05.23.24

ISSUE # 91

CIC Info Bytes 05/23/24

CIC Info Bytes are frequent, succinct updates providing educational and engagement opportunities that help your community thrive!  Please forward and share this newsletter with your peers, neighbors and colleagues so they can connect and join.  Our goal is to curate content that provides a robust basis for contextual understanding to support practical takeaways for you and your association.  Please consider following us on Twitter and Reddit. 

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Ombuds

• From the Illinois Condo and Common Interest Community Ombudsman:

It is clear ... that both unit owners and associations would benefit from more effective, transparent, and timely communication among and between unit owners and association boards of managers.

Illinois General Assembly: Report of the CIC Ombudsperson

Ombudsperson Reports to Illinois General Assembly: 2023 | 2022 | 2021 | 2020

• Approximately 24% of the inquiries raised governance issues: 

  1. whether a board provided adequate notice of meetings

  2. a board’s failure to hold meetings

  3. whether the board improperly conducted business in closed session

  4. whether board members were inappropriately compensated

  5. whether the association violated or failed to adhere to the provisions of the Condominium Property Act, the Common Interest Community Association Act, or an association’s governance documents.

• Nearly 10% of the inquiries raised issues relating to an association’s responsibility for making and paying for repairs

• 5% of the inquiries involved unit owners’ rights to access records of an association.

Sound Advice

• The advice in the article below pairs well with Frequent Mistakes & Lessons Learned and 10 Habits of Great Homeowners.  A short list:

  • Governance is a team sport.  The president is not the boss.

  • An attitude of service trumps an attitude of control.

  • You cannot over-communicate.***

    1. It is possible to inundate members with too much or too frequent information.  Failure to communicate efficiently is a big problem, but often errs on the side of under-communicating important items.

  • “Town hall” meetings should be conducted to obtain feedback about significant issues and projects even if a vote of the members is not required.

    1. Surveys (including satisfaction surveys) are a fantastic tool.

  • Establish a governance model that supports delegation.

    1. Policies, procedures and resolutions are essential.

  • …and so much more!

13 things all HOA directors should know — Kelly G. Richardson | San Diego Union-Tribune | May 18, 2024

Decisions, Decisions, Decisions

• We first mentioned this book in Issue #89.  It’s available on the second-hand market.  While savvy readers will no doubt take concern with the authors’ overwhelming gush for CAI, the 80 or so pages provide a fascinating, spot-on assessment of group decision-making that is just as relevant to community associations today as its was over two decades ago.  Some highlights:

  • Satisficing: That’s not a typo.  Satisficing amounts to simplification where – under pressure or not – a choice is made to agree to outcomes that resolve only a portion of a problem.  A good example is when decision-makers focus on only one or two criteria and overlook 3 or 4 others.  This can also be known as the “can’t please everyone” and “let’s get this off our plate” style of decision-making that eschews a holistic review and/or reasonable due diligence in favor of “moving on.”

  • Avoid Mental Shortcuts: These are also known by psychologists as “judgemental heuristics.”  Some poignant examples:

    1. Expertise: if an expert said it, it must be true.

    2. Expensive equals good.

       • Somewhat similar to things that are scarce must be valuable.

    3. Fixed-action patterns and a click-whirr response.  Familiar circumstances elicit the same response.

    4. “Because”: justification for a request need not be fully explained.  “Because” is enough by itself.

  • Seven Major Group Decision Defects: (adapted from Irving Janis)

    1. Failing to consider all alternative courses of action

    2. Failure to delineate objectives and implied values of the decision

    3. Failure to reexamine the preferred course of action from the perspective of non-obvious risks and/or risks not originally evaluated

    4. Failure to consider non-obvious gains from courses of action that were initially determined to be unsatisfactory

    5. Failure to obtain information from experts

    6. Selective bias toward facts, expert opinions and critics.  Too much focus on facts and opinions that support their point of view and/or the initially preferred course of action.

    7. Failure to thoroughly consider how a course of action might be hindered, including failure to plan for reasonable contingencies to address potentially foreseeable setbacks that could endanger the success of the decision.

Decision Making in Communities: Why Groups of Smart People Sometimes Make Bad Decisions — Jasmine Martirossian | 2001

Don’t Overthink It

• An owner recently posted a proposed eleven (11) page finance committee charter.  Please do your community a favor and keep all policies, procedures, resolutions and committee charters succinct.  Most of these documents can be less than one page.

Verbose documents sometimes result from drafters’ incorporation of content best suited to separate documents.  Individual committee charters should not, for example, include language about conflicts of interest.  Rather, associations should adopt a conflict of interest policy or resolution or incorporate such language into their bylaws.  Colorado law requires this.

Learn more on our Committees Page and examples of policies, procedures and resolutions.

Management Industry Priorities

• Takeaways from a report designed by the industry, for the industry: 2024 Realpage Community Association Management Industry Report

  • “Consolidation by the larger [management] companies is backfiring.  Their service level drops every time they acquire someone…”

  • Respondents also stressed the importance of ensuring they’re taking on the right clients–those who present opportunities for profitability without overtaxing their already strapped teams.”

  • Top 5 pain points for community associations:

    1. 42%: Maintenance woes

    2. 38%: Desire for better compliance / enforcement

    3. 33%: Lack of volunteers

    4. 30%: Finances: operating costs

    5. 27%: Displeasure with management company service

  • Board advice to CAMs and management companies:

    1. Reliable, consistent communication is key

    2. Please know the: 1) governing documents, 2) law and 3) best practices

    3. Provide vendor options and help retain them

    4. Personalize your service

    5. Use intuitive technology

    6. Be visible and provide a reasonable on-site presence

    7. Consistently enforce the governing document

    8. Support the Board.

  • Tertiary fees are a significant driver of profit:

    1. “[Our biggest challenge is] not being able to increase management fees quickly enough to maintain revenue and profitability with consideration that our resale/transfer revenue will be significantly reduced with the slowing market.”

  • CAMs can’t do everything: “[Our biggest challenge is] breaking out what we do into areas of expertise so that managers are not expected to do absolutely everything. [This] leads to better work-life balance as well as [increasing the] bottom line in other areas.” 

Big Legal Spending

• Gilbert, Arizona: Defending lawsuits covered by D&O insurance may be viewed by some as a relatively low-cost effort.  Initiating lawsuits, on the other hand, is not.  A significant point of this dispute is whether the developer is building condominiums or apartments and whether condominium units can be leased.  ARS 33-1260.01 specifically allows condominium units to be used as rental property unless prohibited in the declaration.

“You see faded paint, there’s missing signs, there’s graffiti, there’s all these outdated things that needed to be done, but yet we’re not doing it,” said Jung…

…Arizona’s Family has learned that Power Ranch spent more than $167,268 in legal fees last year.  The reason Power Ranch is spending so much money on legal fees is because of a lawsuit the HOA filed in January 2023 against a development in the Power Ranch Community called Woodcrest East.

The developer, Bela Flor, had purchased the land off Germann Road and Ranch House Pkwy in 2019 with plans on building and selling 120 luxury condominiums.

Then COVID-19 hit, and Bela Flor decided it made more financial sense to rent out the condos instead, prompting the lawsuit.

Bela Flor has since filed a $13 million counterclaim, leaving many of the 4,000-plus Power Ranch homeowners wondering when the legal battle will end, how much more it will cost them, and what they stand to gain from all the litigation…

VIDEO: Power Ranch homeowners in Gilbert upset at HOA over $167K spent on legal fees — Jason Barry | Arizona Family | May 15, 2024

NOT In The Mail 

• Sacramento, California: Natomas Park Master Association: Cluster mailboxes are causing a stir.

There is finger-pointing in a North Natomas neighborhood about who is responsible for making mailboxes safer after years of mail thefts…

Per the USPS Postal Operations Manual Section 632.1 Customer Obligation/632.11 Responsibilities: Appropriate mail receptacles must be provided for the receipt of mail […] Customer obligations are as follows: […]

d. If centralized delivery is authorized, customers must install mail receptacles that comply with USPS […] USPSB1118, Postal Service specification, Cluster Box Units.

632.12 Exception. “The Postal Service may elect, under certain conditions, to purchase, install, and maintain curb-mounted mail receptacles or cluster box units.”

VIDEO: Mail theft victims petition HOA for changes to cluster mailboxes — Michelle Bandur | KCRA3 | May 14, 2024

Resolving Heated Disputes with your HOA

• Flagpoles.  Memorial gardens.  Little libraries.  $4,500 in fines for a little library!

Remember the rain garden?  The Bussard’s successfully petitioned for their HOA to hold a special meeting and successfully amended their governing documents to allow environmentally friendly landscaping.

Complaints against homeowner associations have become so common in South Carolina that the Department of Consumer Affairs said it’s the biggest growing category of all the reports they get…

VIDEO: HOA dispute? How to resolve heated issues — Diane Lee | WSPA 7 | May 14, 2024

Dream Home Deferred

• Tampa, Florida: In short, a homeowner converted their garage into a living space despite the fact that the covenants forbid garage conversions.  There are several concerns here, not the least of which is that individual directors are getting involved in a real property transaction for an association that pays for service from a management company.

After months of searching, local firefighter Shantashia Stevenson said she found her dream home in the Townhomes at Wexford community—earlier this year.

"There was one little step. They told me before I could close on the house I had to have an interview with the HOA," she said, "Previously the townhome had a [HOA] Violation due to the garage, the garage had been converted into a room. After that, the seller was made aware of this, so the seller converted the garage back and then I had the interview."

"When I had the interview, I told the HOA president the garage has been converted back and there is no longer a violation. The HOA president said that the flooring in the garage needed to be fixed as well. So, we fixed that as well. So there was no longer a violation," she said....

"The title company said that I had to have a letter of approval from the HOA to close on the home," said Stevenson.

But more than a month after discussions started and despite emailed demands from the seller's attorney for an inspection—Stevenson said it still hasn't happened…

First responder says HOA dispute is keeping her from dream home — Rochelle Alleyne | ABC Action News Tampa | May 08, 2024

Municipalities Like Development

• We cover the municipal push for development on our What Are CICs?! page.

…Beneath the surface are some of the major flaws of the Suburban Experiment, says Edward Erfurt, Strong Towns Director of Community Action. He describes a sequence of deferred responsibilities, which starts with a municipality or county that wants to maximize impact fees and real estate taxes it will receive from a new development while minimizing the budget and services it must commit. This leads to negotiations with developers, who have an incentive to maximize sales revenue in one development before moving on to another building site.

The result is usually a neighborhood built to completion, with many of the duties foisted upon (or granted to, depending on your perspective) an HOA or similar property management structure. Examples of these duties include infrastructure maintenance, snow removal and facilities management. Basically, “all the things that a municipality refuses to accept” when approving a new development, says Erfurt.

There’s nothing inherently wrong with this structure and it has been used in some very successful places, such as Seaside, Florida. At its best, an HOA manages facilities that enhance property values and that residents willingly choose, such as parks and pools. “An HOA is just a covenant agreement on the property,” says Erfurt, and its structure and finances are accessible to all in public records…

…This case reveals another major flaw in the system. Under a regular municipal maintenance structure, projects are planned and executed in multi-year cycles, with long-term budgeting making funds available when needed. Some developers undercapitalize their HOAs from the beginning, and many HOAs keep fees at levels sufficient for funding ongoing maintenance but have nowhere near the reserves needed for long-term projects. So when it gets to the point where all the roads need repaving, the current residents can be hit with a special assessment to cover major projects that previous generations of owners never contributed to…

Instead of Hating Your HOA, Make Your City Take Responsibility — Ben Abramson | StrongTowns | May 02, 2024

Creative Paint Job

• This situation does not address a community association, but it’s an example of creative solutions to edicts such as “screen your boat.”

The city made him hide his boat — so he had it painted on his fence — Rachel Kurzius | Washington Post | May 11, 2024

Washington state has spent billions $$$$$ fighting homelessness.

For much of the past decade, the amount of money Washington lawmakers dedicated to housing and homelessness programs grew gradually, climbing from around $200 million to $400 million in each two-year budget between 2013 and 2021.

But in the last four years, this spending has surged, according to an analysis of state spending data provided by the Office of Financial Management. 

These figures show that more than $4 billion – or around 80% – of the roughly $5 billion directed to expanding housing and preventing homelessness since 2013 has been packed into the past two state budgets…

How much has Washington state spent on housing in the past decade? — Laurel Demkovich | Washington State Standard | May 20, 2024

Berkeley residents could start selling their accessory dwelling units as condominiums within the next year, as the City Council becomes one of the first in California to embrace such a change.

Assembly Bill 1033, a law authored by Assembly Member Phil Ting, D-San Francisco, took effect at the beginning of this year and allows cities to let residents sell ADUs as condos separate from their primary home. On Tuesday, the Berkeley City Council directed city staff to draft an ordinance authorizing the sales, pointing to the need to make homeownership more accessible in one of the Bay Area’s most expensive markets.

Berkeley appears to be the first city in California to opt in to AB1033, said Louis Mirante, vice president of public policy at the Bay Area Council, a business-backed advocacy group that sponsored the law. San Jose is also considering implementing the law. The San Jose City Council asked planning officials in December to bring them options for opting into AB1033, with staff scheduled to present their recommendations in June…

You will soon be able to buy a cottage in someone's backyard in Berkeley — Christian Leonard | San Francisco Chronicle | May 15, 2024

• Across the United States, more frequent extreme weather is starting to cause the home insurance market to buckle, even for those who have paid their premiums dutifully year after year...

…The problem is, getting data on the insurance industry is really hard. There’s no federal regulation.  There’s no government agency you can go to that holds this data.  If you talk to insurers directly, they tend to be a little reluctant to share information about what they’re going through… We weren’t sure where to go until finally we realized the best people to ask are people whose job it is to gauge the financial health of insurance companies…  In particular there’s one rating company called AM Best whose whole purpose is to tell investors how health an insurance company is…  We asked them to do something special for us.  We said “hey, can you help us find the ONE number that would tell us reporters just how healthy or unhealthy this insurance market is over time?  It turns out there is such a number.  It’s called a “combined ratio.”

Plain English: it is the ratio of revenue to costs… We got that number for every state going back over a decade… In 18 states last year, the homeowner’s insurance market lost money.  That’s a big jump from 5 or 10 years ago and spells real trouble for insurance and for homeowners and for almost every part of the economy… This is our first window showing us just how far that contagion had spread.  One of the really striking things about this data was it showed the contagion had spread to places I wouldn’t have thought of as especially prone to climate shocks… If you think of a map of the country, there was no state between Pennsylvania and the Dakotas that didn’t lose money on homeowner’s insurance last year.  So just huge parts of the middle of the US have become unprofitable for homeowners’ insurance.  This market is starting to buckle under the cost of climate change…

PODCAST: The Possible Collapse of the U.S. Home Insurance System — Christopher Flavelle | NYT | May 15, 2024

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It all adds up: convective storms can sink regional insurers and add to loss attrition for big insurers and reinsurers.

The rising cost of homeowner’s insurance is now one of the most prominent symptoms of climate change in the United States. Major carriers like State Farm and Allstate have pulled back from offering fire insurance in California, dropping thousands of homeowners from their books, and dozens of small insurance companies have collapsed or fled from Florida and Louisiana following recent large hurricanes.

The problem is fast becoming a crisis that stretches far beyond the nation’s coastal states. That’s owing to another, less-talked-about kind of disaster that has wreaked havoc on states in the Midwest and the Great Plains, causing billions of dollars in damage. In response, insurers have raised premiums higher than ever and dropped customers even in inland states such as Iowa.

These so-called “severe-convective storms” are large and powerful thunderstorms that form and disappear within a few hours or days, often spinning off hail storms and tornadoes as they shoot across the flat expanses of the central United States. The insurance industry refers to these storms as “secondary perils”—the other term of art is “kitty cats,” a reference to their being smaller than big natural catastrophes or “nat cats.”...

How ‘Kitty Cats’ Are Wrecking the Home Insurance Industry — Jake Bittle | Grist, Republished by Gizmodo | May 17, 2024

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Some Iowans have struggled to find homeowners insurance as several companies pulled their business out of the state.

The reason companies said they were leaving Iowa was the growing number of severe storms, and the costs to make repairs once they’ve left their mark, and insurance companies said it has only gotten worse….

“I’ve never seen it this bad,” said Ed Faber, owner of Insurance Guru in Cedar Rapids.

Faber said the reason many of the companies were pulling out was because of the state’s history: the 2020 derecho, recent tornadoes, hail, and other damaging windstorms. The insurance industry said it saw a $21 billion underwriting loss last year…

Iowans struggle to find homeowners insurance as companies pullout of the state — Brian Tabick | KCRG News | May 18, 2024

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2024 has already been a test of resiliency for Texans in nearly every corner of the state. No matter the season or location, ice, fire, wind and water are proving to be near-constant threats to life, land and Texans’ homes — and the risks are becoming intolerable for the companies that insure them.

Greg Mauz of San Angelo noticed a concerning shift when he got his rate for homeowner’s insurance this year — a 26% spike from $2,700 to more than $3,400.

“It’s getting outrageous. Where does it end?” he said. “We lived in Hurricane Alley in Florida, and we never got raised this much in one year. Everything’s just going up and up and up.”

Financial analysis company Nerdwallet reports the average premium for a Texas home is nearly $4,400 a year as of May. That’s second only to Oklahoma, and $2,485 more than the national average…

‘Outrageous’: Texans face insurance spikes amid natural disasters — Ryan Chandler | KXAN | May 20, 2024

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“I felt like I was blindsided. If you look at the things they asked me to do, it was a significant amount of money,” said John D’Entremont, who has owned his Malden home for more than 40 years.

He carried homeowners insurance through the same insurer the entire time and had never been notified of any issues. But last August, he got a letter from his insurer detailing pricey repairs. They needed a plan from him within 60 days.

“Get the moss off the roof, trim the tree back that had branches hanging over the house, and get some, in their case, they said get some shingles,” D’Entremont said.

He quickly started gathering estimates, got his tree work done, and reached out to his insurance agent to keep her updated on his progress. It wasn’t enough.

According to D’Entremont, “November 3rd, I get a notification that they have decided to cancel my homeowners policy.”

Massachusetts insurance companies canceling homeowners policies using drone, aerial photos — Catherine Parrotta | Boston 25 News | May 21, 2024

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Insurance costs are a problem for residential and commercial properties.

For Filicia Porter, the insurance bills were the final straw. They’d been climbing steeply for her assisted-living business as Florida was battered with ever more-powerful storms, and eventually, the numbers stopped adding up.

So in March, she finally decided to call it quits, shutting the facility near Palm Beach that she opened just two years ago. That came four months after she closed an older location in Port St. Lucie, opened in 2017. Together, they left a dozen residents scrambling to find another place to live…

Florida Hurricanes Create Expensive Property Insurance, Threaten Senior Care — Lauren Coleman-Lochner and Melina Chalkia | Bloomberg | May 20, 2024

• Florida condos = financial agony.  As reported elsewhere, but captured exquisitely by WSJ  covering the Florida condominium calamity that began with the collapse of Champlain South in Surfside.  New laws have forced condos to levy six-digit assessments and property values are plummeting.

Ivan Rodriguez leapt at the chance to buy a unit at the Cricket Club, an exclusive bay-front condominium in North Miami. In 2019, he liquidated his 401(k) retirement account to purchase a nearly 1,500-square-foot unit with water views for $190,000.

But because of a recent state law that requires older buildings to meet certain structural safety standards, the condo board recently proposed a nearly $30 million special assessment for repairs, including roof replacement and facade waterproofing. It would amount to more than $134,000 per unit owner. 

Rodriguez, 76, didn’t have the money. So he reluctantly put his two-bedroom condo up for sale, joining dozens of others in the building who are doing the same. After originally listing his unit for $350,000, he kept marking it down until finally it sold for $110,000 last month, or 42% less than what he paid for it. 

New Florida Law Roils Its Condo Market Three Years After Surfside Collapse — Deborah Acosta | WSJ | May 13, 2024

Condo prices in Florida have been steadily falling, fueled by an increasing rate of motivated sellers.

Certainly, high interest rates are a part of this trend, but a closer look suggests that changes to the Florida Condominium Act — the state’s laws governing condominium associations — may be a major factor behind the market trend and also suggests that a development boom could be coming…

By the end of this year, condo associations in Florida must obtain a Structural Integrity Reserve Study that outlines what reserves must be collected to finance the repairs and maintenance of critical components of the building over the next 10 years based upon the current condition of the building. If any components of the building, such as the roof or balconies, are past their estimated useful life, it is likely those components will be required to be repaired or replaced right away…

As Florida Condo Prices Fall, What’s a Condo Seller to Do? — Joseph Hernandez | Kiplinger | May 16, 2024

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Assumable mortgages are an increasingly important factor in home purchase decisions.

…Many real estate professionals are unaware that assumable mortgages — last popular in the 1980s, when mortgage rates topped 18 percent — are even possible. But as mortgage rates continue to rise, word is spreading. Realtor.com, a home listing website, recently started tagging assumable properties and making them searchable. And more companies — from small, bootstrap operations to start-ups like Roam — are seizing the opportunity, compiling lists or maps of eligible properties, and charging homeowners a fee to help navigate what can be a nerve-racking assumption process.

An estimated 12.2 million loans, or 23 percent of active mortgages, are assumable, according to Intercontinental Exchange, a data and technology firm, though most conventional mortgages (which account for the majority of existing loans) are not. It’s an embedded feature in mortgages backed by the Federal Housing Administration, which are widely used among first-time home buyers, as well as those from the Department of Veterans Affairs.

The number of assumptions completed is just a small fraction of home sales, but it’s growing. More than 6,000 were completed in 2023, up 139 percent from 2022. This year, there were already 3,896 assumptions completed…

A Little-Known Way Home Buyers Can Beat High Mortgage Rates — Tara Siegel Bernard | NYT | May 10, 2024

Built Environment

• Cars and penthouses.

High above Seattle’s skyline, a $1.7 million McLaren hangs suspended over the 48th floor of a luxurious new condo building. The supercar isn’t just a flashy penthouse perk — it’s a gamble on the city’s ability to reignite its pandemic-emptied core.

Below the mixed-use tower, known as First Light, a harsh reality unfolds on the streets. Shuttered storefronts line the sidewalks, a reminder of the city’s ongoing battle with a surging drug crisis. With daily worker foot traffic at half of pre-pandemic levels and office vacancy rates nearing 30%, Seattle hopes it can count on attracting more residents to fill the void left by a remote-work world…

Why plop a $1.7M McLaren sports car atop a Seattle condo?  Urban Revival — Anna Edgerton | The Seattle Times | May 22, 2024

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Not going to happen in our lifetimes.

Out-of-this-world NYC skyscraper aims to hang from asteroid — Hannah Frishberg | NY Post | May 20, 2024

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1440 Broadway is a 25-story building at the corner of Broadway and 40th Street in Midtown Manhattan, not far from the bright lights of Times Square and the grubby dishevelment of the Port Authority Bus Terminal. Designed by Starrett & Van Vleck and completed in 1925, its brick and limestone facade is a prime example of classic New York architecture.

Today, 1440 Broadway is also emblematic of tensions in the $20 trillion market for US commercial real estate too.

The serious delinquency rate for office loans reached 7% in April, its highest level since early 2017, according to data from JPMorgan Chase & Co. That jump was driven in part by the $400 million loan backing 1440 Broadway, and which was bundled into a commercial mortgage-backed security (CMBS) known as JPMCC 2021-1440…

One New York Office Building Shows the Stress in the $20 Trillion Commercial Real Estate Market — Tracy Alloway | Bloomberg | May 08, 2024

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The future Rockwell Island master planned community on Bimini island.

As Haiti Crumbles, Its Neighbor Is Thriving With a Tourism Boom — Nikki Ekstein | Bloomberg | May 16, 2024

• The United States debt ratio outlook is less than desirable.

Whoever wins November’s election, inflation will present them with an immediate challenge. More than two years after the Federal Reserve started raising interest rates to alleviate a pandemic-era price spike, the so-called core consumer price index remains well above the central bank’s target. It’s a bit puzzling, then, that former President Donald Trump’s economic agenda seems to be dedicated to raising prices…

Election 2024: Trump Economic Outlook Is More Inflation, Less Sanity — Editorial Board | Bloomberg | May 15, 2024

Inflation and Monetary Policy

• Patience, patience!

Federal Reserve Chair Jerome Powell said the US central bank must be patient and wait for evidence that inflation continues to cool, doubling down on the need to keep borrowing costs elevated for longer…

“We did not expect this to be a smooth road, but these were higher than I think anybody expected,” Powell said Tuesday, referring to the lack of inflation progress in the first quarter. “What that has told us is that we’ll need to be patient and let restrictive policy do its work.”

“It looks like it will take longer for us to become confident that inflation is coming down to 2% over time,” he added…

Fed’s Powell Urges Patience Given Lack of Inflation Progress — Craig Torres and Cagan Koc | Bloomberg | May 14, 2024

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• Inflation shows signs of cooling.

A measure of underlying US inflation cooled in April for the first time in six months, a small step in the right direction for Federal Reserve officials looking to start cutting interest rates this year.

The so-called core consumer price index — which excludes food and energy costs — climbed 0.3% from March, snapping a streak of three above-forecast readings which spurred concern that inflation was becoming entrenched. The year-over-year measure cooled to the slowest pace in three years, Bureau of Labor Statistics figures showed.

US Inflation Ebbs for First Time in Six Months in Relief for Fed — Augusta Saraiva | Bloomberg | May 15, 2024

Cashing In

• What lesson should community associations take away from this article?  That index investing has proven to be a reliable way to grow assets over time.

The Dow Jones Industrial Average is a relic. It is also having its worst period of underperformance of the S&P 500 since the dot-com bubble, and before that, the soaring inflation and interest rates of the late 1970s and early 1980s. The Dow’s terrible performance could be a sign that we’re at another turning point for the markets.

In one sense, it definitely is a turning point. The Dow is a measure of companies that used to be considered great, while the S&P is dominated by companies that are currently considered great. In times of change, the two move apart, as the S&P rebalances toward the newest companies, and the Dow doesn’t….

The Dow is lagging behind the S&P by 5 percentage points this year, which is bad enough, but looks truly dire since the pandemic. Over the past 4 1/2 years, it is up 41%, while the S&P has risen 68%; the gap reached 30 percentage points last month. The Dow has remained that far behind over such a period only twice since the Great Depression, in 1976-80 and during the 1999-2000 dot-com bubble….

The Dow Is a Terrible Index. But It Is Telling Us Something Important — James Mackintosh | WSJ | May 10, 2024

Covenants Above All Else?

•  We introduced you to this case in the last issue, but did not expound on its importance.  If associations have the power to amend their covenants and effectively prohibit trees more than 6’ tall and then file suit to have homeowners remove pre-existing trees regardless of the impact (like a landslide) then where does it stop?

Detailed Materials: View Ridge Estates HOA v. Guetter

Camas homeowners association rule dispute heads to Washington Supreme Court — Sarah Wolf | The Columbian | May 09, 2024

Commercial Business from Home

• Eagle, Idaho: Customers traversing a neighborhood for cabinetry and clothing alterations causes a stir.  Some states, like Washington, have created legal carve-outs for operation of licensed child care operations with specific protections for associations.

…In December, Two Rivers Subdivision HOA filed a complaint with Ada County’s Fourth District Court against Yuriy Buchinskiy and his wife Valentina Buchinskiy aiming to force them to stop operating their small businesses out of their home in the upscale subdivision. The HOA says they are in violation of the CC&Rs that block any businesses from operating at all in Two Rivers in order to keep the area specifically for residents and their visitors, not business traffic.

But, the couple says these rules are being arbitrarily enforced against them and there are over 100 other businesses registered in the subdivision. This includes one LLC registered to Two Rivers HOA Board President Kevin Zasio and six registered to Eagle City Council Member Craig Kvamme and his wife, who also serves on the HOA board, according to documents obtained by BoiseDev. The exact nature of these businesses and if they involve more than being a mailing address, as opposed to accepting customers and meetings, is unknown to the public…

HOA sues residents for operating in-home businesses — Margaret Carmel | BoiseDev | April 16, 2024

Commercial Business from Home - II

• Jackson Hole, Wyoming: A winery from home.  Why not?  Oh!

A Jackson Hole couple that built a home-based winery into a $2 million a year business has been shut down after neighbors sued, saying the operation violated their homeowners association rules. The couple is fighting back to reopen their winery.

Neighbors Got Jackson Hole Winery Shut Down With HOA Rules But Winery Fighting Back — Clair McFarland | Cowboy State Daily | May 21, 2024

Raw Deal: Master vs. Residential Association

• This is the latest, greatest example of when associations sue themselves.  Will a court find that the covenants are invalid or unconscionable?

…“The Hotel Lot Owner assesses the Condominium Association’s unit owner members 50 percent for the management, operation, reserves, and insurance of the shared facilities,” the complaint states. “The Condominium Association, however, has no control, input, or vote as to the manner or amount of such expenditures. The master association, which is controlled by the hotel lot owner, has full discretion to determine what maintenance or capital improvements to perform — or not to perform — on the shared facilities.” …

Amancio Ortega In Tussle With Miami Condo-Hotel Association — Francisco Alvarado | The RealDeal | May 13, 2024

2024-008346-CA-01 | May 07, 2024: EPIC WEST CONDOMINIUM ASSOCIATION, INC. VS EPIC HOTEL, LLC ET AL

2023-025144-CA-01 | October 20, 2023: EPIC HOTEL, LLC, VS EPIC WEST CONDOMINIUM ASSOCIATION, INC.

Fenced In

• Can associations teach an old fence new tricks?  How about demanding that all owners remove fences that have been installed for 10 years?  Read about affirmative defenses on our Enforcement page.

  • Cue statute of limitations defense.

  • Potential waiver defense.

  • Separately, there’s worthy discussion about colloquial terminology  when referencing fences.  One should not necessarily look to other statutes to define the term.

  • Finally, there’s a question about whether R&Rs are governing documents.  Keep in mind this is specifically in relation to Florida Statute 720.  The legislature 

Age-old fencing for residents' dogs runs afoul of new homeowners association president — Ryan Poliakoff | The Palm Beach Post | May 19, 2024

Parking for Profit

• Miami, Florida: Buckley Towers condominiums needed money.  The prior board was voted out.  A locksmith had to be brought in to unlock the office where the former president was holed up.

…In their complaint, the owners claimed the association “contrived a plan to sell or lease spaces... Offering spaces at a premium price based on location and leasing spaces close to entrances or exits to the highest bidder.”...

…“One day somebody calls me from downstairs telling me that my car is being towed,” said resident Aleksej Nikitins.

“He towed 20 cars in one day”, said Moredechai Zarger who owns six units at the building.

“They wanted to reassign the parking, but not only reassign the parking, but also charge for that parking,” Trullenque explained.

VIDEO: Condo lawsuit: Neighbors claim association took parking spaces to make a profit — Amy Viteri | NBC | May 14, 2024

It’s Easier to Follow the Law…

• Los Angeles, California.  Liberty Canyon Townehome Owners Association: A lesson in following the law! Avoiding the 73 steps below is EASY: follow the law and your governing documents.  Superior Court of California: Los Angeles Case# 23VESC01383 | May 08, 2024 | Summary:

  • Case brought pursuant to CA Civil Code 5145.

  • This began in small claims based on myriad alleged failures of the HOA to comply with its governing documents and state law: 

    1. incorrect number of directors to be elected

    2. incorrect term length

    3. failure to use an independent inspector of elections

    4. failure to provide toa physical location for the election

    5. inappropriate disqualification of a candidate

    6. some additional concerns.

  • The HOA appealed the small claims ruling.  The superior court ruling heard the same evidence and issued the same ruling.

1. 05/08/2024 Court orders judgment after trial de novo entered for Plaintiff Perrin Davidson and Plaintiff Sarah Nazari against Defendant Liberty Canyon Townehome Owners Association (LCTOA) on the Plaintiff's Claim filed by Perrin Davidson, et al. on 07/05/2023 for costs of $36.75 for a total of $36.75.; Other: 

   1. The Court finds in favor of Plaintiffs. Defendant's July 2023 election is hereby voided pursuant to Civ. Code Section 5145.

   2. Defendant is ordered to conduct a new election for the three seats at issue in that election in accordance with all applicable laws.

   3. Plaintiff's are awarded their costs of suit.

2. 11/22/2024 Court orders judgment entered for Plaintiff Perrin Davidson and Plaintiff Sarah Nazari against Defendant LCTOA on the Plaintiff's Claim filed by Perrin Davidson, et al. on 07/05/2023 for costs of $30.00 for a total of $30.00.; Other: The Court finds that sections of the California Civil Code were violated with respect to the elections codes The Court orders new elections to be properly conducted following all civil codes

3. 05/08/2024 Updated -- Notice of Entry of Judgment (Small Claims): Status Date changed from 05/08/2024 to 05/08/2024 ; Result: Granted ; Result Date: 05/08/2024

4. 05/08/2024 Order Judgment in favor of plaintiff; Filed by: Clerk; As to: LCTOA (Defendant)

5. 05/08/2024 Minute Order (Ruling on Submitted Matter)

6. 05/08/2024 Certificate of Mailing for (Ruling on Submitted Matter) of 05/08/2024; Filed by: Clerk

7. 05/08/2024 Updated -- On the Plaintiff's Claim filed by Perrin Davidson, et al. on 07/05/2023, judgment entered on 11/22/2024 is vacated

8. 05/08/2024 On the Plaintiff's Claim filed by Perrin Davidson, et al. on 07/05/2023, judgment entered on 11/22/2024 as to LCTOA is

9. 05/08/2024 Notice of Entry of Judgment (Small Claims); Filed by: Clerk

10. 04/16/2024 Minute Order (Small Claims Appeal - Trial De Novo)

11. 04/16/2024 Small Claims Appeal - Trial De Novo scheduled for 04/16/2024 at 10:00 AM in Van Nuys Courthouse East at Department O updated: Result Date to 04/16/2024; Result Type to Held - Taken under Submission

12. 04/09/2024 Small Claims Appeal - Trial De Novo scheduled for 04/16/2024 at 10:00 AM in Van Nuys Courthouse East at Department O

13. 04/09/2024 On the Court's own motion, Small Claims Appeal - Trial De Novo scheduled for 04/08/2024 at 02:20 PM in Van Nuys Courthouse East at Department O Held - Continued was rescheduled to 04/16/2024 10:00 AM

14. 04/08/2024 Small Claims Appeal - Trial De Novo scheduled for 04/08/2024 at 02:20 PM in Van Nuys Courthouse East at Department O

15. 04/08/2024 Minute Order (Small Claims Appeal - Trial De Novo)

16. 04/08/2024 Minute Order (Small Claims Appeal - Trial De Novo)

17. 04/08/2024 Address for Perrin Davidson (Plaintiff) clerical correction

18. 04/08/2024 On the Court's own motion, Small Claims Appeal - Trial De Novo scheduled for 04/08/2024 at 01:30 PM in Van Nuys Courthouse East at Department H Held - Continued was rescheduled to 04/08/2024 02:20 PM at Department O

19. 03/11/2024 Small Claims Appeal - Trial De Novo scheduled for 04/08/2024 at 01:30 PM in Van Nuys Courthouse East at Department H

20. 03/11/2024 Minute Order (Small Claims Appeal - Trial De Novo)

21. 03/11/2024 Certificate of Mailing for (Small Claims Appeal - Trial De Novo) of 03/11/2024; Filed by: Clerk

22. 03/11/2024 On the Court's own motion, Small Claims Appeal - Trial De Novo scheduled for 03/11/2024 at 01:30 PM in Van Nuys Courthouse East at Department H Held - Continued was rescheduled to 04/08/2024 01:30 PM

23. 02/27/2024 Notice Notice of Continuance of Small Claims Trial De Novo; Filed by: LCTOA (Defendant); As to: Perrin Davidson (Plaintiff); Sarah Nazari (Plaintiff)

24. 02/26/2024 Small Claims Appeal - Trial De Novo scheduled for 03/11/2024 at 01:30 PM in Van Nuys Courthouse East at Department H

25. 02/26/2024 Minute Order (Small Claims Appeal - Trial De Novo)

26. 02/26/2024 Pursuant to the request of defendant, Small Claims Appeal - Trial De Novo scheduled for 02/26/2024 at 01:30 PM in Van Nuys Courthouse East at Department H Held - Continued was rescheduled to 03/11/2024 01:30 PM

27. 02/23/2024 Declaration Declaration in Support of Defendant's Trial Brief; Filed by: LCTOA (Defendant)

28. 02/14/2024 Substitution of Attorney; Filed by: LCTOA (Defendant)

29. 02/14/2024 Notice of Continuance of Small Claims Trial De Novo; Filed by: LCTOA (Defendant); As to: Perrin Davidson (Plaintiff); Sarah Nazari (Plaintiff)

30. 02/05/2024 Notice Defendant's Trial Brief; Filed by: LCTOA (Defendant); As to: LCTOA (Defendant)

31. 02/05/2024 Small Claims Appeal - Trial De Novo scheduled for 02/26/2024 at 01:30 PM in Van Nuys Courthouse East at Department H

32. 02/05/2024 Minute Order (Small Claims Appeal - Trial De Novo)

33. 02/05/2024 On the Court's own motion, Small Claims Appeal - Trial De Novo scheduled for 02/05/2024 at 01:30 PM in Van Nuys Courthouse East at Department H Held - Continued was rescheduled to 02/26/2024 01:30 PM

34. 12/19/2023 Notice of Appeal on Small Claims Judgment; Issued and Filed by: LCTOA (Defendant)

35. 12/19/2023 Small Claims Appeal - Trial De Novo scheduled for 02/05/2024 at 01:30 PM in Van Nuys Courthouse East at Department H

36. 12/19/2023 Updated -- Notice of Appeal on Small Claims Judgment: Status changed from Issued and Filed to Filed

37. 12/19/2023 Notice of Hearing on Small Claims Appeal; Issued by: Clerk

38. 12/15/2023 Notice of Entry of Judgment (Small Claims); Filed by: Clerk

39. 11/22/2023 Minute Order (Non-Jury Trial)

40. 11/22/2023 Certificate of Mailing for (Non-Jury Trial) of 11/22/2023; Filed by: Clerk

41. 11/22/2023 Non-Jury Trial scheduled for 11/22/2023 at 01:30 PM in Van Nuys Courthouse East at Department P updated: Result Date to 11/22/2023; Result Type to Held

42. 11/06/2023 Authorization to Appear on Behalf of Party (Small Claims) (Shelby Wagner); Filed by: LCTOA (Defendant)

43. 11/06/2023 Notice of Remote Appearance; Filed by: LCTOA (Defendant); As to: Perrin Davidson (Plaintiff); Sarah Nazari (Plaintiff)

44. 11/06/2023 Declaration Defendant's Small Claims Trial Brief; Filed by: LCTOA (Defendant)

45. 10/02/2023 On the Court's own motion, Non-Jury Trial scheduled for 09/21/2023 at 08:30 AM in Van Nuys Courthouse East at Department P Held - Continued was rescheduled to 11/22/2023 01:30 PM

46. 09/21/2023 Authorization to Appear on Behalf of Party (Small Claims) Shelby Wagner appearing on behalf of Liberty Canyon Towne; Filed by: LCTOA (Defendant)

47. 09/21/2023 Updated -- Authorization to Appear on Behalf of Party (Small Claims) Shelby Wagner appearing on behalf of Liberty Canyon Towne: As To Parties:

48. 09/21/2023 Minute Order (Non-Jury Trial)

49. 09/21/2023 Certificate of Mailing for (Non-Jury Trial) of 09/21/2023; Filed by: Clerk

50. 09/08/2023 Notice of Remote Appearance; Filed by: LCTOA (Defendant); As to: Perrin Davidson (Plaintiff); Sarah Nazari (Plaintiff)

51. 09/08/2023 Notice Defendant's Small Claims Trial Brief; Filed by: LCTOA (Defendant); As to: Perrin Davidson (Plaintiff); Sarah Nazari (Plaintiff)

52. 08/04/2023 Updated -- Order on Request for Court Order: Document changed from Request for Court Order and Answer to Order on Request for Court Order ; As To Parties:

53. 08/04/2023 Certificate of Mailing for Order on Request to Postpone Trial (Small Claims); Filed by: Clerk

54. 08/04/2023 Pursuant to the request of defendant, Non-Jury Trial scheduled for 08/21/2023 at 08:30 AM in Van Nuys Courthouse East at Department P Not Held - Advanced and Continued - by Party was rescheduled to 09/21/2023 08:30 AM

55. 08/01/2023 Updated -- Request for Court Order and Answer: Filed By: Perrin Davidson (Plaintiff); Result: Denied ; Result Date: 08/01/2023 ; As To Parties:

56. 08/01/2023 Updated -- Request to Postpone Trial (Small Claims): Filed By: LCTOA (Defendant); Result: Granted ; Result Date: 08/01/2023 ; As To Parties:

57. 08/01/2023 Order on Request for Court Order; Filed by: Clerk

58. 08/01/2023 Order on Request to Postpone Trial (Small Claims); Filed by: Clerk; As to: Perrin Davidson (Plaintiff); Sarah Nazari (Plaintiff); LCTOA (Defendant)

59. 07/31/2023 Updated -- Request to Postpone Trial (Small Claims): As To Parties:

60. 07/28/2023 Request to Postpone Trial (Small Claims); Filed by: LCTOA (Defendant); Has the Claim Been Served?: Yes

61. 07/17/2023 Request for Court Order and Answer; Filed by: Perrin Davidson (Plaintiff)

62. 07/12/2023 Order on Request for Court Order; Signed and Filed by: Clerk; As to: Perrin Davidson (Plaintiff); Sarah Nazari (Plaintiff); LCTOA (Defendant)

63. 07/12/2023 Certificate of Mailing for Order on Request for Court Order; Filed by: Clerk

64. 07/12/2023 Updated -- Request for Court Order and Answer: Filed By: Perrin Davidson (Plaintiff); Result: Denied ; Result Date: 07/12/2023 ; As To Parties:

65. 07/07/2023 Updated -- Plaintiff's Claim and Order to Go to Small Claims Court: As To Parties changed from LIBERTY CANYON TOWNE HOME OWNERS ASSOCIATION (Defendant) to LCTOA (Defendant)

66. 07/07/2023 Updated -- LCTOA (Defendant): Organization Name changed from LIBERTY CANYON TOWNE HOME OWNERS ASSOCIATION to LCTOA

67. 07/07/2023 Request for Court Order and Answer; Filed by: Perrin Davidson (Plaintiff)

68. 07/07/2023 Certificate of Mailing for Request for Court Order and Answer; Issued by: Clerk

69. 07/06/2023 Non-Jury Trial scheduled for 08/21/2023 at 08:30 AM in Van Nuys Courthouse East at Department P

70. 07/06/2023 Case assigned to Hon. Richard F. Walmark in Department P Van Nuys Courthouse East

71. 07/05/2023 Plaintiff's Claim and Order to Go to Small Claims Court; Filed by: Perrin Davidson (Plaintiff); Sarah Nazari (Plaintiff); As to: LIBERTY CANYON TOWNE HOME OWNERS ASSOCIATION (Defendant)

72. 07/05/2023 Notice of Remote Appearances and Exchange and Submission of Evidence Protocol; Filed by: Clerk

73. 07/05/2023 Notice of Online Dispute Resolution (ODR) Program - Small Claims; Filed by: Clerk

• ARIZONA: Seven bills passed this year.  Check the tracker above for them all.

  1. HB2648, while strongly opposed by CAI and revised from its inception, managed to become law and imposes reasonable priorities for payments to an association.

     1. Section 33-1256, Subsection K: Notwithstanding any provision in the condominium documents or in any contract between the association and a management company OR ANY OTHER AGENT OF THE ASSOCIATION, INCLUDING ANY AGREEMENT OR CONTRACT WITH ANY ATTORNEY, unless the unit owner directs otherwise, all payments received on a unit owner's account shall be applied first to any unpaid assessments, DUE BUT NOT DELINQUENT ASSESSMENTS, unpaid charges for late payment of those assessments IF AUTHORIZED IN THE DECLARATION, unpaid reasonable collection fees AND COSTS INCURRED OR APPLIED BY THE ASSOCIATION and unpaid attorney fees and costs incurred with respect to those assessments IF AWARDED BY A COURT, in that order, with any remaining amounts applied next to other unpaid fees, charges and monetary penalties or interest and late charges on any of those amounts.

  2. VETOED: Arizona Starter Homes Act: HB2570

     1. Setting the record straight on the ‘Arizona Starter Homes Act’

     2. Municipalities cannot require developers / property owners to create a condominium or HOA, nor can they require a shared feature or amenity to be maintained or operated by the same (except for stormwater management), nor can they require screening, walls or fences or private streets or roads.

• GEORGIA: …Several state representatives said they will refile House Bill 1032 which would make it illegal for HOAs to foreclose on a home because of unpaid fees.

“This move seeks to address concerns about the potential abuse of assessment fees, which have, at times, been used to unfairly target homeowners,” a news release said…

The three state representatives sponsoring the bill say some HOAs have exploited the foreclosure process using small unpaid fees as leverage to take over homes.  They plan to hold a hearing and a vote in the next session in 2025.

Lawmakers to refile bill to stop HOAs from taking people’s homes after Channel 2 investigation — Scott Flynn | WSBTV | May 07, 2024

HOA nightmares are one of the most frequent calls into the Channel 2 Action News investigative tipline.  Now there are new bipartisan efforts by state lawmakers to look at how to rein in homeowner associations that go too far.  Channel 2 consumer investigator Justin Gray looked into how an HOA can take your house in Georgia…

Each month Karyn Gibbons mailed a check for HOA dues on her Gwinnett County condo to the address provided in writing at closing.  But she said she never knew when or if it would be cashed.

“It was just random. I mean there’d be two, three, four, five months go in between checks being cashed,” said Gibbons.

‘You broke us.’ GA lawmakers to rein in aggressive HOAs after hearing homeowner horror stories — Justin Gray | WSBTV | May 06, 2024

• IDAHO: Reasonable turnover of control from developers to homeowners is a hot topic across the nation.  Legislation in multiple states is trying to reign it in, but developers are putting up a massive effort to keep the status quo: retain control for decades.

A bill aiming to give residents a say in their homeowners associations once most of the development is finished isn’t moving forward, for now.

On Thursday, Rep. Jon Weber, R-Rexburg, brought HB 657 before the House Business Committee in the hopes of giving homeowners in developments with HOAs earlier control over the boards governing their neighborhoods instead of leaving associations under total control of the developer until the entire project is completed. The project would have created a five-member board with two seats for residents once 75% of a neighborhood is built and sold to homeowners. Ultimate control would go to homeowners once 95% of the neighborhood is completed.

But, after hearing mostly testimony in opposition from homebuilders and HOA industry members, Weber asked the committee to hold it so it could be revised. It’s unclear if this will be rewritten this session or if it’s dead for the year.

Homebuilders work to stop bill to give earlier control of HOAs to homeowners — Margaret Carmel | BoiseDev | March 04, 2024

• ILLINOIS: Landscaping, Accessible Parking, EV Charging and more.

Homeowners in an HOA could soon have control of landscaping — Bob Sirott | WGN Radio 720 | May 22, 2024