In New Jersey, the United Stated Bankruptcy Court held in In re. Smiley, 569 B.R. 377 (2017) that a Unit Owner/Debtor can modify the Association’s lien and strip off all but the six month super lien allowed under the state’s condominium act. The facts at the time were that the Association was owed $9,000 for filed liens and another $4,700 that it recognized as unsecured. At the time of the bankruptcy filing, the monthly assessment was $250. The fair market value of the property according to the bankruptcy schedules was $142,000, but it was under water because of a $174,000 first mortgage on the property. Based on these facts the Unit Owner/Debtor claimed, and the court found, that despite the proper lien filings, the Association only had security for $1,500 ($250 x 6 months). Continue Reading Chapter 13 Bankruptcy – Can the Association’s Lien for Unpaid Assessments be Stripped Off? YES
In a 2017 New York case, a dispute arose over what authority the Association had to perform landscaping maintenance on an individual homeowner’s lot (Minkin v. Board of Directors of Cortlandt Ridge Homeowners’ Association, Inc., 149 A. D.3d 723 (2017)). When the owner refused to pay the assessment for the landscaping services, the Board started assessing fines. The owner sued the Board. The New York Supreme Court (the lowest level court in New York) decided that the Board did have the authority to perform the landscaping services on the front lawn and the homeowner was required pay the assessment as well as the fines. Unfortunately for the Association, there was also a larger issue dealing with the work performed and assessed on the side and rear of the house. The problem was that the Board and managing agent could not provide backup or evidence for exactly what work was done in each area, and accordingly, the assessments and fines were not upheld in those areas. Continue Reading Know Your Governing Documents
A recent New York Court dealt with an issue on leasing (Olszewski v. Cannon Point Association, Inc., 148 A.D.3d 1306 (2017)). The Board adopted rules and regulations that placed restrictions on leasing that contradicted relevant portions of the Association’s Bylaws. The Association then fined the owner for violating these restrictions and the owner sued. The owner won at the circuit court level and the Association appealed. On appeal, the Court again ruled in favor of the owner, upholding the trial court’s decision. Why? Continue Reading Can the Association’s Documents be Contradictory and Still Enforceable?
A Maryland Court recently ruled on the extent of powers a Condominium Board had in dealing with a unit owner who was delinquent in assessments (Elvation Towne Condominium Regime II, Inc. v. Rose, 162 A.3d 1027). The Association at issue adopted a policy by which delinquent unit owners would be deprived of their right to enjoy certain common elements – namely the pool and parking of the Association. When they suspended those rights for the delinquent unit owner, the unit owner filed suit alleging the policy was unlawful, since the Association’s declaration did not provide for the Board to withhold common element use rights. Continue Reading Delinquent Owners – Withholding Access to Common Elements
A Court in Arizona recently provided one more reason for your association to have a fine schedule and late fee policy (Turtle Rock III Homeowners’ Association v. Fisher, 2017 WL4837821 and 2017 Ariz. App. LEXIS 187). This particular Homeowners’ Association (“HOA”) required their owners to maintain their property in various ways relative to cleanliness and attractiveness, via the HOA’s declaration. The declaration allowed the HOA to assess daily fines if the violations were not corrected. The HOA sent a particular owner 90 separate notices but started fining the owner less than 30 days from the relevant notice. Continue Reading Does Your Association Need a Fine Schedule and Late Fee Policy? Yes!
A Court in Louisiana recently took up the issue of what to award in interest, late fees, attorneys’ fees and costs when a Unit Owner paid the underlying assessments, but refused to pay anything more. (English Turn Property Owners Association v. Contogouris, 228 So.3d 793 (2017)). In this case, a Unit Owner and its Homeowners’ Association (“HOA”) were embroiled in litigation concerning four years of unpaid assessments, along with interest, late fees, attorneys’ fees and costs, the latter being authorized by the Association’s governing documents. The parties agreed to a payoff concerning the regular assessments, and that a trial would decide what other amounts were owed as a result of the Unit Owner’s failure to regularly and timely pay assessments. Continue Reading Delinquent Owner Pays Assessments, But Refuses to Pay Interest, Late Fees or Attorney Fees. NOW WHAT?
In Illinois, a Court recently ruled on a Condominium Association’s attempt to charge back an insurance deductible to one of its members (Gelinas v. Barry Quadrangle Condominium Association, 74 N.E.3d 49 (2017)). This particular association had a fire originate in an owner’s unit resulting in damage to not only the specific unit, but the entire building. The Association made a claim with its insurance company and received reimbursement for the necessary repairs to be made. The Association then held a hearing and levied an assessment against the Unit Owner in whose unit the fire originated. Continue Reading Special Assessing an Insurance Deductible Back to a Unit Owner
A big thank you to all that attended our recent Spring 2018 Association Academy and made the event a success. For those of you who were unable to attend, don’t worry, you can still catch us on YouTube!
We’ve made our Association Academy available for viewing. Click on the links below to learn more.
- Part I: Association Collections and 2018 Law Updates – Do you track the income and expense of each collection matter and know the net recovery? If not, why? And what your Association needs to know about the 2018 condo law changes.
- Part II: The Times They are a-Changin – Demographic shifts and the new problems facing associations. Millennials are moving in. New people – new problems. What your Association needs to be aware of.
- Part III: Document Refresh: Changes You Should Make NOW – Dust off your governing documents! Learn what policies your Association needs now.
As always, if you have questions on any of these topics, do not hesitate to contact the Husch Blackwell LLP Condominium and HOA Law Team.
A recent case in Florida (MacKenzie v. Centext Homes, 208 So.3d.790 (2016)) was not bashful about holding a developer to the same rules as other property owners in a Homeowners’ Association (“HOA”). The HOA in this case was still largely under developer’s control during the period in question. The developer controlled Board included a reserve line item in its budget and collected reserve funds from its members. Despite initially contributing $32,000.00 to the Association, the developer, Centext, ceased contributing to the operating expenses and assessments, instead opting to fund operating deficits (when assessment income failed to exceed operating expenses). Continue Reading Developer Held to Same Rules as Other Owners
Our long-time client, a condominium association in Milwaukee that historically faced heavy delinquency issues, was unable to fund its expenses due to very heavy delinquency rates. Among the expenses the association could not fund were its legal expenses. The association owed more than $30,000 in legal fees and costs, but had twice that in collections. The association was unable to make regular payments on their expenses due to a lack of cash flow. Continue Reading What to do When Heavy Delinquency Impacts Cash Flow