Most condominiums and homeowner associations (HOAs) are nonstock corporations under Wisconsin Chapter 181.  As such their members can make decisions one of three ways:

  1. Holding a meeting;
  2. Action by written consent (181.0704 Wis. Stat.). This may be used unless “limited or otherwise provided in the articles of incorporation or bylaws…”  For an association to act by written consent, the action must be “approved by members holding at least 80 percent of the voting power, or a different percentage, not less than 50 percent, specified in the articles of incorporation or bylaws.”  The written consents must be signed and dated after the date of the last meeting of the members and kept with the minutes
  3. Action by written ballot (181.0708 Wis. Stat.) This may be used “if permitted by the articles of incorporation or bylaws, any action that may be taken at an annual, regular or special meeting of members may be taken without a meeting if the corporation delivers a written ballot to every member entitled to vote on the matter, the ballot sets for the proposed action and provides an opportunity to vote for or against the proposed action.”  “Approval by written ballot … valid only when the number of votes cast by ballot equals or exceeds the quorum required to be present at a meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve the matter at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot.”

Continue Reading Condo and HOA Virtual/ZOOM Meetings in Wisconsin – How Legal Are They?

Facts

Plaintiff, Coley, owns a home in an HOA, the Eskaton Village (“Association”).  Two other Eskaton named entities (“Eskaton”) develop and support HOAs.  A five-member board runs the Association, subject to the Declaration.  Eskaton has always controlled three of the five directors on the Association Board because it owns 137 of the 267 units.  The three directors are always employees of Eskaton and are “financially incentivized to run the Association for the benefit of Eskaton.”  In short, the better Eskaton performs the higher their compensation, which is directly related to the expenses of the Association.  Coley, one of the other two directors, filed suit because of various acts by the other directors to benefit their employer at the expense of the Association, including disclosing attorney client privileged communications. Continue Reading Self-Dealing by Director is a Breach of Fiduciary Duty (Case 1)

Facts

Plaintiff, Cohen (“Tenant”) and Defendant, Clark (another tenant, “Clark”) leased separate apartments in the same building on the same day, July 21, 2006.  Both leases prohibited pets in the building or on the premises.  Tenant picked the apartment in part because of its no pet policy, as she had a severe allergy to pet dander that caused her to carry an EpiPen to protect against anaphylactic shock.  A month after entering into the lease, Clark requested an emotional support dog as a reasonable accommodation.  Clark provided the landlord with a letter from his psychiatrist stating that he had mental illness that impaired his ability to function.  The psychiatrist recommended that for his well-being he own and care for a dog.  The manager advised the tenants of the request and asked if any had allergies.  Tenant responded providing detailed information relative to her pet allergy.  The manager contacted the Iowa Civil Rights Commission (“ICRC”) and requested it to review the matter.  “The ICRC’s housing provision is nearly identical to the Federal Fair Housing Act (FHA).” The ICRC told the manager that Clark could not be moved to another building as that was unreasonable and that the manager had to attempt to accommodate both issues (Clark’s pet and the Tenant’s allergy).  The manager had them use separate stairwells.  Tenant had allergic reactions such that she seemed to have a permanent cold and her throat swelled at times. Continue Reading Another Helpful Emotional Support Animal Case

Thank you to all who attended our FIRST EVER virtual Association Academy!  We had record-breaking attendance by property managers and board members.  If you missed it, don’t fret, we recorded it for you, and you can access at any time.

To view the recording click HERE.  We reveal the 10 commandments of what association management “Shalt Not” do while governing. Covering the basics of what homeowner associations (HOAs), condo boards and managers need to know. We also dive into the nitty gritty of assessment collections.

Summary

The language and definitions in your governing documents reflect the intentions of the Association.  You need to either follow them or amend them, but NOT ignore them.

Facts

Sunnyside Resort Condominiums is a private resort property located on Lake Gogebic in Gogebic County, Michigan, and governed by the Sunnyside Resort Condominium Association, Inc. (SRCA).  In 2006, the Plaintiffs purchased vacant lots within SRCA with an individual value of $13,000.  Unlike other lots, the Plaintiffs’ lots, among other things, lacked improvements to the property, utilities, and septic systems.

Assessments on Vacant Lots.  Although the Plaintiffs’ lots were free from any structures, Plaintiffs were charged assessment fees despite the association documents essentially providing that the Plaintiffs were not required to pay association assessment fees until a structure was built on the lot.  In part this was due to the fact that the percentages of value for the units were calculated based on several factors including, market value, size, and allocable expenses for maintenance. Plaintiffs stopped paying the monthly assessment fees for their two units in July 2015. Continue Reading Vacant Land Units Can Have a 0% Percentage Interest

Summary

Earlier this year, I blogged on the case of Johnson v. Board of Directors of Forest Lakes Master Association, 454 P.3d 623 (2019) unpublished (Kansas) and explained how improperly passing and/or filing amendments can be VERY expensive. This is true in every state, and today we learn of another way that amendment errors can be costly.

The Facts

The developer created the condominium in 2008 that authorized the development of 109 units in a seven-year period.  The initial phase consisted of 33 units and through properly filed amendments the developer authorized another 18 units, for a total of 53 units.  Before the expansion time passed, the developer had sold 48 of the 53 units.  The day before the development period was to expire in 2015, the developer recorded two amendments to the deed to add 56 partially completed units.  In the initial 2018 case, the association argued and won, the court finding that “the final number of the units in the Condominium was fixed at 53 and that no additional units could thereafter be phased into the Condominium without the vote of the then existing 53 unit owners…” The association then argued that the unbuilt and partially completed units were part of the common area owned by the owners of the completed units, thereby significantly affecting the five mortgages that existed on these partially completed units.  The five mortgagees and developer took the opposite position, as otherwise the mortgages would be subordinate to the master deed and declaration of trust of the association.  It is undisputed that at the time of the sale of each of the 48 units, the mortgagees released its interest in all the common area. Continue Reading Improper Amendments Are VERY Expensive

Summary

Your Association should ensure that the language and definitions in governing documents reflect the intentions of the Association.  If they don’t, amend them, don’t just pretend they say something they don’t say

Facts

Sunburst Farms East (the “Association”) is a residential community consisting of four sections with individual lots (Sections 2, 3, 4, and 7).  Each Section had its own deed restrictions embodied in their own Declaration of Covenants, Conditions and Restrictions (“CC&Rs”).  Every property owner in each Section automatically became a member of the Association, which was created to provide water to its members.  Under the CC&Rs the Association could impose assessments on its members, even if they didn’t use the services.  Over time, a majority of the owners in Sections 3, 4 and 7 voted to amend their CC&Rs to revoke mandatory payment obligations, and Section 7 also voted to revoke automatic membership.

Obviously, this created differences between the various Sections, since they now had different rules.  In 2007, all four Sections attempted to amend the existing CC&R’s and stated in the document that all four Sections seek to amend their CC&R’s and the prior CC&R’s are superseded.  After an election, the CC&R’s were recorded because they had been allegedly approved by a majority of property owners in each Section.  In response to a suit brought by owners, the Association filed a suit seeking a declaration that the 2007 CC&R’s were valid.  During the suit, the owners learned that the CC&R’s had not in fact been approved by a majority of the owners in Section 7.  Therefore, these owners argued the 2007 CC&R’s were invalid. Continue Reading The Language Used in Documents, Amendments and Motions Matters

On September 1, 2020, Wisconsin’s WB-14 form become the standard form used by real estate brokers on behalf of their clients to purchase condominiums.  As drafted, it is a trap for the Seller, and any Broker using it should, at a minimum, cross out lines 158-160.  Although this new form offer may make the broker’s job easier, it puts Sellers (but not real estate brokers) at significant risk for no particular reason.

Specifically, WB-14 includes on lines 149-166 a “Contingency for Additional Condominium Information”.  If checked, which it likely always will be, it requires the Seller to deliver to Buyer at Seller’s expense, within 10 days of acceptance, if they exist, the following:

  1. Line 152 – Association financial statements “for the 2 two years.”
  2. Line 153 – Minutes of “the last 3 Unit owners’ meetings.”
  3. Line 154 – Minutes of “Condominium board meetings during the 12 months prior to acceptance of this Offer.”
  4. Line 155 – “Information about contemplated or pending Condominium special assessments.”
  5. Line 156 — The Association’s “certificate of insurance.”
  6. Line 157 – “The balance of reserve accounts controlled by the Association.”
  7. Line 158 – “Any Common Element inspection reports … held by the Association.”
  8. Line 160 – “Information regarding any pending litigation involving the Association.”

Continue Reading Wisconsin’s WB-14 Residential Condominium Offer to Purchase (CONDO SELLERS BEWARE)

Please join Husch Blackwell’s Condominium & HOA Law Team as we reveal the 10 commandments of what association management “Shalt Not” do while governing. Together, we’ll cover the basics of what homeowner associations (HOAs), condo boards and managers need to know. We’ll also dive into the nitty gritty of assessment collections.

Presenters
Lydia Chartre, Partner, CCAL
Dan Miske, Partner, CCAL
Ketajh Brown, Attorney
Sandra Chapman, Senior Paralegal
Billie Fatheree, Paralegal Continue Reading Association Academy: The 10 Commandments of Association Management – September 25, 2020

Facts

In 2016, Plaintiff sent Defendants a letter telling them that the dog-breeding building (“kennel”) they built violated the restrictive covenants of the Texas association.  The restrictions had been recorded in 1981.  The letter stated that the kennel constituted a “noxious or offensive activity.”  Defendants tried sound proofing the kennel in response.  Plaintiff’s then sued seeking a declaration that the restrictions were valid and enforceable.  Defendants pled waiver and abandonment.

Question/Issue for the Court to Answer

Whether or not the restrictions were enforceable. Continue Reading GOOD BYE: Association Who Fails to Enforce Covenants Loses Right to ENFORCE