Summary

When faced with the question of how much is too much for a “reasonable fee” the US Court of Appeals for the 7th Circuit held that it could not answer the question because the right parties were not before the court.

The Facts

Keith Horist owned a condominium in downtown Chicago building’s condominium association. Joshua and Lori Eyman also owned a condominium in Chicago, but at a difference association. Both associations hired Sudler Property Management to manage their day-to-day operations.

In 2017 Horist and the Eymans put their units up for sale and found buyers.
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Developers of condominium communities and HOAs often reserve access easement rights within the Declaration/Deed Restrictions for the subdivision, especially when the Developer owns yet-undeveloped neighboring property. But what happens if the Developer forgets to reserve such easement rights specifically within the Declaration or Deed Restrictions? A recent case explores this dilemma, and at least in this case, the HOA owners come out on top.

Facts

In a 2019 case, some lot owners within a subdivision, which had been advertised as a private, gated community, sued the Developer for trying to enforce an access easement he had for the main road within their subdivision. The Developer claimed he needed access to that main road in order to develop the neighboring lots behind the gated community.  The Developer also believed he could grant access to the owners of the neighboring lots through the gated community. 
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Summary

In Florida, mere ownership of a condominium makes you liable for all assessments which come due while you are an owner AND all assessments of previous owners.

The Facts

Defendant, Fla Trust Services, bought the condominium in question on July 26, 2016 by quit claim deed. The seller was Homes HQ, LLC who had bought it on June 13, 2016 at a judicial sale held as a result of a final judgment of foreclosure obtained by JPMorgan Chase Bank, NA. After Defendant took ownership, the plaintiff association filed suit based on a lien foreclosure and for damages. The parties agreed that the sole issue was whether the was Defendant liable for unpaid assessments back to June 13, 2016 or back to 2007, when the purchasers bought the condominium.
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Summary

A 79-unit condominium association held a meeting to remove the directors from office and elect new ones. The president objected to the meeting, the procedure and the notice, but since the association followed the documents and had more than half of the unit owners vote for the removal, the directors were removed.
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As Condominium and HOA attorneys, we often receive questions from our clients dealing with all the issues that can get in the way of conducting a successful annual meeting. Most often, it is the issue of not being able to achieve a quorum of owners in attendance—which stymies the Association’s ability to hold Board member elections, approve the budget, and take other important actions to further the HOA’s business for the coming year.  So what happens if an Association’s Bylaws calls for annual board elections, but the Association does not hold elections for a number of years?  Is there a Board? Does the Board have any authority? A recent case addressed these issues, and the court’s findings might surprise you.
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An AS IS exculpatory clause in a contract does not automatically relieve a party of any liability, especially where that party committed fraud to obtain the exculpatory clause.

The Facts

In both of the cases referenced below, the defendant included an as-is clause in a real estate contract. In Frianco the bank defendant (after discovering that the property that it had foreclosed on had significant water damage, and after paying to have those damages repaired) advised the purchaser of property in the offer contract that “it had little or no direct knowledge as to the condition of the property.” Similarly in Herhold, the defendant first represented to the buyers that they would be able to build a home on property they were selling, despite knowing of significant issues that would make that difficult or impossible. The defendant then included an “AS IS” clause in the real estate purchase agreement that also stated that “neither Seller, Broker nor Agent have made any representation or warranties…”
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Disgruntled unit owners love to review their association documents and then demand every document that they think they might be entitled to.  In this case, the court made clear that reasonableness and discretion will play some part in what must be provided.

The Facts

In December of 2014 the Plaintiff sought to inspect the Associations records, including the:

  1. December 2012 and 2013-2014 bank statements;
  2. General ledger from 2013-2014;
  3. Specific 2013 and 2014 invoices;
  4. Official communications between the Association board members and the New Mexico Office of the State Engineer (OSE);
  5. 2012 and 2014 end of fiscal year and year-end balance sheets;
  6. 2012 and 2014 profit and loss reports;
  7. December 2014 accounts receivable aging report; and
  8. December 2014 open invoices report.

The Association was incorporated in 1973 in New Mexico. Plaintiff wanted to inspect the records because she was concerned over the increase in unpaid dues owed the Association and the Board’s financial reporting.

The Board produced most of the records, but “did not produce for inspection the bank statements, the general ledger, invoices, the accounts receivable aging reports, an open invoice report, and communications between board members and the OSE.”
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Summary

The United States District Court held that a prior recorded condominium lien had priority over a federal tax lien but only to the extent of the amount stated in the lien notice. SO make sure you get everything you should in your lien filing.

I want to thank attorney William Z. Kolobaric and Hirzel Law, PLC in Michigan for bringing this case to my attention and for allowing me to reprint large portions of their blog on this subject.

The Facts

Defendant Pamela Norwood (“Norwood”) bought a condominium unit in March 2015 in the Yarmouth Commons Condominium project (“Condominium Unit”).  On April 6, 2015, the IRS made an assessment of past due income taxes against Norwood for the 2009 tax year she failed to pay but it was not until February 8, 2016 that the IRS recorded a Notice of Federal Tax Lien with the Macomb County Register of Deeds against Norwood’s property in Macomb County, which included the Condominium Unit.  About 10 days earlier, on January 28, 2016, Yarmouth Commons Association (“Association”) recorded a notice of lien with the Macomb County Register of Deeds in the amount of $1,490.00 for unpaid assessments, exclusive of interest, costs, attorney fees and any future assessments which may become due.
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Summary

The US Court of Appeals for the 4th Circuit held that a subrogation waiver provision in a construction contract barred an association’s insurance company from seeking to recover from an allegedly negligent contractor.

Facts

United National Insurance Company v. Peninsula Roofing Company, Inc.:  Pelican Beach Condominium (“Association”) needed a new roof. The Board, after obtaining specifications from an engineer, entered into a contract with Peninsula Roofing (“Contractor”).  The contract was a standard form AIA contract that is widely used throughout the country.  Peninsula Roofing placed a generator in the Association’s parking garage from which the contractor ran extension lines to power its tools. The generator caught fire and caused about $3 million dollars in property damage.
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Even the best and most established real estate developers can face hard times, especially in the aftermath of recession and economic downturn, as we experienced a few short years ago. Many condominium and subdivision developments found themselves half completed, both in terms of units and homes built, and common area improvements (like streets and curbs) left undone.  Where a new developer comes in to build upon the remaining lots, what responsibilities does he take on?  As related in a recent 2019 case, the answer may be found in the original development agreements with the municipality.
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