|By Alan Saly
Courtesy of "Habitat
Magazine" April Issue
Imagine your association torn apart by
a legal storm involving the posting of political signs on the lawns, the
editing of the newsletter, permitting dissident groups to hold meetings
in community space, the tape-recording of all board meetings, and the granting
of each unit, regardless of size, one vote. Imagine that, and you've imagined
the situation at the Twin Rivers Homeowners Association. And what the courts
decide there could have serious consequences for your property -wherever
Built on 250 acres in East Windsor Township,
near Princeton, N.J. between 1969 and 1970, Twin Rivers is the state's
first planned unit development. It has 10,000 residents, two K-5 schools,
shopping, recreational facilities and even a library. This seemingly ideal
community began showing cracks when some residents started complaining
about what they saw as heavy-handed practices by the board.
Among other things, some owners claimed
that financial documents were not made available when requested by residents,
that dissidents were roundly criticized by the president in the cornmunity
newsletter without being given an opportunity to reply, and that crucial
parts of board meetings were closed to unit-owners.
"There is an intimidation factor and a
fear factor," claims board member Dianne McCarthy, who has frequently disagreed
with her colleagues. "We were going door-to-door with a petition at one
point when there was a vacancy on the board and we wanted the next runner-up
in the last election to get the position. The board wanted to appoint
someone else. When I would knock on doors people would say, 'I don't want
to get involved.' They won't approve my screen door."
She adds that the board is seeking her
ouster on what she says are trumped-up charges of aiding a unit-owner who
took the association to small claims court. She admits she was at the court
hearing, but only to observe the proceedings, not as a witness for the
owner. Yet, she says, "this was splashed on the front page of the newsletter
and none of it was true."
A BAD SITUATION:
Such feelings eventually led to
the lawsuit. Contending that homeowners' associations are governmental
entities that often abuse their obligation to maintain true participatory
democracy, Rutgers University Law Professor Frank Askin, together with
the American Civil Liberties Union (ACLU) of New Jersey, filed suit on
December 8, 2000 against the association. They are working on behalf
of a group of Twin Rivers unit-owners, including board- director McCarthy,
who helped organize the Committee for a Better Twin Rivers two years ago.
Granville Hackshaw, another Twin Rivers board director, is also a member
of the committee, but not a named plaintiff.
papers ask the court to overturn what the plaintiffs see as Twin Rivers'
restrictive rules on meetings, dissemination of information, political
campaigning, voting, and free speech. Many of these issues, Askin insists,
are not confined to Twin Rivers but affect an estimated 42 million condo,
co-op, and homeowners' association members across the United States.
is that [the homeowners'association] is another governmental body that
regulates peoples' lives," explains Askin. "The decisions of the Twin Rivers
Homeowners Association have more of an impact on these homeowners' daily
lives than do the actions of the East Windsor City Council. This is a governmental
entity and should be subject to state constitutional restrictions, especially
in New Jersey." Askin insists that Twin Rivers is a company town, in which
individuals are less free to express their views and have access to information
than other New Jersey residents.
Twin Rivers attorney Barry Goodman, a
partner with the Woodbridge firm of Greenbaum, Rowe, Smith, Ravin, Davis
& Himmel, believes that Askin and the committee are shooting at the
wrong target. He says that the association's rules and regulations are
reasonable and freely chosen by members, and that, by raising constitutional
issues in litigation against an association the litigants are making a
case that doesn't need to be made, and will only end up costing the homeowners
a great deal in legal fees.
HISTORY OF SUITS
While the litigation will be expensive
for Twin Rivers, Askin can afford to sue. On the faculty of Rutgers Law
School since 1966, he runs the Constitutional Litigation Clinic as part
of the school's curriculum, with brainpower and research assistance provided
by his law students. In 1996, Askin and the clinic won a first-ever free
speech ruling against a homeowners association in Guttenberg Taxpayers
and Rentpayers Association v. Galaxy Towers Condominium Association. In
that case, the New Jersey Court of Appeals held that a condominium that
actively endorsed board candidates by distributing leaflets to its members
could not deny access to political opponents who wanted to do the same
However, Goodman believes that Committee
for a Better Twin Rivers v. Twin Rivers Homeowners Association is
"a quantum Ieap from Guttenberg. I'm sure that Frank sees it as precedent
setting," he says. "He's certainly trying to expand the laws." But "there
is a municipality government in place that [already] oversees this community,"
Goodman told the New Jersey Law Journal. "That is where constitutional
law applies." When homeowner association have a problem with board directors,
Goodman says, their proper recourse is to vote them out of office.
If Askin's side prevails, the association
will be forced to allow the tape-recording of all meetings (with certain
specific exceptions provided for change the format of the association's
Newsletter, which currently features a president's column on the first
pace. If successful, the plaintiffs would also be given an expanded right
to copies of association financial documents.
"My clients say they have been constantly
frustrated in their efforts to obtain certain documents concerning the
financial operations of the association," Askin notes. "They have made
various requests that have been denied. We think there is too much secrecy
and confidentiality attached to financial documents that should be accessible
to members of the community."
also seeks to give homeowners the right to post political signs on their
lawns, to give dissident groups of shareholders the right to hold meetings
in community rooms without posting an insurance bond, and - in a change
which is perhaps the most controversial - seeks to end the weighted voting
by share, granting each unit, regardless of size or cost, one vote, which
is found in many homeowners associations, co-ops, and condos throughout
Goodman takes issue which each point,
saying that even if there are restrictive and unfair boards, Twin Rivers
isn't one of them. "No one has ever precluded any homeowner from publishing
letters in the association's newsletter," Goodman says. "The [litigants]
have simply chosen not to use Twin Rivers Today as a vehicle to get their
message across; instead they have used the local newspaper, and sent them
their letters to the editor.
"The president of the association has
the right to include editorials in the newsletter and to advise the community
about issues that are relevant," he adds.
"If the president perceives that
there is a problem created by a group and addresses this in an article
he writes, that's something the president has the right to do. They've
created certain issues and he's referring that to the community."
Replies Askin: "All homeowners
have basic equal rights to their views in the association's newsletter.
Right now, every month, the president uses the front page to berate and
condemn his opponents. They will let opponents put in letters, but the
president gets the first page every month. This is a common element
of the community that belongs to all of the homeowners, and it's not appropriate
for the President to dominate what is really the main community bulletin
believes that the newsletter's front page should be confined to objective
reporting of general community news, and that "opinion pieces" be relegated
to "the back section."
Goodman disputes the litigant's claims
that they cannot obtain requested documents. "We have a document
production policy that complies with the Supreme Court of New Jersey. Members
also have access to voting lists, and they can be used if confidentiality
is maintained. People are allowed to stand up [and talk] at meetings. We
don't have that type of a [dictatorial] situation. Notwithstanding
that fact, there are a few people, a very small minority, who want to see
that the insurgents on the board had access to lists of voters but not,
she says, to lists of those unit-owners who were deemed ineligible to vote,
and whose ballots,
therefore, would not be counted in the
final tally. Askin recognizes the major consequences of opposing weighted
voting since it is practiced in many co-ops, condos, and homeowner associations.
"This a novel issue that hasn't been litigated,"
he admits, "but by analogy to municipal governments, certainly the town
of East Windsor can't say that a person who owns a $500,000 house gets
twice as many votes as a person who owns a $250,000 house. It should
be one unit, one vote."
Counters Goodman: "That's absolutely frivolous.
The bylaws provide for weighted voting and it's permitted by statute with
reference to condominiums and co-ops. I can understand why the ACLU
wants to press a constitutional issue like this, but it has no place in
this lawsuit. The members of an association have the right to decide what
weight, if any, they want to give to the various units. If they want
to have one person one vote, or one unit one vote, or weighted voting,
that's their right to for themselves:'
The Twin Rivers case taps into deep-seated
resentments by many owner-residents in both New York and New Jersey.
In New York various proposals have been floated (most prominently by Assemblyman
Alexander B. Grannis) for a tenant's bill of rights to combat reported
abuses by boards of Directors in co-ops and condos. In the Garden State,
such complaints even led to hearings before the Assembly Task Force to
Study Homeowners Associations in 1996 and 1997.
Among the prominent
homeowner activists who spoke out against board practices at homeowner
associations at the public forums was Lois Pratt, of North Bergen.
In November 1996, Pratt, who has since died of cancer, testified: "Condominium
associations need some balance that protects the homeowners from any unfettered,
any abusive, any tyrannical, runaway situation so that it becomes the norm
that you have a normal, democratic, open kind of governance in condominium
She singled out open meetings as her key
area of concern, and proposed that the same sunshine laws that govern the
deliberations of state and local agencies also apply to association boards
Her husband, Sam, told the committee:
"What we are trying to do in this relatively new form of housing in the
United States is to build a community. We're not trying to build a special
form of corporation or business. We're trying to do something relatively
new in the history of housing... [the problem is] there isn't the separation
of powers that is customary. You have a single group of men and women who
are legislators, who are executives, and who are judges. They run the three
of them together without any apparent self-consciousness."
of Leisure Village East in Lakewood, another large planed community, took
issue with the conduct of elections in her association in her testimony.
"If you examine our election process for new trustees, you will see a ballot
box posted in our clubhouse the whole month before the ballots are counted.
These ballots are removed at night and looked at or put somewhere. It is
certainly not an election as you would term it in a democracy."
are not being permitted to speak at monthly meetings... Some of our trustees
become consultants to the village after they stop being trustees. Some
of our trustees hold paid positions on certain political parties or water
companies or other things which possibly might pose a conflict of interest...
the lawyer, who we pay handsomely, sits at meetings where we are not permitted
to speak, and he also protects their secrecy."
Dennis Casale, a partner in the Princeton
firm of Pepper Hampdon Comes down on the board's side. "I don't believe
that homeowner associations are mini-governments." he says. "For
certain purposes associations are required to provide protections to residents
that are similar to the protections that Government must provide. For example,
there's been case law on the ability of people to solicit politically within
community associations, but in general, the concept that an association
is a governmental entity or should be treated as one is flawed.
"Take weighted voting. In most condo contexts,
it's one condo, one vote. In terms of Twin Rivers, where different units
have different percentage interests, there is nothing wrong with that.
It's just another way for a non-profit entity to govern itself. You can
make the argument in an association context, which is different from a
municipal context, that those who have the most interest in a community
in preserving its property values should have a greater voting interest.
Frankly, a one-unit-one-vote principle is better - but I don't think it's
are private entities", he continues. They are not governmental entities,
and so they can be established under any reasonable system that complies
with statutory laws, and the New Jersey laws are very flexible. In a homeowners
association it's the owners who have the rights in terms of voting and
that's not the case in a governmental democracy.
"The local country club or newspaper or
magazine - they're not run as democracies, and there's no legal requirement
that they be run that way, and I don't think homeowners associations should
be treated any differently. The essential point is that homeowners associations
are private entities, and it really is a restriction on the freedom of
private individuals to organize themselves in associations and governments
themselves if you say you must govern yourself as a local governmental
agency would do. I see it is as a limitation on freedom of people to associate."
When it comes to open meetings, Casale says that "meetings at which decisions
are made that affect homeowners should be open," a basic principle which
everyone seems to agree on, although the devil is still lurking in the
Casale's view on modifications to the
association's newsletter is also closer to the board's position: "To the
extent that associations use newsletters as political forums, there should
be roughly equal access - I'm using political in the sense of the greater
world of politics, if they want to be commenting on elections. But
when it comes to the association's business, it's the association's newsletter,
and I think the association's president has the right to have a prominent
place in the association's newsletter. It's beneficial to provide
others with access to express their views, but I don't think it's legally
How the situation will be resolved is
anyone's guess, but one thing is certain: the community is fractured and,
whatever the legal result, the board needs to think about mending fences
if the community is ever to be harmonious.
Concludes McCarthy: "Barry Goodman is
making light of this whole thing, but he doesn't live here. We get
calls from people every day who are in tears. Things are done in a very
authoritarian way, and they're done that way by the board because they
can. They are judge, jury and executioner. They are not bad people,
but they do make some horrendous decisions."
Copyright Habitat Magazine
Dianne McCarthy is the President of
Interest Homeowners Coalition, New Jersey
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