New Year’s Resolutions for HOA Board Members

As we approach the new year, allow me to propose the following five New Year’s Resolutions for the Board of Directors of all Homeowners and Property Owners Associations.

1. Develop an understanding of the authorities and documents that control the Association.
In order of priority, the authorities controlling the Association are: Federal Law, State Law, City Ordinance, Covenants and Conditions (C&Cs) and By-Laws. No item may be contrary to anything ahead of it on the list. The Board has no authority over anything but the last two items.

2. Understand Board Limitations.
Read and re-read the Covenants and Conditions and the By Laws. The C&Cs control the things that are required of and prohibited to the residents. The by-laws control the day to day operation of the Association. Things such as when and how meetings are called, what constitutes a Quorum, what items may be discussed and/or decided at the meeting, are all part of the By-Laws. Read these documents until you understand them.

3. Leave Hitler in the History Books.
HOA’s have a frightful reputation throughout the nation. Part of that reputation cannot be avoided. The Board is telling homeowners what they can and cannot do with their property. This automatically puts the Association in the “tyrant” category, regardless how important compliance may be. Counteract this by taking a few simple steps:
a. Maintain Communication. First and foremost, generate a monthly, bi-monthly or quarterly newsletter. Finance it by allowing a few small ads that are sold for the cost of production and distribution. Include current news items, treasurer reports, reminders about current problem areas and other items that will ensure that the newsletter gets read. Link to the Association website, Twitter feed or Facebook Page. If you have not already done so, make a concentrated effort to establish a presence at nextdoor.com.
b. Maintain a usable website. At a minimum, the website should contain; the C&Cs, the By-Laws, the past several newsletters, and current contact information for at least one board member.
c. Clearly communicate the reasons for any actions, whether specific to one resident, or generally to many or all homeowners. “Because we say so” is for your children, not your neighbors.
d. Live by your own rules. I am amazed at the number of Board members that find a way to rationalize their own violations, knowing their fellow Board members will not attempt to enforce the rules against their colleagues.
e. Don’t make a Management Company a buffer between the Board and the residents. The residents need to be able to address the Board directly. If a Management Company is used, it should be for bookkeeping and ministerial tasks only. Never refer a resident to the Company. Figure out the problem, and if needed, assign the appropriate action to the Company. At least annually, the Board should conduct a performance review, to ensure that the Board’s needs are being adequately addressed by the Company.

4. Find what doesn’t work and fix it.
There are a number of things that need to be addressed in any association. Often, covenants are created by the developer, with the intent to make the Developer’s control absolute. Once control is handed to the Association, the rules are not as sensible and seamless. In some cases, a Board Resolution, ratified at the Annual Members Meeting, can establish an interpretation of a troublesome rule. In extreme cases, an actual amendment to the Covenants will be necessary.

5. Recognize the concept of “Opposition without Confrontation”.
Often, the fiercest neighborhood disputes result from someone who takes an opposing viewpoint personally. From that point, every disagreement is attributed to personal motivations. It then becomes nearly impossible to accomplish anything, especially if community involvement or agreement is necessary. Look for instances of hurt feelings, and take steps to mend fences before mole hills begin to grow.

Happy New Year.

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HOA’s May Collect Attorney Fees After Successful Action

In two recent decisions, the Oklahoma Appellate Courts have allowed Homeowners Associations to collect attorney’s fees and costs after successful litigation.

Oklahoma follows the “American Rule”, which is that Attorney Fees may not be awarded unless there is a contract between the parties that allows them or there is a statute that specifically allows for fees in that type of action.

In two cases – Twin Creek Estates v. Tipps, (2011), and Whitehall Homeowners Association v. Appletree Enterprises, (2013), both decided by Division 2 of the Court of Civil Appeals, the prevailing HOA was awarded Attorney Fees, on the strength of the Real Estate Development Act, specifically section 856 which says:

“Any person owning property in a real estate development shall be entitled to bring action against any other person owning property in such development to enforce any of the restrictions or covenants of the real estate development which are specified by the covenants or restrictions. In any action to enforce any restriction or covenant pursuant to the provisions of this section, the prevailing party shall be entitled to recover reasonable attorney’s fees to be fixed by the court, which shall be taxed as costs in the action”.

It is interesting, in my opinion, that in neither case did the Court clarify whether or not the HOA actually owned property in the subdivision.  In the Whitehall case, the issue was whether or not the HOA can be considered a “person”.  The Court clarified by citing a statute that dictates anytime a statute refers to a “person”, the term includes partnerships, LLC’s, Corporations, and other entities.

Despite any ambiguity, it is clear that, at least for now, if the HOA owns property in the subdivision, or if the Conditions and Covenants specifically allow for fees, such fees can be awarded.

 

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Greying Boomers Will Create Legal Concerns for Community Associations, Attorney Says

This article, from the PR Newswire, examines some potential conflicts faced by Homeowners Associations and residents as the aging population continues to grow.

Greying Boomers Will Create Legal Concerns for Community Associations, Attorney Says

 

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The Concept of “Content Neutral”.

With the political climate being what it is, there are few topics more ticklish than patriotism right now.   There is, however, a difference between being unpatriotic and refusing patriotic expression.

In at least two recent cases, conflicts have arisen between homeowners and HOA’s regarding patriotic expression.  One case involves the flying of a large American flag, and the other involves the placement of a large banner.   It is a mistake to think of the issue as one of patriotism.

The issue is whether or not a rule means what it says.  Many subdivisions have rules against the posting of signs, just as many cities have ordinances that regulate the manner in which signs may be posted.  Where a city ordinance says no signs may block the visibility of traffic, it makes no difference if the sign says “Eat at Joe’s” or “Support Our Troops”.  When the City enforces the ordinance, it is not being un-american or unpatriotic.  No one would suggest that the City is opposed to supporting our troops.

The same principle applies to sign covenants.  Signs are prohibited regardless of the message (they are content-neutral).  Where an association allows some signs, but not others, based on the content of the message, and the distinction is not clearly spelled out in the covenant, the association can lose the ability to enforce the covenant altogether.

In short, you cannot have it both ways.  If you insist that a neighbor be allowed a “Support Our Troops” sign, you have to be willing to allow an equally large sign supporting the Westboro Baptist Church.

 

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Tulsa Fencing Dispute Decided in Favor of Homeowners

After being reversed on appeal, a Tulsa District Court Judge has resolved a fencing dispute between two homeowners and the Homeowners Association in favor of the homeowners.

The dispute centered around the perimeter fencing around the Charter Oak subdivision, a gated community in Tulsa.  Two homeowners had constructed gates leading to a public park, in the perimeter fence established in the Association’s fencing easement.  One of the gates had been constructed in 1997, and the other in 2003.  In 2008, the Association announced plans to replace the fence.  One of the homeowners, who was an Association Director, was granted permission by the Board to construct a gate in the new fence in September, 2008.  In January, 2009, the Board voted to remove all gates from the perimeter fence.

Initially, the District Court granted Summary Judgment (finding no disputes of any material fact) to the Association.  The homeowners appealed.  IOn a 2 to 1 decision, the Court of Civil Appeals reversed the decision, deciding that there were disputes as to the material facts, and holding that the homeowners could assert the defenses of estoppel (taking one position deprives a party the right to later take a differing position after another relies on the earlier position), and acquiescence (the permitting of something by words, conduct, or silence for a long period).  The Appeals Court sent the case back to the District Court for a decision on the disputed facts.

After a two day trial in front of District Judge Mary Fitzgerald, the Court found in favor of the homeowners.  At this time, I am not aware of the basis for the Court’s decision, but acquiescence seems the most likely theory.

You can read the Appeals Court opinion here.

Other posts about this and other topics of Oklahoma Law can be found at myOklahoma Law Website.

 

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Effective HOA Board Meetings

Came across this article today.  Anyone responsible for HOA Board Meetings will find this useful.

Read the Article here.

 

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Community Association Insurance

The types and amount of insurance is an important consideration in the operation of any community association.  Matthew Winton is an Oklahoma City lawyer who focuses on community associations.  He has written an excellent article (the first of two) dealing with community association insurance.

Read the Article here.

 

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Debt Collection Fees Under Scrutiny

For some reason, the disputes over HOA practices are especially intense in Las Vegas.  Now a suit filed by two homeowners seeks class action status over the additional fees charged by those collecting HOA assessments.  This applies everywhere, since Federal Courts have held that HOA’s are subject to the Federal Fair Debt Collections Practices Act.  Associations that charge penalties or late fees should review their practices to reasonably assure that they are not subject to attack.

Read the article here.

 

 

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Blog Lists HOA Annual Dues Amounts

A local blog has begun a list of known HOA annual dues amounts.  Although there are only 18 of so Tulsa HOA’s listed, it may become beneficial to see what others are charging.

Read the Post here.

For 2011 – Verify Your Corporate Status

Most HOA’s are organized as Not For Profit Corporations.  In Oklahoma, all corporations are required to file an annual franchise return with a franchise fee.  Failure to file the return and pay the fee results in the Corporate status being changed to “Suspended”, which means the Corporation has no legal authority to sue or defend in Court.

A quick check with the Oklahoma Secretary of State is all it takes to make sure your HOA is in compliance.