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Archive for the ‘HOA’ Category

Florida Updates Its HOA Laws

Posted on: December 10th, 2018

By: Michael Kouskoutis

Earlier this year, Florida has enacted several laws impacting homeowners associations. Among these changes include the following:

As of July 1, 2018, Florida requires homeowners associations to publicly record all amendments to governing documents, where “governing documents” is defined to include “rules and regulations adopted under the authority of the recorded declaration, articles of incorporation, or bylaws and duly adopted amendments thereto.” Prior to this law, an HOA’s rules and regulations did not need public recording to take effect. Therefore, associations should publicly record such rules passed after July 1, 2018, especially prior to any attempt to enforce them.

Also as of July 1, 2018, association board members are not permitted to cast votes through email, and fines levied by the board and approved by the committee must be paid within 5 days after the committee’s approval. Moreover, amendments must be presented to voters with proposed changes either underlined or stricken, unless it would hinder the ability to understand the amendment, whereby a notation must be inserted before the proposal.

While these changes are not monumental, we still encourage homeowners associations to be mindful of them. If you have any questions or would like more information, please contact Michael Kouskoutis at [email protected].

New Florida Law Change Allows Property Owners to Challenge Lapsed Covenants

Posted on: November 30th, 2018

By: Melissa Santalone

A recently enacted section of the Florida Statutes allows property owners to seek court intervention to prevent their community associations from revitalizing lapsed covenants and restrictions as to their parcels. Property owners can commence an action for judicial determination that any revitalization of those covenants or restrictions as to the property owners’ parcels would “unconstitutionally deprive” the property owners of rights or property. Fla. Stat. § 712.12(3), enacted in March and effective as of October 1, 2018, is a new section of the Marketable Record Title Act (MRTA) and allows homeowners to bring these actions until October 1, 2019. Property owners that take advantage of this new right of action can only challenge covenants and restrictions that community associations have allowed to lapse on or before October 1, 2018. If such a property owner is able to obtain a court order or judgment under this section declaring that revitalization of the covenant or restriction would unconstitutionally deprive him or her of rights or property and the covenant or restriction is revived, the covenant or restriction may not alter the rights of the property owner without his or her consent.

This change in the law could result in fascinating litigation in the Florida courts. Under MRTA, community associations’ covenants and restrictions, if not properly preserved or revitalized, are extinguished after 30 years. Therefore, under the new addition to MRTA, it would be possible for a homeowner in a community that has inadvertently let its covenants lapse to go to court and ask that his property not be subject to any community assessments, even if such a covenant imposing them is revived. The end result could leave community associations with fewer resources to manage the same shared property.

With this change in the law, Florida community associations now more than ever need to pay close attention to the age of their covenants and restrictions. Preservation of covenants and restrictions prior to lapse is a relatively simple process in Florida, while the process of revitalization after lapse is more complicated and requires approval from the Florida Department of Economic Opportunity. It is important to note that the lapse of community covenants and restrictions happens in other jurisdictions as well, like in California and for certain communities in Georgia.

Attorneys in FMG’s HOA National Practice Section can advise you as to whether and how covenants and restrictions can expire, preservation, and revitalization in your area.  For more information, contact Melissa Santalone at [email protected].

HOA’s Situated in California’s Coastal Zone May Not Unilaterally Ban Airbnbs

Posted on: November 27th, 2018

By: Frank Olah

In the past few years, online booking sites such as Airbnb have predominated the short-term vacation rental market. As a result, many of California’s traditional vacation destinations have seen a surge in short-term rental (STR) activity causing cities and municipalities to issue rules in an effort to regulate this new type of market without alienating full-time residents.

For communities located in California’s coastal zone, the Coastal Commission has assisted with the development of Local Coastal Program (LCP) vacation rules. It has been the Commission’s position that rules affecting short-term vacation rentals in the coastal zone must be done in the context of a LCP and/or be authorized pursuant to a coastal development permit (CDP).

The coastal zone is an enormous area larger than the State of Rhode Island that varies from several hundred feet to five miles on land and includes a three-mile-wide band of ocean. Implementation of California’s Coastal Act (Pub. Resources Code § 30000 et seq.) policies is accomplished through LCPs that must be prepared by the 15 counties and 61 cities located in the coastal zone, which are then submitted to the Commission for approval. An LCP includes a land use plan. Development in the coastal zone may not commence until a CDP is issued by the Commission or a local government that has a certified LCP.

Unsurprisingly, the influx of Airbnb renters in common interest developments has raised the question of whether and to what extent HOA Boards may regulate or outright prohibits STRs. Generally, California HOA’s have the right to restrict short-term rentals, set minimum rental periods, and impose reasonable fees; and the Board’s decisions are entitled to deference by the courts.(See, Watts v. Oak Shores Community Assn. (2015) 235 Cal.App.4th 466.)

However, the issue has arisen as to whether HOA’s located in coastal zones under the Commission’s jurisdiction may similarly regulate STRs. This year California’s Second District Court of Appeal found that HOA’s located in the coastal zone do not enjoy similar discretion and deference. In Greenfield v. Mandalay Shores (2018) 21 Cal.App.5th 896, the court held that the decision to ban or regulate short term rentals, such as Airbnb’s, must be made by the City and the Coastal Commission, and not the HOA.

In Greenfield, owners in the Mandalay Shores Community Association, located in the Oxnard Shores Coastal Zone, sought to enjoin enforcement of the HOA’s resolution banning STRs because they argued the ban constituted a “development” under the Coastal Act requiring a CDP and the HOA had failed to obtain the permit before adopting the ban.

The court observed that for decades non-residents had rented beach houses at Oxnard Shores on a short-term basis. The certified LCP for the City of Oxnard did not address STRs. In 2016, the City announced it was considering drafting a STR ordinance to regulate the licensing and operation of STRs. In June 2016, Mandalay Shores, a mutual benefit corporation, adopted a resolution banning STRs for less than 30 days and imposed significant fines on homeowners who violated the ban. In August 2016, the Commission notified Mandalay Shores that the STR ban was a “development” requiring a CDP.

The issue before the Greenfield court therefore was whether such a STR ban constitutes a “development” under the Coastal Act requiring HOA’s to obtain a CDP. “Development” is broadly defined to include any “change in the density or intensity of use of land.”  Courts have given that term an expansive interpretation, not restricting it merely to activities that physically alter the land or water.

The court then analogized the STR ban to a locked gate or posting “no trespassing” signs to prevent access to a beach. The court reasoned that one of the goals of the Coastal Act is to maximize public access to the beach. By banning short-term vacation rentals, an HOA created a “monetary barrier” to the beach.

The court found that the STR ban changed the intensity of use and access to the homes in the Oxnard Coastal Zone because before the ban, STRs were commonplace in Oxnard Shores. Just to be sure there was no misunderstanding, the court held: “STR bans are a matter for the City and Coastal Commission to address. STRs may not be regulated by private actors where it affects the intensity of use or access to single-family residences in a coastal zone. The question of whether a seven-day house rental is more of a neighborhood problem than a 31-day rental must be decided by City and the Coastal Commission, not a homeowner’s association.”

The Greenfield court relied on the fact that the STR ban at issue affected 1,400 units that had historically been used for short-term rentals. While this fact may limit application of the case to new developments or those which did not historically have STRs, the Coastal Commission’s policy is to require cooperation from the HOAs in obtaining CDPs according to the local coastal plan where the HOA is situated in a coastal zone. Therefore, HOAs contemplating STR bans must work with their local government and the Commission to develop suitable regulations or risk litigation by HOA members hoping to cash in on Airbnb’s popularity.

If you need help with this or any other HOA related question, Frank Olah practices HOA law in California and Washington and is a member of Freeman Mathis & Gary’s HOA National Practice Section. He can be reached at [email protected]. For information regarding governmental regulation of STRs, please contact Dana Maine in Freeman, Mathis & Gary’s Government Law National Practice Team at [email protected].

Facebook And Association Criticism: How To Address Unfounded Allegations Against An Association And Its Board

Posted on: October 12th, 2018

By: Jonathan Romvary

How far can a Board go in fighting against what they believe is unfair homeowner criticism? Can they publish a formal response to unfounded allegations? How should Associations address online criticism on unofficial Facebook groups created by dissatisfied homeowners?

These issues were partially addressed in a recent unpublished California Appeals Court decision in Kulick v. Leisure Village Association (2018). Kulick involved two consecutive lawsuits between a homeowner who was anonymously publishing an unofficial newsletter that was highly critical of his Homeowner’s Association, the Association’s Board and its attorneys. Unfortunately for the homeowner, the HOAs rules specifically prohibited the dissemination of anonymous publications to the Association’s members and the Association successfully filed suit against the homeowner for breaching the Association’s covenants, conditions and restrictions (CC&Rs) and was awarded more than $125,000.00 including punitive damages.

After losing his appeal, and apparently not learning from the prior lawsuit, the homeowner began republishing his anonymous newsletter criticizing the Association’s Board, this time asserting that the Board and its officers committed perjury, extortion, obstruction of justice, racketeering, and lying and cheating. The Association’s attorneys responded to the most recent allegations by distributing an official letter to all of the homeowners addressing the allegations as a “reckless communication” containing “unfounded, inaccurate, and spiteful allegations” against the Association and detailing the prior lawsuit against the homeowner. Feeling attacked by the HOA, the homeowner filed a lawsuit against the Association for, among other things, defamation. The HOA defended itself saying its actions were protected under California’s anti-SLAPP laws which are designed to protect defendants who have been sued for acts in furtherance of a constitutionally protected right of free speech or petition. The trial court agreed, finding that the Association’s letter constituted “protected activity” as a public writing relating to an issue of public interest to the Association’s homeowners’, i.e. the lawsuit between the Association and homeowner. Ultimately the California Appellate Court upheld the trial court’s ruling.

From Kulick, it is clear that Associations may respond to individual criticisms that are not legally permissible (e.g. false assertions of fact, etc.) and have certain rights against defamation published by its members. However, it remains unclear to what extent Associations can restrict alternative forms of publications, such as Facebook community groups or anonymous Twitter accounts. In the age of Facebook, where publishing and distribution is free and easy, Associations must remain vigilant. False accusations and anonymous publications can cause significant disruption to the operation and reputation of an Association. Associations should be alert for publications containing false assertions or publications that purport to be official communication and should address any statements that defame the association, its board of directors, managing agent, or employees.

If you have any questions on how your Association can be proactive and protect itself against unofficial homeowner publications or would like more information, please contact Jonathan Romvary at [email protected].

New Jersey Appellate Court Affirms Association’s Right to Enforce Code of Conduct

Posted on: October 1st, 2018

By: Mark Stephenson

The close-set nature of condominium association communities lends to the adoption of codes of conduct as an effective way to promote efficient dispute resolution and unit owner civility. Such disputes are a too-fruitful source of litigation. Recently, in Chassman v. Longview at Montville Condominium Association, the Superior Court of New Jersey, Appellate Division affirmed the right of a community association to enforce its code of conduct and approved the way in which the association did so. Docket No. A-1660-16Te, 2018 N.J. Super. Unpub. LEXIS 1325 (June 7, 2018)

Plaintiff Jacqueline Chassman lived with her son as a unit owner at the Longview condominium. On February 3, 2014, Chassman and her son were involved in an altercation with an employee of the snow removal company hired by the Association. During the altercation, the son allegedly threw a punch at the snow removal employee. Learning of the incident, the Association sent a “Cease and Desist Order, Notice of Fine” letter to Chassman, advising her that her son’s conduct was a violation of the Association’s code of conduct, resulting in a $100.00 fine.

The Association’s by-laws afforded unit owners with a dispute resolution procedure, which Chassman used to request a hearing to dispute the allegations regarding the incident. The Association’s judicial committee held a hearing and Chassman was afforded the opportunity to testify, call and cross-examine witnesses and present evidence. Based on the record evidence before it, the committee concluded that the evidence showing Chassman’s son had punched the snowplow operator was credible, the conduct violated the code of conduct and increased the fine to $150.00. The committee issued a written decision that Chassman appealed to the Association’s board, which affirmed the original decision. Chassman refused to pay the fine, causing her membership privileges to be suspended. As a result, she was unable to use the condominium’s common facilities, including its clubhouse and swimming pool.

In May 2015, Chassman filed suit against the Association, alleging, among other things, that the code of conduct was invalid, the Association’s dispute resolution procedure was unlawful, and the Board had breached its fiduciary duties owed to her as well seeking $8,500.00 in damages plus interest and costs. The trial court granted summary judgment in the Associations’ favor, holding that its actions, and those of the Board and the Committee in resolving the dispute were authorized by the by-laws. Chassman appealed. In affirming summary judgment and dismissal, the Appellate Division made clear the Association’s broad right to determine and enforce appropriate rules of conduct and impose penalties for violations, a holding helpful to Associations coping daily with vexing and often highly-personalized disputes.

The appellate court observed that a condominium association’s authority is found in the New Jersey Condominium Act and its by-laws. Such by-laws allow an association to establish a method to adopt, amend and enforce reasonable administrative rules and regulations that the association and its board are responsible to enforce, including reasonable fines, assessments and late fees on unit owners as the by-laws may authorize. In this matter, the Association’s by-laws empowered the Board to adopt rules and regulations necessary for operation and use of the property, including rules and regulations regarding the conduct of unit owners and persons residing in their units. The Association’s by-laws expressly authorized the Board to impose a penalty for violations of the code of conduct and suspend unit owners from membership privileges when they fail to pay a duly-imposed penalty. Finally, the appeals court found that the Association’s dispute resolution process fairly addressed Chassman’s claims. Eventually, Chassman paid the fine and her privileges were restored.

Disputes involving condominium associations, their board and committee members, unit owners and residents are often time-consuming, burdensome and costly. Effective dispute resolution procedures and well thought-out codes of conduct can help resolve matters more efficiently and quickly.

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