The Business Judgment Rule can be a great protection for condo and HOA boards—but only if the board is following the documents.

Facts.  The Declaration for an HOA stated that the Board had the discretion to raise the “maximum annual assessment” without a vote of the homeowners as long as it was “in an amount equal to 150% of the rise, if any, of the [CPI] for the preceding month of July.” Higher increases required the vote of the homeowners. The Association’s Bylaws contained a formula for calculating this “maximum annual assessment” raise, but the formula allowed the Board to accumulate the CPI increases year over year in calculating the maximum assessment. The Board followed the Bylaws formula, and owners sued, contending (1) that the increase to the maximum annual assessment was higher than the Board had authority to do under the Declaration; and (2) that the Bylaws formula conflicted with the Declaration. The HOA Board argued that it exercised good Business Judgment in following the Bylaws formula.
Continue Reading How is the Business Judgment Rule Applied to Board Actions?

Facts. The documents required the consent of the first floor unit owner if the second floor unit owner wanted to erect a terrace above a first floor unit.  When the first floor unit owner refused to give consent, the Board waived the consent requirement and allowed the second floor unit owner to construct a terrace, after determining that it would have no impact on the value of the first floor unit.  The first floor unit owner sued to annul the board’s decision.
Continue Reading Who Says the Board Can’t Favor Resident Owners?

Under the law in most states, and certainly in Wisconsin, the Board of your condominium association controls any changes to the exterior appearance.  This is generally based on a statute that can’t be changed even by the governing documents.  However, things are changing.  Across the country many laws are being passed that require the Board of Directors of various condominium associations to approve certain changes to the exterior.  This can range from artificial turf to solar panels.  In addition, the world is changing relative to emotional support animals, sexual harassment and security. 
Continue Reading 2018 Condo & HOA Issues