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year, I blogged on the case of Johnson v. Board of Directors of Forest Lakes Master Association, 454 P.3d 623 (2019) unpublished (Kansas) and explained how improperly passing and/or filing amendments can be VERY expensive.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

As many of you know, on July 30, 2020, Governor Evers of Wisconsin issued Executive Order #82 declaring a public health emergency to combat COVID-19, and Emergency Order #1 requiring individuals, with certain exceptions, to wear face coverings if:

  1. “The individual is indoors or in an enclosed space, other than at a private residence; and
  2. Another person or persons who are not members of individual’s household or living unit are present in the same room or enclosed space.”

Neither order defines “private residence” and the statutes are of very limited help on whether the common element and/or limited common element of a condominium association is part of a unit owners “private residence.”  The manner of condominium ownership does very little to clarify the issue, since the common elements are owned by the various unit owners.  Hence, each unit owner has a real property ownership interest in the common element.  Continue Reading Must Wisconsin Condominium Residents Wear a Face Covering (Mask) in Indoor Common Element

Facts

Plaintiff, Linder (“Tenant”), entered into a lease in October 2016.  Tenant agreed in the lease not to bring dogs, or other animals on the premises.  Five months later Tenant asked the Landlord if she could have an emotional support animal.  She gave one of the internet letters to support her need for the animal.  The letter said the Tenant was disabled but did not identify the disability or identify any limitations or symptoms of the disability.  Upon receiving the request, Landlord asked the Tenant to consent to his sending the medical provider a letter that asked:

  1. The nature of the mental or physical impairment that is disabling, including a reference to the DSM 5 description of the condition;
  2. A statement of what major life activity this disability interferes with;
  3. Whether the medical provider interviewed the patient;
  4. A statement that the medical provider conducted an examination of the patient appropriate for the diagnosis of the mental impairment in question under the professional guidelines applicable to a Licensed Clinical Social worker and as described in the DSM 5;
  5. That the medical provider photocopy his or her license and send it to Landlord;
  6. Whether a physical exam was conducted of the patient; and
  7. How many sessions the medical provider had with the patient;

The Landlord asked the Tenant to sign the consent letter.  Tenant did not provide the additional information nor sign the consent form.  “As a result, Landlord took no action on Tenant’s request.” Tenant brought a cat in anyway in August of 2017.  The Landlord fined and later evicted the Tenant.  Tenant then filed a complaint against the Landlord for “discrimination on the basis of disability and handicap…” Continue Reading FINALLY, a Helpful Emotional Support Animal Case

Facts

Plaintiffs were two owners (Maples and Brown) at Compass Harbor Village Condominium Association in Maine (the “Association”) who had purchased their respective units sometime in 2007.  The Declarant was an LLC that held more than 50% of the votes (15 of the 24 units) and therefore controlled the board.  For many years the Association common areas were not property maintained in many ways.  In addition, the Association failed to hold meetings, take votes on Association matters, maintain banking or other records and refused to provide financial information to the owners.  The Declarant’s position was that “because it holds a majority of the voting power in the Association and therefore any dispute between it and any of the unit owners would ultimately be decided in its favor.”  Plaintiffs claimed to have lost about $53,000 in value in each of their units because of the actions of the Declarant. Continue Reading Failing to Maintain and Properly Collect Assessments is a Breach of Fiduciary Duties

Facts

Plaintiff, Harmony Haus and a resident, sued Defendant, Parkstone Property Owners Association (“Association”) under the Fair Housing Act (“FHA”) seeking an injunction and attorney fees for violation of the Civil Rights Act.  Association counter sued alleging breaches of deed restrictions.  Plaintiff is a sober living residence for individuals recovering from alcoholism and drug addiction.  Plaintiff residents come directly from an inpatient treatment center.  Association argued Plaintiff was violating its “single family residential use,” its noise and nuisance provisions and its unsightly vehicle provision.  The board of the Association can enforce any violation with a fine.  Plaintiff’s seek exceptions to the Declaration under the FHA by requesting reasonable accommodation, with the specific accommodation to allow 12 residents and 8 cars to be parked on the street.  The Association contends the 8 cars is unsafe and that 12 residents would create an imposition on community resources.  Plaintiff claims the need for 12 residents to reach “critical mass” for its phasing recovery system, so more established residents can mentor newer ones. Continue Reading Can a Group Home be Built in a Single Family Association under the FHA – YES

Facts

Plaintiffs live in Ashbrooke Property Owners Association (“Association”) and missed their annual assessment payments of $115 for three straight years.  The Association hired Defendant, Equity Experts, to collect the past due amounts.  Under the Declaration the past due assessments accrued interest at the rate of 18% per annum, plus the Association could charge a late fee and the Owner was “liable to the Association for all costs and attorney’s fees…”  Equity Experts added fees for their constant contact package and their Pre-Foreclosure package in the amount of $750 and $1,495 respectively.  In December of 2013, Defendant advised Plaintiffs that their balance was $3,199.60, but that if they did not pay within 10 days the balance may be at least $6,644.60.  Plaintiffs filed suit seeking class certification because the interest rate charged exceeded the amount allowed under Georgia law and because the demands were in excess of sums allows under the Association documents. Continue Reading Class Action Status Granted to Association Homeowners Alleging FDCPA Violations