Cities like them because they pick up much of the burden of code enforcement and infrastructure maintenance.

According to the state-run California Research Bureau, the number of homeowners associations in the United States was less than 500 in 1964. Industry estimates put the number at 250,000 today. In California, 34,000 such communities are home to 8 million people, according to the bureau.

The increasing popularity of such developments has meant more conflicts, and homeowner rights activists say the issue is reaching a critical mass that cannot be ignored by legislators.

"So many more people are affected by these mini-governments, on which there are no restraints," said Marjorie Murray, legislative committee member of the Congress of California Seniors.

Last year, the group sponsored a successful bill that requires homeowners associations to give 30 days' notice before putting a lien on a member's home over unpaid dues and fines, something they were not required to do before.

Dozens of other bills regulating homeowners associations have been proposed around the country in recent years. After the terrorism of Sept. 11, states from California to Florida passed laws making it illegal for homeowners associations to ban the flying of U.S. flags.

In May, Arizona passed a law that prohibits homeowners association boards from meeting out of state, a practice that critics said was meant to keep association members from voting in community decisions.

This year, Texas debated a package of bills aimed at weakening homeowners association powers, including a bill that would have made it easier to dissolve such groups. Though most of the bills were defeated, one of them, a law giving homeowners more leeway in choosing how to maintain their lawns, passed.

On Thursday in California, where homeowners association-type developments now spring up at an estimated rate of 2,500 a year, the Legislature passed a bill that gives homeowners the right to more closely inspect how their boards spend association dues, including the salary of property managers and other hired staff. Under current law, the boards are required to disclose only their general budget, but not the details. The bill awaits the governor's signature.

Two other bills addressing homeowners associations cleared the state Senate Judiciary Committee last month. One would give homeowners the right to challenge a board's decision and put it to vote at a meeting of members. The other, sponsored by the American Civil Liberties Union of California, would make it illegal for homeowners associations to forbid the display of noncommercial flags, banners and other signs.

The issue gained publicity most recently when Bill Durston, a doctor and Vietnam War veteran, clashed with his Gold River neighborhood association in the Sacramento area over a United Nations flag he was flying in front of his house to protest the war in Iraq.

"These associations can't enforce any covenant contract that violates public policy," said Francisco Lobaco, legislative director for the ACLU of California. "When you move into these developments, you don't waive your constitutional rights to free expression. Period." 

The new bill, Lobaco said, expands on a law, passed last year, that prohibits homeowners associations from banning the U.S. flag. The author of that bill was not pleased.

"I believe the American flag, the symbol of our nation, should not open the door to showcase anyone's cause," said Dick Monteith, the 71-year-old former state senator from Modesto who proposed his law as an act of patriotism after Sept. 11. "My bill was never intended to be abused for political advantage and as a result trash up the neighborhoods."

And it is the neighborhood, those who support the current system say, that needs to be protected.

"People move into a private community because they want a certain lifestyle," said Karen Conlon, president of the California Assn. of Community Managers. "They give up certain things to gain others, but they don't always realize what they are giving up. They don't realize they must follow the pack."

Conlon and others say the associations and the rules that govern them called CC&Rs, for "covenants, conditions and restrictions" are there to protect community interests from individual caprice. All homeowners signed them and should have read them.

Disputes often arise not because the associations prohibit a certain activity, they say, but because members do not bother to follow procedures. Many of the clashes over flags, for example, were not because they were not allowed but because residents ignored rules stipulating how and when flags can be flown.

And for the most part, cooler heads prevail and conflicts are resolved without much ado, they say. But rules have their place.

If U.N. flags are allowed, "what is going to keep a homeowner from posting 50 pictures of a scantily clad Britney Spears on his garage door?" said Robert Browning, a trustee with the national Community Assns. Institute, an industry lobbying group. But many technical violations, such as a "Welcome Home" sign for a new baby, are routinely allowed, he said. "Every day, homeowners and boards of directors come to reasonable decisions."

Browning said the industry is already heavily regulated and that new laws would lead only to costly lawsuits and add administrative costs for associations. "If you don't like what your board is doing," he said, "you can vote them out."

Browning's group also opposes AB 104, the bill that would make salary information of those employed by the associations available to the homeowners.

"What good purpose does it serve to know how much employees make? It is private information," he said. Homeowners already have access to budgets and audits, and can see if their dues are being properly spent, he added.

But some argue that the associations function like governments. As with taxes, they collect dues to maintain common areas. As with traffic citations, they have the power to fine those who do not follow the rules. And therefore, they argue, the associations should be scrutinized much as public agencies are.

"They are functioning in lieu of local government without the constraints, without the controls we expect of local government," said Murray, the Congress of California Seniors representative. "They make the rules, they enforce the rules, and nobody can challenge them."

Pending legislation 

Three bills in Sacramento would give homeowners broader rights to challenge their associations:

AB 104, introduced by Assemblyman Alan Lowenthal (D-Long Beach), would require associations to provide more detailed information on their finances to members upon request, including salary of community managers and how much contractors and vendors are being paid. Currently, associations are required to provide only general budgets and audit reports. The bill passed a final vote in the assembly Thursday and is awaiting the governor's signature.

  AB 512, introduced by Assemblywoman Patricia Bates (R-Laguna Niguel), would create a process for homeowners to appeal decisions by their boards. Members of an association could vote as a group to reverse a board's ruling, for example. Currently, members elect their boards but have little recourse to challenge directors' decisions. The bill cleared the Senate Judiciary Committee on Aug. 19. The Legislature must vote on a final version and the governor must sign it.

  AB 1525, introduced by Assemblymen John Longville (D-Rialto) and Darrell Steinberg (D-Sacramento), would make it illegal for homeowners associations to ban residents from flying noncommercial flags, posters and banners. Most associations have rules restricting what homeowners can display on their property. The bill cleared the Senate Judiciary Committee on Aug. 19. The Legislature must vote on a final version and the governor must sign it.