Vanitzian

HOMEOWNER ASSOCIATION TITLEHOLDERS ARE "HUMAN CAPITAL

"by D. Vanitzian(c)
2007 Donie Vanitzian

When criminal liability is not charged against the "criminals" in an association, then the titleholders become the Human Capital
used to fund the criminal activities and wrongdoing.Titleholders fund the
excesses of errant boards and their errant third party vendors and agents
because the California laws have no meaningful incentive for deterrence of such
crimes when they occur in a residential common interest development.While
homeowner association-related "crimes" are taking place in record numbers today,
little is being done to prevent their occurrence. The criminality linked
with wrongdoing in homeowner associations more often than not revolves around an
economic and financial benefit flowing to the wrongdoer--whether it be a third
party vendor or board director or association advisors. Even a board
director's $15.00 haircut paid or reimbursed by the association might be viewed
as a "financial benefit." If the board member uses the services of the
association to improve himself and his own property, he has obtained a
"financial benefit" that is quantifiable and should be prosecuted by the
corporate entity. If the board member is not fined for paying his
association's monthly dues late, he has obtained a "financial benefit." If
a board director takes his friends to lunch at association expense, that is a
financial benefit to the individual board member--NOT the association and
certainly NOT the titleholders who fund the bank accounts for the association or
who funded the lunch. [FN1]BENEFITS TO THE ASSOCIATION AND BOARDWhat of
the board director who does not receive a "financial benefit" for his services
on the board? There are also non-economic benefits for being a
director. In one such situation a board director was known to "get off" by
signing his name as the association's C.E.O. This allowed him to represent
himself to the outside world as a "somebody" where he would have otherwise been
a "nobody." Playing C.E.O. and receiving the non-economic benefits of
"recognition" accolades, plaques, applause, and the like, are no different than
the $15.00 haircut. Why? Because they deprive the titleholders of
full advantage of the corporate protocol at the expense of an inept board
director who has nothing better to do than waste his position on the board and
misuse authority => for no other reason than "he can." [FN1] The same can be
said for the board director who is a "yes man" to a management company or
association advisors. Actions like these should be considered a WASTE of
corporate assets--the assets being valuable time lost that cannot be regained at
any cost due to the connivance individuals merely sitting on the board of
directors because it makes him/them feel important or boosts their collective
egos. Doing "nothing" but sucking up to vendors is also costly and it is a
breach of the board's fiduciary duty to every owner who has an interest in
property and whose assets are at risk in that development. [FN1]Board directors
are supposed to be independent thinking decision makers. Playing "follow
the leader" is a breach of duty, especially when the "leader" is a board
director beholden to a vendor with a contract at that association. It is
also a breach of duty to "follow" third party vendors AS IF they are leaders,
and to do the same with management companies, their personnel, association
advisors, or managers in general places the association and all its titleholders
at risk. The board's duty is to supervise and oversee every such entity without
fail and to NOT follow them to the grave or jail, whichever the case may
be. Yet at the same time, every board of directors are vested with the
authority to, in a sense, criminalize and punish the behavior and actions of
their neighbors who own property and reside under the same corporate umbrella
that the board director controls. [FN1]One author states "punishment is a
conventional device for the expression of attitudes of resentment and
indignation, and of judgments of disapproval and reprobation."[FN2]
Therefore, if the board of directors' failure to impose punitive measures
against the wrongdoer and/or it does not punish another board director or its
own agent(s) for wrongdoing, then the message to ALL others is that the
deterrence factor is undermined and a new benchmark has been set for the
corporate value system.HOMEOWNER ASSOCIATIONS VALUE LAWBREAKERS AND WRONGDOERSIf
the wrongdoer is allowed to remain in his or her position on the board or as an
agent of the association, the message becomes this: There is "value" to
breaking the corporate laws (i.e., governing documents and statutes) and
goodwill, because prosecution is not forthcoming and there will be no stigma
attached to the individuals who committed the wrongdoing. Compounding that
problem are the fines and penalties levied against titleholders when they
[subjectively] break a so-called rule. For sake of argument, say the owner
is late in paying his homeowner monthly assessments. The owner is
typically vilified in the association's newsletter or minutes, and shunned in
this oh-so-wonderful-community. This owner has just witnessed board
members commit crimes amounting to, for sake of arguendo, hundreds of thousands
of dollars in misappropriation of funds (or worse) without any punishment or
stigma of criminal prosecution. What now is the actual "value" of punishment
consisting of late charges, interest, and fines against the owner who paid his
monthly assessment after the due date? Why should that owner be forced to
pay even one dollar in fines, interest, and late charges after witnessing board
directors ripping-off hundreds of thousands of dollars from the association that
this same owner, along with the other Human Capital, statutorily fund?Another
example could easily consist of a board's actions that are willful, but not
statutorily remedied, such as failure to generate minutes, provide notice of
meetings, produce a pro forma budget, and more. What happens to the board
of directors who commit their wrongdoing through third party vendors acting as
association agents? Is the board held statutorily liable for failing to
supervise those agents' actions, if not, why not? In an attempt to
avoid prosecution, boards are always free to hire board advisors using
titleholder Human Capital deposited in the association bank account--aren't
they?Because of unbalanced laws, owners are deprived their indignation against
the criminal or the perpetrators of the wrongful acts. It is the lack of
condemnation by those at the helm of the corporate structure against the
perpetrators that so infuriates owners who are used as Human Capital to fund
those bad acts and the façade of "community." Unfortunately, too many
titleholders will spit out phrases like "conflict of interest" as if the
accusation itself has meaning. In the venue of homeowner associations,
"conflict of interest" is a meaningless nondescript phrase that, unless the
phrase exists in the association's governing documents--it is nowhere PER SE to
be found in the California statutes as it pertains to common interest
developments. Needless to say, don't count on those words being in your
documents--and--don't look to the California statutes to provide a meaning for
"conflict of interest" as it applies to homeowner associations so that the
wrongdoer may be prosecuted--it won't happen. Thank the California Law
Revenge Commission and their Legislature buddies for that. Nearly all
corporate culpability has been neutralized by statute to favor, if not "protect"
the "business" of associations. The legislature has consistently diffused
the association's responsibilities as it relates to any wrong doing by its
corporate officers.California's legislature's view towards homeowner
associations appears to be a combination of (a) legislative diffusion (b)
punishment is left up to the association, and (c) use the election process of
removing and replacing the board. The legislature fails to recognize the
ineffectiveness of the Davis-Stupid Act in general, and the fatally flawed
statutory scheme for association election processes; using either "in the place
of prosecuting wrongful behavior" is equivalent to sinking in quicksand.
It is because of this inherent circular flaw, that any deterrent in situations
like this must be sufficient to "qualify" as a "deterrent" and must be
sufficient enough to prevent future abuse. With the presence of a built-in
"prisoner's dilemma" no such deterrent can be effective. [FN3] TITLEHOLDER
EQUITY IS THE ASSOCIATION'S WINDFALLHuman Capital is used to supply the
homeowner association's cash flow. Other than a pat on the back, if lucky,
titleholders producing said Capital get nothing in return. If the Capital
is stockpiled at the time the owner sells and moves away, the stockpiled money
is left behind. If the homeowner association is a debtor and a creditor
suffers a loss, because the homeowner association is a corporation, in the name
of "nonprofit mutual benefit corporation" that creditor's losses become the
debtor association's reorganization process. Of course, the oxymoron of
"mutual benefit" is not to be missed. This may answer the question as to
why gardeners now contract with homeowner associations so that a breach or
failure to pay may then be remedied in court by an order to assess the Human
Capital.The California legislature along with the California Law Revenge
Commission a.k.a. California Law Revision Commission is very clever
indeed. Knowing that "corporations" are rarely prosecuted "criminally,"
and on the odd chance that they are prosecuted -- it's typically years in the
making. One of the few ways that type of prosecution would occur would be
through stripping away its corporate immunity. Another reason owners who
have been harmed by the flailing legal structure of homeowners associations is
because they have been unable to attach any meaningful "liability" to the
corporate fiction. Courts apparently are extremely hesitant to hold the
board members and their aider and abettor management companies or other advisors
"responsible" for their actions. [FN3] This is evidenced by the fact that
white collar crime, now becoming a mainstay in these so-called communities, is
rarely prosecuted in-house (i.e., by the board and association against the
tortfeasors and/or wrongdoers) AND is also rarely pursued by the corporation
against its third-party vendors, such as management companies. The crime
is condoned.Look how sneaky the California Law Revenge Commission has been in
the past seven years with their support of the California legislature and their
industry buddies. Through promoting the nonprofit mutual benefit
corporation fiction and negating "corporate liability" in general, the
California Law Revenge Commission -- a wholly useless agency at best -- has
ensured the longevity and existence of homeowner associations to the detriment
of the Human Capital banking system. Of course, those funding the
fraudulent schema are the titleholders. Because common interest
developments live in perpetuity, that is "forever;" without any readily
enforceable statutory deterrence measures in place, the path of destruction is
virtually endless.It's really very simple; unless you are prepared to be the
Human Capital for that homeowner association, don't buy in a common interest
development. ~0~[FN1] Author note: this article uses "he" to mean gender
neutral. Vanitzian, Common Interest Developments--Homeowners Guide
(Thomson/West, 2006-2008)[FN2] Joel Feinberg, Doing and Deserving (1970) pg
78.[FN3] nd information and file complaints against management companies and
managers here: http://www.certifymyass.com