HOA bill HB 304 passed out of the House Public Utilities and Technology Committee yesterday and is off to the floor of the Senate. As explained in an earlier news article on this site, this law would allow community associations to get advance notice when utilities will be turned off so that Associations can try to avoid freezing pipes and all the damage they cause in community associations. Representative Dixon Pitcher (Representative Pitcher's Website) of the Utah House of Representatives is sponsoring this bill. Representative Pitcher has been a great supporter of fair and balanced HOA laws and his constuents in District 10 should be pleased by his efforts.
John Morris of Morris Sperry testified in favor of Senate Bill 118 (SB 118) today in the House Business and Labor Committee with Senator Todd Weiler. (Senator Weiler's Website) Senator Weiler graciously allowed his original senate bill to be expanded to provide more help for Community Associations trying to amend governing documents (declaration, bylaws, articles of incorporation). SB 118 will limit the restrictions on amending governing documents so that no more than 67% of the owners and mortgage holders are required to approve an amendment. It also fixes a couple of other limitations that exist in some documents, including in Senator Weiler's district. Morris Sperry commends the Utah legislature and Senator Todd Weiler for their serious consideration of the issues facing community associations and their willingness to help solve those problems. Owners and board members in Condominiums, Townhomes, and Homeowners Associations in Senator Weiler's district are well served by his Utah legislative efforts and for his balanced and practical approach to HOA legal issues.
Agencies enforcing the Fair Housing Act have sometimes taken the position that community associations (HOAs, condominiums, townhomes, homeowners associations) must reasign limited common area parking to accomodate requests from disabled (handicapped) persons for more accessable parking. This reasignment can turn into a nightmare because limited common area parking is often assigned in deeds, CC&Rs, and plats. Owners typically rely on the location and convience of an assigned parking spot when making purchasing decisions. It is extremly disruptive and unfair to later force the owner to permanently trade for some parking spot that is often far less convenient after they have purchased. It is similar to informing an owner that they must trade backyards with their neighbor, or someone accross and down the street. Moreover, Associations are making these tough decisions under constant threat of a fair housing complaint that can cost thousands of dollars to defend.
In Commonwealth of Virginia v. Windsor Plaza Condominium Association, Inc., a Virginia Supreme Court found no fair housing act violation when the Assocaition refused to force a trade of limited common area parking assigned to owners, essentially stating that the Association had no right to confiscate the parking of another and therefore the requested accomodation was unreasonable. This case will provide new authority that Associations will have to consider when similar requests for accomodation are recieved.
This case highlights the difficulty Associations face when confronted with Fair Housing Act requests for accomodation. The Association undoubtedly spent tens of thousands of dollars to be vindicated in its ultimately correct decision, with no right to recover any of those attorney fees. If the Court had ruled the other way, the Association would have to pay the complainant's attorney fees, penalties, damages, and its own attorney fees. Morris Sperry understand the Utah Fair Housing Act (UFHA) and the Federal Fair Housing Act (FFHA) and can help associations navigate the difficult procedures that apply when responding to such as request. Moreover, Morris Sperry stays up to date on these and other cases to provide the very best substantive analysis possible.
The Federal Aviation Administration (FAA) has finally released the long-awaited proposed regulation (rules) governing the use of Drones. The proposed regulation contains some very interesting and potentially limiting requirements like the requirement that the drone pilot retain "Visual line-of-site" at all times. One can imagine drone pilots clammoring for access to roof tops and other positions that would allow a greater range while complying with FAA requirements. In addition, the pilots would require vetting, training, and testing by the FAA. The FAA will also require reports of any crashes that cause property damage or personal injury, aircraft registration, and markings on the aircraft like current planes. The drones would be limited to 55 pounds in weight. Cameras are permitted without any limitation. The drones also cannot be flown over people who are not involved in the flying of the drone, although the FAA proposes an exception for "microUAS" drones with proper certifications and knowledge. For an overview of the proposed rule, click HERE. To see the Department of Transportation Operation and Certification of Small Unmanned Aircraft Systems notice that provides the proposed rule and links for making comments, click HERE.
Once again, Morris Sperry projects that within five years Drones will be entering community associations delivering prescriptions and taking photographs for all sorts of commercial enterprises. Moreover, it certainly makes both economic and practical sense for both associations and managers to consider using drones for property inspections as a cost saving effort that might also allow for inspections of areas such as roofs and balconies that in some cases may have been previously impossible. Careful consideration and balancing of prvacy interests will be required when using drones for these types of inspections.
Community Associations with units that share walls (condominiums and townhomes) frequently run into problems when an owner fails to pay utility bills and allows the heat to be shut off in the middle of the winter. The pipes sometimes freeze and burst causing damage in that unit and others nearby.
House Bill (HB) 304 is an attempt to help solve that problem. In short, it would allow HOAs to give notice to the power and gas company and require them to: (1) give notice to the association if they intend to shut off power or gas to a unit, and (2) allow the association to pay the bill if it wants to keep the heat on. It also clarifies the right of the association to enter any unit for the purpose of winterizing the unit if the association receives notice that the power or gas are going to be shutoff and the the association elects not to pay the bills. To read the bill, click HERE.
This bill is another effort by the Utah CAI Legislative Action Committee with the help of Represenative Dixon Pitcher. Morris Sperry remains heavily involved in this committee and with supporting both the Utah Legislative Action Committee and the Community Association Institute generally.
The Las Vegas Consumer Electronics Show was swarming with new drones last week. There were drones small enough to hold in your hand and large enough to carry a twenty-pound payload. The new rage is drones that will follow ("Auto-Follow") a person either by recognizing the person or a logo on the person or by following a device or controller carried by a person. In the next five years community associations will be swarming with drones of all sizes doing all sorts of tasks, the most common of which is taking high definition video or photographs. One can only imagine the issues these drones will raise in society in general and in condominium and homeowner associations.
Consistent with their absolute drive to remain on the cutting edge of HOA law, Morris Sperry is now including provisions in governing documents to address the inevitable arrival of these versatile devices. When you get your governing documents (declaration, bylaws, rules, articles of incorporation, CC&Rs) rewritten by Morris Sperry, you get thousands of hours of work and fine tuning in our template, including ongoing additions and modifications to address new technologies and changes in the law. With a great template to start with, the lawyers at Morris Sperry customize that template to your association with a extensively tested process that produces great documents. That process also maximizes the chances that the association will get the owner approval needed to adopt the new governing documents.
John Morris appeared and testified again before the Senate Business and Labor committee regarding House Bill 98 (HB 98) (HB0098S01), substituted Senate Bill 118 (SB 118) (SB0118S01), and substituted Senate Bill 80 (SB 80) (SB0080S01). All three bills passed out of committee today and are headed to the floor of the Senate. HB 98 is the compilation bill that will clarify and update the requirements for HOA fines in Utah. It will also have a big impact on an association's rights related to rental units in the association and the association's right to impose rental restrictions through amendments to the governing documents. Charges that an Association might impose on rental units just because they are rental units will be a thing of the past as will other blatently descriminatory practices against rental units in associations. SB 118 addresses restrictive provisions in governing documents that make it overly difficult to amend those documents. It will void requirements that 100% of the owners approve amendments in older condominiums, 100% requirements for mortgagee approvals for amendments, and any requirement that a particular owner approve an amendment. If it passes, SB 80 will require certain disclosures at the time of sale of a unit or home in a community association if the association is in the developer control period. This will help provide more information to purchasers about hoa reserve accounts as well as other association financial information.
John Morris testified before the Senate Business and Labor committee last week regarding new HOA laws in Utah. HB 99 will require condominium, townhome, HOA, PUD, and homeowner associtaions to all open their board of directors', management committee', or board of trustees' meetings to owners. John Morris answered questions about the law and addressed concerns of Senators that the law does not go far enough in protecting the rights of owners to attend board member meetings. John explained that the law is a first step and that the industry does not want to create to much of a burden on managers or associations, while nonetheless preserving the right of an owenr to attend board meetings. John continues his work on good laws in Utah on the Community Association Insitute (CAI) Utah Legislative Action committee. House Bill 99 is sponsored by representative Mike Shultz in District 12. HB 99 originated in the local Utah Chapter and was the product of almost three years of discussion among managers, owners in HOAs, board members, HOA attorneys, and other industry vendors and participants.
Leon Benzer pleaded guilty Friday January 16, 2015, in a massive scheme to take over and defraud several homeowners association in the Las Vegas area.
Benzer, a former construction company boss and who prosecutors say is the mastermind behind the scheme, entered a total of 19 guilty pleas, which include conspiracy, fraud, and tax evasion in two separate federal indictments.
In his plea agreement with prosecutors, Benzer provides an explanation of his role in the multi-million dollar scheme. But his agreement does not include testifying against the remaining defendants charged in the HOA conspiracy. Prosecutors allege that this occurred at 11 HOAs across Las Vegas valley between 2003 and 2009.
Prosecutors are recommending that Benzer’s prison time be reduced because of his acceptance of responsibility for his crimes. However, Justice Department lawyer Charles La Bella said prison time will be left to Mahan and his assessment of the federal sentencing guidelines.
Benzer, who once owned Silver Lining Construction Company, and 10 other people were indicted in the scheme in January 2013. These charges relate to more than $7 million that Benzer and his company obtained through fraudulent contracts with the Vistana condominium development to do construction defect work.
The investigation that led to the indictments is thought to be the largest public corruption case federal authorities have brought to Southern Nevada. In all, 36 defendants have pleaded guilty since August 2011. Most are cooperating and waiting to be sentenced after the trial.
Prosecutors are seeking almost $25 million in restitution for the HOAs and lending institutions that were defrauded in the takeover scheme.
Benzer’s goal was to gain control of the HOA boards and steer construction defect litgation contracts to Quon’s (former construction defect lawyer) law office. Quon, now deceased, was to give Benzer 10% of any defect judgments she won. Benzer would also obtain construction defect repair contracts from the corrupted HOA boards.
According to prosecutors, Benzer, Quon and others are to believed to have funneled more than $8 million through secret bank accounts to help them land the contracts.
In his plea agreement, Benzer admits he had the scheme covered from all angles, including setting up buyers to infiltrate HOA communities and get elected to their boards.
Members that were loyal to Benzer were elected through ballot stuffing, bribery and other tricks. Attorneys on Benzer’s payroll were hired to provide legal advice to the boards and oversee the election rigging, putting the Benzer-friendly community management firms in place.
The conspirators gained control of half of the HOA boards and were working on the others until authorities broke up the scheme in 2008 with raids across the valley.
To read the full article, click here.
House Bill 98 (HB 98) just passed the house and has been refered to the Utah Senate for Consideration. HB 98 contains some compromise legislation on landlord/HOA issues and also contains a substantial revision to the HOA fine laws for both condominiums and for homeowners associations governed by the Community Association Act. These provisions allow commercial condominium associations to assess fines for the first time in Utah. Morris Sperry will be ready to help with updates to Rules and CC&Rs to facilitate this new opportunity. The new fine changes also clarify continuing verses repeated violations, the content of warning and fine letters, the procedures related to the issuance of fines and warnings, and the right of board members and owners to attend fine hearings remotely. These fine changes are good for associations and owners. Morris Sperry attorney John Morris is proud to be part of the Utah CAI Legislative Action Committee that worked on this bill and to be one of the primary drafters of the fine law changes in this bill. Morris Sperry remains committed to this volunteer effort and to keeping at the forefront of changes in community association law so that their HOA, townhome, homeowners association, condominium, and PUD clients receive legal advice that is timely and accurate.
Everyone at Morris Sperry took a break Friday for some great fun at Lagoon. It was a well-deserved retreat and the weather and day could not have been better.
By demonstrating competence and skill in the service of our clients, Sydney Allen has been advanced to a legal assistant position at Morris Sperry. She has demonstrated reliability, dedication, and a strong intellect and we intend to fully utilize those capabilities to efficiently and promptly serve our clients. Morris Sperry congratulates Sydney on this quick advancement and looks forward to challenging her in her new position.
The attorneys and staff of Morris Sperry had a wonderful time hosting our guests at the Morris Sperry open house. Thank you so much to all who attended and made the evening enjoyable. Many family members, clients and friends attended and were treated to great hor d'oeuvres and service from the Blended Table. Thank you again to all who attended and we hope you had as much fun as we did.
In a very interactive session, several managers from Advanced Community Services participated in training with the attorneys at Morris Sperry. As usual, the lively discussion was helpful for everyone involved and reflects both ACS's and Morris Sperry's dedication to quality HOA management through intensive training. Anyone looking for a good HOA manager or a good HOA lawyer should start by looking at those people who dedicate serious time to sharpening their skills and expanding their knowledge. Morris Sperry and the managers they provide training to demonstrate that commitment.
Several managers and assistant managers from FCS Community Services were treated to two hours of training on community association rules by the attorneys at Morris Sperry. The interaction and discussion was helpful for everyone. A second session is planned in the future to discuss in further detail various issues that arise in the drafting and interpretation of rules.
In December, 2012, a lawsuit was brought against a Condominium Association and client of Morris Sperry. The plaintiff claimed over $700,000 in damages. The Morris Sperry team, working aggressively in defense of the lawsuit, prevailed on summary judgment in a hearing before Judge Andrew Stone on May 6, 2013. The judge ruled in favor of Morris Sperry's client based on theories advocated and advanced in a cross-motion for summary judgment brought early in the case. This brought a prompt end to a lawsuit brought against a Morris Sperry client.
In a never ending committment to advancing their skills, John Morris and Quinn Sperry completed the 40-hour course required to become court approved mediators. This advanced training in mediation and the extraordinary dedication of time and effort is just one more clear demonstration of the commitement of the Morris Sperry attorneys to unparalled service to their clients. Not only are the attorneys at Morris Sperry excellent litigatators, they do an excellent job of keeping their clients out of litigation whenever possible. The Morris Sperry team is commited to resolving their clients' disputes as economically and efficiently as possible.
John Morris was appointed to the Board of the local chapter of the Community Association Institute. He will serve in that capacity completing a two-year term. This is a further demonstration of Morris Sperry's commitment to the industry and to all homeowners, board members, and industry partners who rely on and look to the local chapter for education and standards. John is excited to begin work as a new member of the board and looks forward to helping and supporting an already great team.
With the additional new staff at Morris Sperry, Quinn has been focusing extra effort and time on the HOA and community association assessment collections. Morris Sperry's advanced collection software allows both managers and board members immediate access to up-to-date account information via the web, anytime and anyplace. Morris Sperry's flexible collections program works with PUDs, Townhomes, Condominiums, HOAs, and every other type of homeowners association.
In a packed house at the Alta Club, John Morris gave an update to Utah attorneys on recent legislation and case law in the area of community association law. The lunch was excellent and the real property section leaders did a great job organizing the event. In a little over an hour, John covered the three most important bills affecting community associations in the 2013 legislative session, HB 101, SB 64, and SB 90. He also discussed and summarized several community association appellate law cases decided in the last year, including one of his own cases. Having participated in the drafting and legislative process of the bills, John added rare insight and perspective, including the history behind the bills and what to potentially expect in the future.
In a well attended event, the CAI Chapter put on a mock annual meeting and a panel of experts offered insight into various issues. Quinn Sperry of Morris Sperry moderated and the rest of the team at Morris Sperry acted out a "typical' annual meeting. There were lots of laughs as issues involving comfort animals, defamation, guns, video recorders, obstructive owners, alcohol, meeting notices, and proxies were raised and discussed. It was great training and good fun for everyone who attended.
Here is another example of the need for HOAs to carefully select their D&O policy. A California community association lost its lawsuit against State Farm after State Farm refused to cover a lawsuit against the HOA under the D&O policy because the plaintiffs had not claimed compensatory damages. You might think you have D&O coverage to cover lawsuits against board members and the association, but if the D&O policy does not cover non-monetary claims or limits the type of claims or remedies sought, you may not have any defense. Every community association should check with its agent to make sure the board members understand the scope of coverage for their D&O policy.
A South Carolina jury awarded an owner in a condominium complex $550,000 in actual damages and $340,000 in punitive damages against the board of a condominium association and the association. The association and board members apparently handed out a flyer to owners identifying a sex offender with the same name as an owner in the complex. While the person on the flyer was not the owner in the project, the association and board members continue to say it was even after other owners challenged the claim. One of the board members also apparently called the owner's bank and told a loan officer that the owner was a sex offender. The board was apparently upset that the owner had not paid assessments on time.
On November 25, 2013, the Justice Department filed a lawsuit against a Minnesota HOA claiming discrimination under the Fair Housing Act against families with children. A key element of the complaint was a rule against "playing" on the lawn imposed against all owners. The complaint also referenced several association enforcement actions and warnings with references to children and children playing on the lawn. The lawsuit seeks injunctive relief and damages. Morris Sperry has successfully defended associations against similar fair housing act enforcement actions which in Utah are brought by the Utah Anti Discrimination and Labor Division.
After a five-week trial (yes . . . five weeks), a California Orange County Jury awarded a homeowner in a condominium association $15,000 in damages for exposure to second hand smoke. The lawsuit was brought against the condominium association, the manager, and the tenants. The Plaintiff prevailed on both negligence and nuisance claims against the Association, essentially due to the Association's failure to take sufficient action upon receiving complaints. Following trial, the Court awarded the Plaintiff another $54,000 in attorney fees pursuant to the attorney fee provision in the Declaration. Including costs of defense for a two-year lawsuit and a five-week trial, the total loss to the Association likely exceeded $300,000. This case stands as a good lesson on the shifting attitudes regarding smoking and the Association's need to carefully consider its obligations in the governing documents.
On October 3, 2013, a judge in Missouri ruled that an association's ban on political signs was unconstitutional. In a detailed opinion, the judge applied prior authority from a well known New Jersey case, holding that the community association's ban on political signs did not satisfy constitutional standards. Fortunately for Morris Sperry clients who have engaged us to review or draft their rules, we have been warning about this possibility since the ruling in New Jersey several years ago. If your association's rules ban political signs either expressly or implicitly, call the lawyers at Morris Sperry to help you consider your options with experienced, thoughtful, and balanced advice.
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.
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?