Amending CC & Rs and Bylaws -- National and Local Presentations

The National Business Institute has asked me to present a national teleconference on the subject of amending community association (HOAs, Homeowner Associations, Home Owner Associations, condominiums, PUDs, Planned Unit Developments -- whatever you want to call them) governing documents.

The course will be held on May 17, 2010; I'm going to be looking into whether NBI will let me have a few guests in our training center, so that I'm not talking into a telephone.  I'm also looking into the possibility of a video recording for future access.

Meanwhile, over the next several days I will be working on the course materials, so if there are any sample materials that you want me to include, let me know and I'll try to include some.

The Essentials of Community Management

Last weekend, The Utah Chapter of the Community Associations Institute sponsored its "Essentials of Community Management" course. Several active members of the industry taught about the fundamentals of homeowner association and condominium management. Here are some pictures of some of the presenters. (Not pictured: Derek Petersen).

Thanks to Beat Koszinowski and the Buckner Group for hosting us.

Wasatch County v. Okelberry, Round 2 of __?

You may recall this post from two years ago, where I reported on a trilogy of cases which dealt with the public dedication of private roadways; in the opinions, the Utah Supreme Court held that "An overt act that   is intended by a property owner to interrupt the use of a road as a public thoroughfare, and is reasonably calculated to do so, constitutes an interruption sufficient to restart the required ten-year period under the Dedication Statute."

The Okelberrys and Wasatch County were the parties to one of those three cases, and when the Supreme Court issued its opinion, it sent them back to the trial court for further proceedings, in light of its clarification.  The Okelberrys sought a new hearing or trial to present evidence on their intent; the trial court denied that request and reviewed prior pleadings, new memoranda and heard new arguments.  The trial court found that there were gates on the roads, and that the gates were intermittently locked.  The court stated that Ray Okelberry had testified that he locked the gates but "he did not testify that he intended to keep the public from accessing the roads at this time.


The appellate court reviewed this history, and ultimately sent the case back, once again, to the trial court to "give the parties an opportunity to present evidence related to the Okelberrys' intent to interrupt public use and identify with more specificity whether and when the gates were closed and locked and the intent of those actions."

I think we can anticipate another appeal in a couple of years, at which time the court will review the credibility of Okelberrys' almost certain testimony that the locks were indeed put there to stop people, (rather than exceptionally intelligent Wasatch County livestock with opposable hooves), and Wasatch County's contention that that testimony is not credible.  Hopefully, when presented with that evidence, the appellate courts will allow this case to be finally resolved.

South Ridge HOA v. Brown -- What's a "Short-Term" Rental?

In an opinion issued about a month ago, the Utah Court of Appeals decided that "a weekly rental is clearly similar to nightly rentals and timeshares, when considering those terms together."

The case arose from language contained in the South Ridge Homeowners' Association's Declaration of Covenants, Conditions and Restrictions (C, C & Rs) that provided, in relevant part, "No timeshare, nightly rental or similar use will be allowed on any single family lot."  The court thus considered its task to be to determine "whether Brown's weekly rentals were uses similar to a nightly rental or timeshare."  The court concluded that "a weekly rental is clearly similar to nightly rentals and timeshares, when considering those terms together."  In coming to this conclusion, the court focused on the fact that the "common thread" of these short duration rentals is that "people will be coming and going for short periods of time."

The court ultimately ruled in favor of the association, and surprisingly affirmed the lower court's broad injunction, despite the fact that the court found "the breadth of the trial court's injunction more troubling..."  Under the injunction, Ms. Brown was to notify the association of the identity of her visitors and the duration of their visits.  The association's counsel argued that the requirement of notification was only to apply to those guests who were not accompanied by Ms. Brown, but that was not in the order.  The dissent agreed with the majority's interpretation of the C, C & Rs, but would have limited the injunction to prospectively prohibit the disputed short-term rentals, without a requirement of advance disclosure of occupancies.

I'm not certain whether I disagree with the court's ultimate conclusion in this case, although I'm a bit disappointed as to how they got there.  First of all, in order to interpret the contract as a matter of law, they had to find the contract to be unambiguous.  I'm troubled that they quickly disregarded the provisions which allowed an owner to "rent or lease said owner's residential building from time to time." Brown's counsel asserted, and it was apparently not challenged, that the rentals happened "occasionally" and "fewer than six" times a year.   Thus it appears uncontested that the frequency of the rentals was not in violation of the covenants, leaving only their duration of possible violation.  In that regard, the court relied upon the "timeshare" language to expand the prohibition of "nightly" rentals.

What the court appears to have disregarded is that a "timeshare" is a particular type of ownership, and not directly related to rental periods, or even really related to a rental of a unit by its owner.  Timeshares are specifically defined and regulated by an entire chapter of the Utah Code, (Utah Code Ann 57-19), and that a timeshare unit is intended primarily to be owned among a wide variety (presumably 52) groups of owners, whereas Ms. Brown's rentals were occurring at about 10% of that frequency.  I think it's a stretch, at best, to conclude "as a matter of law," that the uses are similar.  The  conflict between the "time to time" language and the "nightly" prohibition seems to have created an ambiguity which, under traditional jurisprudential rules, must be determined by a jury.  See, e.g. Rubey v. Wood, 15 Utah 2d 312     (1964).    

News on Reverse Foreclosures

My Twitterpal Melissa Garcia, (@ColoradoHOAGal) pointed me to this article in the Miami Herald, which  explains the mechanics of a typical reverse foreclosure.  Reverse foreclosures are being pursued by community associations throughout the country, as associations find themselves stuck with units on which the owners will not pay and on which the lenders will not foreclose.  The problem arises everywhere, but particularly in those states with higher foreclosure rates.

A condominium or homeowners association (HOA) that forecloses a unit upon which there is a senior lien will not be able to take title, but will be able to get access to the unit, and presumably put some pressure on the lender to step up to its obligations.  The law is still developing in this area, so watch for new developments as some cases are decided.

The article also quotes another frequent blogger and twitterer, Donna Berger, (@CondoandHOALaw); Donna wisely recommends that associations rent the units after taking them from the banks.

The Essentials of Community Management

I'm in Natick, MA., preparing to teach the CAI course on The Essentials of Community Association Management tomorrow and Friday.  I don't teach this course as often as some others, but every time that I do teach it, I am impressed as to what a good overview of the industry that it provides.  I've taught board members, attorneys and many managers in the course, and I think it provides knowledge at all levels.  If you haven't taken the course, you should consider it.  It is also available as a home-study course, if you're not inclined to take the time to learn from one of CAI's distinguished national faculty members.

Truth in Advertising of "Utah HOA Attorneys".

There's a new website out there that purports to be a listing of HOA attorneys in Utah.  There's one firm listed on the site, and the listed lawyer (who won't be identified) is identified as a "thoroughly [sic] attorney."   Since I'd never seen the site before, I thought I'd give it the benefit of the doubt, and suggest Hobbs & Olson for a listing, but I clearly indicated in my email that I was not interested in paying for a listing.  5 minutes later, after 9 p.m., I received a response which stated: "we are a paid only service, we do not give space away for free..."

So, if you want to find a "thoroughly [sic] attorney," who is paying to be the listed HOA attorney, you might want to find that other site by Googling it.  I'm not going to list it here, because that would be assisting that site's credibility, and I don't think that a website that purports to list "the best hoa attornies [sic] in Utah," but that is a "paid only service" deserves any credibility.