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Apple/Pear

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?

Elevators

Harrison v. Casa de Emdeko, Incorporated, No. SCWC-15-0000744 (Haw. Apr. 26, 2018)

Holding

The Supreme Court of Hawaii held that, under the Hawaii Condominium Property Act, expenses for building components that served only particular units (residential units in this case) in a mixed-use project had to be allocated as limited common expenses to the units served, even though the declaration of the association did not assign the components as limited common elements.

The Facts

Harrison purchased two commercial condominium units out of a mixed use condominium project consisting of both residential and commercial units. The residential units were completely separate from the commercial units. Even though she only owned commercial units, Harrison was assessed expenses for elevators, lanai railings, and drains for the residential buildings. After Harrison brought suit for being improperly charged, alleging that the items were limited common elements, the association responded that Harrison never objected to the costs during her 30 years of ownership or her tenure on the association’s board of directors.
Continue Reading Commercial Units in Mixed-Use Condominium Not Responsible for Residential Unit Costs