Frequently we are asked about either inconsistent association documents or advised that although our documents say X we have always done Y so won’t our past precedent control? The answer is NO.  Your documents control.  You must follow what your documents say, unless there is something in them that is illegal or against public policy. This same point is continually stressed by the courts around the country.
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Harbour Island Condominium Owners Association, Inc. v. Alexander, No. B285755 (Cal. Ct. App. Jan. 24, 2019)

Summary

In Harbour Island, the Court of Appeals of California held that tenants renting a unit that was part of a condominium association did not have standing before the board concerning meeting attendance and fines imposed for violations. The association did not have to give the tenants an opportunity to be heard, unlike the rights of actual unit owners.
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Becker Boards Summit, LLC v. Summit at Copper Square Condominium Association – 2018 WL 6695279 ( 2018 Ariz.)

Issues:  The court in this case addressed two important issues:

  1. Can a Developer, before turnover, amend a Declaration to convert Common Element to Limited Common Element for the benefit of a Developer Unit?
  2. Can Developer contracts entered into before turnover be voided after turnover?


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Master v. Country Club of Landfall, — S.E.2d — (2018)

Issue

Does due process require a hearing before an impartial tribunal (Board)? NO!!!

The Facts

Masters was a member a private golf club within his HOA. The golf club (“Club”) sought to make significant changes to its bylaws. Masters opposed the changes and wrote and sent a series of emails to other members claiming the proposed changes were unethical and immoral.  Specifically, within the emails Masters “made references to Hitler, Barabbas, Jesus and slavery.”  After several Club members complained, the Board concluded that Master’s actions were “insulting and inappropriate and had no place within the Club.” As a result they voted unanimously to terminate his membership.  In accordance with the Rules the president referred the matter to a hearing panel.  Master’s was given notice of the hearing and although he did not appear, his attorney did attend and argued for “suspension” instead of termination, but did not ask any members to recuse themselves. The hearing panel voted to terminate Masters membership and he filed suit.
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Eith v. Ketelhut, — Cal.Reptr.3d — (2018)

The Facts

Homeowner bought home in 2003.  In 2005 they planted a vineyard consisting of 600 plants on around .4 acres after obtaining approval of the Board’s Architectural Committee to their landscape plan that included the grape vines.  The CC&R’s (Covenants Conditions and Restrictions) specifically prohibited that “No lot shall be used for any purpose (including any business or commercial activity) other than for a residence of one family…”  The first wine harvest was in 2008 and the owner began selling the wine in 2009.  In a good year he would produce 720 bottles of wine.  Neighbors objected and when the Board did nothing, they filed suit seeking declaratory and injunctive relief claiming that the Board breached its fiduciary duty and to prohibit the owner from operating their business.  At trial the owner admitted that “the sale of wine is a business,” that the vineyard “operates like a business” and that “this was a hobby.”  The owner also testified that he filed IRS Schedule C for the vineyard, which is entitled “Profit or Loss of Business (Sole Proprietor).”  Under the IRS rules you would not file Schedule C if the business was only a hobby 
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Courts across the country have been hearing cases about short-term rentals of homes and condominium units, and there is not much consistency in the decisions made. Sometimes, it is the homeowners’ association that is trying to enforce its covenants in a manner that prohibits short-term rentals, and sometimes it is a municipality trying to enforce its zoning ordinances.  In the two cases discussed below, we have one of each—and in both cases, the language of the covenant and the ordinance made all the difference.
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Facts: The facts in the case of Forrest v. The Ville St. John Owners’ Association, Inc., No. 2018-CA-0175 (La. Ct. App. Nov. 7, 2018) are straightforward.  In March of 2016 there was a fire.  It damaged common element and the Forrest unit.  The Association had two insurance policies: one for Property and one for Community Association Management Liability Coverage.  The Property policy was issued by Lloyd’s of London. Lloyd’s paid on its policy, for both the common element and unit damages, but the funds were insufficient to repair the common elements and the unit.  So the Association repaired the common elements.

Trial Court: The unit owner, Forrest, filed suit against the Association alleging breach of fiduciary duty and various other claims under state law. 
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Castilian Hills Homeowners Association v. Chaffins, (Wash. Ct. App. Oct. 22, 2018)

The Facts

Homeowner bought home in 2004. In 2016, the homeowner failed to pay his $147 assessment.  The homeowners association (“HOA”) assessed a $20 late fee. The homeowner still did not pay, despite the normal language in the HOA governing documents about interest, the right to lien and reasonable attorney fees. After more notices, the HOA filed a lien for $525.52 and then a complaint against the homeowner seeking the $525, plus interest and attorney fees.   The homeowner argued to the court that the HOA was “required by statute to provide notice and an opportunity to be heard” prior to filing a foreclosable lien.
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Some states have statutes that require that Associations provide a notice and opportunity to be heard to a resident before the Association can fine them for a violation of the governing documents. Even though Wisconsin does not have such a statute, providing residents a notice of the alleged violation and opportunity to give their side of the story is an important component of providing due process—which will help make your fines ultimately enforceable.
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