Over the past few years, I have read many comments on Facebook and twitter from frustrated members of HOAs who apparently have lost their Constitutional rights to protect the value of their properties. The E-Book available from my website deals with overcoming this problem; but, it is important for members to to understand how they are losing these rights.
The State laws that I have reviewed for Washington and Oregon clearly provide the language that should protect members from incompetent or abusive Boards of HOAs; but, a powerful self-serving Board that has the support of a majority of the HOA's members can misinterpret or amend governing documents in violation of the super-majority voting requirements for members' approval; and it can misinterpret or ignore State laws and/or County ordinances because lawsuits are expensive to file against an HOA. Therefore, the important question is why have Boards been able to circuvment members rights to Due Process in a Court of Law? The most plausible answer is that a State's Business Judgment Rules (BJR) have been intrepreted in a manner that sets aside the 14th Amendment to the U.S. Constitution, which guarantees a citizen's right to Due Process, meaning that no one shall be “deprived of life, liberty or property without due process of law.”
Most States, including Oregon and Washignton, have enacted Business Judgment Rules (BJR) that apply to corporations and non-profit corporations such as HOAs. These Rules are designed to protect the Boards of Directors from being sued for decisons made in good faith when their decisions turn out badly. However, apparently, some Courts or attorneys think that a victim of a Board's decisions cannot be compensated for a loss in the value of property unless the property has been physically damanged. These attorneys have probably never heard that a home's value can decrease for any number of reasons, beside physical damages, one of them being the BOA Board's failure to ensure that it is not contributing to the devaluation of a member's property.
If a State Court's interpretation of its BJR violates the Due Process afforded by the U.S.Constitution, then I am inclined to say that the Court's interpretation fo the BJR must be inaccurate; and I would like to read a State's constitution that has a different definition of Due Process. For example, according to the State of Washington's BJR, the Court will not protect/defend an HOA Board's actions if the Board acted in a selfserving manner, committed fraud or engaged in an act of bad faith. My personal opinion would be that a Board that violates Due Process is engaging in an act of bad faith in the U.S.. Therefore, it would be useful if all the State Courts felt the same way.
Fortunately, I am not the only one who is interested in protecting the Constitutional rights of HOA members. According to a Court's recent ruling in the State of Mississippi on August 12th 2019, Chancellor Carter Bise ruled that "Under the Fifth and Fourteenth Amendments of the United States Constitution, all citizens have the right to what is known as “due process”. These laws dictate that you must notify a litigant of any proceeding that would deprive someone “of life, liberty or property without due process of law. The phrase appears twice in the Constitution. The Constitution states only one command twice. The Fifth Amendment says to the federal government that no one shall be “deprived of life, liberty or property without due process of law.” The Fourteenth Amendment, ratified in 1868, uses the same eleven words, called the Due Process Clause, to describe a legal obligation of all states. Chancellor Carter Bise also clarified the intent of Due-Process, by adding that "the court further finds that because the owners purchased these lots based upon actual or implied knowledge of and reliance upon these restrictive covenants and the 85 percent super majority to protect their properties, to act without due process notice to these owners would be to unconstitutionally deprive them of their substantive and procedural due process right of access to the judicial system to protect valuable property rights such as the arbitrary decision to change the 85 percent super majority to a 60 percent majority of those who appear. For these reasons, the request for declaratory relief is denied.” – Chancellor Carter Bise" Source: http://diamondheadnews.com/dhccpoa-violated-members-constitutional-rights-chancellor-carter-bise/?fbclid=IwAR1kwFmyNN3Bk8jRulxqodgmeNoZLieiW3p87dNNfjx43TptlNRQFx9DlIc ) voint
In other words, an HOA Board cannot deny members their "procedural" Due Process rights to protect their valuable properties by relying on a voting rule for amending an HOA's governing documents that differs form the voting requirements for members that are authorized to amend their governing documents because changing these requirments could either impact the market value of the members' homes or the physical conditions of the HOA that inidirectly infuences the the market values of many homes. Thererfore, Chancellor Carter Bise would have issued the same ruling if the he Board had circumvented the member's voting requirements completely by reassigning the responsibility to amend the HOA's govering documents from the members to the Board.
Although this lawsuit set an out-of-State precedent that carries no weight in Washington or Oregon, is it an important precedent because a self-serving Board will circumvent or ignore members voting rights so that it can create benefits for a subset of members, while ignorig the maintenanence and improvments of common areas and/or infrastructure for the other members. Therefore, a Court's ruling in the State's of Washigton or Oregon would be a major win for members of HOAs if the Courts in these States set a precedent on the rights of HOA members to Due Process and if the State constitutions did the same thing.