Friday, January 30, 2009

On to Alternative Dispute Resolution

Things are getting more interesting now; the discussion has moved to whether or not mediation works.

A few lawyers are saying that it never works; most lawyers are in jurisdictions where mediation is mandatory. Benny Kass is speaking favorably of the process; he laments only that mediation comes at the end of the case. There seems to be a consensus in the room that if mediation fails, it is often due to poor choice of a mediator.

On to leasing restrictions... Once again, participants are talking about "rental prohibition regret" -- the situation where partially vacant associations are wishing that they could allow rentals, in order to stop or slow foreclosures, or provide for some income that might allow for the payment of assessments. A panelist who will remain unnamed is suggesting, with a chorus of "boos" that "A board doesn't necessarily have to follow its bylaws." The contention is that the times warrant the action. Jim Strichartz is suggesting that boards should seek adoption of temporary moratoriums on enforcement. Another participant reminded that any such hardship should be conditioned upon continued payment of assessments.

Similarly (as discussed yesterday), what about the age-restricted communities? First and foremost, associations are reminded not to lose their exemption status in connection with the granting of such hardship exemptions.

Another suggestion: Can a board exercise its business judgment, in light of financial difficulties, not to pursue enforcement of violations during the financial crisis? Most panelists (and I) think that's a rather scary proposition, because it might lead to widespread violations, which could lead to waiver of the provision.

CCAL Law Conference -- Day 2, Part 3 -- The Economy, Again

Another session dealing with the economy -- this time, "How to Guide Your Firm Through the Economic Slump". Four partners/shareholders of various sized firms are addressing the economy's effect on firms; all of these firms are seeing dramatic increases in revenue, and (unfortunately) parallel increases in accounts receivable.

One bit of consistent advice from all of the panelists (Hobbs & Olson clients beware) is that firms be more aggressive in following up on accounts receivable. All of the panelists report terminating clients who haven't been paying.

Two collection attorneys in California report that due primarily to the California statutory restrictions, they are accessing each routine collection matter at least 50times. Suddenly, the weather in Southern California is not quite as inviting...

All of the attorneys on the panel insist upon payment for their collections rather than accepting contingent referrals; the consistent response: "You get what you pay for..." Contingent firms, these panelists say, tend to focus only on gathering the "low hanging fruit". Those easy cases, of course, are not the most important cases to be pursuing.

Liveblogging CCAL -- Part 2

The current session is dealing with the perpetual issue of when to report a liability claim. The speaker, Jeanette Dixon Lee-Sam, is reporting that one of the largest reasons for denial is the failure to give timely notice. She reports that her company (AIG) has a staff or lawyers, one of whom will be appointed to seek to resolve the claim, in house.

Ms. Lee-Sam has stated, more conclusively than I have ever heard anyone state, that the notice of a potential claim will not adversely affect coverage or premiums. Her co-presenter, Joel Meskin, generally agreed, although he said that a number of notices may have an adverse effect.

Association lawyers who wish to provide a defense on behalf of their insureds, and insured associations which wish to have their counsel are advised to: 1) carefully consider whether that is, in fact in the association's best interest; 2) articulate, if they do wish to represent the association, how they are specially suited to assist, and 3) be willing to accept the insurer's scheduled rates.

Live Blogging the Law Conference -- Day 2

As posted yesterday, I'm here at the College of Community Associaton Lawyers' Law Conference; while I'm at the various sessions today, I intend to share some of the highlights.

First up this morning is the first session of the two-morning case law update; there are over 50 cases to be covered. I don't intend to summarize all of them, but will note some of the highlights. If there are any particularly interesting cases, I'll follow up with summaries of some of them either here, or on this blog's parent cite, Utahcondolaw.com.

Starting out with some good news; the speakers are reporting that the "Business Judgment Rule" has been repeatedly reaffirmed. The Business Judgment Rule, simply stated, is that the good faith business decisions of a board, if within the authority granted to the board, will not be unduly scrutinized by the courts. The predictions are for more Fair Housing litigation, more Fair Debt Collection Practices Act and more construction defect cases. I think they're predicting that one correctly.

In an Ohio case, Gall v. The Mariemount Windsor Square Condominium Association, the court refused an association's attempt to "correct" an apparently erroneous par value schedule. The lawsuit, which was fought over a change of less than 1%, was brought by an individual who came in third, in an election for two directors.

A California case, Mission Shores Association v. Pheil, involved a California statute which allows a court to reduce the requisite vote for a declaration amendment, wherein 36% of the owners didn't even participate. A similar result was reached in Fourth La Costa Condominium Owners Association v. Seith. Fourth La Costa also dealt with the problem of lender approval. The court affirmed the association's mailing, by certified mail, of letters to lenders, in order to get their "consent".

In the collection realm, a Rhode Island case, Mullowney v. Masopust, rejected a marina condominium's effort to reallocate assessments. Owners in this condominium had a unit that consisted of a locker; ownership of the locker allowed the use of a boat slip. Some owners (presumably also owners of smaller boats), wanted to change the assessments, and base them upon boat size. The court found the efforts to violate the Rhode Island Condominium Act.

In Association Two Condominium Association, Inc. v. Kliger, a Florida Appelate Court rebuked a law firm for refusing to accept a partial payment on assessments. The case serves as a reminder that courts will not be sympathetic to over-reaching associations and their counsel.

A Wyoming case, Dwan v. Indian Springs Ranch Homeowners Association, Inc., involved architectural restrictions; an association which had approved a non-compliant roof pitch later rejected the same pitch on a garage, proposed for the same lot. Based upon the approval to the house, the court reversed the denial on the garage.

Gleneagle Civic Association v. Hardin, another architectural control case, involved an email exchange regarding the proposed construction of a fence. The owners requesting the fence corresponded by email; the ACC chairs responded by email; ultimately the requesting owners attempted to argue that the email rejections of the proposed fence were valid. The Colorado Appelate Court, reviewing all of the circumstances involving email correspondence, affirmed the validity of the email as a "written denial".

A Washington case, Lake v. Woodcreek Homeowners Association, dealt with an owners' conversion of airspace above his garage. The court rejected the conversion of the common area to individual space, without the unanimous consent of the owners, as it altered the owners' percentage interests in the common areas.

In McMahon v. Pleasant Valley West Association, an owner sued the owner of attacking pit bulls, and attempted to sue the association for failure to exercise reasonable control in failing to control the dogs, due to the known dangerous propensities of pit bulls. The court held that the association had no such duty.

Thursday, January 29, 2009

"It's the Economy, Stupid"

I’m at the College of Community Association Lawyers’ law conference, and the big subject of the day is – yeah, you guessed it – the economy.

Speakers are covering a number of topics associated with the economy, and its consequences. Numerous suggestions are being made – few things are strikingly new to me, but the speakers’ repeated affirmation of Hobbs & Olson’s collection practices are reassuring. One of the early afternoon speakers suggested that firms should be considering the pursuit of personal judgments – a practice that we’ve been advocating for years. Another speaker suggested that associations should be including a budget line item for bad debt –I’ve only been recommending that for a year.

A big issue of discussion – and one that we are seeing more of – deals with lenders who foreclose and don’t thereafter pay their assessments, and other lenders who, either by virtue of mandated or voluntary policies, are not foreclosing on their units. It seems to be the consensus that those deadbeat lenders should be pursued aggressively. I agree.

Ellen Hirsch De Haan, President of the Foundation for Community Association Research, is suggesting that associations might want to consider relaxing some rules that might otherwise make sense. Do you want to rigidly enforce anti-rent restrictions, if that rental income might help the owner to pay their mortgage and/or their assessments? Are you going to rigidly enforce your single family restrictions if the children who lost their jobs (or the parents who lost their 401(k)) move in?

“Good guys”, who pay their assessments, are being penalized if the association does not pursue their neighbors, because the neighbors end up paying more. For this reason, associations should be actively pursuing their collections equally, but equitably.

And here’s a scary tale from Florida – abandoned homes there are being stripped of appliances, cabinets, copper wiring and everything else of value. In high-end communities, the strippers are apparently watching the public foreclosure records, and visiting the foreclosed, and thus vacant, homes. So, if you are aware of foreclosed and vacant units in your association, keep an eye on them.

Tuesday, January 13, 2009

Service Animals, Revisited Again


A recent edition of the New York Times Magazine included a rather lenghty, but interesting and (I thought) balanced article on the controversy surrounding companion animals.

The article addresses a number of service and companion species, including miniature horses, monkeys, goats, parrots, iguanas and ducks. The article addresses the Justice Department's proposed rulemaking respecting the Americans With Disabilities Act. As regular readers know, the ADA does not apply to most community associations. The applicable act in the community association realm is the Fair Housing Act, and it has many similarities, but also significant differences.

Because many courts and most owners don't draw a distinction between the ADA and the FHA, however, and because the issues in the article apply to both Acts, I recommend it to those who are interested in the issues. Please remember, however, that the article deals with the ADA, and the rights and responsibilities of associations and residents under the FHA differ greatly from the rights and responsibilities of providers and customers under the ADA.

Sunday, January 04, 2009

Urbane Urban Turbines


The Blue Sea Development Company is building affordable housing in the Bronx which will receive a portion of its electricity from wind-powered, rooftop turbines. Ten one-kilowatt turbines, which apparently cost about $10,000 each, according to the New York Times article, will provide about half of the building's power, which should reduce the building's common area electricity usage from $18,000 per year to $9,000 per year.

This installation is one of many wind-powered installations underway in New York City, following Mayor Michael Bloomberg's stated support for rooftop wind projects in Manhattan.

Photo Credit: Rob Bennett for The New York Times

Friday, January 02, 2009

USGBC's Great Green Home Guide



Green Home Building



The United States Green Building Council has a great web site, full of suggestions for homeowners seeking to save energy, money and to help to save the Earth. Clicking on the logo above should take you there; if not, the site is at www.greenhomeguide.org.

Monday, December 29, 2008

General Growth (Or the Lack Thereof)

Saturday's online Salt Lake Tribune included a reprint of an article from the Wall Street Journal from several weeks ago, regarding the developer [?] of the site that used to be the Cottonwood Mall. It appears that the developer will be giving us more progress in the form of another vacant lot. Perhaps that's better than a vacant mall.

Yet another condominium project being put on hold for a while.

Not exactly cutting edge, but since the Tribune's running this old story, and because I missed it, you may have as well.

Monday, December 22, 2008

We're Number One!

The new Census reports are out, and Utah leads the nation in growth.

That's good and bad news, of course. Good news in that it indicates that there will be a continued need for housing; bad news in that there will be a continued need for housing.

Most of the growth, not surprisingly, comes in small packages. 64 percent of the state's growth in the last year comes from "natural increase" -- births minus deaths.

The Governor's Office of Planning and Development has predicted that at current growth rates, there will be no farmland in Davis County be 2020. And more residents mean more roads, more traffic, more pollution, and more consumers of our state's limited water resources.

Needless to say, it's time to support wise land use decisions.

Tuesday, December 16, 2008

Upcoming Seminars

On February 19, I'll be teaching a seminar for NBI, Legal Aspects of Condominium Development and Homeowners' Associations. My topics will include:
SMOOTH OPERATION, MANAGEMENT AND CONVERSIONS
1:00 - 2:00, Lincoln W. Hobbs

Understanding the Concept of Initial Consent of Homeowners' Associations
Resolving Conflicts Between Governmental Rules and Association Rules
Maintenance and Improvements
Rights and Obligations of Unit Owners
Meeting Procedures, Voting and Elections
Operation of Association
Management and Control
Setting Up Budgets, Reserves and Special Assessments
Fulfilling Insurance Obligations
Managing Conversions
ETHICAL CONSIDERATIONS
2:00 - 3:00, Lincoln W. Hobbs

Understanding Who Your Client Is
What if Provision of the Governing Documents Conflicts With the Law?
Avoiding Conflicts of Interest
Determining and Collecting Attorneys' Fees


Karin Hobbs will be presenting with me; her subjects will include:
CONFLICT RESOLUTION AND CLAIMS AGAINST DEVELOPERS
3:15 - 4:15, Karin S. Hobbs

Construction Defect Litigation
Association Methods of Enforcing Governing Documents
Enforcement of HOA Rules and Regulations
Owners' vs. Association Conflicts
(collection disputes, use restriction violations, major community association renovations and repairs)
Association and Board of Director's Liability Issues
(business judgment defense, statutory and contractual protections, insurance issues)
Disputes Between Individual Owners
ADR and Other Effective Dispute Resolution Strategies
Litigation Process Overview


And, if you're looking to attend a seminar in a warmer climate, I'll be presenting at CAI's Thirtieth Annual Community Law Seminar. That presentation will deal with the greening of communities; the presentation description is:
Earth, Wind & Fire:
The Environmental Debate & its
Impact on Community Associations
Lincoln W. Hobbs, esq., Amy H. Bray, esq., Loura
Sanchez, esq. and Marvin J. Nodiff, esq.
Higher energy costs, regulation of greenhouse
gases, water usage and changing values
will all start to create conflict with existing
association rules and deed restrictions. As the
most local form of governance, community
associations are uniquely positioned to adapt
to this changing environment; the challenge,
however, is to turn obstacles into opportunities.
This interactive panel discussion will kick
off an ongoing dialogue, tackle hypothetical
situations and engage attendees in seeking
solutions to these emerging challenges.

Sunday, December 14, 2008

More Risks Associated With Smoking


In case you missed it, there was a rather spectacular and very unfortunate fire at the Incline Terrace Condominiums last Friday night; as a result of the fire, 80 residents were displaced, and 39 units were destroyed. Here are some links to stories on the fire: KSL, The Salt Lake Tribune and the Deseret News.

Fortunately, no one was killed or seriously injured in the fire. Unfortunately, a few pets were apparently not rescued, and a number of unit owners (and renters) were without insurance for the contents of their units.

Please, regularly remind your owners and tenants that the contents of their units are not insured by the association's policy. And if you prohibit smoking in the units, you probably ought to prohibit it on the decks, as well. (There is a conflict, in the various news stories, as to whether the association tried to stop the on-deck smoking.)

The photo was taken by Jason Denney, and posted on ksl.com.

Tuesday, December 09, 2008

The Collapse of Communism?

A community in Eagle Mountain is suffering from the business failure of Sundance Homes; according to KSL, the developer abandoned the partially-completed community, leaving the association in a mess.

KSL reported on the story yesterday; the story was not very informative, but the comments certainly were. I learned, for example that community associations are communist.

By this morning, for whatever reason, most of the communism references were gone. (A communist plot? KSL protecting its readership?) Anyway, the comment page still has some rather amusing and enlightening comments.

Sunday, December 07, 2008

As Gas Prices Fall, Trash Prices Fall

Not that there's a direct correlation between those two. Rather it's the tanking economy that leads to less expensive (used) gas tanks and their contents.

Recycling, it appears, may be yet another victim of the economic downturn. As demand for new goods drops, so does the demand for the recycled products that those new goods are replacing, as well as the packaging that they came in.

This New York Times Article details the problem; the bottom line is that municipalities are back to paying for their recycling programs.

Don't let this bad news discourage you and your association from actively recycling, however. Low gas and trash prices should not distract anyone from the need to reduce consumption and increase conservation.

Saturday, November 29, 2008

Please, Comment...

In response to this new layout feature.

The goal of the new embedded comment box (below) is to make it more inviting for you, my readers, to comment.

So, let me know if it works...

Friday, November 28, 2008

Will Litigate for Food (Again)...


Once again, Hobbs & Olson will be providing credits on bills to our clients who bring in donations for the Utah Food Bank; each non-perishable item will earn a ten dollar credit on existing bills. And this year, in light of the increased need for contributions, we'll credit up to $200.00 (twenty cans).

So, bring in the cans. Bring more than twenty. And if you're not a client, or you're a client without an outstanding balance, bring them in anyway! We'll be accepting contributions in our bin for the remainder of the year...

Wednesday, November 26, 2008

The Argument...

before the Utah Supreme Court on the continued vitality of the Economic Loss Doctrine (which regular readers know that I "love to hate"), will be heard on Tuesday, December 2, at 9 a.m.

Arguments will be at the Utah Supreme Court, 450 South Main, 5th Floor, Salt Lake City, Utah.

The appeal arises from a dispute between the Davencourt at Pilgrim's Landing Townhome Owners Association and the entities involved in the development of the project. The lawsuit involves allegations of serious construction defects; the development entities successfully argued in the trial court that the economic loss doctrine precluded most of the plaintiff's claims.

I won't get to argue to the court, but I'll be in the audience cheering the plaintiffs on. I was allowed to file an amicus curiae (friend of the court) brief on behalf of the Community Associations Institute. A copy of my brief is available here.

I hope to see you there. And remember, although the public is allowed, literal cheering from the courtroom is strongly discouraged.

Saturday, November 22, 2008

Upcoming Posts

Regular visitors and subscribers to this blog may have noticed my uncharacteristic silence for the last while; I was more than slightly obsessed with the election, and then had to spend some time trying to catch up.

One of the matters that I have been working on is the Best Practices Manual on Environmental Issues and Sustainability; I also created and co-presented a seminar on "The Art of Creating a Green Mixed Use Project". I promised the attendees that I'd post the Power Point which contains a number of links to great sites; here it is.

Over the next few weeks, as I work on the project, I'll post some of the better ideas and links that I find.

Thursday, October 09, 2008

Probably Not Coming to a Condo Near You...


One of the new amenities being used to sell condos in the New York Metropolitan area are wine cellars, located both within the Units themselves, and in what appears to be a limited common storage area.

This article in the New York Times describes the limited common areas:
Designed by Cellarworks, a local company, the $500,000 U-shaped space will provide a mahogany cabinet free of charge to nearly every resident, though larger apartments will get larger cabinets, Mr. Manton said.

Whether you use it to store wine or not, that mahogany cabinet sure puts the classic cubicle with a plywood door and a master lock to shame.

Then again, these condos start at 1.5 million.

Thursday, October 02, 2008

Yes You Can!....


turn your sprinklers off for the year, that is.

According to the Utah State Division of Water Resources, Northern Utah residents can stop watering in October.

You may want to keep an eye on the temperature, because it has been unseasonably hot this Summer, but I think it's still safe to cut your time and frequency way, way back.