Even good principles demand good law …

I am a passionate defender of property rights. They are a foundational principle of our U.S. and Montana Constitutions.

But as a resident and owner in a Montana community with a homeowners association, or HOA, I am both saddened and outraged that SB 300 is currently being rushed through our state’s Legislature. It is an affront to the principle of protecting property rights, contracts, and local democracy by its almost certain unintended consequences if signed into law. In fact, as even the lawmakers’ own Legislative Services Division flagged for them more than a month ago, it quite possibly would violate both the U.S. and Montana Constitutions!

The bill is one of the worst types of legislation: It would insert the Legislature into an as-yet-not fully-publicly-disclosed ongoing legal dispute between two parties — a homeowner and their HOA. It would put a finger on the scale of justice when what may be needed is a thoughtful look at real questions about good governance at the most basic level. In the SB 300 case it appears that the homeowner had SB 300 drafted because of the prospect of a losing lawsuit. 

When a person buys into a development with covenants, conditions and restrictions — CC&Rs — that run with the land, they agree to abide by them. Virtually all have provisions, often super-majority vote ones, that allow for updates to the CC&Rs themselves, and to bylaws, and rules. By agreeing to their real estate contracts, the buyers agree to follow the HOA rules and processes, including the upgrading of standards. By my signing my contract I made such an agreement. My neighbors did the same. My contract includes the explicit right to expect that HOA standards — and update processes — have been agreed-to by everyone to protect our community standards by democratic processes and we all agree that the “use” of our individual property will be appropriately guided and regulated, with uniform enforcement of rules. 

By its design, apparently SB 300 would say to homeowners who have pushed the bill that they don’t have to be bound any longer to the agreed-upon CC&R provisions. And that its OK to abrogate my contract rights with respect to our CC&Rs and related standards and rules that my family and I rightfully expect to be updated periodically and enforced uniformly. 

This is ridiculous. 

Having volunteered as a leader of HOAs in three different states, including most recently for years in my home state of Montana, I can assure you that the legislation would turn upside-down the most basic democratic processes found in communities — processes that benefit both homeowners and local governments by putting the most basic community services and governance closest to the people. And the residents agree to that governance by contract if they choose to live in an HOA community. 

There are many, many examples of real governance and legal problems that would occur under SB 300. My HOA is in the process of considering proposed upgrades to our 1999-vintage CC&Rs that govern the use of our property. We want to carefully consider how to best reflect modern building and land use practices, energy and environmental technologies, and our Board will put recommendations before our owners for super-majority vote before enacting any changes. The prospect that, under SB 300, no one would have to comply with certain amendments, and only an unknown fraction of our owners would ever have to think about complying with new standards sometime in the future, is quite chilling.

This is especially sad if the state legislature is acting against a background of a legal dispute that, by its nature, indicates a belief that legal remedies for questionable HOA decisions in specific cases are already available under Montana law. It is even more-so when one realizes that if signed into law this bill would almost certainly be immediately challenged as violating Montana Constitution provisions related to contracts and ex post facto lawmaking, not to mention the Contracts Clause of the U.S. Constitution.

Surely thoughtful legislators do not intend to put thousands of state HOA residents in hundreds of HOAs through such uncertainty and costs when, despite the claim that this bill protects property rights, mine and so many others’ are at stake because of it!

If any measure deserves a step back for an interim study of real issues and potential reasonable solutions, this is it.

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Dr. Bill Whitsitt is a member and immediate past president of his homeowners association in Bigfork.