The topic of "open meetings" was discussed at another successful CAI leadership Luncheon. In a very lively discussion moderated by John Morris of Morris Sperry, opponents and proponents of open meeting legislation had a chance to express their thoughts. The discussion explored many aspects of the proposed legislation including notice to owners, the burden on management companies, the value of open meetings, and the mechanics of making it work in a way that avoids litigation. Open meetings continues to be a difficult topic that requires the careful balance of competing interests.
John Morris of Morris Sperry was elected to be the president-elect of the local Utah CAI (Community Association Institute) Chapter. He will serve under the current president this year and take over as president next year. John looks forward to this new position in service to CAI and is hopeful that he can provide the same excellent leadership demonstrated by prior presidents.
The Morris Sperry team and their guests attended and participated in the Utah CAI (Community Association Institute) Golf Tournament. It was a great opportunity to support the local CAI chapter. It was also a great opportunity to socialize and build relationships with people in the industry. Morris Sperry continues to support CAI and its important overall objective of education and training for owners, board members, managers, and all other participants in the industry.
In a previous news story, Morris Sperry reported on an association that banned unmarried couples from moving into the association. That rule, passed in mid-July 2013, was recently abandoned by the association in the face of tremendous national publicity. The story also ignited a nationwide debate among HOA lawyers over the various claims that might be brought against the association and whether the rule addressed issues that should or should not be within the discretion of an association to regulate. This issue highlights how ongoing social and cultural changes in our society can directly impact community associations. It is frequently the case that rules and board actions in associations unknowingly violate the law and/or modern social norms. Well run associations with educated managers and HOA experienced legal counsel typically avoid these types of problems or at least make decisions knowing the risks.
On August 13, 2013, the Justice Department announced that the Townhomes of Kings Lake HOA Inc. (HOA) and Vanguard Management Group Inc. have agreed to pay $150,000 to settle a lawsuit alleging violations of the Fair Housing Act (FHA). The lawsuit alleged that the HOA adopted and both defendants enforced occupancy limits that discriminated against families with children at the Townhomes of Kings Lake, a 249-townhome community in Gibsonton, Florida. Under the proposed consent decree, which must still be approved by the Court, the defendants will pay $45,000 to the family that initiated the original complaint filed with the U.S. Department of Housing and Urban Development (HUD), $85,000 into a victim fund to compensate other aggrieved families, and $20,000 to the United States as a civil penalty. In addition, the proposed consent decree prohibits the defendants from discriminating in the future against families with children and requires the defendants to receive training on the requirements of the FHA.
In a new and unexpected twist, a Florida condominium has apparently adopted a declaration amendment or a rule banning anyone from moving into the association who is "living in sin." The ban allows couples of any gender and sexual orientation to move in, so long as they are married. But, if they are "a couple" and are not married, the association intends to restrict them from moving in. While we can certainly talk about the legal and moral issues arising out of this decision, a more important issue is clearly implicated. Should the owners or board members in a condominium association be regulating this type of behavior at all? One can only imagine the "investigation" that will ensue when the first couple attempts to purchase a unit and professes that they are merely roommates, not "living in sin." Should a board be in the business of investigating and verifying someone's sexual activity? Moreover, exactly how would they do that?
John Morris and Quinn Sperry have been selected to be speakers for the 35th annual Community Association Law Seminar in Las Vegas, Nevada in January 2014. The Community Association Law Seminar is the preeminent national seminar for community association lawyers around the country and around the world. Hundreds of HOA lawyers from around the world converge for three and half days of seminars on cutting edge legal issues affecting community associations. John and Quinn will present on the complicated issue of whether community associations can file for bankruptcy relief and the challenges a filing presents. They offer unique insights into this issue because of their strong backgrounds in both bankruptcy and community association law.
Many people have watched the prosecution of George Zimmerman and the recent not guilty verdict. For Mr. Zimmerman's past neighbors, however, a much more intimate lawsuit was resolved in April 2013. George Zimmerman lived in a community association (HOA). After Mr. Zimmerman fatally shot Trayvon Martin, Trayvon's family filed a lawsuit against the HOA. Hopefully there was insurance coverage for the HOA, but either with our without insurance, a lawsuit against the HOA can be a very stressful process. The case was settled in a confidential settlement in April 2013 and we think it is safe to assume that some payment was made to Trayvon's family.
This incident highlights the serious legal issues involved in community associatoin neighborhood watch programs and with any sort of self policing of associations. Morris Sperry is pleased to post on our website a helpful overview of HOA neighborhood watch programs provided by Beat Koszinowski of the Buckner Company. Go to the Resources tab of this website and look under Articles for the Neighborhood Watch article. At a minimum, any community association considering a neighborhood watch program should talk both to their legal counsel and their insurance agent.
In 2008, an owner in a 2000 single-family home association in Illinois was driving through the community at 34 miles per hour. The posted speed limit was twenty-five miles per hour. The HOA's private security officer pulled the owner over with flashing lights and issued him a fine. The Rules also provided that if the owner had not pulled over, he could have been fined an additional two hundred dollars. The owner fought back and challenged the stop in a lawsuit that ultimately made it to the Illinois Supreme Court. The Illinois Supreme Court held that the Association had the right to pass rules allowing for security personnel to stop owners, to use radar guns and flashing lights on vehicles, and to issue fines for exceeding speed limits. The Court's opinion can be viewed here.
The latest in a never-ending stream of HOA embezzlement stories involves a management company accounts payable employee stealing $180,000 in condominium association funds. For over four years (2009-2013), the employee wrote checks to herself and cashed them at banks and stores. This story, along with all of the others we hear about, highlights the need for vigilance in reviewing financial statements for managers as well as board members. Serious consideration should be given to requiring board members to sign checks and for regular audits or reviews. Finally, it is always important to review the crime/dishonesty insurance policy and any fidelity bonds of any management company retained by the association. Morris Sperry is preparing training specifically on this topic and will be making that training available to board members and managers in the fall of 2013.