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.”
Continue Reading

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.
Continue Reading

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.
Continue Reading

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.
Continue Reading

The Board of Directors always has the power to make and amend Rules and Regulations on its own, without owner approval…right? Wrong.  The Board’s rule-making power and authority completely depends upon what authority is given by the Declaration and Bylaws, and as we know, all associations’ Declarations and Bylaws are different!  This is true in Wisconsin and in many other States.  Knowing what is in your governing documents will keep you out of troubling lawsuits.
Continue Reading

Problem

What do you do if you want a detached garage but your documents don’t allow it?

Facts

Plaintiffs sought to enjoin the construction of a detached garage in their association on the grounds that it was specifically prohibited by the declaration. However, the declaration provided a procedure for review of any proposed structure that would otherwise violate the declaration. That process required submission and approval in writing from the Trustee (think Architectural Control Committee or “ACC”). However, the Association had not had any ACC in place for approximately nine years.
Continue Reading

Problem & Facts

The association’s detention pond overflowed causing damages to property downhill from the pond. The developer built the detention pond in 2007. The owner of the downhill property (who bought in 2012) sued the association in 2013 for damages in excess of $300,000. (Kowalski v. TOA PA V, L.P. and Traditions of Amercia at Liberty Hills Condominium Association, Pa., May 22, 2019). The owner, through expert testimony, claimed $300,000 was the cost to install an appropriate storm water management system. The association filed a third party complaint against the developer.
Continue Reading

Summary

An insurance company can’t sue a condominium tenant in subrogation, even if they were negligent in starting a fire.

The Facts

The Declaration required the association to “obtain and maintain a … policy of all risk property insurance” for the association.  The Declaration also required the policy to name as insureds the unit owners and their bank mortgage holders (Mortgagees) and that “any insurance maintained by the association shall contain [a] ‘waiver of subrogation’ as to the Units and Mortgagees.”  Finally, the Declaration also prohibited the owners from obtaining fire insurance and required all occupants and tenants to comply with the Declaration.

One of the unit owners leased its commercial unit to the tenants (Defendant). The lease did not specify who would carry fire insurance. 
Continue Reading

Facts

When you are headed down the wrong path – TURN BACK.  This applies to owners and associations when they act on their belief of what their documents say, but then learn that their understanding may be wrong.  Often parties who make a mistake, or learn that they might have made a mistake, refuse to reevaluate their situation and at least allow turning back to be an option.  Such appears to have been what happened in the recent case of Fritz v. Lake Carroll Property Owners Association, Inc., (2019 unreported case out of Illinois) where the association passed a rule that required inspection and pumping of the owners privately owned septic system every four years and that if an owner failed to follow the rule they would be fined $250 and $25 per day. 
Continue Reading