Community Associations

2017 Legislative Update

Oregon and Washington law makers are in session. There are several proposed house and senate bills which impact condominium and homeowner associations. Here's a brief summary, along with links to review the language of the proposed legislation.

Oregon

SB 470 - Would prohibit CC&Rs, Bylaws, or Articles of Incorporation from prohibiting or restricting certified family child care homes. Read bill.

HB 2722 - In the event of a drought or water shortage, a condominium association may not require owners to irrigate landscaped areas. Read bill.

HB 3056 - Associations often file lawsuits against delinquent owners. If the association receives a court judgment, this bill clarifies that the judgment does not operate to release or extinguish the lien on the owner’s property. Read bill.

HB 3057 - This bill adds criteria for a board of directors to use when updating or reviewing the association’s reserve study. In addition, the proposed legislation changes the timeframe for financial reviews from 180 days to 300 days. Read bill.

HB 3094 - The current laws governing the restatement of governing documents is vague. This bill clarifies the meaning of “restatement” and establishes requirements for the board to follow when preparing and recording a restatement. Read bill. 

Washington

SB 5134- This bill will give homeowners an objective timeframe of 45 days notice to be heard by the board of directors before the association may impose or collect charges for late payments of assessments. Read Bill.

SB 5250- Often times, it is very difficult for associations to obtain the required amount of votes to amend the bylaws due to non-participation. This law provides an alternative process for acquiring and counting votes to amend condominium bylaws.  Read Bill.

 

 

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Snow Removal in Community Associations

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The Portland metro area and central Oregon are covered in snow and ice. As a result, dangerous conditions may exist in common area parking lots, sidewalks, or roadways.  What is the community association’s obligation to clear or remove natural accumulations of snow and ice?

Some states have adopted the “Massachusetts Rule”. This rule states that property owners have no obligation to remove snow or ice from common areas under an association’s control. However, if the association aggravates the natural conditions, there may be liability.  For example, suppose an association shovels snow from a walkway, but fails to put sand or salt on the surface. The walkway is now covered in a sheet of ice and has created an even more dangerous condition.  In that case, there may be liability.

There are dozens of cases in different jurisdictions dealing with a property owner or association’s obligation for snow and ice conditions. For instance, in a number of cases in which an individual slipped and fell on ice or snow while walking on or across a parking lot, the courts, reasoning in general that a defendant was not liable for slip-and-fall accidents on natural accumulations of snow but could be liable for unnatural accumulations or aggravations of natural conditions, held that it was or could be proven that there was liability because the defendant plowed, sanded, or otherwise cleared the snow in a poor manner, or left icy or slushy ruts or tracks in which the plaintiff slipped.

Many court decisions have found that It is unfair to make a landowner or community association absolutely liable for every slip-and-fall accident on snow in a lot, especially as this would require the owner or association to spend the entire winter clearing the lot on pain of losing a liability suit. Moreover, it is equally unfair to require the lot owner or association to shoulder the expense of plowing and replowing the lot during the course of a continuous storm. In this vein, many jurisdictions have ruled that there is no liability for an accident that takes place while a storm is still going on or a reasonable time thereafter, to give the owner a chance to clear out the lot.

Here are the general rules of thumb for community associations:

1. If the Declaration or Bylaws requires the association to plow, shovel, or clear common areas, the association must do so. Many community associations, particularly in central Oregon, are obligated under the governing documents to provide snow removal.  Use a licensed, insured, and bonded contractor to perform those services.

2. In the case where the association has no obligation for snow removal, there is a potential to create liability if the association engages in those activities.

3. If the association has common areas which are generally open to the public, there is typically an obligation to keep those areas clear of snow and ice, regardless of any requirements in the governing documents.

4. If the association has no obligation for snow removal, but decides to provide that service, it should hire a licensed, insured, and bonded contractor.  The removal of snow or ice must result in a safer condition than leaving the natural accumulation on the common areas.

Disclaimer: By reading the information above, you do not become a client of the firm. The information provided above is based on general legal principles, and may not be applicable to you. If you have a legal issue or question, you should speak with an attorney.

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Free Speech in Community Associations

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Condominium and homeowner associations in Washington and Oregon often deal with free speech issues.  Political signs are perhaps the most common issue. It is commonly misunderstood that owners have a right to display political signs.  Generally, there are no free speech rights in community associations unless granted under the governing documents or state law.  There are a few exceptions, though.

Some states, such as Maryland, have enacted statutes authorizing owners in community associations to display “candidate” signs. (Maryland Code Annotated, Section 11-111.2(c)). The Maryland statute specifically states that community association CC&Rs and rules may not prohibit the display of signs advocating for political candidates.  Illinois has adopted a similar statute. (765 ILCS 605/18.4(h)).

Another exception is the Federal Flag Act. (18 USC 700, et. seq.). The Act prohibits community associations from barring the display of the American flag.  Thus, if the association’s governing documents prohibit flags, that provision in the governing documents is void.

Free speech rights in community associations were given articulate treatment in a New Jersey Supreme Court case. (Committee for a Better Twin Rivers vs. Twin Rivers Homeowners’ Association, 192 NJ 344 (2007)). While the case is not binding in other jurisdictions, the reasoning and basis for the Court’s decision would likely be followed by most state courts. I’m attaching a copy of the decision to this letter. 

I’ll explain the facts and discuss the outcome: 

Twin Rivers is a planned community consisting of condominiums, townhouses, single family homes and commercial buildings.  The community consists of nearly 10,000 residents. The Twin Rivers Homeowners’s Association is a nonprofit corporation created to oversee the affairs and operations of the community.  Each owner, upon purchasing property in the community, becomes a members of the Association. 

In early 2000, a group of owners formed the Committee for a Better Twin Rivers.  The committee repeatedly placed signs throughout the community, and the Association promptly removed the signs each time.   The Committee filed a lawsuit against the Association to invalidate its rules governing signs on the basis of free speech protection.  The Association’s sign rules prohibited political signs on individual owner’s property and in the common areas of the community. 

The case went through the trial court, the Court of Appeals, and ultimately to the New Jersey Supreme Court. In summary, the Court held that in order to enforce constitutional rights, there must be “state action”. This means that a governmental actor or entity must attempt to curtail an individuals free speech rights in order to trigger enforcement.  Here, the court held that the Association’s enforcement of its sign rules did not constitute “state action” and that the owners’ expressional activities were not unreasonably restricted. 

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2015 Case Law Review

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Lawyers depend on case law to provide advice to homeowner and condominium associations.  While cases in other states are not binding, they often provide guidance to lawyers and board members. The following is a short summary of cases from around the United States involving community associations.

Filmore LLLP v. Unit Owners Association of Centre Pointe Condominium - Washington

The association attempted to adopt a cap on the number of rentals in the community. While the governing documents stated that only a majority of owners were required to vote in favor of the amendment, the Court imposed a higher approval threshold of a supermajority of all owners.

Acorn Ponds Homeowners Association vs. DeBenedittis - New York

Pedestrian filed action against homeowners association and association's snow removal contractor to recover damages for personal injuries pedestrian allegedly sustained when he slipped and fell on a patch of ice on property owned by association. The court found that the snow removal contractor did not substantially contribute to the injuries.

Neufairfield Homeowners Association v. Wagner - Illinois

The court in this case determined that two daycare businesses did not create sufficient traffic to violate a use restriction prohibiting frequent commercial traffic in the subdivision.

100 Harborview Drive Condominium Council of Unit Owners v. Clark - Maryland

An owner sued the association after the board refused to provide copies of it’s legal invoices. Under the law, communications between an association and it’s legal counsel are considered privileged. The court denied the owner’s request for copies of those documents.

Bluff Point Townhouse Owners Ass'n, Inc. v. Kapsokefalos - New York

An owner within the community claimed that the association did not have the authority to levy assessments. The Court found that the governing documents provided the authority to levy assessments and that the board had followed the proper procedures to levy and collect monthly assessments.

Arbors at Sugar Creek HOA vs. Jefferson Bank - Missouri

Owners of five lots in 18-lot subdivision brought action against lender that acquired from developer, through foreclosure, the 13 unsold lots and against contractor that agreed to build on the unsold lots seeking, among other things, declaratory and injunctive relief relating to management of the subdivision. The court made the following rulings:

1 lender could establish a successor homeowners association for the subdivision;

2 lender did not violate its duty of good faith and fair dealing by amending subdivision's declaration of covenants so as to remove residency requirement for members of association's board;

3 sufficient evidence supported trial court's finding that board acted reasonably and in good faith in approving building plans for one of the unsold lots;

4 lender was not entitled to recover from the lot owners the expenses it incurred to maintain the subdivision; and

5 lot owners could not be held liable to lender for abuse of process or slander of title.

Belleville vs. Malvern Hunt Homeowners Association - Pennsylvania

The developer of the community recorded CC&Rs before starting construction of the homes. During construction, the developer decided that a portion of the community would receive certain services (snow removal, landscaping) and that other portions would not receive those services.  Shortly after that decision, an owner purchased a lot. The developer gave the owner an unrecorded and unsigned amendment to the CC&Rs. The Court held that without recording the amendment, it was not valid or binding on the owner.

Houston v. Wilson Mesa Ranch Homeowners Association, Inc - Colorado

An owner in the community began leasing his home using VRBO (a short-term vacation rental website). The association took the position that frequent short-term rentals violated the commercial use provision in the CC&Rs.  The Court found that even though the owner was making a profit, the rentals merely provided a place for others to eat and sleep—therefore the use was “residential” and not commercial.

Gonon v. Community Management Services, Inc. - Indiana

Law firms or agencies which handle the collection of assessments are subject to the Federal Fair Debt Collections Practices Act. In this case, an owner sued the association’s management company for violations of the Act. The Court found that because the owner was not delinquent at the time the association hired the management company, the management company was not subject to the Act.

Walker I Investments, LLC v. Sunpeak Association, Inc. - Utah

In this case the Court found under the state’s nonprofit corporation law, the homeowners association was not obligated to provide an owner with the email addresses or phone numbers of the other owners in the community.