A veteran manager in the Utah HOA industry recently told a lawyer at Morris Sperry that he manages a Utah community association in which the board (with the help of an attorney member) has decided that it is just too hard to get the required 67% approval of owners necessary to approve declaration amendments. So, in a clever solution to this problem, they decided that they will treat any owner who does not respond to a voting request as a "yes" vote. Not surprisingly, amendments to their declarations are now easier than ever! In a perverted twist on voting, unless they get more than 33% of the owners to vote "no," every amendment the board propose passes without any problem! You don't need a single person to vote "yes," or at all, to get amendments to the declaration to pass!
It only takes a minute to think of the fun any owner in this association could have. Just get enough owners to demand a special meeting and vote on a particular issue and your are in business. Sometimes it only takes a handful of owners to demand a special meeting. The board must send out the ballots and apply the same rules they are applying to their amendments. You don't like that rental restrictions . . . demand a special meeting and watch the association board scramble to gather enough no votes to prevent your amendment from passing!
After you quit laughing, a hard reality sets in. The ultimate effect of this voting rule is a letter from an attorney hired by an owner demanding that the association undue all of its bogus declaration amendments and threatening a lawsuit. It is not a question of whether these amendments will be challenged, it is just a question of when and how much it will cost the Association in attorney fees to come to their senses and undue the amendments passed using this laughable voting rule.
Naturally, our veteran manager expressed concern over this voting practice and was told by the board that an outside attorney had offered a legal opinion and that this was a legal way of voting. This is why community associations (condominiums, PUDs, Townhomes, and homeowners associations) should seek out the advice of the HOA attorneys at the Morris Sperry law office. Community association law is a complex area of law with no mercy on general practicioners and dabblers who have one HOA case a year. Would you go to a divorce lawyer for estate planning? Would you want someone who handles personal injury cases to file your bankruptcy? The lawyers at Morris Sperry have one focus - HOA law. That's all they do. Why would you go anywhere else for your HOA legal questions and risk the type of advice that this poor association received?
Condominiums, Townhomes, and Homeowner Associations should be aware that playing music or movies in the clubhouse or in any common area to a group of owners and/or their guests could be a copyright infringement. The test is whether the display is a "public performance." That legal and factual analysis depends on the makeup of the group of people in attendance. Private parties in HOA clubhouses have been held to be public performances for purposes of the music played at those events. Any association considering any organized event in a clubhouse or common area at which a movie or music will be offered by the Association, should contact Morris Sperry for a quick analysis or make sure whoever they source for that entertainment complies with copyright law.
Senate Bill 80 passed the Utah Senate yesterday and will now start its journey through the House of Representatives. SB 80, entitled "Homeowners' Association Reserve Fund" will require developers during the period of administrative control (the time developers control a new project) to provide a copy of the HOA governing documents and the most recent financials for the association in any sale of a unit or home in the community.
Senate Bill 218 has passed out of committee in the Utah Senate and is now moving forward on the floor of the senate. This bill would make several changes to the Revised Nonprofit Corporation Act. Those HOAs that are incorporated, which 95% are, will be subject to the changes in all sorts of areas. Among other things, the new HOA law would: (1) clarify that notice and member participation by text, email, and other electronic means is acceptable in more circumstances, (2) eliminate the ability to use written ballots in a meeting if those ballots were solicited as part of an effort to take action without a meeting, (3) clarify that a proxy may be sent by text, email, or other means of electronic communication, (4) clarifying the right of board members to approve of board actions by text and email, (5) limit the authority of committees, (6) clarify that other types of notice may be permitted for meetings of the members and board, (7) clarifies the conflict of interest section application to relatives of board members, and (8) clarifies the contents of articles of restatement.
If this bill passes, HOAs will need to update their procedures and practices applicable to daily decision making by board members and for member meetings and action. Morris Sperry will continue to monitor this bill and will be ready to provide any association with a complete overview of the changes if this new law passes.
SB 118 was amended and substituted today to include an after-the-fact change to HB 99, the HOA open meetings bill that recently passed both houses of the Utah Legislature and is waiting for the governor's signature. If the governor signs it, HB 99 will require HOAs to have most board meetings and management committee meetings open to all owners and will require notice of most of those meetings to owners who request notice. Consistent with the desires of the Utah Senate, a provision was added to SB 118 that will modify the new HOA open meeting law to provide for a notice, right to cure, and cause of action for an owner against an HOA that refuses to comply with the open meeting laws. This cause of action will allow an owner to recover a $500 minimium damage amount, an order that the association comply, and attorney fees if an HOA ignores the new open meeting requirements after a warning from the owner. As one of the draftsman of both the original HB 99 open meeting bill and of the changes required by the Senate, John Morris and the Morris Sperry team of lawyers are ready to advise HOAs in Utah (condominiums, townhomes, homeowners associations) on what they need to do to comply with this new law and all HOA laws. As a frequent advocate of owner rights, the Morris Sperry attorneys also remain willing to assist owners with enforcing their rights under this law and any other.
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.
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.
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.
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.
Morris Sperry has confirmed their continuing sponsorship of the local Community Association Institute Chapter. Morris Sperry once again agreed to sponsor the local Chapter at the highest level - a diamond Sponsorship. Morris Sperry stands behind the local chapter and its mission to educate board members and industry participants.
In a recent decision, the Utah Supreme Court held, a condominium property manager owed no duty to a resident in the complex who tripped and fell on tree shoots in the lawn. In a lengthy decision addressing several legal theories, the Utah Supreme Court stated that the property manager was not a "possessor" or the land, did not owe an independent duty to the owner, and had generally complied with its contractual obligations. One lesson is clear from the decision. If a property manager takes any action to contribute to a dangerous or unsafe condition, the manager may be liable. Although the court was concerned that the property manager may have contributed to the danger caused by the tree shoots through repeated mowing instead of proper removal, the issue had not been properly addressed by the plaintiff and was therefore disregarded. The core lesson for associations and managers is to always strive to resolve unsafe conditions in HOAs. Nobody wants anyone to get injured enjoying the open space in an HOA, regardless of legal concerns.
Houston is a unique city in that it has no zoning. Theoretically, anyone can build anything they want anywhere. In reality the ability to develop remains constrained in other ways that prevent building anything anywhere. In a recent and unique case a developer considered building a large mixed use project near single family residential areas. The residential owners sued and obtained a verdict for over a million dollars under the theory that just the plan for the new development created a "nuisance" that damaged them. Although this is an interesting case, it would be very difficult to bring a case in Utah under the same legal theory. More importantly, most new construction in Utah is subject to some zoning regulation. This case remains, however, an interesting result of the never ending tension between existing land owners and developers of nearby parcels. Morris Sperry is uniquely situated to assist both existing owners and developers in these situations.
In a recent study performed by CAI, only 10% of owners expressed some level of dissatisfaction with their HOA. Almost two-thirds of owners rate their association experience as positive, with 26% indicating that they are neutral. The study goes on to confirm that 90% of owners say association board members serve the best interests of their communities, 92% of association owners are on friendly terms with their association board members, and 70% confirm that they believe the association rules protect and enhance property values. Although the media and critics tend to focus on the occasional association dispute, most associations are well run and the owners in them are very happy with what the association is doing.
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.