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. Continue Reading Are Grievance Committees Impartial Enough?

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  Continue Reading When is a Business NOT a Business?

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. Continue Reading Short-Term Rentals—A Tale of Two Cases

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.  Continue Reading Insurance is NOT all the Same-Another Case Proving Why You Need an Insurance Committee

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. Continue Reading How to Turn $147 into $10,000 – the WRONG Way

Davis v. Echo Valley Condominium Association, No. 17-12475 (E.D. Mich. Nov. 7, 2018)

Summary

The Eastern District of Michigan court held that a smoking ban demanded by a disabled owner was an unreasonable accommodation for purposes of the Fair Housing Act since the measure was not approved by the owners, and the Association was powerless to impose a ban without an owner vote.

The Facts

Plaintiff owned a Unit in the Echo Valley Condominium Association (the “Association”). Plaintiff complained to the Association that her neighbors smoked tobacco. She alleged that she could regularly smell it and that it exacerbated her existing respiratory health conditions.

Plaintiff informed the Association about her medical issues and asked the Association to address the smoking by creating a rule that all smokers in the Association should be required to seal gaps around doors and windows to prevent smoke from escaping. The Association declined to enforce a rule because neither the Association documents nor state law prohibited people from smoking in their homes. Continue Reading Smoking Ban Was An Unreasonable Request

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. Continue Reading The Importance of Due Process—What is a “Notice and Opportunity to be Heard?”

The Fair Debt Collection Practice Act (FDCPA) was enacted to protect consumers from unscrupulous debt collectors; as a shield against prohibited acts. However, it is now often used as a sword, by attorneys who are part of a “cottage industry” that simply look for even the smallest of violations and then claim thousands of dollars of attorney fees and damages in their first letter to the alleged violator. Continue Reading Foreclosing on a Unit When Owner Discharged in Bankruptcy

The answer to the question of when are fees unreasonable is simple: when a court says they are.  Fairfield Ridge Homeowners Association (association) is an HOA in Ohio.  The association entered into a management agreement with Elite Management Services, Inc. (EMS) to manage the association, including providing closing certification letters to sellers just before the closing on a sale.  EMS charged a unit owner $395 for these letters along with a $100 fee if they needed expedited service.  The association declaration provided that a “reasonable charge” could be assessed to a unit owner for these letters.  Ms. Barger viewed the $495 in charges as unreasonable and filed a class action suit against EMS. Continue Reading When Are Fees Unreasonable?

IMPRESSION: The ruling in Great Am. Ins. Co. v. State Parkway Condo. Ass’n, No. 17-cv-3083 (N.D. Ill. Sept. 11, 2018), should serve as a cautionary tale to Condo and HOA boards.

DETAILS: In Chicago, a unit owner of a condominium located at 1445 North State Street filed an Illinois state discrimination claim in 2007 against the State Parkway Condominium Association (“SPCA”) for failure to accommodate his hearing disability during SPCA Board meetings.  The SPCA defended the claim under its 2006-2007 Non-Profit Management and Organization Liability Insurance Policy (“policy) issued by Travelers Casualty and Surety Company of America (“Travelers”).

A settlement between parties was reached in September 2007; but six months later, the SPCA sued the same unit owner in an entirely unrelated matter. Continue Reading “Related Wrongful Acts” Can Exhaust an Association’s Liability Insurance Policy Limit