Articles & News
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Many homeowner and condominium associations have difficulty meeting the quorum requirement for annual ownership meetings. Unless a quorum is achieved, the meeting cannot proceed. The association’s bylaws typically contain the quorum requirement—usually a percentage of the ownership. Oregon has a unique statute which allows for a reduced quorum for ownership meetings. For condominiums, the statute is ORS 100.408, for planned communities, the statue is ORS 94.655.
If the membership meeting cannot proceed because of a lack of quorum, you may adjourn the meeting. The meeting may then immediately re-start with a reduced quorum. The reduced quorum is 1/2 of the quorum requirement or 20%, whichever is greater.
So, if your quorum requirement is 50%, the reduced quorum would be 25%. If your quorum requirement is 30%, the reduced quorum is 20% (remember, 1/2 or 20%, whichever is greater). If your quorum requirement is 20%, it stays at 20%. Keep in mind that the notice of the meeting must contain a statement that the quorum will be reduced and what the percentage will be if reduced. The language should also state that the meeting will be immediately recalled with the reduced quorum percentage (otherwise, you must wait 48 hours).
Let’s walk through a hypothetical:
It’s Saturday morning and the annual ownership meeting is about to begin. The association’s governing documents require at least 30% of the ownership to be present in person or proxy. After everyone has checked in with the secretary, only 25% of the ownership is present in person or proxy. Assuming the notice of the meeting contained the required language, the new quorum requirement is 20%. And with 25% of the owners present, you’ve reached quorum!
If you’re interested in calculating your reduced quorum requirement, plug-in your numbers in the Oregon quorum calculator here.
Many community associations rely on proxies to meet quorum requirements for ownership meetings. Proxies are especially critical in communities where many of the owners may live elsewhere, or in communities where it’s difficult to get owners to attend meetings. Always check your governing documents and state law for specific proxy requirements. That said, here’s a general overview of proxies:
A proxy is a power of attorney between the "proxy giver" and the "proxy holder". The proxy holder attends the ownership meeting and can act on behalf of the proxy giver. This includes making motions, voting, and engaging in debate.
When to Use Proxies
Note that proxies are typically exclusive to membership meetings, and in most cases should not be used for board meetings. Oregon, for example, explicitly prohibits the use of proxies in board meetings. (ORS 100.419 & 94.641)
Types of Proxies
There are many types of proxies: general proxies, directed proxies, proxies for the purpose of establishing quorum, and combinations of general and directed proxies. General proxies are the most common type in community associations.
Who May be a Proxy Holder
Unless restricted by the governing documents, the proxy holder may be any individual, including individuals who may not even live in the same community. For example, I could give my proxy to my grandmother who lives in another town. What’s important is that I give my proxy to someone I trust, and who will exercise good judgment.
Proxies vs. Voting
Keep in mind that giving a proxy to the proxy holder does not cast a vote. It merely authorizes the proxy holder to attend the meeting and then cast votes on behalf of the proxy giver. Proxies are not absentee ballots, and there is no such thing as a "proxy ballot”.
If the proxy giver wants the proxy holder to vote a certain way, then a “directed” proxy may be used. But there are downsides to directed proxies. Suppose I give my neighbor a directed proxy which instructs my neighbor to vote for Emily Almberg for the board. However, as the meeting begins Emily decides not to run for the board, and Jane Smith steps into Emily’s place. Now, my directed proxy is useless (not quite useless, it still counts toward the quorum requirement).
General Proxy Requirements
A proxy should contain the following information:
1. Name of association 2. Name of proxy giver 3. Proxy giver’s unit, lot or address 4. Name of proxy holder 5. Date when proxy giver signs 6. Expiration date 7. Signature
Again, always consult your governing documents and state statute for specific proxy requirements.
Click here for a sample proxy: Sample Proxy
Disaster may strike at anytime. It could be a fire, tsunami, or earthquake. Community associations should be particularly aware of procedures and plans if affected by a disaster or emergency. For high-rise communities, a disaster plan is critical. Managers or contractors who typically maintain or service the building may not be available in the wake of an emergency. The board should consider: 1) how residents will be evacuated; 2) utility shut-offs (who and how); and 3) how communications will be established.
Here is a disaster/emergency outline for boards or committees to consider when formulating a recovery plan: Disaster Plan Outline
The following are some useful links:
“Prepare! A Resource Guide” from the Red Cross - http://www.portlandoregon.gov/
Portland Bureau of Emergency Management: http://www.portlandoregon.gov/pbem/46475
FAQs About Building Evacuation” from the National Fire Protection Association - http://www.nfpa.org/safety-
“High Rise Emergency Handbook” from the City of Bellevue, WA - http://www.ci.bellevue.wa.us/
Over the last decade, I've seen hundreds of board meeting minutes. Some of these minutes are 20 pages long and contain a summary of everything each board member said during the course of the meeting. Please, don't do this. [Click here for an example of what meeting minutes should look like: Sample Meeting Minutes]
Robert's Rules of Order (11th ed.) contain very specific guidelines on meeting minutes. Minutes should reflect what was done at the meeting, not what was said by the members.
The content of the minutes should include:
That's it! With these guidelines in mind, most meeting minutes should not be more than a page or two. There are a couple of special considerations that each board can decide how to handle.
Association records, especially for older associations, may become voluminous over time. While there is no clear definition of what constitutes an “association record,” generally, any document that involves association business is considered a “record.” And yes, that probably means email communications between board members. Records are important for obvious reasons. They may show how or why certain board decisions were made, the financial status of the association, or the maintenance and repair history for common property. If the association is ever involved in litigation, records related to the litigation must be produced and the association may be sanctioned if it destroys or withholds relevant documents.
The question, then, is which records must be kept and for how long? With current technology, thousands of documents can be stored on a single disk or portable drive. Regardless of which documents are kept and how they are stored, every association should adopt a record retention policy or resolution for the current and future boards to follow.
Below are some statutory record retention requirements, along with some general recommendations. For condominiums, turn to ORS 100.210; ORS 100.480(1); and ORS 65.771, and for planned communities, review ORS 94.670(1); and ORS 65.771.
A. Permanent Records
a. As-built architectural, structural, engineering, mechanical, electrical, and plumbing plans. ORS 100.480(1)(a); ORS 100.210(5)(j)(A); ORS 94.670(1)(a); ORS 94.616(3)(o)(A).
b. Original specifications indicating thereon all material changes. ORS 100.480(1)(a); ORS 100.210(5)(j)(B); ORS 94.670(1)(a); ORS 94.616(3)(o)(B).
c. Plans for underground site service, site grading, drainage and landscaping together with cable television drawings. ORS 100.480(1); ORS 100.210(5)(j)(C); ORS 94.670(1)(a); ORS 94.616(3)(o)(C).
d. All other plans and information relevant to future repair or maintenance of the property. ORS 100.480(1); ORS 100.210(5)(j)(D); ORS 94.670(1)(a); ORS 94.616(3)(o)(D).
e. A list of the general contractor and the electrical, heating and plumbing subcontractors responsible for construction or installation of common property. ORS 94.670(1)(a);ORS 94.616(3)(0)(E). Does not apply to condominiums.
f. Minutes of meetings of members. ORS 65.771(1).
g. Minutes of meetings of board of directors. ORS 65.771(1).
h. Corporate action taken by members or directors without a meeting. ORS 65.771(1).
i. Records of all actions taken by committees of the board of directors in place of the board on behalf of the association. ORS 65.771(1).
j. Resolutions adopted by the board relating to characteristics, qualifications, rights, limitations and obligations of members. ORS 65.771(5)(c).
B. Three years
C. One year
1. Proxies and Ballots-one year from date of determination. ORS 100.480(1)(b); ORS 94.670(1)(b).
Recommendation: Retain proxies and ballots for amendments to governing documents which need to be recorded for one year from date of recording the amendment.
D. Current Only
1. Articles of Incorporation and amendments currently in effect. ORS 65.771(5)(a).
2. Bylaws and amendments currently in effect. ORS 65.771(5)(b).
3. List of names and business or home addresses of the current directors and officers. ORS 65.771(5)(f).
4. Most recent annual report delivered to the Secretary of State. ORS 65.771(5)(h).
E. Financials
1. Financial Records - sufficient for proper accounting. ORS 100.480(2); ORS 94.670((3); ORS 65.771(2)
2. The last three annual financial statements, if any, must be available for inspection. ORS 65.771(5)(g).
3. The last three accountant’s reports if annual financial statements are reported by a public accountant, must be kept for inspection. ORS 65.771(5)(h).
4. Other Financial Records: Accounts payable and receivable ledgers; Bank statements, cancelled check; Certificates of deposit; Budgets; Tax returns; Audits, etc.
F. Recommended Non-Statutory Retention Periods
1. Contracts - ten years from date of completion of contract
Disclosure And Inspection of Records
A. Who may inspect. ORS 94.670( 8); ORS 100.480(8)(a).
B. What may be examined. ORS 94.670( 8); ORS 100.480(8)(a).
2. Personnel matters relating to specific identified person or person’s medical records. ORS 94.670(8)(a); ORS 100.480(8)(b)(A).
3. Contracts, leases, and other business transactions under negotiation. ORS 94.670(8)(b);ORS 100.480(8)(b)(B).
4. Communications with legal counsel that relate to matters (a) and (b) above. ORS 94.670(8)(c); ORS 100.480(8)(b)(C).
5. Disclosure which would be in violation of the law. ORS 94.670(8)(d); ORS 100.480(8)(b)(D)
6. Documents, correspondence, management or board reports compiled for board or association by agents or committees for consideration by board in executive session. ORS 94.670(8)(e); ORS 100.480(8)(b)(E).
7. Documents, correspondence, or other matters considered by board in executive session. ORS 94.670(8)(f); ORS 100.480(8)(b)(F).
8. Files of individual owners. ORS 94.670(8)(g); ORS 100.480(8)(b)(G).
C. Must provide records within 5 business days. ORS 65.774(1).
D. Duplication of Records ORS 94.670(8).
3. The purpose and the records the member desires to inspect must be described with reasonable particularity. ORS 65.774(3)(b).
4. Records must be directly connected with the purpose. ORS 65.774(3)(c).
The term “governing documents” refers to a host of documents, some of which are recorded, some which are filed with the state, and others are merely distributed to owners. In general, governing documents include: the Declaration/CC&Rs, Bylaws, Plat, Articles of Incorporation, and Rules/Regulations/Resolutions. Understand that there is a hierarchy to these documents. For example, the board cannot adopt a rule or regulation that conflicts with provisions in the CC&Rs. See the attached charts to better understand the hierarchy:
Let’s discuss each:
1. Plat
The plat map is the graphical depiction of the community. For planned community subdivisions, the plat is a birds-eye view of lot lines, easements, roads, and other property interests. Condominium plats are slightly different. Condo plats include the elevation drawings of the structures, and show the boundaries between the units, limited common elements, and general common elements. Often, plats will have notations regarding ownership of common areas, maintenance obligations, and references to the CC&Rs. Plats are recorded with the county recorders office.
2. Declaration/CC&Rs
Think of the CC&Rs as the constitution of the community. When you purchase property in a community association, you do so subject to the conditions in the CC&Rs and the other governing documents. The CC&Rs usually include: a description of the property, what you can and can’t do on your lot or on common property, the authority to assess regular dues, provisions related to insurance, and who is to maintain, repair and replace property throughout the community. Like the plat, CC&Rs are also recorded with the county recorder.
3. Articles of Incorporation
This document establishes the corporate structure for the community association. Typically, the association incorporates as a nonprofit corporation. Incorporation can provide protection against liability, allow the association to hold title to property, and simplify the process of securing insurance policies. Articles of incorporation are filed with the secretary of state.
4. Bylaws
The bylaws are the operating guidelines for the association and typically include: meeting requirements, quorum requirements, number of officers and directors, and provisions governing books and records. Usually, the bylaws are recorded in the county recorders office.
5. Rules/Regulations/Resolutions
This is a broad category, and refers to those documents that are typically adopted by the board of directors without a vote of the owners (note: some associations may have owner approval requirements). Examples include: architectural guidelines, collections resolutions, enforcement procedures, and house rules. These documents are not recorded, which is why it is critical that owners receive and are on notice of these documents. Keep resolutions simple, be sure to cite to the authority for adopting the rule or regulation, and make sure owners know the reasons for adoption.
http://www.bendbulletin.com/home/2738115-151/deschutes-river-ranch-landowners-sue-for-9-million#
Suit claims developer falsely represented land
By Claire Withycombe / The Bulletin / @kcwithycombe
Landowners in Deschutes River Ranch envisioned a working cattle ranch with open spaces where they could ride horses, fish and enjoy mountain views unobstructed by power poles.
According to a $9,041,000 claim filed Dec. 16 in Deschutes County Circuit Court against the land’s developer, the vision was never realized.
The suit, filed by landowners in the planned community north of Bend, alleges defendant Deschutes River Ranch Group LLC, a property development company, and its managing member, Craig S. Morton, falsely represented ranch amenities to buyers.
Amenities were slated to include recreational areas allegedly advertised as low-cost and accessible to residents of Deschutes River Ranch, according to the complaint. In a 2003 declaration of easement recorded in Deschutes County, the complaint alleges, Morton granted the plaintiffs perpetual access to those areas.
Morton, who declined to comment Wednesday, sold the individual lots and created the marketing materials and website used in their sale, according to the complaint.
The plaintiffs claim Morton promised to renovate an old barn, build an equestrian center and a casting pond. Morton also promised to bury a power pole and plant native grasses.
Instead, landowners have access to a single trail, according to the Dec. 16 complaint. The Deschutes River Ranch Group and Morton erected barriers and posted signs denying access and charged residents tens of thousands of dollars each in usage fees, the plaintiffs allege. Furthermore, they allege those fees went to paying the ranch’s operational expenses, including cattle and haying operations and Morton’s salary, “despite representations to the contrary.”
Six parties are claiming damages ranging from $500,000 to about $3.5 million.
This is not the first time the business has gone head-to-head with residents in court. The Deschutes River Ranch Group is plaintiff in an ongoing civil suit, claiming $5,568 against the Deschutes River Ranch Community Association, according to the Oregon Judicial Information Network.
— Reporter: 541-383-0376,
cwithycombe@bendbulletin.com
Satellite dishes are gaining in popularity among consumers. Many HOA CC&Rs have blanket prohibitions on dishes, which the federal Over-the-Air-Reception-Devices Act "OTARD" override. The following is a bullet point overview of OTARD's provisions. Purpose
- prohibit restrictions that unreasonably prevent, delay, or increase cost of antenna installation or otherwise interfere w/ reception of over the air TV signals
Applicability
- applies to state and local governments and HOA's
- applies only to dishes less than 1 meter in diameter
Types of property affected
- single family homes, condominiums, cooperatives, townhomes, and manufactured homes. In the case of condominiums, cooperatives, and rental property, the rules apply to an area where the viewer has exclusive use, like a terrace, balcony or patio
OTARD does not apply to:
- common areas that are owned by a landlord, a community association or jointly by condominium owners. These common areas may include the roof or exterior walls of a multiple dwelling unit
The Challenge to HOAs
- the breadth of §207 makes it very difficult for HOAs to prohibit the installation of satellite dishes
These are things the HOA may not do under §207:
- have a blanket ban on all dishes
- impose rules that unreasonably burden an owner's ability to receive signal
- impose rules that unreasonably delay or prevent installation, i.e. costly permits
These are things the HOA can do:
-prohibit large dishes
- regulate where dishes are placed
- ensure the installation of the dish complies with safety regulations
- clearly-defined, legitimate safety restrictions are permitted even if they impair installation, maintenance or use provided they are necessary to protect public safety and are no more burdensome than necessary to ensure safety
- prohibit installation if building is a “historic site.” To qualify for this exemption, the property may be any prehistoric or historic district, site, building, structure or object included in, or eligible for inclusion on, the National Register of Historic Places. In addition, restrictions necessary for historic preservation must be no more burdensome than necessary to accomplish the historic preservation goal. They must also be imposed and enforced in a non-discriminatory manner, as compared to other modern structures that are comparable in size and weight and to which local regulation would normally apply
- require owners to pay for maintenance and damage associated with their dish
What should you do if there is a dispute:
Restrictions that impair installation, maintenance or use of the antennas covered by the rule are preempted (unenforceable) unless they are no more burdensome than necessary for the articulated legitimate safety purpose or for preservation of a designated or eligible historic site or district. If a person believes a restriction is preempted, but the community association disagrees, either the person or the restricting entity may file a Petition for Declaratory Ruling with the FCC or a court of competent jurisdiction
For more information:
<http://www.fcc.gov/mb/facts/otard.html>
“Common Interest Developments” or “CIDs” is a broad term used to identify condominiums, cooperatives, planned communities, or other housing developments where more than one owner shares in ownership or control of property. Chances are, you or someone you know lives in a CID. In 2006, there were approximately 57 million people living in some form of a CID. While news coverage of CIDS typically focuses on overbearing board members or angry owners, CIDs do offer advantages. Owners often share the expenses of utilities, maintenance and replacement of common property or facilities and in some communities, owners don’t have to worry about maintaining their yards or the exteriors of their homes. Gated communities offer security and high-rise condominiums offer a unique and enjoyable social setting. Most importantly, purchasing property in a CID usually comes with the benefit of knowing that your property value will be maintained.
With the increase of CIDs, most states have adopted laws which govern the operations and creation of these communities. Most states have very specific laws containing the requirements to form and operate a condominium, and there has been an increase in the number of states which have adopted legislation governing planned community developments in which owners own their lot and structure, but have a collective ownership interest in common property such as a recreation center or golf course.
It’s important to know the type of CID in order to know which statute may apply. A condominium is a form of legal ownership (not an architectural style) whereby owners own the “sheetrock inward” of their unit and are joint owners of the remainder of the buildings and structures, often referred to as “common elements.” Condominiums may take the form of a high-rise building, a townhouse style development, or even an office complex.
A cooperative is similar to a condominium, but in a cooperative a corporation holds title to the units and the common areas, and owners or members receive an exclusive occupancy right for his or her unit through a lease agreement.
Planned communities, on the other hand, are developments where individual owners own their land in “fee simple”, but are obligated to pay assessments used for maintaining common property typically owned by the homeowners association.
Both types of CIDs usually have recorded documents which bind the owner to certain obligations and restrictions. These documents are often referred to as “CC&Rs”, an acronym for “Declaration of Covenants, Conditions and Restrictions.” This document may restrict owners from painting their homes certain colors, requiring approval by the board prior to building fences or other structures, or prohibiting loud or obnoxious noises or behavior.
Most CIDs also have Bylaws which may or may not be recorded depending on the jurisdiction. The Bylaws contain the provisions on how the CID is to operate, such as how many individuals serve on the board of directors, when and how to hold the annual owners meeting, and the required number of votes in order to approve certain actions. If the CID association is incorporated, which many states now require, the CID will also be governed by its articles of incorporation.
Boards of Directors, with authority from state law or its governing documents, may also adopt rules and regulations. The rules and regulations must be consistent with the other governing documents, and are often used to interpret ambiguous language or set forth procedures for issues like violations of governing documents or failure to pay assessments.
CIDs are typically governed by a board of directors. The board is elected each year by a vote of the entire membership at an annual meeting. Although the board members may volunteer owners in the community, the law requires these board members to exercise “fiduciary duties.” This means that board members must act in the best interests of the association and the membership at all times, avoid conflicts of interest, and ensure that common property is maintained, repaired or replaced when needed.
Owners also have obligations to the association. The primary obligation is the payment of regular assessments or “dues.” These assessments are used by the association to purchase and maintain insurance, pay for common area landscaping, maintain recreation facilities, and for professional management of the association.
Most states and governing documents allow the association to place a lien on the property which may be foreclosed upon if an owner fails to pay these assessments. Although foreclosing on an assessment lien may sound harsh, it’s important to remember that when an owner fails to pay his or her assessments, the rest of the owners must make up that difference in order for the association to continue to operate.
Other owner obligations may include avoiding activities that may be a nuisance to other owners, and maintaining their unit or lot so that the aesthetics of the community remain consistent.
Ultimately, the goal of a CID is to foster a community, preserve property values, and create an enjoyable place to live.
As the year comes to an end, take a few minutes and assess the health of your association. Use the flowchart below to help you get off to a good start at the new year. Some things to Consider:
Insurance
Reserves
Finances
The significance of the plat map is often overlooked in community associations. Put simply, the plat is a graphical depiction of lot boundaries, easements and other ownership interests. Here's an example:
This is a plat map for a planned unit development subdivision. Condominium plats are slightly different, and include building elevations, unit boundaries, and common elements locations.
Notations on plats are important, too. Examples of notations include: maintenance obligations, common area ownership, and utility company easements. These notations are just as significant and important as provisions in your CC&Rs.
Now that you know how important your plat map is, you may be wondering how counties or municipalities keep track of who owns what and where property is located. Plats contain very specific location information, starting with township, then range, and then section, like this:
We can tell that the subdivision is located in the east 1/2 of Section 28, Township 1S, Range 1E, W.M. (Willamette Meridian). This coordinate system is attributed to Thomas Jefferson, and was formalized in the Land Ordinance Act of 1785. The Act called for the creation of townships 6 miles by 6 miles, with 36 square sections containing 640 acres. Every township referenced a meridian, like the image above, which references the Willamette Meridian.
If you don't have a copy of your plat, many county recorder or survey offices provide the files online. Here are links to access your plat map in the tri-county area:
Multnomah County: https://multco.us/surveyor/sail-survey-and-assessor-image-locator
Washington County: http://www.co.washington.or.us/AssessmentTaxation/GISCartography/maps-online.cfm
Clackamas County: http://www.clackamas.us/surveyor/
Last month Oregon voters passed Measure 91, legalizing marijuana, and following in the footsteps of Washington and Colorado. Many community associations are asking "what can we do about it?" One possible solution is an amendment to your governing documents that specifically addresses any nuisances that may result from marijuana smoke or growth operations. In other cases, adopting a rule or regulation may be feasible.
However, one issue (which remains undecided by the courts) is what authority does a homeowners association have to regulate the use of marijuana by owners with disabilities? Under the Fair Housing Act, homeowner associations must grant reasonable accommodations or requests to owners or residents with a qualifying disability. Community Association Law Group can help you navigate these Fair Housing issues.
Associations wanting to take a proactive approach should consider an amendment to the governing documents. Community Association Law Group will prepare an amendment to your governing documents which addresses the use and growth of marijuana for a flat fee of $800.00.
Here are some news articles from different states discussing the issues:
Oregonian: Marijuana may be legal in some states, but homeowner agreements can still ban it
NerdWallet: Is Marijuana Covered By Homeowners Insurance?
MainStreet: Marijuana Legalization Meets Challenges With Homeowner's Associations
Click here to open: Sample Proxy
Click here to open: Disaster Plan Outline
Click here to open: Sample Meeting Minutes
Click here to continue: Oregon Quorum Calculator
