07.18.24

ISSUE # 95

CIC Info Bytes 07/18/24

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. 

READ the full newsletter with graphics in the embedded document below.

All issues of CIC Info Bytes are available online and indexed from the omnibox search.

View the Calendar

• Visit our homepage to view events and add them to your own calendar.

Board members, managers, attorneys and everyone else who SERVES homeowner members should avoid shortcuts.  Stop blaming other homeowners for what ails your association.  Reflect on your own leadership.  Be accountable for ethical, legal and professional standards.

Michelle Schlichting: Okay, so does a mail in budget ballot qualify instead of an in person annual ratification meeting this HOA was built in 1980?

Aimee Hilton: Oh, good question. Unfortunately, it does not. [?!]

You have to have a budget ratification meeting. 

[BALLOTS AND PROXIES ACTUALLY WORK WELL FOR RATIFICATION MEETINGS] 

Michelle Schlichting: I think what people find is that they need to understand you don't really even need a ballot for a budget meeting. What you're looking for is a negative vote. Exactly.

Aimee Hilton: I do not send out ballots or proxy locks or budget ratification meetings. And this is not to be overly difficult. This is not to try to avoid ‘no’ votes by any means [IT’S A SHORTCUT FOR MANAGERS] but it's because the method of the confirmation or no vote is different for the ratification. [?! NO, IT ISN’T]

If an owner emails me and says, Hey, Amy, my neighbor is going to attend the ratification meeting for me. Can I have a proxy? I will absolutely send them a direct proxy because they've requested it, but I'm not going to put it out. There. Because then you can have somebody who's coming to a vote, and they may not understand the budget in full. [MANY OWNERS AND BOARD MEMBERS DO NOT UNDERSTAND MANY THINGS, BUT THAT’S NOT AN EXCUSE FOR MANAGERS TO TAKE SHORTCUTS]. 

And what if they misinterpreted something [HAPPENS ALL THE TIME] and then they're voting 'no' for five people because they're misguided [THE WORLD IS FULL OF MISGUIDED HOMEOWNERS, BOARD MEMBERS, COMMUNITY ASSOCIATION MANAGERS AND ATTORNEYS, BUT THAT’S NOT AN EXCUSE FOR MANAGERIAL SHORTCUTS], or don't have all of the information [THE BOARD AND MANAGER'S JOB IS TO PROVIDE ALL OF THE INFORMATION IN A WAY THAT MAKES SENSE] that as a manager and a board you've gathered... 

Questions & Answers

• Answer to a reader's question about achieving continuity through technology.

QUESTION: Are you using Google Workspace "free edition" for nonprofits? I tried to set up an account for our condo association (including uploading the Employer Identification Number and IRS tax form 990-N, but got back a "you don't qualify" reply. Maybe I'm not filling out their online form correctly.

Google Workspace looks like a potentially good place to archive documents (official association records) electronically; so does Microsoft Workspace; wondering if you have any suggestions about storage solutions in general. I'm not a board member,

Google Workspace looks like a potentially good place to archive documents (official association records) electronically; so does Microsoft Workspace; wondering if you have any suggestions about storage solutions in general. I'm not a board member, but I am trying to offer help to a self-governing board struggling with administrative matters after deciding to terminate their contract with a licensed management company.

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ANSWER: If you haven't already seen it, there's some information on our Records page that might be helpful.  You should also review the Document Management survey.

Google's free tools are fairly robust and can serve the needs of a wide variety of small businesses, but personal accounts (with any service) do not necessarily pass the test for continuity.  That’s why we recommend a Google Business Starter plan with two or more seats so there’s more than one person who can help ensure continuity of access.  Else, the principal personal account being used can close up shop.  Things fall apart quickly!

Community associations should absolutely have their own records management and collaboration solution (Google and Microsoft are the two most obvious choices given their ubiquity and value proposition) regardless of whether they pay for management or choose to be self-managed.  Florida law will now require condos with 25 or more units and HOAs with 100 or more units to provide an online portal or website hosting a number of records.  Community association “portal” (CRM) software solutions work well for general owner and resident access to records and for certain workflows (ACC / ARC applications, violation management, etc.), but they do not replace a proper records and collaboration management system like what Google and Microsoft provide.

Google's nonprofit discounts are only for 501(c)(3) orgs, so 99.99999% of all community associations will not qualify.  Even without the discount, $6/month+tax is a small price to pay for a system that works.  💡The SMAARTE Group provides independent expertise to get Google Workspace configured and running smoothly.

Full Funding = Forced Selling

• Florida: What happens when you cram decades of deferred maintenance and reserve contributions into the span of 2.5 years?  The end of condominium ownership.

Owners of the Beach Sound Condominium on Jupiter Island, fearful of multi-million dollar repair bills, have agreed to sell their four-story, 12-unit building to a partnership affiliated with Kolter Group, according to documents filed with Palm Beach County. But for the sale to take place, the builder wants the county to change the zoning code to allow a bigger building to be built without the developer having to seek a variance. The issue will be addressed today at a county commission meeting that begins at 9:30 a.m.

The transaction could be the first forced sale resulting from the new state law adopted in response to the deadly collapse of the Champlain Towers South condominium in Surfside on June 24, 2021. The law requires, in part, that older condos along the state's coast undertake detailed inspections to determine if repairs are needed to ensure their safety. Some of these repairs can cost in the millions of dollars…

Surfside law forces sale of Jupiter beachfront condo but it will need zoning change first — Mike Diamond | The Palm Beach Post | July 17, 2024

Even the Experts Misunderstand FL’s “Full Funding” Requirements

• A recent Poliakoff column about reserve "full funding" requirements misunderstands how reserves are funded.

If component ABC needs to be replaced 5 years from now and it has an expected useful life (EUL) / replacement cycle of 30 years, the full funding required for that component is accelerated 600% into 5 years instead of 30.  Is the association required to "catch up" that funding?  The association obviously has to be able to pay for the replacement happening in year 5, so the answer is "yes."

While Florida and Maryland law does not require a "one time make-up" charge, the expense of fully funding components that should have been amortized by contributions over 10, 20, 30 or 40+ years is now compressed into a few years (or even a single year).

Whether owners have 5 years to fund a component -OR- they're charged a large assessment up front to better prepare (and "rip off the band-aid") is likely little solace.

Does law now require condo owners pay catch-up fees for years when reserves were waived? — Ryan Poliakoff | The Palm Beach Post | July 08, 2024

DOJ Issues Multi-Million Dollar $ PPP Fines & Repayments

• As we’ve reported previously, most community associations were ineligible for PPP.

DOJ: Tellico Village Property Owners Association to pay $1.3 million — WBIR | July 04, 2024

Nonprofit Organizations Pay Over $5.8 Million to Resolve Allegations of Fraudulently Obtaining Pandemic-Related Loans

— Department of Justice | June 12, 2024

HOAs In Crosshairs Of 'Serial Relators' For Alleged PPP Fraud — Quinn Wilson | Crowell & Moring | February 09, 2024

Follow-up to Even More PPP Problems in Issue# 86:

Litigant withdraws PPP fraud suit against condo associations, clubs — Rick Carroll | Aspen Daily News | April 16, 2024

$8,000,000 Embezzlement Scheme

• Naples, Florida: American Property Management Services (FB page still live, but website is toast) has been indicted for “hijacking” bank accounts and embezzling $8,000,000 or more.

Florida property firm allegedly stole $8M from dozens of communities — Dan Glaun | Naples Daily News | April 06, 2024

The owners of American Property Management Services, who allegedly stole millions from dozens of Southwest Florida community associations, have been indicted by a federal grand jury.

The 17-count indictment, filed in January, charges Orlando Miserando Ortiz and his wife Lina Munoz Posada with wire fraud, conspiracy to commit money laundering and failure to file income tax returns.

Collier, Lee condo fraud: Owners of management company indicted on federal fraud charges — Dan Glaun | Naples Daily News | March 05, 2024

Indictment: 2:24-cr-00002-SPC-KCD - US v. Ortiz

A Naples law firm has filed a lawsuit in Collier County against a property management company it alleges has taken funds belonging to nearly three dozen homeowner and condominium associations and kept the money for its owner’s benefits.

The firm, Hamilton Mikes, is suing on behalf of 34 associations that say American Property Management Services LLC will not hand over the funds entrusted to it and is refusing to turn over bank statements.  According to Florida’s Division of Corporations AMPS is owned and run by Orlando Miserandino Ortiz.

Lawsuit accuses area property management company of embezzlement — Louis Llovio | Business Observer | January 21, 2022

$47,222 and Counting

• The sheer number of cases involving embezzlement and fraud for condos and HOAs is daunting.

A candidate for a Lake County-based state Senate seat is charged with stealing $47,722 from a homeowners association whose finances she managed and is facing trial in September.

Cheryl Blancett, who goes by CJ, has been charged with grand theft of $20,000 or more, a second-degree felony. The charges were first reported by VoxPopuli, a website that covers West Orange County news.

The alleged offenses took place in 2018 and 2019, while Blancett was in charge of managing finances for Sawgrass Estates in east Orange County…

…She pleaded not guilty to the charges and told the Orange County Sheriff’s Office deputies that she didn’t spend homeowners association funds for personal use.

But deputies determined Blancett mixed homeowners association funds with her personal LLC account, according to a document outlining the charges, and concluded she used the intermingled business account for personal purchases and items other than approved homeowners association expenses.

“Ms. Blancett knowingly withheld records, intermingled funds, and used cash to conceal the theft and permanently deprive the Sawgrass Estates HOA of $47,722.34,” deputy Jacob Devine wrote in his report….

Orlando-area state Senate candidate charged with $48K theft from HOA — Annie Martin | Orlando Sentinel | July 5, 2024

"Karens” Want to Ban Sidewalk Chalk

• Don’t chase the sidewalk art…

I live in a large complex with expansive green spaces surrounded by walkways. Our HOA isn’t as restrictive as most, which is generally a good thing. Many kids live here, and they love drawing on the walkways with chalk.

Most residents are fine with this, except for a number of Karens who take issue with the drawings. Someone even brought it up at a board meeting, and predictably, the HOA decided to try to ban chalk art.

This decision has turned our community Facebook group into a battleground. The naysayers claim the kids are ruining the aesthetic of the complex, while others are baffled by their negativity.

Amidst the adult arguments at board meetings and online, the kids have responded by creating even more chalk art. They've even adopted a caricature of a piece of chalk as their symbol, which is my favorite part.

My favorite part is the kids “somehow” figured out the area where the complainers live and have turned it into Louvre of chalk art. Not only that but one kid is signing his work! I’ve added some of my favorite pieces.

The kids in my complex have gone to war with the Karens — u/dertigo | Reddit | July 16, 2024

North Carolina HOAs in Focus

• North Carolina has been a major focus of homeowner advocacy over the past few years.

In Denial: “There’s no one-size fits all. North Carolina is its own unique community.  The beauty of our current laws…is they reflect what our state needs, so there’s nothing in particular in the other states that we would want to point to.” — Harmony Taylor, CAI NC LAC Chair

In Focus: HOA laws in North Carolina — Loretta Boniti | Spectrum News | May 05, 2024

South Carolina Complaints by Management Company

• South Carolina has a formal system to track HOA complaints.  Waccamaw Management racked up 20 of them.  Also see Issue# 85.

These HOA and property management companies in Myrtle Beach area get the most complaints, SC says

— Maria Elena Scott | Myrtle Beach Sun News | July 13, 2024

Georgia Legislators Want to Tackle “HOA Hell”

• This article shares an overview of legislative goals for Georgia saga in one notable HOA featured in other news articles.  Board president with a machete?  Check!

HOA Hell: Belmont Park in Newnan sparks state legislation — Laura Camper | The Newnan Times-Herald | July 05, 2024

Abolish HOAs?

• The following article includes some helpful references, but as many have already recognized, “Getting rid of the HOA” is NOT reality.  Just this year, Arizona's governor vetoed HB2570 that would have prevented local governments in the state from requiring the creation of covenanted communities.  This bill might not have changed much at all since developers would still be free to establish condos and HOAs without a government mandate, but it was a step in the right direction.

That said, the hundreds of thousands of existing community associations are not going to disappear and so legislation like Florida's 2024 HB1021 and HB1203 are necessary to continue reining in unreasonable governance and unethical and illegal practices where the business industry reaps the benefits of a chaotic, mostly unregulated system.  Notably absent from your article was mention of the Community Associations Institute (CAI) that has expended millions of dollars lobbying for business-friendly regulation while pretending to support the best interests of community associations whose homeowners spend an estimated $100B annually on assessments.

…If we want to rein in these private governments, end the housing crisis, and finish the job of racial integration, it will take more than some modest adjustments to HOA governance. We may need to break the system of privatized governance entirely…

Abolish HOAs: Homeowner Associations Make It Harder to Own a House — Ned Resnikoff | Business Insider | July 08, 2024

Owner Encamps Skeleton of Former Home

• An unfortunate situation to say the least.  Single-Family Home in HOA Burnt Down — u/mc_37bear | Reddit | July 07, 2024

Are Condos a Good Investment?

• This article highlights some reasonable considerations.

…According to Jack Gaughan of the Greater Nashville Realtors, condos typically don't appreciate in value as quickly as single-family homes, and their value depends on several factors that are sometimes out of an individual owner's control.

For example, amenities may need upgrading in older condominium buildings, but it takes a large investment and the entire HOA to agree to make those changes, which ultimately impact the value of each unit.

Overall, condo ownership is a lifestyle choice — not always a strategic investment, Gaughan said.

"In general, the demand for a condo is always going to be lower because there are fewer people who want that lifestyle," he said. "Going into a condo thinking it’s going to be a prime investment probably isn’t the right mindset."...

Are Nashville condos a good investment? What buyers should know — Molly Davis | Tennessean | July 08, 2024

How to get money to install a heat pump in Washington state

— Christine Clarridge and Melissa Santos | Axios | July 15, 2024

• Are new laws changing the tide of property insurance woes in Florida? 

Florida lawmakers passed 185 new state laws — but only one was related to the property insurance crisis — and it does nothing major on affordability.  Florida Rep. Hillary Cassel, an attorney who worked for insurers, was behind the bipartisan support needed to pass the bill into law in Tallahassee.

During This Week In South Florida on Sunday, the Democrat from Dania Beach explained the new law in detail and said there is an urgent need for reform.  “It’s not a matter of if; it’s a matter of when,” Cassel said about the risk of a destructive hurricane. “We have got to make some big changes here in Florida.”...

…“We are really kind of kicking the can down the road a little bit further because when they go to price it, they are not going to stay with that surplus line carrier that may be 30%, 40%, 50% — they are going to go back into a Citizens policy,” Cassel said about the CPIC, which was created to provide homeowners with windstorm coverage and general property insurance away from the private marketplace…

‘It’s not a matter of if; it’s a matter of when’: Lawmaker calls for property insurance reform before big hurricane hits

— Glenna Milberg and Andrea Torres | Local 10 | July 07, 2024

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…The state’s Citizens Property Insurance Corp. topped 1.211 million policies last week, as it continued to add thousands of customers. Citizens had 1,211,914 policies as of Friday, up from 1,207,292 policies a week earlier and 1,202,696 policies two weeks earlier, according to information on its website.

Citizens, which was created as an insurer of last resort, has become the state’s largest carrier in recent years as private companies dropped policies and raised rates because of financial problems. Citizens reached as many as 1.412 million policies in fall 2023 before seeing reductions because of what is known as a “depopulation” program designed to shift policies into the private market…

Citizens Tops 1.211M Policies — News Service of Florida | July 02, 2024

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…"We see more people throughout the state of Florida choosing a risky option of going from being insured to self-insuring," said Mark Friedlander, with the Insurance Information Institute.  According to a Florida Tax Watch report Friday, Florida's average annual premium nearly triples the national average, and the rates are even higher in South Florida.

Friedlander said a recent study showed 15% to 20% of Floridians choose to drop their insurance.

Matt Friedman, who has had property insurance while living in his Coral Gables home for 17 years, is wondering if he needs to change course.  "We're getting to a point now where it's really math," Friedman said.  Even with upgrades he's made to reduce insurance premium costs, his annual premium is north of $10,000.

"I know a lot of people have seen their premiums go up more," added Friedman.  One of them is a nearby neighbor, who told CBS News Miami off camera that her annual premium is more than $20,000. She's considering going without insurance…

VIDEO: Florida homeowners dropping their insurance in face of high premiums — Joe Gorchow| CBS Miami | July 12, 2024

What goes down might come up…  

InSinkErator’s motto is “grind fearless.”  There's one item notably absent from this article: the after-effects of fat, oils and grease from food on the pipes in multifamily residential properties and the millions of dollars in related water losses incurred annually.

…Just over half of U.S. homes have a garbage disposal, according to federal data, and the appliances remain rare elsewhere in the world. That presents a big opportunity for manufacturers such as Whirlpool, which in 2022 paid $3 billion for InSinkErator, the world’s largest disposal maker. It touts garbage disposals as an environmentally friendly alternative to dumping food scraps in landfills, where they can create climate-harming methane.

Boosting sales will require converting skeptics such as Nathaniel Marshall, a plumber who lives in the Atlanta area. He has dealt with the fallout from those who placed too much faith in their disposals, such as the customer whose 75-foot drain pipe was fully packed with coffee grounds. Marshall sees garbage disposals as tools that don’t serve a true need. As far as he is concerned, nothing should go down them.  “I don’t see there’s a net positive effect,” he said…

Grinding Debate: What Should Go Into the Garbage Disposal? — John Keilman | WSJ | July 14, 2024

Built Environment

• Boring boxes form the basis of myriad multifamily housing.

The whining of architects is futile. The stick-frame-over-podium building—the so-called 5-over-1—is here to stay. The Box, as I like to refer to it, utilizes the hybrid technology of a concrete-and-steel base below wood-frame construction, and is used predominantly for market-rate housing. Despite the common negative reaction to its banal aesthetics, the appeal to a large segment of apartment consumers is undeniable. It’s an obvious hit with developers, too.

Why? The Box costs less to build than other building methods. If cost is king, then simple and big become the default settings for value—resulting in, well, boxes that cover as much of a site as possible. The cost savings allow for higher ceilings and bigger windows—things that homeowners love—but the developers don’t spend money on fewer units, more common space, or additional streetscape amenities. Perversely, the density so prized in sustainable design is not complemented in these buildings by an approach that values social good. “Density” in a Box means densely packed people.

Beyond the cheaper construction costs, the focus of these buildings reflect the values of the 21st century. This New World is not brave, it’s safe. Our digital life encourages isolation, self-interest, and autonomy. We once went to school and work and social events and shopped in stores, but now the internet allows for a lifestyle that embodies a self-isolated existence lived inside, looking out…

Why So Many Banal Boxes? Because Architecture Reflects the Ethos of Its Time — Duo Dickinson | Arch Daily | July 12, 2024

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Danish architecture studio BIG has completed two residential skyscrapers with twisted forms alongside New York's High Line.

The 300-foot (91 metres) and 400-foot (122 metres) towers on Manhattan's west side are now completed, with amenity spaces designed by New York architecture office Gabellini Sheppard and Paris-based studio Gilles & Boissier.

Located in the blocks between the High Line elevated pathway and the Hudson River, the One High Line project includes the 36-floor West Tower and the 26-floor East Tower.  In total, they host 236 condominiums as well as amenities such as a pool, gym and dining area…

BIG completes twisted One High Line skyscrapers in New York — Ellen Eberhardt | Dezeen | July 04, 2024

Inflation and Monetary Policy

• Perhaps the FOMC will cut sooner than later.  September cut in the cards?

US inflation cooled broadly in June to the slowest pace since 2021 on the back of a long-awaited slowdown in housing costs, sending the strongest signal yet that the Federal Reserve can cut interest rates soon.

The so-called core consumer price index — which excludes food and energy costs — climbed 0.1% from May, the smallest advance in three years, Bureau of Labor Statistics figures showed Thursday. The overall measure fell for the first time since the onset of the pandemic, dragged down by cheaper gasoline.

Similar to the May CPI report — which Fed Chair Jerome Powell described this week as “really good” following an unexpected flare-up in the first quarter — the June reading will go a long way toward giving Powell and his colleagues the confidence they need to cut rates, likely starting in September. Policymakers will have a chance to signal such a move may be coming when they meet later in July, especially since unemployment has now risen for three straight months…

US Inflation Broadly Cools, Likely Sealing Deal for Fed Rate Cut — Molly Smith | Bloomberg | July 11, 2024

Federal Reserve officials said they were awaiting additional evidence that inflation is cooling and were divided on how long to keep interest rates elevated at their last policy meeting.

Minutes from the two-day Federal Open Market Committee gathering ended June 12 showed officials didn’t expect it would be appropriate to lower borrowing costs “until additional information had emerged to give them greater confidence that inflation” is on track to their 2% goal.

The Fed has held its key policy rate in a target range of 5.25% to 5.5% — the highest level in more than two decades — since last July…

Fed Sought More Evidence of Cooling Inflation, June Minutes Show — Amara Omeokwe | Bloomberg | July 03, 2024

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Milder Inflation Opens Door Wider to September Rate Cut — Sam Goldfarb and Nick Timiraos | WSJ | July 11, 2024

Cashing In

• A “tsunami” of commercial real estate (CRE) distress is coming.

“Compared with the Savings & Loans crisis and 2008, we’re still in the first or second innings” when it comes to troubled assets, said Rebel Cole, a finance professor at Florida Atlantic University who also advises Oaktree Capital Management. “There’s a tsunami coming and the waters are pulling out from the beach.”

— David Rovella | Bloomberg Evening Briefing | July 10, 2024

Cashing Out

The Internal Revenue Service has now made it easier to take a limited amount of money out of a traditional retirement account penalty-free. While previously you could tap your savings without penalty in more limited ways, and often with more paperwork, you can now take out up to $1,000 of your funds for any self-defined emergency.

The change comes after the IRS spelled out what counts as an emergency personal or family expense under a 2022 retirement law that went into effect this year. The reasons can include medical care, funeral expenses and auto repairs, but the key phrase is the catchall “any other necessary emergency personal expenses.”

The $1,000 provision is different from other retirement-account withdrawal options because you can just say that you have an emergency, without specifying what it is. So you can get the money faster. It is one of several ways Congress keeps making it easier for people to use their retirement savings as emergency funds…

Using Your Retirement Account as an Emergency ATM Just Got Easier — Ashlea Ebeling | WSJ | July 15, 2024

No Cameras in Common Hallways

• Charlotte, North Carolina: Fat City condominium association.  Most people don’t want a camera mounted in a common hallway of a condominium.  Using a peephole camera could have avoided $73,000 in $100 daily fines and $115,000 in attorneys’ fees.  The jury trial didn’t help. View the full discussion on Reddit.

VIDEO: Condo owner sues HOA over Ring camera, loses, has to pay $73K — Jason Stoogenke | WSOC TV | July 05, 2024

Canine Eviction

• Our Animals & Pets page offers succinct recommendations to avoid.

Condo seeking to evict dogs gets gobsmacking legal estimate to make their case — Ryan Poliakoff | The Palm Beach Post | July 14, 2024

$8,000,000 Lawsuit

• Every association should promptly inform owners of major disputes and especially litigation.

HOA rejects plans for large home gets sued for $8M — Barbara Holland | Las Vegas Review-Journal | July 15, 2024

Florida Condos: Trucks Not Allowed

• Florida’s 2024 HB1203 added protections to FS720 allowing owners, guests and contractors to park trucks at HOAs.  Florida’s 2024 HB1021 added no such protections for condominiums governed by FS 718.

Florida Condo Truck Violation? — u/Additional_Essay_446 | Reddit | July 07, 2024

Florida HOAs: Still Enforcing Parking Restrictions Despite Law

• Sarasota, Florida: Trucks and vans are still relegated to a paid parking lot over half a mile outside The Meadows HOA.

VIDEO: Subdivision continues fines and towing after Florida HOA law banning parking restrictions goes into effect

— Adam Walser | ABC Action News Tampa | July 16, 2024

Kaufman Language Killing HOA Parking Restriction Prohibition?

• Sarasota, Florida: No “as amended from time to time”?  No compliance with the law.

If you are one of more than 40 percent of Floridians who live in a community governed by a homeowner’s association, you may have heard a legal term recently regarding bylaws, covenants and declarations.

It’s called “Kaufman language” based on the 1977 case of Kaufman vs. Shere, which affects governing documents for HOAs…

…“If you have certain Kaufman language, that’s indicating that if the legislature changes the statute, that would apply,” said attorney Jonathan Ellis

Ellis says The Meadows and other neighborhoods which don’t have “Kaufman language”, which includes the phrase “as amended from time to time”, don’t have to follow the new law…

VIDEO: Language in HOA bylaws could determine whether new Florida parking law applies — Adam Walser | ABC Action News Tampa| July 17, 2024

Goats and Governance

• Maryland Heights, St. Louis: Autumn Lakes HOA.  Situational awareness is key.  We have an entire page dedicated to rules and Rules: 8 Commandments for Development and Enforcement.

After an HOA board member saw the goats, she virtually headbutted the homeowner.

The weed-munching crew wasn’t allowed, she wrote in a letter. The goats had to be gone in three days or there would be fines. And, the homeowner needed to pick up their manure.

It’s not surprising that a homeowners association in Maryland Heights wouldn’t allow livestock. But the goats were two-week temps. They were there on a job.  “They had been rented to clear weeds,” says Laura Fisher, a neighbor of the goats’ employer. The ruminants were from a licensed business allowed by the city. A sign in the front yard alerted passersby to “landscape clearing.”...

…The Autumn Lakes association in Maryland Heights has bickered about various issues between house and condo owners and board members for more than a year. But it’s not alone: Homeowners throughout the metro area complain about what some say are illogical rules — or board interpretations —that have responsible adults reduced to fighting over issues like children in a playground…  Examples:

• Molded plastic chairs banned from front porches

• Ripping out handsome landscaping to match the emptiness of other buildings

• Having your trash can out on a Friday after Thanksgiving’s pickup was delayed

• Banning trucks with logos

• Temporary parking in visitor spots when returning home from the hospital

HOA rules in the St. Louis area can turn into fighting words — Jane Henderson | St. Louis Post-Dispatch | July 17, 2024

Duty of Care and Domination

• This is a thorny case highlighting the doctrine of adverse domination.

The Washington Supreme Court granted respondents’ joint petition for review on December 2, 2014 (see also joint answer to petition for review) and was eventually dismissed.  Here’s also the petitioner's supplemental brief under Supreme Court No. 906424.  This began with King County Superior Court case# 11-2-30778-6 filed September 2011 and finally resolved in July 2015.

¶ 41 …In order for the discovery rule to apply, the situation must be one “in which plaintiffs could not immediately know of the cause of their injuries.” Hibbard, 118 Wash.2d at 750, 826 P.2d 690. This type of situation is unlikely to exist where the directors are merely “disengaged” and not concealing information from the shareholders. Although shareholders might not immediately know the cause of their injuries if they are inattentive to the corporation's mismanagement, the discovery rule does not apply where “the plaintiff [was] sleeping on his rights.” Crisman v. Crisman, 85 Wash.App. 15, 20, 931 P.2d 163 (1997). In light of Washington's discovery rule, we hold that the doctrine of adverse domination applies only where the plaintiff alleges concealment by board members.

¶ 47 …As the Stacy court noted, Clark applied the doctrine of adverse domination to claims against a corporation's attorneys, in addition to its board members, because the attorneys, “ ‘owing fiduciary duties to the company, ... took action contributing to the adverse domination of the company.’ ” Stacy, 198 W.Va. at 505, 482 S.E.2d 115 (quoting Clark, 192 W.Va. at 399, 452 S.E.2d 714)....

¶ 49 The doctrine of adverse domination functions in a similar manner. The doctrine prevents corporate board members from defeating claims by continuing to dominate the board. See Hecht, 333 Md. at 351, 635 A.2d 394 (“This prevents the culpable directors from benefiting from their lack of action on behalf of the corporation.”); In re Blackburn, 209 B.R. 4, 10 (Bankr.M.D.Fla.1997) (adverse domination is “grounded in the equitable notion that the receiver should not be time barred from pursuing the management of an insurer in liquidation to recover for alleged wrongdoing that management committed while in control of the insurer”). Additionally, when a board is controlled by directors who continue the wrongdoing initiated by their predecessors, the board continues to “represent” the interests of the shareholders (or here, the unit owners) on the particular matter associated with that wrongdoing.

¶ 50 The two doctrines are based on similar rationales. One of the policy reasons underlying Washington's adoption of the continuing representation doctrine was that “ ‘[t]he attorney has the opportunity to remedy, avoid or establish that there was no error or attempt to mitigate the damages.’ ” Janicki, 109 Wash.App. at 663, 37 P.3d 309 (quoting 3 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 22.13, at 431 (5th ed.2000)). This rationale also rings true for corporate directors who, while they are in control of the board, have “the opportunity to remedy ... or attempt to mitigate the damages” caused by prior board members. Shareholders (or unit owners), on the other hand, are generally limited to their ability to file suit or replace the board with new directors whom they hope will be more honest than their predecessors.

¶ 51 As one federal court noted, decisions adopting the doctrine of adverse domination “reflect an implicit appreciation of the realities of the shareholders' position, that, without knowledge of wrongful activities committed by directors, shareholders have no meaningful opportunity to bring suit.” F.D.I.C. v. Bird, 516 F.Supp. 647, 651 (D.P.R.1981). This reality is the same for the unit owners of a homeowners' association. The WCA defines the duties of board members in their governance of the association. IT IS REASONABLE for unit owners to expect that the board members will properly discharge those duties. Where board members are concealing their wrongdoing, the unit owners are unlikely to know or to suspect that those duties are being breached, rather than properly discharged. Without knowledge of the wrongdoing, the unit owners have no meaningful opportunity to evaluate whether to bring suit against the directors. This is true regardless of whether the unit owners ultimately bring their claims individually or on behalf of the association.

696378: Alexander v. Sanford — WA Court of Appeals, Division I | May 12, 2014

Units Benefitted Cannot Supercede Allocations

• The supreme court declined to review this case on March 2, 2021, but granted respondents request for attorney's fees.  One allegation related to “units benefitted” language that’s become a staple of condominium declarations.

¶30 Plaintiffs assert that the MA amended the master declaration in 2010 to add section 10.4.10, which gave the MA discretion over annual common expense allocations. Section 10.4.10, however, applies only to limited common elements, not all of the common elements. Section 10.4.10 provides that "Any Common Expense, or portion thereof, benefitting fewer than all of the Units may be assessed by the Board exclusively against the Units benefitted." See also RCW 64.34.020 (" ‘Limited common element’ means a portion of the common elements allocated by the declaration or by operation of RCW 64.34.204(2) or (4) for the exclusive use of one or more but fewer than all of the units").

Common expenses, and limited common expenses are different expenses, governed by different provisions of the master declaration, and subject to differing statutory requirements. Thus, for example, while the MA has discretion under Section 10.4.10 to approve a limited common expense that would benefit only the retail unit and assess that limited common expense only against the retail unit, Section 10.4.10 does not grant the MA the discretion to change the overall common expense liability allocation set out in exhibit B. Because there is no discretion to change the common expense liability allocation, any challenge to the original allocation accrued in 2006.

770179: Mohandessi v. Urban Venture, 13 Wash. App. 2d 681 — WA Court of Appeals, Division I | June 29, 2020

Mohandessi v. Urban Venture appellate and supreme court documents

Washington Court Holds Association Liable for Following Cost Allocations in Declaration — Stoel Rives | May 07, 2020

• Have some legislation for us to share?  Please let us know!

• NETHERLANDS: Calls for required mediation as courts are “counterproductive.”

Some 40% of homeowners’ associations are riddled with conflict and should have access to mediation, watchdog organization Vereniging Eigen Huis (VEH) has found.

Everyone living in an apartment building is required by law to form a homeowners’ association (VVE) to agree on communal costs, such as building insurance and repairs, but increasingly disputes get out of hand and in some cases, neighbors confront each other in court, the VEH said.

The energy transition and stricter quality and safety rules have forced VVEs to make increasingly complex and costly decisions, director Cindy Kremer told broadcaster NOS…

Mediation needed for squabbling homeowners' associations

— VEH Dutch News | July 09, 2024

• COLORADO: The article below highlights some of the salient points in HB24-1337 including limitation of reimbursement for attorney fees to $5,000 or 50% of the actual costs the association incurred for the failure to obey (subject to certain provisions).

New law will make it tougher for Colorado HOAs to foreclose on homes

— Jesse Paul | Colorado Sun | May 12, 2024

• IDAHO: Three bills passed this session.  CAI appears to have ineffectively lobbied against at least two of these bills. managed to lobby

• MICHIGAN: HB5028 brings solar power within reach by adding incredibly precise statutory language, but one that unfortunately includes a mediocre remedy.

People who want to install solar panels on their roofs have to consider a lot: sunlight, cost, and coordinating with contractors and utilities. Tens of millions of people across the country also have to think about their homeowners association…

Homeowners associations in Michigan now have to allow rooftop solar

— Izzy Ross | Grist | July 11, 2024

• NEW JERSEY: What began as A4384 was eventually substituted  by S2760 and signed into law effective immediately on January 8, 2024.  Thankfully, New Jersey did a better job than Florida and Maryland to provide a ramp for funding.