Posts Tagged ‘law’

Trainwreck from Yuma

September 11, 2013

http://www.yumasun.com/articles/hoa-89558-laws-office.html

Well, I knew we’d be watching this Arizona HOA law, but I thought for different reasons.  It appears there was a successful challenge to the way that the homeowner association-related laws were passed in the middle of a bill regarding general election laws

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Where Your California Bar Membership Won’t Get You…

June 19, 2013

In a week marked by an interesting US Supreme Court ruling on “the right to remain silent”, California’s Fourth District Court of Appeal has found that an owner’s right to attend an HOA meeting does not equate to the right to bring counsel along.

I find this especially interesting as the owner is an LLC, not your average Joe.

http://www.metnews.com/articles/2013/sb061913.htm
http://www.leagle.com/xmlResult.aspx?xmldoc=In%20CACO%2020130522049.xml&docbase=CSLWAR3-2007-CURR

New Mexico Gets HOA Reform

June 11, 2013

New Mexico recently adopted an act to govern some basic homeowner association functions. The Act  goes into effect on July 1, 2013.

New Mexico Capitol

New Mexico Capitol

I have not reviewed the Act in depth, and I am not very familiar with the law of New Mexico. However, it appears that the Act addresses a number of concerns local to New Mexico, for instance relating to water shortages. The Act was adopted in addition to a condominium act. The topics addressed in the Act’s title are a good measure of what is covered:
PROVIDING FOR THE FORMATION AND MANAGEMENT OF PLANNED
COMMUNITIES;
REQUIRING NOTICE AND OPEN MEETINGS;
PROVIDING FOR DISCLOSURE OF RECORDS;
ALLOWING AUDITS;
PROVIDING FOR ATTORNEY FEES;
REQUIRING DISCLOSURE OF HOMEOWNER ASSOCIATION INFORMATION TO PURCHASERS;
LIMITING RESTRICTIONS ON THE INSTALLATION OR USE OF SOLAR COLLECTORS AND WATER CONSERVATION MEASURES.

A number of these provisions would be very helpful in Idaho, where we have little clear law addressing homeowner rights, association obligations, or water conservation.  However, the New Mexico statute language seems very much focused on establishing homeowner rights at the expense of all of the other interested parties.  For instance, the law “providing for attorney fees” simply broadens attorney fee provisions to always award attorney fees to the prevailing party if the declaration provides attorney fees to any party.  It would have been more helpful to HOAs, in my mind, to establish a broad right to attorney fees for enforcing HOA rights found in any declaration.  These fees are often what keep homeowners from being able to enforce declaration provisions at all.

 

Good local commentary is found here:  http://www.abqjournal.com/main/208656/biz/new-law-affects-homeowner-associations.html

The Act text is here: http://www.nmlegis.gov/lcs/handouts/ERD%20-%20Homeowner%20Association%20Act.pdf

 

Rocky Mountain Rumble

January 30, 2013

A law blog post from Colorado highlights some interesting HOA declaration policy.  First some background.

When a developer wants to build a condominium, he (and they are almost always he’s) starts by recording a declaration of covenants, conditions, and restrictions on the property.  In Idaho and most states, this declaration puts the property under the Condominium Act, and, as implied in the title, binds future owners to the covenants, conditions and restrictions stated.   The Colorado case highlights two common clauses.

One is an arbitration clause that demands that all disputes be resolved by arbitration rather than in the courts.  Arbitration is very much preferred by developers and builders as it is seen as much more friendly than the courts.  Conversely, associations prefer to use courts.

The second clause at issue is an amendment clause.  These allow condominium owners to amend their declarations, usually with a super-majority vote.  Developers almost always retain veto power, in one way or another, over the amendment provisions, so that owners cannot take control of  the declaration amendment process before developers are finished building and selling units, etc.  Otherwise, the developer-friendly terms in the declaration might be amended out to the detriment of the developer.  Owners are presumed to have read, understood, and agreed to all the terms included by their decision to purchase.

With that background in place, it is easier to see why the arguments made in Colorado are interesting.  Per Messrs. Berg and Mill:

Residents began reporting the alleged defects, and the Residential Association (the “Association”) retained construction defect counsel. Shortly thereafter, the Association voted to amend the declarations to remove the arbitration clause without seeking the developer’s or GC’s consent. The Association then filed a construction defect suit against the developer and general contractor.

From this association-side lawyer’s point of view, the developers’ position is nearly comical.  The developers unilaterally drafted a document with total control of the language it contains.  Then they retain absolute control of the association while they build the condominiums and sell them.  Finally they turn over the condominium to the owners’ control and exit stage left.  When the owners discover defects, they amend the declaration in their favor.  Now the developers challenge the legality of the amendment, saying their interests were not fairly represented in the amendment process.  Remember, these are the folks that drafted the entire original document with absolutely no give-and-take with the future owners.

I’ll have to try to get a copy of the opinion and briefing, but it sounds like the Colorado judge got it right, finding that there was no language in the Declaration requiring developer consent to amendments, so the owners were free to amend the Declaration under its explicit language.  Good luck to those condo plaintiffs in Colorado fighting the good fight.

http://www.lexology.com/library/detail.aspx?g=b768d3c2-c021-4701-83eb-59bdc1998b87

 

Florida Bar To Shine Sunlight On Unlicensed Practice Of Law

September 11, 2012

Lawyers have a monopoly, just like doctors and dentists do.  We go to law school, pass a bar exam, learn and follow professional rules, and get regular training.  In exchange, each state lets lawyers control a monopoly over the practice of law in that state.  But, since we’re lawyers, there’s always argument about what “the practice of law” means, exactly.

In Florida, attorneys are trying to decide where the boundary  is in the field of homeowner association management.  What does “the practice of law” include in this industry?

The line is not always clear.  The Florida Bar has already had a meeting on this question, and is expected to issue an advisory opinion in September addressing  the following actions:

1. Preparation of a Certificate of assessments due once the delinquent account is turned over to the association’s lawyer,

2. Preparation of a Certificate of assessments due once a foreclosure against the unit has commenced,

3. Preparation of Certificate of assessments due once a member disputes in writing to the association the amount alleged as owed,

4. Drafting of amendments (and certificates of amendment that are recorded in the official records) to declaration of covenants, bylaws, and articles of incorporation when such documents are to be voted upon by the members,

5. Determination of number of days to be provided for statutory notice,

6. Modification of limited proxy forms promulgated by the State,

7. Preparation of documents concerning the right of the association to approve new prospective owners,

8. Determination of affirmative votes needed to pass a proposition or amendment to recorded documents,

9. Determination of owners’ votes needed to establish a quorum,

10. Drafting of pre-arbitration demand letters required by 718.1255, Fla. Stat.,

11. Preparation of construction lien documents (e.g. notice of commencement, and lien waivers, etc.),

12. Preparation, review, drafting and/or substantial involvement in the preparation/execution of contracts, including construction contracts, management contracts, cable television contracts, etc.,

13. Identifying, through review of title instruments, the owners to receive pre-lien letters, and

14. Any activity that requires statutory or case law analysis to reach a legal conclusion.

Some of these activities also occur here in Idaho, but many are unique to Florida’s regulatory scheme.   I believe the definition of the practice of law has traditionally been narrower in Idaho.  According to the American Bar Association‘s list of state definitions:

Idaho State Bar v. Villegas, 879 P.2d 1124 (Idaho 1994)
This Court has defined the practice of law as: ‘The doing or performing services in a court of justice, in any matter depending [sic] therein, throughout its various stages, and in conformity with adopted rules of procedure. But in a larger sense, it includes legal advice and counsel, and the preparation of instruments and contracts by which legal rights are secured, although such matter may or may not be depending [sic] in a court.’
Idaho State Bar v. Meservy, 80 Idaho 504, 508, 335 P.2d 62, 65 (1959) (emphasis in original) (quoting In re Matthews, 57 Idaho 75, 83, 62 P.2d 578, 584 (1936)).

Any thoughts out there?

A Ditch Runs Through It

August 14, 2012

Ok, I admit it, the fly fishing photo is a red herring.  Idaho is well known for its fly fishing, but it ought to be just as well known for its amazing irrigation systems.  These canals, and the institutions that maintain and operate them, allow thousands of us to live and farm in what was once a rocky desert.

In Idaho’s Treasure Valley, the canal system and farmland that it supports is steadily being moved, buried, and reshaped into HOA-governed slices: many what the New York Times called “a quintessential slice of American suburbia.” Some Idaho associations run irrigation or well systems, so irrigation is a central part of their role.  However, for most suburban HOA-dwellers and boards, this engineering marvel is a scenic backdrop, but not much more. This should not always be the case.

When a developer moves in and builds homes where there was once open farmland, the canals are buried, put in pipes, or put into concrete spillways along major roads.  Sometimes the open canals get attention when a child is tragically swept away, but usually they remain in the background for suburban and urban (sic) Idahoans.

But buried or not, canals require maintenance and care.   Often large volumes of water flow through these arteries.  Roots can catch onto debris and block the flow of water.  Clogged canal pipes can flood and damage homes and property.

Idaho code requires the owners of the canals–irrigation companies–to maintain their canals:

42-1204. Prevention of damage to others. The owners or constructors of ditches, canals, works or other aqueducts, and their successors in interest, using and employing the same to convey the waters of any stream or spring, whether the said ditches, canals, works or aqueducts be upon the lands owned or claimed by them, or upon other lands, must carefully keep and maintain the same, and the embankments, flumes or other conduits, by which such waters are or may be conducted, in good repair and condition, so as not to damage or in any way injure the property or premises of others.

Idaho caselaw has interpreted statute to mean that when a landholder puts a canal into a pipe, the landholder becomes responsible only for any increased maintenance costs.  However, these questions are usually not left to statute or courts.  When a developer seeks to move or bury a canal, the easement-holding irrigation company most likely will require a “license agreement.”  These license agreements are recorded documents in which the developer will take responsibility to maintain the now-buried canal.  The developer, in turn, may pass this duty along to the association in the CC&Rs.

If the CC&Rs of your Association require the Association to maintain a buried irrigation pipe, the Board should have a plan in place to regularly perform this maintenance.  Not only could an Association become liable to downstream water users in the event of a disruption of water, but it could find common areas and private lots swamped in the process.

Jeremy

Some History and Background:

Las Vegas’s HOA Scandal: Bringing Out The Best In HOA Crooks

August 10, 2012

I have argued before, and often, that we need more laws in Idaho for homeowner associations and condominiums: Just a few guidelines to keep boards, accountants, and managers on the straight and narrow.  So, when the hokey pokey that is known as the Las Vegas HOA Scandal (it looks better in neon) came along, I thought I’d found a gift that would keep on giving.  Fake elections with straw buyers and counterfeit ballots, millions stolen, suicidal lawyers, all this needed was a some official cover-up, and you’d have a world-class headline.

It made my job easy.  Throw up the latest development, and “jackpot!” Arguments for reform don’t come much easier.

The problem is that Nevada already has HOA legislation.  A lot of it.  If anything, Nevada’s law only drove the sheisters to new levels of creativity.

Here in Idaho, we don’t get big HOA scandal headlines, because our scammers are low-profile and uncreative.  All you have to do to skim a little off the top is write some checks, take some vacations and spend as you go.  If the board is not paying attention, you can get away with it for years.  When you get caught, it is barely news, because who hasn’t heard of a treasurer or manager running off with association funds before?

In the Gem State, you are on your own.  But don’t pack for Idaho yet, potential scammers.  That can cut both ways.  We also love our guns.

The Unspoken Rule: Discrimination in Unenforced Covenants

August 9, 2012

Can something discriminatory written and recorded in your Idaho CC&Rs decades ago still pose a liability for your association today?  Today, a blog for the Orlando Sentinel discusses the state of the law in Florida, and recommends a professional review of governing documents to find and remove offending restrictions. Not surprisingly, in Florida’s litigious society, there are municipal and county fair housing regulations.  Florida associations have been found liable for discrimination for “publishing” rules and regulations that caused a tenant “emotional distress,” even where those rules are not enforced.  That 1997 decision is online here.

The question remains how to regard that decision and legal advice here in Idaho, where the legal climate is as different from Florida’s as Idaho’s high desert climate is different from Florida’s coastal humidity.  Certainly the federal fair housing laws still apply, even if we do not see much additional municipal and county fair housing regulations.

Idaho’s Supreme Court found in a 2002 case, D & M Country Estates v. Romreill, that Idaho statutes restricting discrimination in zoning laws do not apply to covenants.   The Court found that because the governing documents in question were specific and unambiguous in limiting housing use to two “families,” the Idaho association was acting within its rights to prohibit use of a house by eight unrelated adults in a group home setting.  Unfortunately, in that case, claims based on the Idaho Human Rights Act were not properly before the Court, and so did not factor into the decision.  Indeed, the Human Rights Commission no doubt would urge Idaho courts to follow the Florida ruling that recorded “published” governing documents indeed can have a discriminatory effect.

In my experience, unenforced clauses in Idaho governing documents have not led to court liability.  However, I have seen such unenforced clauses lead to discrimination charges against associations and their boards.  Even unsuccessful fair housing claims require legal representation and defense.  Rather than face that uncertainty and expense, a preemptive review and amendment of governing documents is still as good an idea here in Idaho as in Florida.  But it may not be the only option.

An option that has not been explored here in Idaho is the use of a recorded cover sheet, as is required in California.  This would involve recording a statement that any discriminatory language in the remaining covenants is to be ignored.  The cover sheet would explicitly void any discriminatory covenants.

Either amending covenants to change language or to add a cover sheet would require the same supermajority vote by the owners.  In Idaho, we have no uniform common interest ownership act to make the process any easier than it sounds.  At the moment, either approach would require legal assistance and membership participation.

Imagining HOAs’ Future

August 7, 2012

A while back, I enjoyed author Neal Stephenson’s imagining of a United States where neighborhoods exercised virtual national sovereignty, with extreme border security and visa requirements restricting even the movements of a high-speed katana-wielding pizza deliveryman.  While this would certainly be an unexpected evolution of today’s covenant-based associations, there has been some evolution of HOAs over the years.  I sometimes wonder how HOAs will evolve in the near future.

First, I think we can all agree that homeowner associations are inherently conservative organizations.  They are based on covenants conditions and restrictions that are recorded on real property and that often remain unchanged for decades.  Usually CC&Rs can only be amended by a supermajority of the owners: an action that takes coordination, participation, and consensus.

It is no surprise then,  that HOAs are not weather vanes of social change.  Instead, we see conservative covenants challenged by owners with particular agendas, be they environmental responsibility, political activism, or the like.  Those who challenge covenants no doubt see precedent set in federal legislation that has retroactively outlawed covenants creating racially segregated housing communities, age-specific restrictions (except in retirement communities) and other fair housing issues, in addition to less-obvious federal rules regarding satellite dishes.

It would be interesting to see if HOAs could play a leading role in even more politically-charged social areas.  For instance:

  • Could an HOA ban undocumented residents?
  • Could an HOA ban guns of any kind?
  • Could an HOA require smart meters, solar panels, or laundry lines?
  • Could an HOA dive into the marriage debate?

Of course, we always advise our clients to avoid issues that might lead to litigation.  But that doesn’t mean attorneys can’t enjoy imagining legal problems yet to arise.

Update: These Colorado HOA attorneys just blogged about another social topic:  smoking bans.

Hello world!

August 3, 2012

I am an attorney in Boise, Idaho with Vial Fotheringham, LLP.

I represent a lot of homeowner and condo owner associations.  I like to write, and I like to read news feeds. Stick around for posts on HOA-related news and comments, and other thoughts related to Idaho.