Enforcement of CC&Rs

Condominium and homeowner association CC&Rs are, in many ways, similar to contracts. If one party breaches the terms of the contract, the other party may seek the help of the legal system for damages or to require the breaching party to fulfill their obligations. Most CC&Rs allow the community association to enforce the covenants and promises found in the governing documents. The association does this through its elected board of directors.  But does the association have an obligation to enforce the CC&Rs? In most cases, the answer is yes.

A careful look at the CC&Rs will determine who has enforcement authority and whether enforcement is an obligation or a right. Some governing documents require a vote of the owners prior to taking certain enforcement actions.  Other CC&Rs (where there may not be an association) require individual owners to enforce all of the provisions of the governing documents.

The question of whether or not an association may use legal proceedings to enforce its CC&Rs depends on “standing.”  Standing, in a legal sense, means that the party to the litigation has a stake or interest in the dispute, as well as the capacity to sue.  In Oregon and Washington, state law grants community associations standing and authority to enforce covenants through legal action.

Oregon law specifically authorizes community associations to initiate or intervene in matters relating to the enforcement of governing documents:

[A] homeowners association may…initiate or intervene in litigation or administrative proceedings in its own name and without joining the individual owners in the following:

      (A) Matters relating to the collection of assessments and the enforcement of governing documents[.] (ORS 94.630(e)(A))

In Washington, homeowners associations have similar authority. Unless prohibited by the governing documents, an association may:

Institute, defend, or intervene in litigation or administrative proceedings in its own name on behalf of itself or two or more owners on matters affecting the homeowners' association, but not on behalf of owners involved in disputes that are not the responsibility of the association[.] (RCW 64.38.020)

Before an association takes legal action to enforce its governing documents, ask these questions:

1. Would levying fines against a violating owner be more effective?

2. Does the cost of litigation outweigh enforcement through a lawsuit?

3. Does the association have an affirmative duty to enforce the covenant?

4. Is enforcement of the issue more appropriately handled between individual owners?

5. Is alternative dispute resolution an option to resolve the violation?

Methods of Voting

There are numerous methods of taking a vote in community associations.  For issues which may be challenged, it’s wise to use a written paper ballot.  For other non-controversial matters, associations may choose from a variety of voting methods.

Robert’s Rules of Order describes several ways to take a vote. Here’s an overview:

1. Voice

Often referred to as “viva voce”, this is a common method of voting. The chair would say, “The question is on the adoption of the motion to approve the special assessment.  Those in favor say ‘aye’, those opposed say ‘no’.  In larger assemblies where the vote is close, this may not be the most effective voting method.

2. Rising

This method is used to verify a voice vote which is inconclusive. The chair asks those in favor to stand up and a count is taken of the standing members.

3. Show of Hands

Typically used in smaller associations, this method may be used in place of a rising vote or a voice vote.

4. Ballot

For any issue which may be contested, a written ballot should be used. Written ballots allow for easy recounting and verification after the meeting. Ballots should be considered association records, i.e. owners may review and inspect the ballots.

5. Voting Cards

Some organizations, if authorized by the governing documents, use voting cards.  Voting cards are distributed to members at the start of the meeting. This method is typically used in lieu of rising or show of hands voting.

6. Electronic Voting

Technology has changed the way many associations operate. Some large associations have adopted electronic voting at annual meetings. Several services allow owners at a physical meeting to use their cell phones, tablets, or computers to cast votes.  The results are instantly counted and displayed.  One such service is: https://www.polleverywhere.com/

7. Roll Call Vote

This is an alternative method of voting which also creates a written record of the vote. The secretary or other individual appointed by the chair reads the names of each member of the association, asking if they vote yes or no on the issue.  The vote is then recorded next to the member’s name.

8. Absentee Voting

Robert’s Rules of Order discourages absentee voting: “It is a fundamental principle of parliamentary law that the right to vote is limited to the members of an organization who are actually present at the time the vote is taken at a regular or property called meeting[.]”  The point of debating a motion is that members may change their mind on an issue. If the vote is cast prior to the meeting via an absentee ballot, the debate/discussion portion of a motion is circumvented.

Bend Board Training - April 21

• Effective collections policies
• How to handle bank foreclosures
• Understanding liens and priority
• Working out payment plans with delinquent owners
• Collecting on judgments

Visit www.calaw.attorney/events to view location and to RSVP.

Special Owner Meetings

Community associations typically have three types of meetings: board meetings, annual owner meetings, and special owner meetings. The notice requirements, quorum provisions, and subject matter are very different for each type of meeting. The most common reason for a special owner meeting is for the removal of directors. Other reasons include approval of special assessments and amending the governing documents. Because the meetings are "owner" meetings, all owners have the right to participate, make motions, and vote.

The notice requirements for special owner meetings are typically found in the association's bylaws. Notice is commonly required no less than 10 days and no more than 50 days prior to the meeting. The notice of a special owner meeting must contain a description of the business to be conducted. For example, if the meeting is to remove a director, the notice must specifically state: "The purpose of this meeting is to consider and vote upon the removal of director John Doe."  The special meeting is strictly limited to the business contained in the notice.

Owners may call a special meeting by submitting a petition signed by enough owners required to call the meeting. Once the petition is submitted, the board should verify the names and ownership of each person who signed the petition. Assuming the petition contains the required number of signatures, the board has a duty to call and hold the special meeting.

Here is a chart showing who may call special owner meetings:

Oregon Condo & HOAs	Washington HOAS	Washington Condos
1. President of the association; 2. Majority of the board of directors; or 3. 30% of the owners (unless different req. is in documents)	1. President of the association; 2. A majority of the board of directors; or 3. 10% of the owners	1. President of the Association; 2. A majority of the board of directors; or 3. 20% of the owners (or lesser percentage if specified in the governing documents)
ORS 94.650	RCW 64.38.035	RCW 64.34.332

The Importance of Mediation

Engaging in mediation implies that something between the parties has broken down. There’s a disagreement, an argument, a conflict.  Mediation provides a mechanism to settle the conflict by conversation and voluntary agreement. 

But why is mediation successful? One reason is that mediation changes the structure of how we discuss conflict.  In everyday conversation, we interrupt and may not pay complete attention to whoever is speaking to us. But mediation allows each party to tell their story, without interruption. Further, each party is directing their story at a 3rd party neutral mediator who has the authority to enforce conversational etiquette. Many times, disputes are resolved simply by allowing the parties to speak and be heard without argument or interruption.

Civil trials in the United States have been on the decline over the last decade. Much of the reason is because parties often reach a settlement through alternative dispute resolution, such as mediation or arbitration. Many conflicts in homeowner and condominium associations are resolved through mediation. Mediation is voluntary—you aren’t bound by decisions of the mediator. However, if an agreement is reached, you’re legally required to comply with the terms of the agreement.

For Oregon community associations, mediation may be required before filing a lawsuit. With a couple of exceptions, associations or owners must offer to use alternative dispute resolution:

(a) Subject to paragraph (f) of this subsection, before initiating litigation or an administrative proceeding in which the association and an owner have an adversarial relationship, the party that intends to initiate litigation or an administrative proceeding shall offer to use any dispute resolution program available within the county in which the planned community is located that is in substantial compliance with the standards and guidelines adopted under ORS 36.175. The written offer must be hand-delivered or mailed by certified mail, return receipt requested, to the address, contained in the records of the association, for the other party.

In addition to hopefully settling the dispute, mediation provides other benefits. For example, a mediator (new to the conflict) may quickly point out weaknesses in your argument or legal position. Another important point is that mediation is inexpensive, especially when compared to the cost of taking a case to trial.

When preparing for mediation, it’s important that the board of directors is on the same page. Knowing what the board will agree to beforehand is critical to a successful mediation. Depending on the nature of the dispute, it may make sense to use a mediator who is also a lawyer with experience in the type of dispute at issue. Most important, though, is that the parties to a mediation must be willing to look forward toward a settlement or compromise, and avoid dredging up the events that led to the dispute.

Board members must recognize that mediation does not dwell on who may ultimately win at trial. While that may be a factor, it doesn’t dictate the outcome of the process. Mediation requires that board members focus on coming to an agreement that is mutually satisfying to everyone involved. In short, it’s the time to compromise.

Some cities and counties provide mediation services. The City of Beaverton runs a dispute resolution center with trained mediators and is free for residents. http://www.beavertonoregon.gov/disputeresolution.

Community Mediation Services in Clark County is inexpensive and also uses trained mediators: http://www.mediationclarkcounty.org/

Creating A Business Metric Dashboard

I'm a big fan of business metrics dashboards.  A couple of months ago I put together a digital dashboard that is displayed on a large TV screen in the office.

The dashboard displays the following information:

1. Weekly calendar and appointments;
2. Daily amount billed by each firm member;
3. Monthly amount billed by each firm member;
4. Total amount of monthly billings;
5. Google analytics data from firm website;
6. Constant contact email marketing data;
7. Time & weather.

Our firm uses Clio for our law practice management, including contacts, documents, billing, and time keeping. Because Clio has an API, you can access your data however you'd like. I'm not much of a programmer, though, so I use Zapier to pull data from Clio. Using Zapier, each time a firm user creates a time entry, that data goes to a private Google Spreadsheet:

Once the data is in Google Sheets, you can display the information in a variety of ways on a dashboard.  I use Cyfe, which has dozens of "widgets" to connect to your data.

Here's a look at the current dashboard design:

April Board Member Seminar: Collections & Foreclosures

Portland - April 7  |  Vancouver - April 13  |  Bend - April 21 Visit www.calaw.attorney/events to RSVP

• Effective collections policies
• How to handle bank foreclosures
• Understanding liens and priority
• Working out payment plans with delinquent owners
• Collecting on judgments

Drones in Community Associations

Drones are no longer exclusive to the military.  The prices continue to plummet and the technology has improved to allow even the not-so-tech-savvy consumer to easily pilot the flying devices.  But when drones land on the White House lawn or interfere with firefighting operations, public concern grows.

There are many practical uses for drones. Arial video and imagery are used by construction professionals, farmers, conservationists, and film makers. Most exciting: Amazon has announced that products will be delivered by drone in the near future.

But for many individuals, drones raise safety and privacy concerns. Federal laws impose some expectations and regulations on drone pilots.  For example, the FAA encourages recreational or hobby users to follow certain guidelines:

• Fly below 400 feet and remain clear of surrounding obstacles
• Keep the aircraft within visual line of sight at all times
• Remain well clear of and do not interfere with manned aircraft operations
• Don't fly within 5 miles of an airport unless you contact the airport and control tower before flying
• Don't fly near people or stadiums
• Don't fly an aircraft that weighs more than 55 lbs
• Don't be careless or reckless with your unmanned aircraft – you could be fined for endangering people or other aircraft

Oregon has adopted legislation governing the use of drones which may be used to regulate the flying of drones. ORS 837.380 allows property owners to sue a drone operator if (1) a drone has flown less than 400 feet above the owner’s property at least once; (2) the property owner has told the drone operator that they do not consent to the drone flying over their property, and; (3) the operator then flies the drone less than 400 feet above the property again. If these three conditions are met, the property owner can seek injunctive relief, “treble damages for any injury to the person or the property,” and attorney fees if the amount of damages is under $10,000.

What can community associations do to limit or regulate drones? The answer is: not much.  Some associations would like an all out ban.  Other associations have taken a more moderate approach, and amended the governing documents to allow the board to adopt rules and regulations which govern the flying of drones within the community.  This allows flexibility as technology changes and unanticipated uses arise. If the use of drones in your community creates a nuisance or violates other owner’s privacy, there may already be tools in your governing documents to handle those types of violations.

Stay tuned for a sample set of rules and regulations governing the use of drones in community associations.

Board Member Resignations

Suppose that during the middle of a board meeting a director stands up and says "I quit!". Immediately, the director leaves the meeting.  Does this constitute a resignation from the board of directors? And what if the director returns to the meeting minutes later and explains that he or she didn't really intend to resign, and now wants to return to the board of directors? Most community association bylaws require that board member resignations be in writing.  Further, Robert's Rules of Order suggests that resignations must be "accepted" by the remaining directors:

The duties of a position must not be abandoned until a resignation has been accepted and becomes effective, or at least there has been a reasonable opportunity for it to be accepted.

The acceptance is usually accomplished by a motion to accept the resignation, but recording the resignation in the minutes, without a motion or vote, is likely sufficient to accept the resignation. The act of recording the resignation in the meeting minutes may satisfy the "in writing" requirement.

But what if the resignation is oral, like in the hypothetical above?  If the resignation is never memorialized in writing and it is obvious that the director resigned, i.e. they don't attend the next board meeting, they cease communications with the board, etc., then the board is entitled fill the vacancy regardless of whether the resignation is in writing.

Back to the hypothetical. Let's assume the director who proclaimed they quit and left the meeting returns minutes later, before the board could act or even discuss the resignation.  In that case, it's not obvious that the director desired to abandoned their duties and resign, and the board has not acted or relied on the resignation. The oral resignation should be considered ineffective.

If a director formally resigns in writing, can that resignation be revoked? Generally, written resignations may not be revoked. This is especially true if the board has already appointed a replacement to fill the vacancy.  Oregon law, however, suggests that the board of directors may allow revocation of a resignation:

Once delivered, a notice of resignation is irrevocable unless revocation is permitted by the board of directors. (ORS Chapter 65.321(3)).

In other words, the board may exercise discretion to accept a revocation after a director has formally resigned.

Let's skip ahead and assume a resignation is effective and has not been revoked. This creates a vacancy on the board. The general process to follow is: the remaining directors vote to appoint a replacement to fill the vacancy. This can be done even if the vacancy has left less than a quorum of directors. The individual appointed then serves the remainder of the term.

As always, be sure to carefully review your Bylaws to determine if there are provisions governing resignations or the filling of vacancies.

The Importance of Bids

Most homeowner and condominium associations engage the services of professionals to help with the operations of the community. These professionals include accountants, landscapers, contractors, and managers. As board members, you have a duty to ensure that association funds are spent carefully and responsibly.  Part of the process to ensure financial responsibility is soliciting and reviewing competitive bids prior to hiring professionals or vendors.

1.  Define the Scope of Work

Prior to seeking competitive bids the board or committee must develop a comprehensive scope of work. In other words, what services does the board want performed? Let's suppose the association wants to hire a landscaping company to maintain the common areas. The scope of work may look something like this:

SERVICE	FREQUENCY	COST
GRASS MOWING, FERTILIZING, AND MAINTENANCE	3X MONTH
TRASH COLLECTION IN COMMON AREAS	WEEKLY
TREE & SHRUB PRUNING & MAINTENANCE	MONTHLY
IRRIGATION SYSTEM MAINTENANCE	BI-ANNUALLY
APPLICATION OF HERBICIDES AND INSECTICIDES	AS NEEDED
TOTAL ESTIMATED COST:

Each potential contractor receives the same bid form and returns the form to the association with their total estimated costs and a break-down of each line item cost.  Otherwise, its easy to be misled. Perhaps one contractor's price appears significantly lower, but it's because they haven't included the costs associated with the maintenance of the irrigation system.

Ideally, three bids should be solicited and compared.  However, some associations develop strong and lengthy relationships with vendors. That's ideal, but it makes sense to occasionally compare services and prices of other vendors even if the board is intent on continuing its relationship with its preferred vendor or contractor.

2.  Do Your Homework

Once bids are received, ask around about the vendors who submitted bids. What's their reputation? In Oregon and Washington you can check on the status of a contractor's license, review their insurance, and see if anyone has submitted complaints against the company.

For Oregon contractors visit: http://search.ccb.state.or.us/search/

For Washington contractors visit: http://www.lni.wa.gov/TradesLicensing/Contractors/HireCon/verify/Default.asp 

3.  Hammer Out The Contract

Very few people enter into a contract with the expectation of future disputes or that the other party may breach the terms of the agreement.  At a minimum, service contracts should contain the following elements:

• Detailed statement of when and how work will be performed;
• Amount and terms of the contract price;
• Acts or omissions which entitle a party to terminate the contract;
• A warranty of any work or services performed;
• A statement by the contractor that it is licensed, insured and bonded;
• Indemnification language whereby the contractor will indemnify and hold harmless the association and the board members from legal claims arising out of the contractor's work; and
• Provisions governing how disputes will be resolved, i.e. mediation, arbitration.

As always, have an attorney prepare or review all contracts prior to signing.

4.  Review

Once the bidding and contracting are done, follow-up with contractors and vendors to ensure that the terms of the contract are fulfilled.  The board or a committee should review all association contracts on an annual basis to verify that services have been performed, if new bids should be solicited, and that payments have been made.

Upcoming March Education Seminars

Topic: Amending Governing Documents

- Identifying provisions that are outdated, conflict with the law, or unworkable

- The process of drafting amendments

- Getting owners involved

- Proposing the amendments to owners

- Preparing and administering the voting process

- Finalizing and recording the amendments

Dates & Locations

March 10 - Portland

March 15 - Vancouver

March 17 - Bend

Visit www.calaw.attorney/events for more information and to RSVP

Bruce Lepore Joins Community Association Law Group

Bruce joined Community Association Law Group in January 2016 as a legal clerk supporting the office with research and document preparation.   Bruce brings a wealth of business experience, most recently as a Community Manager for homeowner and condominium associations in Central Oregon, where he developed a reputation among his clients for having a detailed understanding of laws governing community associations and a keen mind for solving the complex issues that associations face.   

Bruce is a Certified Manager of Community Associations (CMCA) and also holds the Oregon State Property Manager license.   Bruce will be enrolling in law school in fall of 2016.

Prior to moving to Oregon, Bruce had a successful career in Executive Search in Tokyo, Japan.  In 2007 he co-founded the Tokyo branch of a leading Executive Search firm, and successfully navigated the global recession.  Over the next five years Bruce and his partners grew their office to 30 staff and $6 million in annual revenue.  In 2011 he successfully negotiated an equity buyout, after which he served as General Manager of the office until his departure in 2013.

Lauren Strauch Joins Community Association Law Group

Lauren recently joined Community Association Law Group as a legal assistant. Lauren grew up in Eugene, Oregon, and was an International Baccalaureate student at Henry D. Sheldon High School. After graduation in 2008, she enlisted in the Air National Guard where she continues to specialize in aircraft armament on the F-15 fighter jet. She has earned several awards for her service, including an Air Force Achievement Medal and two Superior Performer awards. In 2014, Lauren graduated from the University of Oregon with a Bachelors degree in Sociology and moved to Portland to pursue a legal career.

In her free time, Lauren enjoys traveling, hiking, cheering on the Oregon Ducks, and spending time with her family.

Resolutions, Rules & Regulations

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.

1. Resolutions

Resolutions memorialize policies and procedures of the board of directors.  They are also used to enact rules and regulations.  Generally, resolutions, rules and regulations are adopted by the board without a vote of the owners. 

There are several types of resolutions:

Policy Resolutions - these affect the rights and obligations of owners.  Examples include enforcement resolutions and architectural guidelines.

Administrative Resolutions - these govern the operations of the association. Examples include collections resolutions and resolutions governing board and owner meetings.

Special Resolutions - this type of resolution is used for a specific circumstance. For example, if the board decides to take enforcement action against a specific owner, this may be recorded in a formal resolution.

2. Rules

Rules are specific guidelines governing the behavior and actions of the owners within the community.  Rules are often enacted via a policy resolution.

Typical rules in a community association include rules governing: pets, parking, solicitation, garbage and trash, and renting of homes or units. Architectural guidelines are a type of rule, but specifically govern the appearance of an owner’s lot or unit. 

When creating rules, make sure:

The rule does not violate federal or state law;

The rule is consistent with the other governing documents;

The rule relates to the affairs and operations of the community;

The rule is reasonable and capable of uniform enforcement; and

The rule is necessary. 

3. Rule Development

Follow the same steps each time a rule is considered and created.  Here are some guidelines:

1. Identify the need for the rule, and make sure that the issue isn’t already addressed in other governing documents.

2. Determine the authority to create the rule. Many governing documents provide specific authority to adopt certain rules.  State law also provides the authority to create certain rules.

3. Specify the scope of the rule, i.e. who and what it applies to. Don’t be vague and clearly list procedures, due process and enforcement. Rules should be brief and easy to understand. 

4. Solicit owner feedback about the proposed rule. Owners will often provide valuable feedback on proposed rules. Consider holding an owners meeting to openly discuss the rule.

5. Once the rule is adopted by the board, ensure that all owners receive notice of the rule.  Begin uniform enforcement immediately. 

Architectural Review Guidelines

Many community associations are governed by architectural design guidelines. Often, those guidelines are enforced by an architectural review committee (sometimes called architectural control committees or architectural design committees). The guidelines allow owners to know what types of changes require approval, acceptable materials and colors, and the process to appeal a decision.

Ideally, architectural design guidelines should educate owners about the design review process.  Here is an overview of what should be contained in the guidelines.

1. The authority in the CC&Rs or other governing documents which allow for the adoption and enforcement of design guidelines. Typically, the CC&Rs contain a broad restriction requiring approval for all construction or “improvements”. The guidelines, in turn, detail the process and criteria.

2. Indicate what changes require review and approval. In some associations, landscaping changes do not require review or approval, while any changes to the exterior do require approval. Most architectural guidelines require approval for all new construction (including dwellings, sheds and outbuildings), material changes in paint color, and the installation of hot tubs and swimming pools. The guidelines should state exactly what changes require the submittal of plans and architectural review.

3. The guidelines should articulate the criteria for approval. In most cases, architectural review committees have broad authority to approve or deny an application. Whether the design or color of a structure fits within the aesthetics of the community is an inherently subjective determination. Attempt to include as much criteria as possible. For example, all paint colors must be earthtone, fences must be cedar, roofs must be composition style, etc.

4. Detail the procedure that will be followed for architectural submittal and approval. Indicate the type and size of the plans that must be submitted, whether color swatches must be included, and all other information required for the committee to make an informed decision. The procedure should also state the time frame for the review and the decision. If there is an appeal right, state the time frame for the appeal and whether the appeal is decided by the committee or the board of directors.

5. If the CC&Rs do not dictate the number of architectural committee members, the guidelines should set forth the number of individuals. In addition, the guidelines should contain the term limits for each member, whether the members are appointed by the board or elected by the membership, and the criteria for removing a committee member.

Architectural guidelines are not usually recorded in the county records. As a result, it is important to provide the guidelines to all owners, especially new owners in the committee.

2015 Case Law Review

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.

What Our Clients Say About Us

Last week Community Association Law Group sent an online survey to its clients. Here are some of the things our clients had to say about why they hired us, working with us, and why they stay with us.

• Kevin is very accessible, knowledgeable and works very hard for those he represents!

• [The] flat fee pricing got our attention and opened the door, but it was Kevin's personal style, keen knowledge of HOA law and experience with numerous HOAs that sealed the deal

• The main reason was Kevin's accessibility

• Flat-Fee pricing, approachability

• Love the newsletters and being able to search on a topic at the website

• Great information to send out to our Board members on specific topics as well as keep in a "topics" file in our office.

• Thought provoking articles

• Everything went smoothly and all documents were received timely.

• I am a former board member and currently do the newsletter for our association. I often cite you as a source of information and sometimes use parts of articles or ideas from your newsletter to inform residents on how associations work and what laws/rules regulate us. The articles are useful for educating residents who frequently don't understand how a large association works.

• I found great information on issues that I hadn't thought about; i.e. how new laws might impact communities

• You have an epic logo!

• We were attracted to the Community Association Law Group through the governing document review special offered in Nov, Dec, 2015. 

2015 Statistics

Education Seminars: 23 Speaking Engagements: 12

New Clients: 180

Delinquent Assessments Collected: $185,000

New Employees: 3

Website Visitors: 51,235

Electronic Newsletters Sent: 53

Board Members and Proxies

Occasionally board members of homeowner or condominium associations may not be able to attend board meetings. In most cases it is appropriate for absent board members to participate by telephone. However, sometimes board members ask if they may grant a proxy to another board member in their absence. Can a director give a proxy to another director for a board meeting? The short answer is: NO.

Oregon law specifically prohibits directors from granting proxies for board meetings:

94.641 Assent of director to board action. (1) A director of a homeowners association who is present at a meeting of the board of directors at which action is taken on any association matter is presumed to have assented to the action unless the director votes against the action or abstains from voting on the action because the director claims a conflict of interest.

      (2) When action is taken on any matter at a meeting of the board of directors, the vote or abstention of each director present must be recorded in the minutes of the meeting.

      (3) Directors may not vote by proxy or by secret ballot at meetings of the board of directors.

A proxy allows another individual to act on your behalf.  But directors have been elected by the membership because they trust the director’s judgment. In other words, they elected the director to act on their behalf, exercise discretion, and make decisions that affect the entire membership. Granting a proxy to another director means you are not exercising the fiduciary duties which you were elected to fulfill.

In short, while the board may certainly delegate authority or tasks to managers or committees, directors may not delegate decision making to other directors through the use of a proxy.

Online Voting for Community Associations

We recently concluded a membership vote to adopt an entirely new set of CC&Rs and Bylaws.  The CC&Rs require 75% of all owners to approve, and the Bylaws require 51%. With nearly 300 lots in the community, it was a high number of "yes" votes to receive.  Surprisingly, within a matter of weeks the necessary votes were received and the documents approved. The Association appointed a committee to oversee and coordinate the "governing document project." After an initial meeting to review the challenges with the original governing documents, CALAW created a first draft of the CC&Rs and Bylaws.  Those drafts were reviewed, comments were solicited, and revisions were made.  After one more round of meetings and revisions, we were ready to present the proposed documents to the owners.

First, we posted drafts of the proposed documents on the internet for owners to review and download. Shortly after the documents were provided to the owners, the first of two townhall-style meetings were held.  At the first meeting, attorney Kevin Harker reviewed each section of the CC&Rs and Bylaws, explaining the meaning of each provision and reasons for inclusion.

For the next several days after the meeting, we collected feedback from the owners. Once the owners' concerns and comments were incorporated into a new draft, a second townhall meeting was held to ensure that owners understood the importance and significance of adopting new CC&Rs and Bylaws.

Then came the voting. Owners voted through an online ballot:

As soon as owners clicked "submit", the vote was recorded in an online spreadsheet:

The spreadsheet contained a separate area which kept a live tally of the votes:

With the required number of votes received, the next step was to sign and record.  Community Association Law Group uses Simplifile to upload and record documents to the county recorder's office:

Thirty minutes later the documents were recorded with the county recorder's office:

Once recorded, the documents were official!