05.15.25

ISSUE # 116

CIC Info Bytes 05/15/25

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Open Meetings Provisions Do Not Require Interpretation

• Washington State: Do you want to make your association the test case for open meetings litigation?  If so, you should hire an attorney who suggests that “working sessions” are allowed under RCW 64.90 / WUCIOA.

“Meeting” means communication through which a quorum of members of the board, committee or unit owners of the association simultaneously participate with each other and where association business is considered regardless of whether any formal action is taken.

What you see below are two essentially opposite opinions about open meetings from attorneys associated with CAI’s Washington State Legislative Action Committee (LAC), express.  This is the crux of poor governance concepts introduced by attorneys (not by homeowner advocates).  CAI isn’t in the process of trying to fix any of this.  Some attorneys take heart in selling their services to clients exactly because of undefined terms.

Manager Hilary Bublitz: All meetings are open, correct?  There's no such thing as a board workshop where you get to meet.

Attorney Theresa Torgesen: So actually, that's why, specifically why, I mentioned that the statute has this beautiful language that says, “if no association business is being conducted…”, and Valerie, I would love your take on it, but my association business, to me, means voting, and you're not conducting business if you're not holding any votes.

[This is abysmal advice.  Theresa acted as WSCAI’s liaison for legislative changes in Washington over the past year where WSCAI resisted efforts to define a meeting.

Example: Let’s say a quorum of Board members convene to negotiate line-items in the following year’s budget, or to work on the reserve study, or to review bids for a project.  The Board does not vote to adopt the budget or to change the reserve study or to hire any of the bidders during the time they spend together at that session, but it’s still a meeting that must be properly noticed and open to your members.  Anyone who says otherwise is clearly violating the intent of the statute.]

Attorney Valerie Oman: …I think it's great to highlight that there are people who are reasonable and experienced and do this, have been doing this for a really long time, that have different interpretations.

I think that the section that Theresa is talking about that says, you know, incidental meetings, essentially, of people who happen to be on the board together, but where business is not being done, doesn't count as a board meeting also says that you can't use like a social gathering, and call it a social gathering when it's really a board meeting, to avoid having open meetings, right?

And I think the legislative intent is really clear, which is that meetings should be open to the homeowners because transparency is valuable. Having owners who are informed about the association's business is something the legislature cares a lot about.

So if one of my clients asks me if they're working sessions should be open to the ownership, my advice to them is going to be that, yes, those should be open.  Do I think that every single time two board members happen to have a conversation about Association business, that is a meeting that has to be open?  No, I think we have to have some sort of reasonable guard rails on these requirements.  But the other thing I'll point out is something that Teresa said earlier, which is we don't have case law in any of this, and ultimately I might have my opinion, Theresa is going to have her opinion with her clients, and until a court decides whether working sessions are considered board meetings that have to be open, we are basically giving our best and most reasonable interpretation of the language given our understanding of the legislative intent.

So I guess the question that I would ask is, why work so hard to exclude your owners from things like working sessions, and why not sort of err on the side of transparency, given what we know about the legislative intent here?  So that's where I land on that one.

— Excerpts from the “WA Legislative Updates Webinar” | May 09, 2025

What’s Old is New…Again

• This newsletter has taken the opportunity to highlight poignant journal articles and academic research about CICs that started appearing in the early 1990s.  Links to a variety of works are available on our What are CICs?! page, on our Publications page and on our Governance page.  What you see below is an attorney’s perspective from a 2008 journal article suggesting a variety of state statutory reforms along with our brief annotations.  Many concepts espoused below are captured in our CIC State Statute Concepts Matrix.

  • Active State Paradigm: The State should actively protect homeowner rights from the creation of a common ownership development, acting publicly and unequivocally in the owners' best interests. This includes recognizing the impracticality of current Public Offering Statements (POS) and requiring developers to submit applications electronically for easier review. The State needs to hold press conferences, issue public service announcements, intervene in key cases, and hold informational meetings to solicit owner concerns and provide objective information.

    1. Public offering statements are voluminous, but so too are the standards required for such statements by a variety of states.  The UCIOA framework includes multiple public offering prongs (example from Washington State).

  • Educational Brochure and Mandatory Board Education: The State should create and distribute a simple brochure to educate prospective purchasers about association living, their rights, and where to seek help. Mandatory, objective education for elected board members on their obligations and owner rights should be provided through independent institutions like state or county colleges.

    1. Government-sponsored education for homeowners, Board members and industry professionals is few and far between.

  • Standard Governing Documents: State regulators should work with  independent educational institutions to formulate and mandate standard initial governing documents for associations, as well as documents to apply after a transition of declarant / developer control.

    1. Government sponsored governing document templates will probably never come to pass because states are not in the business of drafting contractual documents between private parties.

  • Dedicated State Oversight and Enforcement Powers: A dedicated, energetic state agency focused on owner protection should be created, empowered to enact regulations for governance (elections, voting, rule-passing), record access, and dispute resolution.  Empower a state entity to sue on behalf of owners in significant cases to create comprehensive case law supporting general owner rights. Eventually, the legislature should provide counsel fees for owners forced to sue their board for deficiencies after prior notice and failure to remedy.

The State must have the power to remove board members acting contrary to law, governing documents, or ethical/election regulations, and to impose individual fines on culpable board members. A board member under charges should not use the association attorney for their defense unless they successfully rebut all charges.

1. Government-sponsored enforcement when things go askew in CICs has been addressed sporadically across the nation.  Learn more on our Get Help! Page.

2. A small number of states have legislated remedies for owners to be awarded their attorneys fees in specific circumstances.  Substantially more common is that a prevailing party could be awarded attorneys fees by a court.

• State Licensing and Oversight of Property Managers: Implement state licensing or certification and oversight for property managers to ensure competency, accountability, and standards of conduct, providing owners a venue for complaints against unscrupulous managers.

  1. Just like other forms of government-sponsored oversight, state licensing requirements are few and far between.  Moreover, the effectiveness of licensing ranges from toothless (Georgia) to meaningful (Florida).

• Legislative Revisions Based on Experience: The Legislature should revise statutes based on 30 years of owner experiences and the Assembly Task Force Report, protecting owners from board abuses, especially concerning conflicts of interest, disclosures, bidding, record access, and attorney use. Regulations must be carefully drafted for compliance.

  1. The United States has experience with CICs dating back to the 1800s and a robust set of concepts that have been studied, introduced as legislation and adopted as law.  State legislators would do well to borrow language from across the country.

• Clear Separation of Developer and Association: A statute must establish a clear separation between the developer and the owners' association; the developer cannot control or act as the association. Developer rules should expire after all units are sold or marketing ceases, with owners then voting on their own rules.

  1. UCIOA does a decent job of establishing relatively reasonable developer transition requirements.  Legislators would do well to consider UCIOA’s transition framework (example from Washington State).

• Owner Self-Determination for Restrictions: Owners must be allowed to impose restrictions on themselves through voting, based on appropriate regulatory guidance, rather than being burdened with overturning developer-imposed restrictions. Wholesale adoption of existing rules should be prohibited; owners should evaluate and vote on each restriction individually.

  1. Debating every. single. rule. and. restriction. sounds. like. a. nightmare.  Evan McKenzie wrote about the challenging nature of supermajority homeowner approval to change restrictions imposed on associations by developers back in 1994!

• Limited Board Powers Focused on Common Property: Board powers must be limited to managing common property and protecting owners' interests, not broad powers. Boards should be held to governmental principles when acting in a governmental capacity (e.g., rule enforcement) and have no power to impose personal restrictions without an owner vote. Owners should decide on significant expenditures and all capital improvements, with bylaws setting specific dollar limits on board authority.

  1. Focusing powers on common property was discussed by the MN CIC Working Group.

• Address Municipal Mandating of HOAs: Convene a panel with municipal and developer representatives to address the practice of municipalities mandating HOAs for developments with minimal common areas, which unnecessarily burdens owners.

  1. This is another concept taken up by the MN CIC Working Group and one that was passed by the AZ legislature in 2024 but subsequently vetoed (HB2570).

• Independent Oversight for Fair Elections: Provide for independent oversight to ensure fair elections, simplifying the appeal process for owners beyond requiring a Superior Court summary proceeding.

  1. A handful of states have adopted legislation focused on fair and balanced electoral processes.  Providing standards for candidacy and notice, requiring ballots, prohibiting undirected proxies, and reasonable limitations on who can access election results are all examples of meaningful reforms.

• Accurate Nomenclature for Boards: Change board terminology to reflect their actual role: neighbors managing common elements and enforcing community-adopted rules (e.g., "Members of the Governance Committees," "Committee Chairperson") rather than "Board of Directors" or "President."

  1. Your association is NOT run by a CEO.

— Edward Hannaman | Homeowner Association Problems and Solutions | Rutgers Journal of Law & Public Policy. Vol. 5, No. 4 | Spring 2008

Build First, Ask Questions Later

• West Lake Hills, Texas: Elon Musk purchased a home in a large HOA and subsequently erected a 16 foot fence.  The city has been asked to take enforcement action and the HOA seems to have remained somewhat on the sidelines during all of this.

At first, residents of the upscale cul-de-sac in West Lake Hills, Texas, did not know who had moved into the 6,900-square-foot, six-bedroom mansion next door.

Then construction workers arrived to erect a 16-foot chain-link fence around the $6 million property, which is one of four homes on the leafy street. They also installed an outward-facing camera. Next, a fleet of cars — many of them Teslas — began parking on the street. Three times a day, a shift change signaled security personnel coming and going at the house. Once, the driver of a passing car shouted late at night that he was looking for a party at “E’s house.”...The complaints have since escalated into an uproar over city ordinances, permits and exceptions known as variances…

…Moguls including Mark Zuckerberg have sometimes hit the limits of their wealth and connections in disagreements over their luxury homes. So has Mr. Musk, who is so far losing against the municipal bureaucracy in West Lake Hills. He and his employees did not obtain permits for a metal gate and the fence built around the property, making the chain-link structure 10 feet taller than was allowed, local records showed. In total, the construction violated six city ordinances. After some neighbors protested, Mr. Musk’s team tried to gain retroactive permission for the projects.

But Jim Pledger, one of the six commissioners on the West Lake Hills Zoning and Planning Commission, said he and his colleagues voted unanimously last month against recommending that the homeowner — he was careful not to name Mr. Musk — be granted variances for the projects. If an exception was made, Mr. Pledger said, “we’d incentivize people to break the rules.”

Unless the City Council disagrees with that decision, Mr. Musk faces the prospect of tearing down the fence and gate or changing them to comply with the town’s rules…

Elon Musk, His 16-Foot Wall and the Feud With His Texas Neighbors (free 🔗) — Kirsten Grind | The New York Times | May 05, 2025

Environmental Impacts of HOAs

• A group of undergraduates at Michigan State University analyzed the environmental impact of HOAs.  AI summary of key points:

  • Research Question: What factors account for the variability in HOA restrictions regarding environmental sustainability?

  • HOA Functions & Ubiquity: HOAs prioritize aesthetics and property value, outnumber local governments, and are more common in wealthy suburban areas.

  • Residential Landscapes & Sustainability: Landscaping practices, especially lawns, have a significant environmental impact.

  • Factors Shaping Behaviors: Both internal factors (demographics, values, policies) and external factors (social norms, housing market, local policies) influence environmental behaviors in HOAs.

  • Methodology: The research involved literature review, data collection (CCRs and bylaws coding, interviews), and data analysis (statistical analysis, sustainability scores).

  • Sampled HOAs: 189 HOAs were sampled, with a majority clustered in Southeast Michigan.

  • CCRs & Bylaws Analysis: Focused on environmental sustainability restrictions and good governance practices.

  • Results:

    1. Sustainability-related CCRs varied widely.

    2. Good governance-related bylaws also varied.

    3. Most HOAs were over 20 years old.

    4. Older HOAs and less educated HOAs tended to have higher sustainability scores (contrary to the hypothesis).

    5. HOA governing policies were unrelated to HOA sustainability.

  • Interview Analysis: Highlighted issues like HOA maintenance, board responsibilities, acceptability of sustainable energy, education needs, and dated CCRs and bylaws.

  • Research Shortcomings: Outdated CCRs and bylaws, census data limitations, lack of regional diversity, accuracy of aggregate measures.

  • Discussion: The document explores why factors typically associated with pro-environmental behaviors didn't correlate with sustainable HOA policies.

  • Conclusion: Further research is needed with an expanded and more geographically diverse sample to evaluate alternative explanations.

Final Presentation MC4509: The Impact of HOAs on Residential Environmental Sustainability — Michigan State University Capstone Course | May 2025

Infrastructure Angst Settlement

•  South Carolina: A group of current and former owners sued their association for failing to undertake infrastructure inspections and repairs on a timely basis.

A significant settlement has been reached in the ongoing lawsuit involving the board of directors of Renaissance Tower and its current and former condominium unit owners. The proposed settlement, totaling $1.25 million, aims to resolve claims that the board concealed the building’s deteriorating conditions, ultimately resulting in millions of dollars in repair assessments for residents.

The case, which was filed in South Carolina federal court on October 13, 2022, has led to a landmark settlement agreement after extensive mediation. The 300-member class of current and former owners accused the Renaissance Tower board of failing to address structural issues in the 21-story mixed-use building, leading to costly assessments for necessary repairs.

The settlement, reached on March 5, 2025, will see the class members receive a total of $1.25 million, including $60,000 designated for the unit owners, with $50,000 going to the nonprofit responsible for maintaining and repairing the Renaissance Tower. The remaining funds, excluding some exceptions, will be allocated to the class members who owned units as of October 7, 2022. This agreement comes after the class initially sought damages exceeding $12 million…

SC Condo Board Settles $1.2M Lawsuit Over Building Repairs — Rochdi Rais | USA Herald | May 12, 2025

4:22-CV-03556-RBH | Liberty Property Holdings SC LLC et al. v. Richardson et al. | 10/13/2022

Bribery in Singapore

•  Singapore: A contractor bribed an association or facility manager.  According to this article, the contractor was punished.  What about the manager?

A contractor gave a condominium manager a series of bribes in exchange for contracts for his company.  According to court documents, Panneerselvam Elumalai won a tender to replace tiles for the condominium's driveway in this manner.  However, paint started peeling from the driveway barely a week after works were completed, and chips and cracks began appearing soon after. 

The 41-year-old was fined S$15,000 (US$11,600) on Thursday (May 8) after he pleaded guilty to abetting the commission of an offence under the Prevention of Corruption Act.   This was for giving the condominium manager documents that contained false statements relating to offers for tenders, which were to mislead the management council of Parc Life’s Management Corporate Strata Title (MCST).   Another two charges under the Prevention of Corruption Act were taken into consideration for his sentencing…

Contractor fined S$15,000 for bribes to condominium manager in exchange for jobs — Koh Wan Ting | CNA | May 08, 2025

The Cost of Net Zero

Properties and municipalities across the United States rely on Energy Star Portfolio Manager to facilitate exchange of information about energy use.  What’s going to happen if Energy Star evaporates?

It’s a voluntary program launched during a Republican administration, endorsed by manufacturers, and well-recognized by US consumers, who have saved an estimated $500 billion over the past 33 years guided by its familiar blue label.

But President Donald Trump’s administration has decided the Energy Star program has got to go.

CNN and The Washington Post first reported the plan to eliminate the program that certifies the most energy-efficient appliances and buildings with the Energy Star label. Knowledgeable sources have confirmed to Inside Climate News that Environmental Protection Agency staffers learned the details at an internal meeting earlier this week…

…Word of Energy Star’s potential demise began to circulate weeks ago. On March 20, a wide array of manufacturers and industry associations signed on to a letter to Zeldin, urging him to maintain the Energy Star program.

The groups, including the US Chamber of Commerce; the Air Conditioning, Heating, & Refrigeration Institute; and the Association of Home Appliance Manufacturers released their letter publicly this week. It called Energy Star “an example of an effective non-regulatory program and partnership between the government and the private sector.”

Companies that have invested in making more efficient products are faced with the loss of the Energy Star brand as a marketing tool. The Energy Star logo has helped them make the case, with the government’s support, that the initial higher cost of efficient appliances will be offset over time in reduced water and energy consumption…

Industry groups are not happy about the imminent demise of Energy Star — Marianne Lavelle | Ars Technica | May 10, 2025

• Florida and Everywhere: This newsletter recently highlighted insurance frustrations (also see our Lender Requirements page). Insuring for the full replacement cost of a total loss is expensive.  Total losses are, by far, an exception.

  • Insurance does not pay for losses created by deferred maintenance (payouts for the collapse of Champlain Towers South in Surfside, Florida, were an aberration).

  • The insurable circumstances leading to a complete loss of a condominium constructed of post-tension concrete are few.  So few, in fact, that those circumstances are generally: 1) a terrorist attack or 2) an earthquake.

The Legislature this session passed a bill that made new rules for condo associations to take out loans and get lines of credit to finance needed repairs — seen as helping condo dwellers cope with new state regulations designed to avert a deadly disaster like the one that felled a 40-year-old Miami-area condo tower.

The new legislation clarifies three options for acceptable levels of condo insurance.

Still, following the guidelines set out in the bill awaiting Gov. Ron DeSantis’s signature might not get associations a clean bill of health from financial institutions, which are looking for condos to be insured at full replacement value.

Talking about the legislation's insurance tweak, the bill’s sponsor, Sen. Jennifer Bradley, R-Fleming Island, said: “There are associations in Florida that I think are being asked to carry coverage levels at an exorbitant cost and insurance levels they will never touch. So … in consultation with their insurance specialist, they (condo associations) will be able to land on the proper level that is adequate from a protection standpoint.”

The bill allows for condos’ common property to be insured at “insurable value.” Fannie Mae, however, requires what may be a higher bar: that the common property is insured for the full replacement cost — a guidance that many banks follow in deciding who gets a loan.

Andy Kasten, president of Fort Lauderdale-based Creative Financial Property and Casualty, said insuring for anything less than full replacement value could mean of a repeat of the Surfside debacle, where the association was unable to rebuild because of underinsurance. In that tragedy, 98 people were killed when the Champlain Towers South condominium in Surfside collapsed in the early hours of June 21, 2021.

"If in fact they are allowing condos to insure at less than full replacement, where is the additional money going to come from to rebuild the structure in the event of a catastrophe?" Kasten asked. "It runs counter to what these laws that changed after the Surfside collapse were supposed to do. You can never assume that you are not going to have a 100% loss."

Rep. Vicki Lopez, R-Miami, who sponsored the legislation about to become law, acknowledges that the clarified options in her bill don't line up with Fannie Mae's. She argues that it's financial institutions that need to adjust their requirements. What they consider acceptable levels of insurance when it comes to backing mortgages are holding condos hostage, she said.

"If you are insuring to the full replacement value, it could be said that you are over-insured, because never in a disaster has one of our condo buildings been leveled," Lopez said. "They may have roof issues, air conditioning issues, window issues, but the whole building doesn't go down.

"... My next step is to try to connect with either U.S. Sen. (Ashley) Moody or Sen. (Rick) Scott or one of our congressional delegation members to say, look, we have to have a meeting with [federal home loan company] Freddie Mac and Fannie Mae so they are aware of the financial impact they are having on condo owners in terms of insurance when they insist on having full replacement value," she said…

Florida condo crisis: HOA's insurance can block owners from refinancing... — Anne Geggis | The Palm Beach Post | May 12, 2025

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Florida: What effect will last year’s hurricanes have on property insurance?  The answer might be declining prices due to decreases in reinsurance rates.

It’s a cliffhanger from last year’s busy hurricane season: Would three hurricanes making Florida landfalls drive up windstorm rates for the homeowner insurance bills on the horizon?

Now, it looks like good news for Florida homeowners six months since insurance companies started digesting the results of hundreds of thousands of residential insurance claims resulting from the 2024 hurricanes Debby, Helene and Milton. Homeowner insurance policyholders will not be hit with the premium increases that marked the aftermath of previous storms, industry observers say. And policyholders may start reaping the significant savings promised when the state changed its tort laws in 2022, they say.

One insurance agent is reporting that he’s writing premiums that show up to a 50% decrease from the year before.

That’s because the financial markets, which make sure the catastrophic losses of the state’s insurance companies get covered, are not jacking up the costs that the state’s insurers must pay to back up their reserves in the event of catastrophic-level claims as they did before, industry observers say.

The risk factors that had catastrophe bond markets spooked in the past are looking less risky, according to officials with the state’s largest insurer, Citizens Property Insurance Corp., and representatives of the catastrophe bond industry…

Here's what you need to know about how last year's hurricanes will affect insurance rates — Anne Geggis | The Palm Beach Post | May 08, 2025

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Clearwater, Florida: Failing structural supports lead to yet another condominium evacuation in the Sunshine State.

The South Beach III condo building on Sand Key “is currently being evacuated due to a support beam splitting,” Pinellas County Commissioner Chris Latvala posted to social media late Tuesday.

About 60 residents were ordered out, and by 6 p.m. the 12-story building was clear, according to local news reports. The structure has 161 units and was about half-occupied at the time the split beam was noticed by construction workers who were renovating the bottom-floor parking area, WFTS TV news reported…

Clearwater Condo Building Evacuated After Support Beam Splits — Insurance Journal | May 07, 2025

Majority of Clearwater condo evacuees allowed to go back home almost a week later — Anne Geggis | The Palm Beach Post | May 08, 2025

• Buying a home in the US is so complex that it even beguiles the experts.

Here's a fact you may find either comforting or dismaying: Even a housing economist can't tell whether it's a good time to buy a home...

...It's a weird time for buyers — even the ones armed with Ph.D.s and reams of housing data. Mortgage rates recently spiked after sliding for several months, pouring cold water on dreams of cheaper monthly payments. President Donald Trump's tariffs have thrust the economy into chaos, and recession fears are back with a vengeance. It should come as no surprise that people are second-guessing the homebuying plunge when they feel shaky about their stock portfolios or, more importantly, their jobs.

While it's an especially bad time to be a buyer in some respects, there are green shoots. With the number of homes for sale on the rise, house hunters enjoy more options than they've had in years. Home prices are flattening, offering some relief for buyers. And the traditional draws of homeownership — the stability and comfort of a place to call your own — haven't gone anywhere…

'It's a raw deal': The ugly truth about America's homebuying outlook — James Rodriguez | Business Insider | May 07, 2025

Built Environment

• New York, New York: We last covered the lawsuits at 432 Park tower in Issue# 92.  The situation has not improved.  In fact, it’s gotten worse.

Unit owners have filed two separate complaints against the building's developers. One, filed in 2021, says the building is plagued with structural issues and accuses the developers of not addressing them. The other, filed last month, accuses the developers of "massive fraud."...

…The building's developers defended themselves in a 2021 court filing: "432 Park had such issues — no different from any other building. Plaintiffs, however, have vastly exaggerated the scope of the work that was required (both in the reports of their consultant, SBI Consultants, Inc. ("SBI"), and in their Complaint) in furtherance of their gambit to exact undue payments from Sponsor."

In April, the tenants filed a second lawsuit against the group, as well as service firm WSP, SLCE Architects, and McGraw Hudson Construction, which is owned by the founder of Macklowe Properties. The unit owners said those companies knew "since the outset of construction that the Building's white concrete façade's design was wholly defective and would never hold up."

The developers "conspired with the other Defendants to concoct and disseminate fraudulent misrepresentations through the condominium offering plan and the Department of Buildings to conceal these alarming defects from Unit Owners in order to secure massive profits and leave Plaintiffs holding the bag," unit owners said in the April complaint…

Owners at a luxury skyscraper on NYC's Billionaires' Row say their multimillion-dollar apartments are riddled with defects

— Lauren Edmonds and Dan Latu | Business Insider | May 05, 2025

Inflation and Monetary Policy

• Amid uncertainty created by on-again, off-again tariffs and other trade policies, the FOMC kept rates steady for a third consecutive meeting.  The BOE cut 25bps.

Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective...

Federal Reserve issues FOMC statement — US Federal Reserve | May 07, 2025

How does your association plan for inflation: in your operating budget, in your reserve projections, in your reserve investing strategy?

US inflation rose by less than forecast in April amid tame prices for clothing and new cars, suggesting little urgency so far by companies to pass along the cost of higher tariffs to consumers.

The consumer price index, excluding the often volatile food and energy categories, increased 0.2% from March, according to Bureau of Labor Statistics data out Tuesday. That marked the third-straight month of softer-than-forecast readings.

The CPI report highlights two underlying dynamics in the economy. Goods categories exposed to higher tariffs, including new cars and apparel, didn’t see the kind of price increases that economists had expected by now. That suggests importers and retailers are absorbing some of the extra costs and imported products sold now had arrived before the brunt of the tariffs — namely on China — were in effect.

Separately, some weakness in services categories like travel and recreation suggest consumers are cutting on leisure and other discretionary spending…

Softer-Than-Expected Inflation Points to Muted Tariff Fallout — Augusta Saraiva | Bloomberg | May 13, 2025

Cashing In

• Dividend-paying securities could be a great investment strategy for your association.

It’s one of the most successful investing strategies, but you can easily do better.

Dozens of funds and hundreds of billions of dollars of conservative investors’ savings have been deployed in the belief that companies that steadily increase their dividends over time have been the best market performers in the long run…

...Dividends have become less important over the decades, but they are hardly extinct. Ed Clissold of Ned Davis Research points out that more than four-fifths of companies in the S&P 500 pay one, and that 324 either grew or initiated them in the past year.

Though not intentionally, it was some research years ago from his firm that stoked the obsession with dividend growers. Using an older technique for calculating returns that has been widely reproduced, it showed stellar results specifically for that type of stock…

…dividing large capitalization, dividend-paying stocks into five buckets by yield is the first step. It isn’t the top group that one should buy, though, because those really could be dogs—sort of like Walgreens before its meltdown. Instead, buy the second-highest group of yielders.

“So it’s just like the Steady Eddie strategy that anybody can run…you can get this data off the internet for free. You can run it yourself every month, and it’s just been, like, a really kind of an interesting, very, very boring unsexy strategy that seems to work in most market environments,” said Subramanian. 

How well? Using information from Hartford Funds, a $1,000 investment in the S&P 500 or its predecessor made in 1930 would have grown into $8.6 million through last year. An investment in the second quintile of stocks by yield would have grown to $31 million…

The Most Profitable Dividend Strategy Is the Simplest One — Spencer Jakab | The Wall Street Journal | May 09, 2025

Most investors (and associations) would do well to play the long game…

It all made sense in the depths of the downdraft. Steel your portfolio against calamity, load up on defensive positions and find a safe port to ride out the storm.

Four weeks into Wall Street’s epic turnaround, some of those decisions are starting to look rash.

Trades that got crowded in April’s tumult have suddenly become vulnerable, among them shorting the US dollar, betting against equities and wagering on higher market volatility. Behind the backfiring wagers has been Donald Trump’s concessionary tone on tariffs and a string of positive economic reports — and the ensuing rebound in sentiment.

While the strategies may well end up proving prescient as trade squabbles play out, as of now they’re becoming lessons in the risk of making hasty decisions during an era of whiplash market swings…

Big Wall Street Comeback Is Upending a Slew of Bear Market Bets — Lu Wang and Denitsa Tsekova | Bloomberg | May 09, 2025

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While annual expense ratios for money-market funds have not seen the same decline as stock and bond funds, money-market funds still boast significantly higher yields than traditional bank accounts (these are also known as “sweep” accounts where balances greater than $250,000 per institution are swept to maintain FDIC insurance).  We have plenty of coverage of this and more in our Dollars & Sense Article Library and blog article Don’t Trade Convenience for Yield.

Over the past couple of decades, the costs of investing have collapsed. Commissions on stocks and mutual funds have all but disappeared. The costs of holding stock and bond funds have shrunk to near-zero.  In the 1990s, the annual expenses on stock mutual funds often ran between 1% and 2% of your investment. Today, more than 50 exchange-traded stock funds charge 0.05% or less.  that’s a cost reduction of more than 95%, a blessing for investors. It’s often called “the Vanguard effect,” driven by the ferocious competition set off by Vanguard Group and its late founder, Jack Bogle.

That stunning decline in costs has barely touched money-market funds.  Since 2015, taxable and tax-free money-market mutual funds have grown by more than 150%, to $6.91 trillion from $2.75 trillion, according to the Investment Company Institute. Over the same period, stock mutual funds (including international and balanced portfolios) grew less than 70%, to $16 trillion from $9.48 trillion.

Yet the average expense ratio at U.S. stock mutual funds fell to 0.33% annually from 0.54%, according to Morningstar—a 39% decline.  Meanwhile, annual expenses at money funds rose slightly to 0.21% from 0.19%—even though their assets boomed. (All these figures are weighted by the size of the funds.)...

Your Money-Market Fund Is Ripping You Off — Jason Zweig | The Wall Street Journal | May 02, 2025

Decibels: Fair Housing vs. the Right of Quiet Enjoyment

• Pembroke Pines, Florida: Fair Housing laws have their limits.

SUMMARY: A federal statute prohibiting discrimination against the disabled in housing confronts homeowner association covenants designed to protect a member’s “right to the undisturbed enjoyment of” a unit “which is inseparable from ownership of the property,” a right that dates back to the common law.  W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 87, at p. 619 (5th ed. 1984). 

After a jury decided contested fact issues in the association’s favor, the circuit judge entered an injunction that threaded the legal needle.  We affirm the orders on appeal in all respects but one—we reverse the trial court’s order granting a new trial on the Federal Housing Act claim in Count I of the counterclaim. 

Park Crossing HOA v. Suarez — Florida Court of Appeal, 4th District | April 30, 2025

Fences Are Not Sheds, Nor Undefined “Structures” 

•  Carneys Point Township, New Jersey: The homeowner defendants in this case obtained permission from the township and the HOA to erect a fence.  After installation, the association took enforcement action stating that the installation violated the declaration.  The association then south to amend the declaration’s fence setback requirement.

The judge rejected the Association's argument that a fence is an "exterior improvement" under Section 8.1(dd).  He stated: 

“I don't know if you can say that a fence is an exterior improvement or not, whether temporary or permanent.  [Section](dd) was meant for the wood shacks, the metal shacks, a porch that's kind of permanent in nature.  It's a structure.  It's not a fence.   

Nobody can interpret this language, building, shed, shack, porch, or a similar type of structure as including the fence when fences are directly addressed under a prior section.   

And referring to the zoning ordinance, I believe that fences are governed under 8.1(c).”

The judge also explained why imposing a thirty-foot setback for fences defied logic.  He stated:  

“I don't know the size of the lots over there, but unless you've got a couple acres, [thirty] feet back off your property line is a pretty significant distance.   

Frankly, it wouldn't be very aesthetically pleasing if you look at it that way, which is what these Association rules are meant to provide. 

[A] [thirty]-foot setback requirement for a fence is just . . . unheard of.”

The plain language of the Declaration, read in its entirety, supported the judge's concluding that Section 8.1(c), and not Section 8.1(dd), governed fences.  Because defendants' fence complied with the Township's fence ordinance consistent with Section 8.1(c), the judge correctly concluded they were entitled to summary judgment.

The Estates at Layton’s Lakes HOA v. Bonnie Watson, et. al. — Appeal from NJ Superior Court | Docket# A-3123-23 | May 07, 2025

Recipe for a Leaky Roof Lawsuit

• Seattle, Washington: Resale certificates matter.  Really.

  • Real estate agents are not required to understand and explain condo disclosures.

  • Over 99% of condominium purchasers fail to obtain expert resale review.

  • Associations delegate the incredibly important responsibility of resale disclosures to their managing agents without any oversight.

COURT OF APPEAL DECISION EXCERPT

The Washington Condominium Act demands that the seller of a condominium unit deliver a resale certificate to the buyer. The act requires that the condominium association prepare the certificate for the seller.

Eighty South Jackson Street Condominium Association delegated preparation of its resale certificates to outside managers and the individual homeowners selling their condominiums. In 2019, Raymond Waite managed the association. The association took no steps to assess Waite’s qualification to prepare resale certificates. Waite lacked the complete books and records of the association, lacked training or experience in preparing resale certificates, and utilized forms remaining from earlier sales. The association denies knowledge of Waite’s preparation of certificates and knew not who Waite directed to sign the certificates.

Raymond Waite delegated preparation of resale certificates to Eighty South Jackson Street Condominium Association bookkeeper, Gigit Koh. Waite took no action to determine Koh’s qualifications to prepare the certificates. Waite provided Koh no training or information to prepare the certificates. In a deposition, Waite admitted that delegating preparation of the certificates to Koh made no sense. 

Gigit Koh believed Raymond Waite tasked her with preparing resale certificates because, as a bookkeeper, she knew the amount in the reserve account kept by the condominium association. Koh lacked access to information about past reserve studies and the condition of the condominium building. She never examined the condition of any condominium units or the building as a whole.

Gigit Koh, on behalf of the condominium association, signed the resale certificate for Suzanne Parisien’s purchase of unit 405. Manuel Lucio signed as the selling unit owner. Both Koh and Lucio attested that the resale certificate was true and correct to the best of their knowledge and belief under oath and penalty of perjury. The form contemplated that Lucio would forward it to Parisien. After Lucio and Parisien reached an agreement, Lucio sent Parisien the condominium resale certificate.

The resale certificate delivered to Suzanne Parisien denied any code violations, stated that the current monthly assessment for unit 405 was $597.81, declared that the condominium association’s reserve account balance was $183,162.31, and asserted no anticipation of repair or replacement costs in excess of five percent of the condominium association’s annual budget. The certificate contained a blank for the purchaser’s initials on each page along with a formal acknowledgement of receipt. Suzanne Parisien did not ask her real estate broker or her attorney to investigate the accuracy of the certificate or the seller’s disclosure statement.

Some evidence shows comments in the resale certificate to be false. The roof drainage scupper was undersized and lacked overflow protection required by the building code. The inadequate size of the scupper rendered the scupper susceptible to blockage and overflow of water. Even with properly sized scuppers, overflow protection is required because the scupper will typically become blocked by debris over time. Plant matter, windblown garbage, dead birds, or other random detritus can become lodged in the scupper opening and cause a blockage. Ice dams during freezing may also plug the scupper. The current building code anticipates blockage such that the code demands overflows in the roof drainage system. The absence of overflow protection creates the risk of scupper blockage resulting in water intrusion.

The resale certificate failed to warn Suzanne Parisien about the lack of a current reserve study. Some evidence demonstrates that, at the time of Parisien’s purchase, Eighty South Jackson Street Condominium Association’s reserve account was grossly inadequate and underfunded. An updated reserve study, performed at Parisien’s request soon after purchasing her unit but before her unit flooded, revealed that the reserve account balance should have been $1,180,000, one million more than the cash on hand. This post-purchase, pre-flood reserve study employed a visual inspection and actuarial cost estimates. The condominium association had deferred maintenance, repair, and replacement of common areas. A comprehensive evaluation after the 2019 water intrusions in unit 405 revealed that repairs would cost between $9.75 and $19.85 million.

Suzanne Parisien testified that she relied on the resale certificate in deciding to proceed with the purchase of her unit from Lucio. If the certificate had disclosed building code violations and warned about the lack of a current reserve study and associated risks, she would not have purchased the unit.

Stephanie Susen did not recognize or notify Suzanne Parisien that the resale certificate came on an outdated form. Because of its staleness, the certificate omitted a warning required by former RCW 64.34.425(1)(s) (2011): 

This association does not have a current reserve study. The lack of a current reserve study poses certain risks to you, the purchaser. Insufficient reserves may, under some circumstances, require you to pay on demand as a special assessment your share of common expenses for the cost of major maintenance, repair, or replacement of a common element.

CP at 2158. Susen never warned Parisien of the risk attended to the absence of a reserve study. 

Real estate broker Stephanie Susen never agreed to conduct an independent inspection of unit 405 or the condominium building. Susen never agreed to investigate the accuracy of information in the reserve study or the resale certificate and never promised to review the condominium association’s financial situation. Suzanne Parisien never asked Susen to scrutinize the condition of the condominium unit, the condominium building, or the condominium association finances.

Stephanie Susen did not review or discuss the condominium documents with Suzanne Parisien, but she recommended that Parisien review them and obtain an inspection…

🔊 Audio Overview

📂 Parisien v. Eighty South Jackson Condominium Association

Suzanne Parisien v. Eighty South Jackson Condominium Ass'n, et al — Washington State Court of Appeals, Division III | 40267-3 | May 08, 2025

What Restrictions?

• Bonney Lake, Washington: This appears to be a case of homeowners who have no interest in following the rules of their HOA, nor of civil procedure.

Autumn Crest at Timberridge HOA v. Wojdyla — Washington State Court of Appeals, Division II | 58973-7 | May 13, 2025

— Pierce County Superior Court | 24-2-10562-9 | December 06, 2022

Bad Reputation

• Toronto, Ontario, Canada: A director with his hand in the cookie jar and disruptive behavior to boot.

A recent decision by the Condominium Authority Tribunal shows that ICE board director Rajat Sharma — who is also an Airbnb Superhost who owns multiple units in the building — has been accused of harassing building management and generally "intruding into the operations of [the condo] in a disruptive way."

Sharma "created a toxic, hostile and disruptive work environment" for staff, fellow board members say in the suit, consistently engaging in "harassment, disruption and inappropriate behaviour" to the point that multiple employees resigned.

Toronto's sketchiest condo complex put on blast for reputation in new lawsuit — Becky Robertson | blogTO | May 09, 2025

Toronto Standard Condominium Corporation No. 2510 v. Sharma, 2025 ONCAT 55 (CanLII) — Toronto Condominium Authority Tribunal | April 11, 2025

• CALIFORNIA: The first official casualty of this year’s legislative session is a bill that would have enumerated minimum requirements for the content of meeting minutes and expanded 

Republican Assemblymember Joe Patterson says a woman slowly drives by his Placer County home about once a week and takes pictures.

She’s not an angry constituent or a stalker. He said she’s a representative from his homeowners’ association gathering evidence to make sure the exterior of Patterson’s home complies with its strict rules...

So it didn’t take a lot of arm twisting from Patterson’s Republican colleague, Carl DeMaio, to persuade Patterson to present DeMaio’s Assembly Bill 21. The proposed new law would force California’s estimated 50,000 private homeowners’ associations to behave more like local governments when it comes to open records and public meetings. The bill failed to advance from its first committee hearing last week…

California Lawmakers Kill Bid To Force HOAs To Follow Open Meeting Laws — CalMatters | edhat santa barbara | May 04, 2025

• MINNESOTA: Will SF1750 be rolled into a larger omnibus bill?  You can read the minutes and watch the 90+ minute hearing on HF1268 (the companion bill to SF1750) held on March 4, 2025.  SF1750 has received some amendments since that time.

Minnesota has a chance to reform HOAs — Roxanne Young Kimball, Chris Coleman and Nelima Sitati Munene | MinnPost | May 09, 2025

Minnesota Senate passes bill reining in HOAs — Madison McVan | Minnesota Reformer | May 06, 2025

• NEVADA: “You bought it, now live with it” only goes so far.

A legislative hearing on a bill intended to give homeowners some “wiggle room” and avoid the onerous fines imposed by homeowners’ associations exposed what state Sen. Dina Neal called “classism” on the part of HOA industry representatives and opponents.  

Senate Bill 121 would, among other things, afford cash-strapped new homeowners three years rather than 180 days to landscape their backyards. An HOA could require that owners put down a single layer of rocks after 18 months, to prevent blowing dust. 

“Most people have spent most of their money on the refrigerator, the blinds, the furniture, and they actually don’t have the funds” to spend within six months on landscaping, Neal, a Democrat from North Las Vegas, said while presenting SB 121 to the Assembly Judiciary Committee on Friday. “Home ownership is very important. Achieving the American Dream is very important. But not all people are walking into a home with the same amount of money in their bank account.”

New homebuyers are “fully informed” of their obligations, HOA attorney Adam Clarkson had earlier testified in opposition to the bill before the Senate Judiciary Committee in April on its way to passage in the Senate. “When they purchase a home, they know whether or not they can do it. The bright line test is don’t purchase these homes if you don’t want to have to do this.” 

However, finding a home that’s not in a HOA is a challenge in Nevada, where HOAs represent the owners of 623,917 housing units – half of the state’s 1.3 million homes, according to the state…

…The bill would prohibit an association from assessing late fees sooner than 30 days after an obligation becomes past due, and from reporting any past due obligation to a credit agency. There was no opposition to that provision. 

The legislation would also curtail an HOA from assessing a fine for an oil stain that is entirely on a homeowner’s driveway, however, a homeowner could still be responsible for oil stains on the asphalt in front of their property…

‘Classism’ in the capital at hearing on HOAs, Neal says — CalMatters | Nevada Current | May 05, 2025

• NORTH CAROLINA: HB444 did not pass from the House to the Senate by the May 8th crossover day, but SB378 is still alive and well.

Increased regulations on homeowners' associations in North Carolina are in a proposal approved Tuesday morning by a committee in the House of Representatives.

Homeowners Association Reform Bill, known also as House Bill 444, advances to the Judiciary 1 Committee and if approved there to the Rules Committee. Full floor vote would be next. Crossover day is Thursday.

“This bill makes targeted reforms to how homeowners' associations operate in North Carolina,” bill sponsor Rep. Ya Liu, D-Wake, told the Commerce and Economic Development Committee. “The changes promote fairness, transparency, and accountability for both homeowners and the associations.”

The bill would limit homeowner association management contracts to one year, with no automatic renewals allowed and prohibits those companies from accepting fees for collecting fines. This ensures that there is no “profit motive” in enforcement of fines, Liu said. Fines would be capped at $100 a day with a $2,500 maximum per violation.

The associations would not be allowed to foreclose on a homeowner until the dues are at least six months behind on dues or owe $2,500 or more. It also gives homeowners access to association records, financial documents and management contracts.

The legislation would also require associations to share budgets with all homeowners, and a majority of the homeowners would have to approve the budget before it takes effect. It requires mandatory mediation in most cases before a homeowners association files a lawsuit against a homeowner. The bill also requires the North Carolina Department of Justice to track homeowner complaints again HOAs.

Homeowners association reform, creation of bank board advance — David Beasley | The Center Square | May 06, 2025