Facts

A dispute arose between four condominium associations within a master association as to obligations to pay for the maintenance, repair and upkeep of a roadway easement.  The road connected the four condos and other properties.  The master deeds for each association were recorded in the 1970s.  In 2013, Plaintiff, Bayberry Group, Inc. (“Bayberry”) sought an agreement to share the costs of the road.  As a result, a Common Area Maintenance Agreement (“CAM Agreement”) was created.  The CAM Agreement covered the road and the “lawns and entirety of any … landscaping in the roadway easement.”  A majority of the associations in the master association executed the CAM Agreement, but the four defendant associations did not.  The defendants also refused to pay their share of the fees under the CAM Agreement.  Bayberry filed suit alleging the road easement is a general common element of each of the associations.  Defendants answered denying any road easement as a common element.
Continue Reading Road Maintenance – Who Pays? (Duties under Association Documents and Case Law)

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?

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

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

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

Does your Association have rules that target children?  Does your Association have rules that apply differently to children and adult residents within the community?  The following case is a cautionary tale for Condominium Associations and HOAs—repeal those rules now, or potentially face a losing battle pursuant to federal law.

Facts

In a federal district court case from early 2020, a homeowner brought suit against his HOA alleging that the Association’s rules with respect to use of the tennis courts, the pool, and clubhouse were discriminatory.  The tennis court rules stated that adults had court privileges over children after 3:00 PM on weekdays and any time on weekends and holidays.  The pool rules stated that residents 14 through 18 years of age were limited to one pool guest per person, while adult residents were permitted to have up to 6 pool guests at a time.  The clubhouse rules stated that it was reserved for adult use only during summer months while the pool was open.  The homeowner claimed that these three rules discriminated against families with children (also known as “familial status”), which is prohibited by the federal Fair Housing Act (FHA).
Continue Reading Rules that Target Children Really Target Your Association (for Discrimination Lawsuits)

I recently read an article on the difference between condominium and homeowner association officers and directors by an attorney out of Ohio, Jennifer B. Cusimano of Kaman & Cusimano, LLC.  It was well written, clarified a subject that is often confused, and inspired me to do my best to explain the difference to our readers.

In simple terms, directors are elected by the owners, officers are NOT.  Officers are elected by the Board of Directors annually. 
Continue Reading What is the Difference Between Community Association Directors and Officers?