ADA Pool Regulation Upcoming Effective Date

January 31, 2013 is the effective date for existing swimming pool owners to bring their pools into compliance with ADA regulations, including providing accessible means of entry and exit. What does this mean to Community Associations? Associations have to consider the following:

1) Is the Association a “public accomodation” under Title III of the ADA? This definition would include, but is not limited to, condotels, associations with swim clubs, and those with events open to the public.

2) Is it “readily achievable” to remove physical barriers in existing pools? Can the Association afford a pool lift or sloped entry in the pool? Will a mounted pool lift fit in the available space surrounding the pool? What architectural renovations will be required to make it feasible?

3) Would it be “readily achievable” to purchase a pool lift in the near future? Associations should get cost estimates and start setting aside funds to move towards compliance if it is not currently feasible to purchase a lift or otherwise remove barriers.

In answering these questions, Associations should consider having a reputable company provide cost estimates for pool lifts that meet the ADA requirements and maintain this documentation as part of the Association’s records.

Please note that non-fixed (portable) lifts will not comply with the ADA requirements unless they were purchased prior to March 15, 2012. The ADA and Department of Justice (DOJ) are not proponents of non-fixed lifts because people with disabilities should not have to wait for a pool attendant to move and operate the lift. The lift should be readily available and operable by the disabled user.

This site and any information contained herein should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

 

Notice of Arbitration Must Appear on First Page of Master Deed to be Enforceable

In Richland Horizontal Prop. Regime Homeowners Ass’n, Inc. v. Sky Green Holdings, Inc., the Court of Appeals upheld the trial court’s ruling that an arbitration clause on a master deed was unenforceable. In this case, a developer created a horizontal property regime by master deed. The master deed included  a cover page and then a second page where the arbitration provision was found. The developer later created a supplemental master deed, also including an arbitration provision, to add a new unit to the existing regime and reduce the proportionate share of common area ownership held by the original unit owners. The original unit owners filed suit seeking a declaratory judgment that the supplemental master deed violated the original master deed. The developer moved to compel arbitration, which motion was denied.

The court held that the arbitration clause failed to comply with the Uniform Arbitration Act which provides in § 15-48-10(a): “Notice that a contract is subject to arbitration pursuant to this chapter shall be typed in underlined capital letters, or rubber stamped prominently, on the first page of the contract and unless such notice is displayed thereon the contract shall not be subject to arbitration.”

The developer argued that the cover page of the master deed should not be included because the second page contains the following statement: “This is the first page of the Master Deed for The Richland Horizontal Property Regime. In the event other pages including, but not limited to cover pages, indexes, or tables of contents are placed in front of this page, those pages shall not be deemed to be the first page. This page and only this page shall be deemed the first page of the Master Deed for all legal purposes.

The court strictly construed the language of the statute and held that the “first page of the contract” meant  “preceding all others.” Since the cover page preceded the other pages in the master deed and it did not contain an arbitration provision, the court held that arbitration was not required.

This site and any information contained herein is for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Liability for Wild Animals: Alligator Update

The Georgia Supreme Court overruled the court of appeals decision holding a homeowners’ association liable for an alligator attack on a guest. Last November, I wrote an article explaining how this case may have come out in South Carolina.

The Georgia Supreme Court used a similar analysis in determining that the association should not bear any liability. Specifically, the court addressed the fact that Ms. Williams knew of the potential for alligators in the pond because she had previously seen gators there. Since the danger was open and obvious to her, the association did not have a duty to warn. 

The court was split 4-3 on this decision. The dissenting opinion by Justice Benham argues that there was no “competent” evidence that Ms. Williams was aware that alligators over seven feet could be found in the area. The association has a policy of removing gators that exceed seven feet or are particularly aggressive. The animal that fatally attacked Ms. Williams was eight feet in length.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Covenant Enforcement: Height Restriction Upheld

Greenbank Beach & Boat Club, Inc. v. Bunney, No. 66308-9-1, Wash. App. Ct., May 29, 2012.

In this case, the association brought suit against Bunney for violating a 15’ maximum height restriction on dwellings within the neighborhood. Bunney submitted building plans for a home six feet taller than the maximum allowed height and these plans were rejected. In spite of this and further attempts by the association to bring him into compliance, Bunney constructed the home as planned.

At trial, Bunney argued that the association abandoned its right to enforce the height restriction by selectively enforcing it. He presented evidence that other homes in the association exceeded the height restriction.  The court determined that the association had not waived this restriction and further found that Bunney acted in bad faith by continuing to build a home that he knew was in violation without attempting to resolve the issue with the association.

As a result, Bunney was ordered to modify his home to comply with the 15’ restriction.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Punitive Fining is Outside Board’s Authority

Fairfax Co. Redevel. and Housing Auth. v. Shadowood Condo. Ass’n,
No. CL-2010-13282, Va. Cir. Ct., May 12, 2011.

In this case, a condo association levied more than $20,000 in fines against a housing authority, which owned several units to rent to low income families. The fines were related to rules violations by the authority’s tenants and failure to provide the association with paperwork relating to the units.

The court held that the fine amount was unreasonable and punitive in nature. After analyzing the association’s governing documents, the court determined that the board’s authority to fine was limited to maintenance of common area property and association operations. The board lacked authority to issue fines as a penalty.

Before levying fines, a board of directors must ensure that the association’s governing documents permit monetary fines. The board should also draft a policy outlining fine procedures and provide notice of the policy to association members.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Liability of a Parent Corporation for Construction Defects

Magnolia N. Prop. Owners Ass’n, Inc. v. HeritageComm. Inc., No. 4943.

A property owners association (POA) filed suit for construction defects in a condominium complex. Appellants are three corporations: HCI (parent corporation), HMNI (seller) and Buildstar (general contractor).  HCI created separate corporations for every development it constructed for the purpose of operating as cost centers. HMNI was the cost center for Magnolia North POA and Buildstar supervised construction at Magnolia North.            

The POA board of directors initially consisted of officers of the Appellant corporations.  During this time, unit owners discovered various construction defects. The officers assured POA members that the defects would be timely cured.  The POA filed suit after turnover of the board from the developer to the unit owners. The POA asserted causes of action of negligence, breach of express warranty, breach of warranty of workmanlike services, and breach of fiduciary duty.  The court affirmed the jury’s award of $6.5M in actual damages and $2M in punitive damages. 

Amalgamation

Amalgamation is a theory of holding a parent corporation liable in place of its subsidiary where evidence shows that corporate interests, entities and activities are blurred to the point that separate legal distinctions can be ignored.  This is not piercing the corporate veil, as fundamental unfairness and fraud are not required elements. The court compared the instant case with Kincaid v. Landing Devel. Corp. where amalgamation was found between three distinct corporations.  In the instant case, the court pointed to the following facts for upholding the trial court’s finding of amalgamation:

1.     HCI, HMNI and Buildstar “shared officers, directors, office space and a phone number”

2.     The corporations shared employees

3.     HCI held itself out to the POA as the corporation responsible for construction defects in its written warranty

 Equitable Tolling

A three-year statute of limitations applied to the POA’s causes of action. Appellants argue the statute of limitations started when construction defects were discovered, marked by the POA’s first meeting on March 8, 2000.  The court disagreed and held that the statute did not begin to run until the date of turnover.

The court relied on the recent case of Hooper v. Ebenezer Senior Svcs and Rehab. Ctr., where the supreme court described equitable tolling as a “doctrine to suspend or extend the statutory period to ensure fundamental practicality and fairness . . . It has been observed that equitable tolling typically applies in cases where a litigant was prevented from filing suit because of an extraordinary event beyond his or her control . . . To deny [equitable tolling] would permit one party to suffer a gross wrong at the hands of the other.”

The POA board consisted of the corporations’ officers until turnover, so it is unreasonable to expect that the POA would have brought suit before the homeowners gained control of the board. As soon as turnover occurred, the POA promptly filed suit.  The court upheld the trial court’s ruling on equitable tolling.

Equitable Estoppel

The Appellant corporations were equitably estopped from asserting the statute of limitations as a bar to the POA’s claim because the Appellants induced the POA’s delay in filing suite.  The court held that deceit is not an essential element of estoppel; it is enough that the party “reasonably relied on the words and conduct of the party to be estopped in allowing the limitations period to expire.”  Appellants assured the unit owners that the construction defects would be repaired, so it was reasonable for the unit owners to give the Appellants time to make good on these promises before filing suit. 

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice.  Seek a competent attorney for advice on any legal matter. 

Use Caution When Reviewing Leases

Many governing documents provide the association with the authority to review and either approve or deny the leases of community members. This authority can be helpful in that the association can ensure the lease document complies with the association’s governing documents, the association can have a record of the new tenant’s name and contact information, and the association can be sure that the number of units or homes leased does not exceed a set percentage if there is such a requirement in the governing documents.

However, with this authority comes great responsibility. Associations must use caution not to violate the Federal Fair Housing Act when reviewing leases.  By enacting a reasonable policy for lease reviews and applying it evenhandedly to all leases, the association can avoid the pitfalls of discrimination complaints.

A tenant cannot be rejected on the basis of her race, color, religion, age, sex, ethnicity, national origin, family status, or handicap. If the tenant participates in the Section 8 Voucher Program, denying the lease could be a violation of the Fair Housing Act on the basis of disparate impact. Similarly, conducting criminal background checks for tenants may also be a disparate impact violation under the Fair Housing Act in some circumstances.

The best approach for community associations is to formulate and enact a reasonable leasing policy and stick with it. Making exceptions in some cases and not others can open the door to litigation.  Leasing policies should focus on length of the lease and compliance with the governing documents rather than the background and identity of the tenant. However, having the tenant’s contact information and a copy of the lease on file will promote better communication within the community. 

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter. 

Property Maintenance Company Cannot Foreclose on Condo Units

Parc Central Aventura E. Condo. v. Victoria Group Serv., LLC, 54 So. 3d 532 (Fla. Dist. Ct. App. 2011).

A Florida court of appeals determined that a company providing cleaning, concierge and security services to a condo association could not foreclose on individual units when the association failed to pay $290,737.27 for services under three separate contracts.  The trial court issued a judgment in favor of the maintenance company and an order of foreclosure on the basis that the individual owners consented to and authorized the services through the contracts entered into by the association. The trial court relied on Florida’s mechanic’s lien statute to order the foreclosure of condo units.

On appeal, the court held that the maintenance company did not have a valid lien under the mechanic’s lien statute.  The court held that the services provided by the company were not permanent improvements, and maintenance of property is non-lienable.  Under Florida’s Condominium Act,if a valid lien encumbers multiple condominium parcels, each owner of an encumbered parcel may exercise the rights of a property owner . . . .”  The court reversed and remanded the case with instructions to issue a monetary judgment instead of foreclosure.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice.  Seek a competent attorney for advice on any legal matter.

Self-Help and Covenant Enforcement- Drawing a Line in the Sand

Frustrated board members often find themselves in a predicament: how far is too far in covenant enforcement?  Oftentimes, the governing documents of an association will allow the board to use self-help to enforce the covenants in a handful of situations.  For example, the covenants may state that if an owner refuses to maintain his or her yard the board may hire a landscaper to mow and then charge the owner for the service.  Unfortunately, boards sometimes go too far in seeking enforcement measures and step into the realm of vigilante justice.  This was the situation in a Florida case where the board of Palomino Lakes Subdivision literally blocked access to the subdivision on three occasions to prevent an owner from delivering what they thought was a mobile home.  Parton v. Palomino Lakes Prop. Owners Ass’n, Inc., 928 So. 2d 449 (Fla. Dist. Ct. App. 2006).

The covenants for Palomino Lakes prohibited mobile homes, but the owner was actually delivering a modular home, which was to be attached to a concrete slab and was permitted by the covenants.  By blockading access to the neighborhood, the board violated the covenants.  The owner later sued the association and the board members individually for breach of contract and injunctive relief. 

At trial, a jury determined that the owner was entitled to $5,000 in compensatory damages and punitive damages of $60,000 against one board member, $50,000 against another board member, and $40,000 against a third.  As the prevailing party, the owner was also entitled to reasonable attorney’s fees.

Board members should think twice before taking self-help measures and subjecting themselves to personal liability.  Always ensure that board actions are permitted by the governing documents.

This site and any information contained herein is intended for informational purposes and should not be construed as legal advice.  Seek a competent attorney for advice on any legal matter.

Alcoholic Beverage Licences for Homeowners’ Associations

H. 3295 is a bill introduced in the House on January 12, 2011 and signed by Governor Haley into law on June 17, 2011. This bill authorizes homeowners associations to hold state licenses to sell alcoholic beverages. In order to meet the definition of a homeowners association under H. 3295, the association must be chartered as a nonprofit by the Secretary of State and “conduct[ ] a business bona fide engaged primarily and substantially in the preparation and serving of meals or furnishing of lodging.”  Prior to the enactment of H. 3295, the Department of Revenue ruled that homeowners associations were not entitled to alcoholic beverage licenses. 

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice.  Seek a competent attorney for advice on any legal matter.