Renters and Rental Amendments

There are usually three types of occupants in condominium or homeowner associations:

1. Owners - motivated to maintain value and foster relationships

2. Investors - motivated by profit; usually less interested in quality of community

3. Renters - often view community association living as apartment living

The term “renters” often carries a stigma in condominium and homeowner associations. Not all renters are bad (and not all owners are good). If renters are a problem in your community, your best bet is to deal with the behavior rather than attempting to ban or limit rentals. If renters are causing parking issues, adopt a parking resolution. If renters are causing noise, enforce the noise or nuisance provisions in your governing documents.

In some cases, adopting a rental amendment makes sense. For example, prospective buyers in community associations may find it difficult to secure financing if the number of rentals is too high.

Adopting a rental amendment is no easy task. In most cases, at least 75% of the ownership must vote “yes” on the amendment. Grandfathering existing rentals will often increase the amount of yes votes. In addition, a good explanation to the ownership about why the board is proposing the amendment and the benefits to the community will go a long way in receiving support for the amendment. Have a lawyer draft or review any proposed amendment to your governing documents.

Here are some things to consider when contemplating a rental amendment:

1. Minimum lease periods - typically a 30 day minimum.

2. Grandfathering existing rentals - any owner renting their unit or lot when the amendment becomes effective is exempt from the rental cap unless that owner sells or transfers their interest in the property.

3. Tenants must receive governing documents - consider requiring owners to put a provision in the lease agreement mandating that tenants receive copies of the association’s governing documents.

4. Contact information - owners should be obligated to provide contact information of each tenant to the association or management company.

5. Hardship provision - think about including a hardship provision allowing an owner to rent their property in excess of the rental cap if circumstances require. A good example of a hardship is military service.

Electronic Voting

By statute, Oregon condominiums and homeowners associations may use electronic voting for association matters. ORS 100.428 governs electronic voting for condominiums in Oregon, and ORS 94.661 applies to Oregon planned communities. (Washington community association may also use electronic voting if the governing documents allow.) In communities where many owners live off-site, this is an effective way to increase participation and voter turnout. Here are a few things to keep in mind:

1) Notice of the electronic vote should be sent via postal mail. The notice should explain what will be voted on and the website address to access the online ballot.

2) The vote is effective as soon as it's electronically transmitted.

3) A vote by electronic ballot may not be revoked.

4) The board must adopt policies or procedures to ensure compliance with the statutory written ballot requirements. Those requirements include specific notice provisions to owners and the right of owners to request secret ballots.

Take a look at a sample electronic ballot here: Sample Online Ballot

Mapping Community Associations and Crime

How should condominium and homeowners associations handle crime in or around association property?  Proactively and carefully.  Certain steps can be taken by the board, such as improved lighting, upgraded locks, or in some cases, onsite security. Some associations have organized community crime-watch programs.  Be careful though--activities by such groups may not be covered by the association's insurance policy.  Many local law enforcement agencies will help associations and the members learn how to prevent crime, how to report suspicious activities, and steps that can be taken to make your community more safe.

The map below is a small section of Portland, Oregon, showing community associations (building icons) with reported crimes during 2013.

Fair Housing Act and Community Associations

In 1988, Congress expanded the scope of the Federal Fair Housing Act ("Act") by adopting the Federal Fair Housing Amendments Act of 1988. These amendments, in part, created a new protected class of disability. Other protected classes include:

1. Race or color

2. Religon

3. Sex

4. National origin

5. Familial status

Requests for reasonable accommodations are as varied as the type of disabilities and the type of rules and regulations. In evaluating requests for accommodations, community associations must normally evaluate whether: (1) the individual is disabled; (2) the requested accommodation is reasonable; and (3) the requested accommodation is necessary for the individual to use or enjoy a dwelling.

The term "disability" means any impairment of a major life activity--things like seeing, hearing, walking, or breathing.  Disabilities include blindness, hearing impairment, mobility impairment, HIV infection, alcoholism, drug addiction, chronic fatigue, learning disability, head injury, and mental illness.

Condominium and homeowners associations are subject to the Act. Here are some recent cases involving the Act and community associations:

Jacobs v. Concord Village Condominium X Association, Inc., 2004 U.S. Dist. LEXIS 4876 (S.D. Fla., 2004). The court found that the defendant condominium association had violated the Fair Housing Act by refusing to allow a physically handicapped resident to install a ramp so that the plaintiff could freely store, access and charge her motorized tricycle in a storage closet in the condominium building.

Sabal Palm Condominiums of Pine Island Ridge Association, Inc. v. Fischer, No. 12-60691-Civ-SCOLA (S.D. Fla. March 19, 2014). A Florida district court ruled that a condominium association violated the Fair Housing Act by its unreasonable delay in granting a request by a physically disabled resident to keep a service dog.

Hollis v. Chestnut Bend Homeowners Association, No. 13-6434 (6th Cir. July 29, 2014). A Tennessee homeowners association may have violated the Act when it denied owners from constructing an exterior sun room which was designed to accommodate two children with Downs Syndrome.

Board of Directors of Cameron Grove Condominium, II v. State of Maryland Commission on Human Relations, No. 47 (Md. Mar. 28, 2013). A Maryland appeals court ordered a condominium board to pay damages to unit owners who were denied reasonable accommodation of their disabilities.

Bhogaita v. Altamonte Heights Condominium Association, Inc., No. 6:11-cv-1637-Orl-31DAB (M.D. Fla. Dec. 17, 2012). A Florida court found that a condominium association’s intrusive search for more information regarding a unit owner’s medical condition constituted a denial of his requested accommodation under the Fair Housing Act.

Warren v. Delvista Towers Condominium Association, Inc., No. 13-23074-CIV-MARTINEZ-GOODMAN (S.D. Fla. July 29, 2014). A Florida U.S. District Court held that a county ordinance banning pit bull dogs was preempted by the Federal Fair Housing Act with regard to service animals. Under HUD regulations, a request for an assistance animal can be denied if the animal’s behavior poses a direct threat and if its owner takes no effective action to control the animal’s behavior to mitigate or eliminate the threat. However, FHA requires that a significant risk—not a remote or speculative risk—exist to deny the reasonable accommodation. Particularly, HUD adopted a notice stating that a request to accommodate an assistance animal can be denied if “(1) the specific assistance animal poses a direct threat to the health and safety of others that cannot be reduced or eliminated by another reasonable accommodation; or (2) the specific assistance animal would cause substantial physical damage to the property of others that cannot be reduced or eliminated by another reasonable accommodation.”

If you are faced with a Fair Housing accommodation or modification request, speak with a qualified lawyer immediately. Violations of the Fair Housing Act may expose the association and board to legal liability.

For more information:

http://www.justice.gov/crt/about/hce/housing_coverage.php

WA State Supreme Court Case on Implications of Plat Dedications

On February 12, 2015, the Washington State Supreme Court issued a ruling on the implications for municipalities which accept plat dedications. In this case, the recorded plat dedicated certain ground water and storm water systems to the county. The county then accepted those dedications by signature on the plat. The homeowners association (and its members) filed suit after issues arose with a drainage pipe. The lawsuit sought to compel the municipality to take action to fix the drainage pipe. Read the case here: http://www.courts.wa.gov/opinions/pdf/895333.pdf

Judicial Foreclosure in Oregon

Overview

Oregon is a “lien theory” state, meaning that a mortgage of real estate only creates a lien or encumbrance and does not transfer title. Foreclosure of a mortgage lien is done through a statutory foreclosure lawsuit, i.e. judicial foreclosure.

This is a different process than the foreclosure of a deed of trust through advertisement and sale, which may be done non-judicially.

ORS Chapter 88 governs the foreclosure of mortgages:

Except as otherwise provided by law, a lien upon real or personal property, other than that of a judgment, whether created by mortgage or otherwise, must be foreclosed, and the property adjudged to be sold to satisfy the debt the lien secures, by bringing suit. Except as provided in ORS 88.103 (Sale of real property after mortgage foreclosure), in addition to the judgment of foreclosure and sale, if the lien debtor or another person, as principal or otherwise, has given a promissory note or other personal obligation for the payment of the debt, the court also shall enter a judgment for the amount of the debt against the lien debtor or other person. The provisions of this chapter as to liens upon personal property do not exclude a person that has a lien from any other remedy or right that the person otherwise has with respect to the property. (ORS 88.010(1))

1. Right to Foreclose

In order for the mortgage holder to foreclose, the mortgagee must default or breach the terms of the mortgage. Typically, this occurs when the homeowner stops or fails to pay the monthly mortgage payment.

2. The Foreclosure Lawsuit

A.  Procedure

The lawsuit to foreclose is filed in the circuit court in the county where the property is located. Like any other lawsuit, the foreclosure suit must be filed with the court, and then personally served upon the defaulting mortgagee.

The mortgagee has 30 days to file an “answer” or response to the suit. If the mortgagee fails to file a response, the mortgage holder is entitled to a “default judgment”. If a response is filed by the mortgagee, a trial date will be set and the case proceeds like any other circuit court case.

B.  Parties

ORS 88.030 describes other lien holders and debtors as defendants:

Any person having a lien subsequent to the plaintiff upon the same property or any part thereof, or who has given a promissory note or other personal obligation for the payment of the debt, or any part thereof, secured by the mortgage or other lien which is the subject of the suit, shall be made a defendant in the suit, and any person having a prior lien may be made defendant at the option of the plaintiff, or by the order of the court when deemed necessary. The failure of any junior lien or interest holder who is omitted as a party defendant in the suit to redeem within five years of the date of a sheriffs sale under ORS 88.106 (Sale and redemption) shall bar such junior lien or interest holder from any other action or proceeding against the property by the person on account of such persons lien or interest. (ORS 88.030)

The foreclosure lawsuit will usually name the following as necessary parties to the litigation:

1.  Owner of the mortgaged property;

2. If the owner is deceased, the personal representative of the estate and the heirs;

3. Junior lien holders, such as second mortgagees and judgment creditors.

4. Any individuals residing at the property

 C. Defenses The mortgagee may raise several defenses to the foreclosure action. Defenses include:

1.  Fraud

2.  Failure to credit payments

3.  Statute of Limitations

4. Laches

5. Unclean Hands

3. What Gets Foreclosed?

If it’s the first mortgage on the property, nearly all interests or liens on the property recorded after the first mortgage are wiped-out through the foreclosure lawsuit. For example, suppose an owner purchases the property through a mortgage in 1999. In 2001, the owner takes out a line of credit secured by the property. If the owner defaults on the 1999 mortgage and a foreclosure suit is filed, that suit will wipe out the 2001 line of credit lien.

A. Priority of Liens

1. Tax Liens

2. Condominium Liens

Whenever an association of unit owners levies any assessment against a unit, the association of unit owners shall have a lien upon the individual unit and the undivided interest in the common elements appertaining to such unit for any unpaid assessments. The lien includes interest, late charges, attorney fees, costs or other amounts levied under the declaration or bylaws. The lien is prior to a homestead exemption and all other liens or encumbrances upon the unit except:

     (a) Tax and assessment liens; and

     (b) A first mortgage or trust deed of record[.]

    (ORS  100.450(1))

A condominium lien can become superior to a first mortgage or deed of trust if proper notice is given. See ORS 100.450(7).

4. The Sale

Before the sheriff conducts the sale of the foreclosed property, they must publish notice of the time and place of the sale once a week for four successive weeks. The notice must describe the property. The mortgagor may then file a motion for the Court to confirm the sale after 10 days from the date of the sheriff’s sale. Typically, the Court will confirm unless there is evidence of fraud, abuse, or inadequacy of price.

5. Sheriff’s Deed 

After the statutory redemption period has expired, the purchaser or last redemptioner is entitled to receive a deed of conveyance from the sheriff.

6. Redemption

Up until the time of the actual foreclosure sale, the mortgagee may pay the amount of the debt and “redeem” his or her right in the property. This dismisses the foreclosure suit. Even after the sale, the debtor has another chance at redemption by paying the purchase price (plus taxes and other fees) within 180 days after the date of the sale.

If the rights of all persons entitled to redeem are acquired by the purchaser or a redemptioner before the statutory redemption period expires, then the court may direct the sheriff to make an immediate conveyance to that person, without requiring him or her to wait for the redemption period to expire.

Click here for a judicial foreclosure timeline chart: Oregon - Judicial Foreclosure

Turnover in Condominiums and HOAs - Oregon

Organization of Association The Oregon Planned Community Act (PCA) and the Oregon Condominium Act (OCA) require that an association of owners be formed for the purpose of administrating, managing, and operating the development. The PCA specifically requires the declarant to organize the association as a nonprofit corporation under the Oregon Nonprofit Corporation Act (See ORS chapter 65) and adopt and record the initial bylaws not later than the date on which the first lot is conveyed.   With respect to a condominium, upon the recording of the declaration and bylaws, an unincorporated association is created by operation of law. Typically, the governing documents require the declarant to incorporate the association as a nonprofit corporation under ORS Chapter 65 prior to the conveyance of the first unit or by the turnover meeting discussed below.

Declarant Rights Relating to Control of Association.  

Subject to certain statutory limitations, a declaration may provide for a period of declarant control of the association. A declarant’s control of an association may include the authority to appoint and remove officers and members of the board of directors of the association, to exercise powers and responsibilities otherwise assigned by the declaration and bylaws to the association, to approve amendments to the declaration or bylaws and, to allocate a greater number of votes to lots or units owned by the declarant. However, even though a declarant may initially control an association, the association itself is a separate entity.

Transition from Developer Control to Control by Owners

Transition is frequently characterized as a process and not an event. This concept is reflected in the PCA and OCA, both of which require the formation of a transitional advisory committee. This committee provides for the transition from administrative control by the declarant to administrative control by the association and its board and is generally referred to as a “turnover.” The timetable and procedure for turnover is established by the PCA or OCA and the declaration. A smooth transition, one that is well organized and amicable, will minimize conflicts and be in the best interests of all involved parties. A successful transition significantly contributes to the success of a development.

Transitional Advisory Committee

As mentioned, the PCA and the OCA provide for the formation of a transitional advisory committee to facilitate the transition from the administrative control by the declarant to control by the association. For condominiums, the formation of a transitional advisory committee is only required if the condominium consists of at least 20 units or, if it is a staged or flexible condominium, the number of units that may annexed or created totals 20. For a planned community created on and after January 1, 2002, a transitional advisory committee is only required for Class I Planned Communities. A transitional advisory committee is advisory only. However, it can request access to the information, documents and records that the declarant must deliver to the owners at the turnover meeting. Serving on the committee provides owners an opportunity to become familiar with the governing documents, budgets, architectural and other restrictions, rules and other critical aspects of association operation and management. Members of the advisory committee are often those owners who ultimately run for, and are elected to, board positions at the turnover meeting.

Turnover Process

Turnover marks the time when legal control of an association is transferred from the declarant to the owners. However, a developer who retains a majority of the units may still practically control the association.

Calling of the Turnover Meeting

The PCA and OCA require the declarant to call the turnover meeting within 90 days of the expiration of any declarant control specified in the declaration. If no such control has been reserved in the declaration, the PCA and OCA specify a time by which such meeting must be called. The declarant must give notice of the turnover meeting in accordance with the bylaws and PCA or OCA. If the turnover meeting is not called by the declarant within the time specified, for a condominium, the meeting may be called and notice given by an owner. In the case of a planned community, the meeting may be called and notice given by an owner or the transitional advisory committee.

Turnover Meeting

At the turnover meeting, owners elect a board of directors and the declarant has the obligation to deliver all property of the owners and association held or controlled by the declarant, as well as all items specified in the PCA and OCA. This includes the association’s governing documents and financial records. Turnover is a critical time in the life of an association. It is therefore important that the association consider retaining the assistance of an attorney experienced in HOA law to ensure a smooth transition and enable the new board to function in a manner that is consistent with all applicable laws and meets the needs of the development.

Three-Month Period After Turnover Meeting.

To facilitate an orderly transition, during the three-month period following the turnover meeting, the declarant, or an informed representative, is required to be available to meet with the board of directors on at least three mutually acceptable dates to review the documents delivered at the turnover meeting.

Review of Financial Statement

For communities with annual total assessments of more than $75,000, the PCA and OCA require the financial statement of to be reviewed in accordance with statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants.

Audit of Association Affairs

After the turnover meeting, the owner-elected board of directors should conduct an audit of the affairs of the association. The board will ultimately need to decide the breadth and scope of the audit. However, consideration should, at a minimum, include a review of the following:

(1) Property Inspection. An inspection of the physical components of the association’s property is critical. In conjunction with such inspection, the following are recommended:

(a) An inspection of and written report regarding the physical condition of the development by someone with experience to recognize faulty workmanship, shoddy maintenance and construction defects.

(b) A written report by an engineer or other qualified person to determine if plans and specifications were followed in construction of the development.

(c) Determination of the status of any unfinished construction repairs.

(2) Association Status. The declaration and bylaws govern matters relating to the operation of the association, including whether it must be incorporated. Unless the declarant provided a copy of the articles of incorporation at the turnover meeting, the board of directors must review the governing documents and determine whether the association is required to be incorporated. If so, after confirming with the Corporation Division in the office of the Oregon Secretary of State, the board should cause the articles of incorporation to be drafted and filed in accordance with Oregon law.

(3) Association Records. As noted above, the PCA and the OCA require that the declarant deliver to the association at the turnover meeting specific documents and items. If not provided by the declarant, the board should specifically request:

-An original or photocopy of the recorded declaration and copies of the bylaws and articles of incorporation;

-A deed to the common property, unless contained within the declaration;

-The recorded minutes of the association and board of directors;

-All rules and regulations adopted by the declarant;

-Financial statements;

-Any and all records of association funds and accounts;

-Any and all tangible personal property of the association and an inventory of such property;

-Records of all property tax payments to be administered by the association;

-Copies of all income tax returns filed by declarant in the name of the association;

-Any and all bank signature cards;

-Reserve account and reserve study information;

(4) Assessment Collections Audit. There should be a complete analysis and evaluation of the collection process and the adequacy of the reserves fund. If there are a significant number of past due assessments, immediate action should be considered. Even if there are only a few assessments that are past due, it is recommended that if there is a transition committee, that it have a collection resolution drafted and ready for adoption by the owner-elected board of directors to facilitate the collection process. A professional reserve study may be needed to help properly fund this account.

Model Code of Ethics - Condominium and HOA Board Members

 Model Code of Ethics for Community

Association Board Members

Board members should:

Strive at all times to serve the best interests of the association as a whole regardless of their personal interests.

Use sound judgment to make the best possible business decisions for the association, taking into consideration all available information, circumstances and resources.

Act within the boundaries of their authority as defined by law and the governing documents of the association.

Provide opportunities for residents to comment on decisions facing the association.

Perform their duties without bias for or against any individual or group of owners or non-owner residents.

Disclose personal or professional relationships with any company or individual who has or is seeking to have a business relationship with the association.

Conduct open, fair and well-publicized elections.

Always speak with one voice, supporting all duly-adopted board decisions even if the board member was in the minority regarding actions that may not have obtained unanimous consent.

Board members should not:

Reveal confidential information provided by contractors or share information with those bidding for association contracts unless specifically authorized by the board.

Make unauthorized promises to a contractor or bidder.

Advocate or support any action or activity that violates a law or regulatory requirement.

Use their positions or decision-making authority for personal gain or to seek advantage over another owner or non-owner resident.

Spend unauthorized association funds for their own personal use or benefit.

Accept any gifts—directly or indirectly—from owners, residents, contractors or suppliers.

Misrepresent known facts in any issue involving association business.

Divulge personal information about any association owner, resident or employee that was obtained in the performance of board duties.

Make personal attacks on colleagues, staff or residents.

Harass, threaten or attempt through any means to control or instill fear in any board member, owner, resident, employee or contractor.

Reveal to any owner, resident or other third party the discussions, decisions and comments made at any meeting of the board properly closed or held in executive session.

New iPhone App Goes Live!

Community Association Law Group's iPhone app is now available in the iOS app store.  Download here:  https://itunes.apple.com/us/app/community-association-law/id954171498?mt=8

Also available for Android/Google phones here: https://play.google.com/store/apps/details?id=com.calaw.attorney

Reduced Quorum for Oregon Condominiums and HOAs

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.

Proxies for HOAs and Condominium Associations

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

Emergency Preparedness for the Community Association

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/pbem/article/410173

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-information/for-consumers/occupancies/high-rise-buildings/faqs-about-building-evacuation.

“High Rise Emergency Handbook” from the City of Bellevue, WA - http://www.ci.bellevue.wa.us/pdf/Fire/mac8659-HighRiseHandbookFINAL.pdf

Meeting Minutes (Not Hours)

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:

1. the kind of meeting (special, board, annual)
2. name of the association, society, or assembly
3. date, time and place of the meeting
4. names of those in attendance
5. whether the minutes of the previous meeting were read and approved (as read or as corrected)
6. all main motions
7. the outcome of the motion (in Oregon, ORS 94 & ORS 100 require the minutes to reflect how each board member voted on the motion)
8. points of order
9. hour of adjournment

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.

1. Committee Reports: in small board meetings where the substance of a committee report is given orally, you may summarize the report in the meeting minutes. In most cases, a committee will deliver a written report which can be noted in the minutes and then attached as an exhibit if necessary.
2. Guest Speakers: Robert's Rules states that the name and subject of a guest speaker may be given, but no effort should be made to summarize their remarks.
3. Secondary Motions: In some cases secondary motions (motion to recess, motion to suspend rules) may be recorded in the minutes if it is necessary to record them for the sake of clarity or completeness.

Condominium and HOA Records

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

1. The following documents, (including those which are typically received at turnover), should be kept permanently:

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

1. All written communications with the prior three years required by ORS Chapter 65 (Oregon Nonprofit Corporation Act). ORS 65.771(5)(e).
2. All written communications made to members in prior three years. ORS 65.771(5)(e).

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

2. Insurance Policies - ten years

3. Insurance Claims-ten years

4. Legal files-pleadings, judgments, other documentation - ten years

6. Miscellaneous records - ten years

Disclosure And Inspection of Records

A. Who may inspect. ORS 94.670( 8); ORS 100.480(8)(a).

1. Owners

2. Mortgagees

B. What may be examined. ORS 94.670( 8); ORS 100.480(8)(a).

1. All records of the association must be reasonably available for examination, except:

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).

1. Request must be in writing

2. Request must be in good faith and for a proper purpose

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).

Governing Document Primer - Condominiums and HOAs

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:

Oregon

Washington

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.

Deschutes River Ranch landowners sue for $9 million

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

Published Jan 3, 2015 at 12:02AM

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 and HOAs

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>

Understanding Common Interest Developments

“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.

Oregon HOA Annual Review Checklist

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

• Oregon law requires the board to review its insurance policies and coverage annually.  ORS 100.417(3) & ORS 94.640(3).

Reserves

• ORS 100.175(3)(a) & ORS 94.595(3)(a) require that: "The board of directors of the association annually shall conduct a reserve study or review and update an existing study to determine the reserve account requirements."

Finances

• ORS 100.417(4) & ORS 94.640(4) require an association to file annual tax returns if necessary.

The Importance of the Plat Map

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/