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Archive for the ‘HOA’ Category

Trying to Go Green May be Harder Than it Seems

Posted on: March 11th, 2020

By: Matthew Jones

There is more and more urgency for people to utilize “greener” products in an effort to be environmentally friendly and more efficient.  Some of these products include electric cars, water efficient toilets, and solar panels, to name a few.  The government, both state and federal depending on the jurisdiction, even incentivize people to use these products by discounting the purchase price or providing a tax credit.

However, purchasing and then using some of these products is not as simple as that.  Specifically, homeowners’ can run into problems using solar panels if they are part of a Homeowners’ Association (“HOA”).  As part of its governing power over the homeowners in its area, the HOA can control what is done in the common areas or even what is visible in the common areas.  Some people are experiencing that control and receiving pushback from HOAs that do not like the color, build, or location of the solar panels, thereby rejecting the homeowner’s request to utilize the product.  Such restrictions have resulted in frustration from the homeowner who is claiming an attempt to simply “go green” and save some money on electricity bills.

Given this back-and-forth between HOAs and homeowners, a common ground or solution needs to be reached.  And, with these always-changing products and incentives, generic HOA guidelines, rules and regulations, and bylaws will have to adapt, or else litigation is likely to follow.

If you have questions or would like more information, please contact Matthew Jones at [email protected].

Association Board Members Have Fiduciary Duties

Posted on: February 6th, 2020

By: Ali Sabzevari

The Georgia Property Owners’ Association Act and an HOA’s governing documents govern the creation and operation of a homeowners’ associations (“HOA”) and the duties of its board members.

A Board of Directors is typically responsible for managing all aspects of an HOA, but what some people may not understand is that board members have what are called “fiduciary duties” owed to the HOA members in the neighborhood.  A fiduciary relationship may be created by law, contract, or the facts of a particular case. The board members are in an important position of trust, and therefore owe a fiduciary duty to the HOA.

Board members owe fiduciary duties to the homeowners who form the HOA, including a duty of good faith and duty of care, among others. A board member’s failure to adhere to its fiduciary duties could expose the HOA to legal suits and potential liability. Under Georgia law, “a claim for breach of fiduciary duty requires (1) the existence of a fiduciary relationship, (2) breach of that duty, and (3) damage proximately caused by the breach.”

Before volunteering to serve on a Board of Directors, one should consider the legal duties involved.  Moreover, newly-formed and existing Boards need to fully understand and appreciate the governing documents and the duties imposed therein and under Georgia law, including fiduciary duties.  These duties should be taken into consideration when making decisions that impact the HOA members.  Dealing with these issues can be complex.

If you have any questions or would like more information, please contact A. Ali Sabzevari at [email protected].

Changes In Store for California HOA Elections

Posted on: November 18th, 2019

By: Nicole Clowdsley

With 2020 fast approaching, California HOAs should be proactively preparing to comply with a litany of new statutorily mandated changes to their election processes. On October 12, 2019, California Governor Gavin Newsom signed Senate Bill 323 into law resulting in amendments to multiple sections of the California Civil Code regulations governing HOA elections. These changes become effective January 1, 2020.

Among the more significant substantive changes are specific standards HOAs may use to disqualify candidates from running, such as ineligibility of persons with certain past criminal convictions. Also, in order for an HOA to allow for board member acclamation – meaning there are more open positions than nominees and the nominees simply take the board seats – an HOA needs to have at least 6,000 units! HOAs may no longer suspend any member’s voting rights for any reason other than not being a member. Finally, in addition to limiting who may serve as an inspector of elections, HOAs must now ensure the inspector retains additional election materials, such as candidate registration and voter lists, for one year following the election process.

In addition to all the new requirements HOAs must abide by, associations needing to amend their election operating rules must now do so no later than 90 days before an election. So, for those HOAs with elections after the first of the year, time is of the essence. HOAs must act quickly to ensure upcoming elections are conducted in accordance with California’s extensive new requirements, or, they could find their election results overturned for legal noncompliance.

If you have any questions or would like more information, please contact Nicole Clowdsley at [email protected].

‘Tis the Season. The HOA v. The Holiday Display

Posted on: October 15th, 2019

By: Nicole Graham

Piling the family in the car to drive through the neighborhood and see holiday displays is a time-honored tradition. With Halloween and the winter holiday season quickly approaching it is a good time to review the HOA’s guidelines on exterior, seasonal décor. Costly disputes between the HOA and an overly-festive homeowner may be avoided with clearly-expressed, seasonal guidelines that do not go beyond the scope of the HOA’s authority.
In Sainani v. Belmont Glen Homeowners Ass’n., 831 S.E.2d 662 (VA 2019), a fight over two strings of holiday lights between an HOA and homeowners went up to the Supreme Court of Virginia. The seasonal guidelines were intended to promote harmony in the community; avoid discourteous and unsafe conditions affecting property values; to avoid religious issues in the community; and to avoid the prolonged display of lights and decorations outside the respective holiday. The seasonal guidelines permitted “tasteful special decorative objects and lighting that are consistent with recognized Federal Holidays, Religious Holidays, Valentine’s Day and Halloween” for a specific length of time. The guidelines further required decorative lights be turned off by midnight each evening.

One home in the community displayed a string of lights on its front door and another string of lights on the railing along the back-deck in celebration of several Hindu, Sindhi, and Sikh religious holidays throughout the year. The HOA sent the homeowners letters outlining their violation of the seasonal guidelines.  The homeowners did not respond.  A hearing was held.  The homeowners did not appear. The review board who oversaw the hearing imposed a $10 per day fine for each day the violations went uncorrected for a period of up to 90 days. The homeowners did not correct the violations or otherwise respond.  Litigation ensued.

The homeowners argued the seasonal guidelines exceeded the HOA’s authority under its declaration of restrictive covenants and were thus unenforceable. The HOA claimed the seasonal guidelines were authorized by the declaration of restrictive covenants governing the community.

The Virginia Supreme Court sided with the homeowners and found the HOA’s justification for the seasonal guidelines was not reasonably related to any restrictive covenant and their enforcement was, therefore, arbitrary, capricious and unreasonable. The Court noted that restrictive covenants are to be construed most strictly against the grantor and persons seeking to enforce them, and substantial doubt or ambiguity is to be resolved in favor of the free use of property and against restrictions. The Court found none of the covenants in the declaration could be construed to authorize the seasonal guidelines. The only restrictive covenant that directly referenced exterior lighting was inapplicable because it merely prohibited directing exterior lighting outside the boundaries of the lot and causing any adverse visual impact to adjacent lots, whether by location, wattage or other features. The seasonal guidelines did not mention “adverse visual impact” and did not regulate location, wattage or other features. The seasonal guidelines only regulated the dates and number of days during which the residents may display decorative lighting. The Court concluded the seasonal guidelines exceeded the scope of the exterior-lighting covenant.

Both parties incurred far more in attorneys’ fees and costs than the $900.00 imposed by the HOA before the case was finally concluded. At the trial court level, the HOA had incurred approximately $40,000.00 in attorneys’ fees and costs to fight over two strings of lights it did not have the authority to regulate. For further information or questions, please contact Nicole Graham at [email protected].

Before bringing or defending an enforcement action filed in court involving an HOA, ask, does your state first require ADR or that a request for ADR be made?

Posted on: March 12th, 2019

By: Michael Shepherd

As courts across the country become more congested, many courts now order the parties to participate in some form of alternative dispute resolution, such as mediation or non-binding arbitration. When it comes to Homeowners Associations, many state legislatures have taken the affirmative step of requiring HOAs or owners bringing an enforcement action to at least request ADR before filing a lawsuit in court.

It is important to carefully examine your state’s laws to see (1) whether ADR or a request for ADR is required and (2) under what circumstances. For example, California only requires a request for ADR in civil actions that (1) solely seek declaratory, injunctive, or writ relief; (2) solely seek declaratory, injunctive, or writ relief in conjunction with monetary damages not in excess of the limits for small claims actions; and (3) seek to foreclose on an owner’s interest. Cal. Civil Code §§ 5930(b) and 5705. Moreover, a request for ADR is not required in California if the action is filed in small claims court or if preliminary or injunctive relief is necessary. Cal. Civil Code §§ 5930(c) and 5950(a)(3).

In California, the Davis-Sterling Act prevents associations or owners from filing an enforcement action in court before the parties have attempted to submit their dispute to ADR. An enforcement action is defined as a civil action brought to enforce the Davis-Sterling Act, to enforce the Nonprofit Mutual Benefit Corporation Law, or to enforce the governing documents of the HOA. Cal. Civil Code § 5925(b). ADR can take the form of mediation, arbitration, conciliation, or any other nonjudicial procedure that involves a neutral party in the decision-making process. While there is no requirement that the parties participate in ADR, a party’s unreasonable refusal to participate in ADR may be considered when attorney’s fees and costs are recoverable. Cal. Civil Code § 5960. Furthermore, the parties must file a certificate of compliance with the civil action stating that ADR was requested or that a request is not required under the circumstances. Failure to file the certificate of compliance exposes the complaint to a demurrer or a motion to strike.

In today’s world of congested courts, it is important to be apprised of when ADR is required as it is often implemented as a way to relieve court dockets. This is just as true in enforcement actions involving HOAs. Therefore, before bringing or defending an enforcement action involving an HOA, be sure to learn whether your state requires ADR or a request for ADR.

If you have any questions or would like more information, please contact Michael Shepherd at [email protected].