If you are being foreclosed on by your HOA, you may want to call the following information and U.S. Supreme Court case to the attention of your attorney. 


HOA foreclosures as an excessive penalty violation of due process

Homeowner injustice is prevalent with the unconstitutional failures of due process protections and the unequal protection of the laws relating to the association's right to penalize and foreclose.

Under many state statutes,  the association is allowed to penalize homeowners who fail to make assessment payments on time with penalties and interest charges on these debts. It gives the false belief that the association had advanced its own funds to the homeowner and is now seeking a timely repayment. Such is not the case, for these associations do not advance funds nor is their primary business a lending or credit business.

Black's Law Dictionary defines a penalty as,

"1. Punishment imposed on wrong-doer, esp. in the form of imprisonment or fine.
2. Excessive liquidated damages that a contract [in our case the CC&R contract] purports to impose on a party that breaches.

'A penalty is a sum which a party ... agrees to pay or forfeit in the event of a breach, but which is fixed, not as a pre-estimate of probable actual damages, but as a punishment, the threat of which is designed to prevent the breach ...'

Excessive punishments, as in excessive punitive damages, has been found by the US Supreme Court to be an unconstitutional violation of the 14th Amendment's due process clause and a deprivation of property. (see note 1 below, State Farm v. Campbell ). Foreclosing on a $200 HOA debt with over $2,000 in attorney fees causing the homeowner to lose his equity in his home that can have a market value of $120,000 or $200,000 or even $1,000,000, representing a 200x to 5,000x ratio of damages to losses, is extremely excessive. The Court offered a 10 to 1 or less ratio as acceptable ratios for punitive damages.

For these reasons, I ask that new legislation be adopted to remove these punishments, such as the right of the HOA to impose daily fines to the extent they become excessive, as well as the right to foreclose, as a remedy to collect assessments in arrears as they are excessive punitive damages under the USSC guidelines of State Farm v. Campbell.

Note 1.
The US Supreme Court case of  State Farm v. Campbell , 538 U.S. 408 (2003) in which the Court said:

'"The Due Process Clause of the 14th Amendment' prohibits the imposition grossly excessive and arbitrary punishments a tortfeaser [wrong-doer]."

"[The $145 million award was] neither reasonable nor proportionate to the wrong committed, and it was an irrational and arbitrary deprivation of the property of the defendant".

posted by Citizens for Constitutional Local Government