Facts

David Bagwell was the developer of three homeowners’ associations (HOAs).  David and his wife Susan (the Bagwells), acted as directors of each of the HOAs.  Sister Initiative, LLC (the LLC) loaned money to the HOAs and was owned by Bagwells’ daughters.  Susan Bagwell was the manager of the LLC.  The Bagwells also owned several other businesses that interacted with the HOAs.  In 2010 the LLC loaned the HOAs $120,000, allegedly because of the downturn in the economy.  In 2011 the Bagwells were ousted as directors, and the LLC sued to recover on the loans.  The use of the funds is the heart of the case, as the HOAs argued that the funds were funneled to improper uses.
Continue Reading Association NOT Liable for Loans Made By Developer Related Entity

Facts

The dispute in this case centered on what rights owners of lots that did not have frontage on a lake (“Non-Lake Lot Owners”) had to place a dock in the lake based on the restrictive rights for their homeowner’s association (“HOA”) which were recorded in 1922.  The HOA consisted of 146 lots.  All Non-Lake Lots were granted a perpetual easement over and across seven lakefront outlots for their use and enjoyment, including access to the lake.  Some of the Non-Lake Lot Owners construed this broadly enough that they installed a dock and used one of the outlots for activities unrelated to the water (picnics and such).  Plaintiff, a “Lake Lot Owner”, had a letter sent to the Non-Lake Lot Owner Defendants demanding that they stop using the outlot and remove the dock.  The parties disagreed.  Plaintiff sued.
Continue Reading HOAs & Riparian Rights-Can I Put a Dock Here?

Summary

A company that handled fee collections for an Association engaged in unlawful practices when it falsely indicated that a lien had been filed against two homeowners.

Facts

Plaintiffs Chad and Caitlin Truhn fell behind on their assessment payments to their Homeowner’s Association. In their agreement with the Association, the Truhns agreed to pay the cost of collecting their fees, a task the Association outsourced to EquityExperts.org, LLC (“the Collector”). The Truhns eventually settled their debt and brought suit alleging that the Collector’s practices violate the Fair Debt Collection Practices Act (“FDCPA”). The Truhns claimed that the Collector’s collection letters contained incorrect and misleading information.
Continue Reading Debt Collectors Adherence to Generic Forms Were Inaccurate and Misleading

Facts

Diane Steele owned a home in the Diamond Farm development, which was managed by the Association. While in accordance with the Association’s declaration of covenants, conditions and restrictions, the Association must obtain at least two-thirds of the members’ total votes to increase annual assessments, assessment increases in 2007, 2011, and 2014 did not receive the requisite two-thirds vote for approval. Consequently, Steele ceased making payments. The Association brought suit seeking unpaid assessments and attorney’s fees. Steele’s defense was that she did not owe dues for the amounts of increases imposed without the supermajority required under the Declaration of Covenants.
Continue Reading Can Homeowners Sue an Association for Increasing Assessments Where the Association Did Not Receive the Requisite Votes Required?

Summary

Even where homeowners characterize their claims against an Association as civil rights violations, the claims involved in the parties’ rights under the declaration, and the declaration’s attorney’s fees provisions applied.

Facts

In 2011, David Merritt, a former HOA board member, and his wife, Salma, sued their Sunnyvale HOA, Classics at Fair Oaks (Classics), as well as three of its board members. The dispute centered on the Association’s covenants, conditions, and restrictions (“CC&Rs”) involving parking restrictions at the Classics. The HOA’s parking policy requires residents to pay for and obtain a permit for each vehicle parked on the street versus in the garage of each residence. The Merritts had a two-car garage, but only parked one car inside it. They argued that they can only park one car in the garage, because Salma is disabled, and needs additional space to enter and exit the vehicle when it is parked inside the garage.
Continue Reading Owners Pay High Price of Litigation Against Association

Summary

If your Association excessively fines an owner, expect a court to find a way to penalize the association.

The Facts

In 2004 Mr. and Mrs. Mills (“Mills”) bought a home in the subdivision called Galyn Manor.  In 2007 Galyn Manor began fining Mills for a commercial work vehicle parked in their driveway in violation of the association rules.  Galyn Manor advised Mills that the fines would be $50 for each day that the commercial vehicle was parked on their property.  By the end of 2007, the fines amounted to $645.  In January of 2008, the association hired the Andrews Law Firm (“Law Firm”) to collect the fines.  Between 2008 and May of 2015 many demands for payment were made, and many payments were made.
Continue Reading Excessive Fines Cause Courts to Find Liability – A Lesson in Fair Debt Collection Practices

Summary

A single warranty date applies to each condominium building in a development.  Meaning that each unit does not have its own warranty date, and units in different buildings will likely have different warranty dates, unless they happen to be completed on the same date

The Facts

Village Lofts Condominium Association consisted of two buildings: A and B.  Building A was substantially completed in 2003 and Building B was substantially completed in November of 2004.  In 2014 the Association discovered various water leaks in Building A.  In June of 2015 they had also found similar leaks in Building B.  The Association repaired the leaks throughout both buildings.  In August 2015 the Association sued the developers and contractors for breach of warranty, breach of contract and negligence.  The defendants brought motions for summary judgment arguing that that the Association couldn’t bring a suit after 10 years based on the statute of repose (similar to a statute of limitations).
Continue Reading Investigate for Hidden Defects at Turnover or Pay the Price

Summary

Not following ALL of the required procedures when preparing amendments to your association governing documents can be VERY expensive.  Take the time, money and effort to do it right.

The Facts

In 2015 the board for Forest Lakes Master Association distributed notice that it would be holding a vote to amend its voting procedure at its annual meeting.  The board and property manager alleged that they had received the required votes for the amendment.  Because of some interesting counting techniques, the number of votes in favor of the amendment kept rising.  One owner, Johnson, emailed the board and stated that he believed the board failed to follow proper voting procedures and that the amendment did not pass.  After counting the votes, Johnson confirmed his belief that the board had violated the voting procedures in their documents.  Johnson demanded that the Board find the voting procedure void.  When the board refused Johnson filed suit.  Both parties moved for summary judgment and the association also asked for attorney fees.
Continue Reading Improper Association Governing Document Amendments – How Expensive is it When You Do it Wrong? VERY

Summary

If smoking is otherwise allowed in your association, you do not need to ban it as a reasonable accommodation for a person with asthma.

The Facts

Phyllis Davis suffers from asthma but lives in a condominium complex that allows residents to smoke in their units.  Davis claimed that the smoke from a neighboring unit aggravated her asthma.  Davis is a cancer survivor with “a history of asthma and multiple chemical sensitivity disorder.”  When the association didn’t ban smoking in her building she sued alleging that the association had discriminated against her by not granting her reasonable accommodation request to ban smoking in her building thereby violating the Fair Housing Act because of her disability.  Davis also alleged a nuisance claim under the bylaws.
Continue Reading Must Your Association Ban Smoking as a Reasonable Accommodation? NO

Declarant/Developers of Community Associations love to reserve themselves rights within the Declaration that extend far beyond their Declarant control powers.  This is nothing new.  But when a Homeowners Association puts it foot down, who will end up on top?  It depends on how all the sections in the Declaration read together, and as this case shows, ambiguity does not favor the Declarant.

Facts

In a 2019 case, a court had to interpret the Declaration governing an HOA (subdivision) and determine who was right.  The Developer, after turning over control to the homeowners, sold the final lot to a buyer with a planned home that did not fit the specifications of the Declaration.
Continue Reading Post-Turnover Declarant Rights? Think Again…This One has a Happy Ending for the HOA