2015 Condo and HOA Laws – Fines

June 22, 2015

By Curtis G. Kimble.

This year was another busy year at the Utah legislature for the HOA world.  Many changes and additions were made to the statutes that govern condominiums, community associations and nonprofit corporations.  As always, refer to the UtahHOALaws app on your iOS device or Android device, or on the web at utahhoalaws.com for the current HOA statutes.

The most significant changes that affect HOAs are laws that:

  • Change how fines must be levied and collected,
  • Require board meetings to be open to the association membership,
  • Change what rental restrictions may be adopted by an association after May 12, 2015,
  • Set forth requirements and procedures for record keeping and making records available to members.

Fines.  

Utah Code 57-8a-208 for community associations (non-condo HOAs), and Utah Code 57-8-37 for condos, provides certain requirements for levying fines.  These laws went into effect May 12, 2015.

Before assessing a fine, the board must give the owner a written warning that:

  1. describes the violation;
  2. states the rule or provision of the association’s governing documents that the owner’s conduct violates;
  3. states that the board may assess fines against the owner if a continuing violation is not cured or if the owner commits similar violations within one year; and
  4. if the violation is a continuing violation, states a time that is not less than 48 hours after the day on which the board gives the owner the written warning by which the lot owner must cure the violation.

Then, a board may assess a fine if:

  1. within one year after the board gives written warning, the owner commits another violation of the same rule or provision identified in the written warning; or
  2. for a continuing violation, the owner does not cure the violation within the time period that is stated in the written warning.

Subsequent fines.  If permitted by the association’s governing documents, after the board assesses a fine against an owner, the board may, without further warning, assess an additional fine against the owner each time the owner:

  1. commits a violation of the same rule or provision within one year after the day on which the board assesses a fine for a violation of the same rule or provision; or
  2. allows a violation to continue for 10 days or longer after the day on which the board assesses the fine (thus, there must be a 10-day period between fines for continuous violations).

Note, as indicated for “subsequent fines,” it is important to have a schedule of fines or fining policy in place in the governing documents (if not in the CC&Rs, then in the rules or separate policy) that allows for levying more than one fine for the same violation without having to repeatedly provide notice first.  Contact us for help with that, if needed.

In my next post, I’ll discuss the new laws on open meetings and rentals.

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Your Single Family Definition Could Land You in Hot Water

October 3, 2012

By Curtis G. Kimble.

The U.S. Department of Housing and Urban Development (HUD) announced recently that it is charging a Florida homeowners association (HOA) and its management company with violating the Fair Housing Act by telling a family of eight that they had too many people living in their townhouse and threatening to evict them if they didn’t reduce the number of occupants based on an occupancy policy that permitted only six people to live in a four-bedroom home.

The federal Fair Housing Act makes it unlawful to deny housing or impose different rental terms and conditions based on disability, race, national origin, color, religion, sex, or familial status. Overly restrictive occupancy policies may unlawfully discriminate against families with children by preventing them from living in a home.

“Homeowners associations and management companies have an obligation to ensure that their occupancy standards do not violate the Fair Housing Act,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD is committed to taking action against anyone who unlawfully denies housing to families because of the number of children in the family.”

If a federal judge finds discrimination did occur, the homeowners association and the management company could face up to $16,000 in fines plus damages.

This issue frequently arises as a result of the enforcement by an association of a requirement in the CC&Rs that a unit or lot be occupied by a “single family.”  If the definition of “single family” is too restrictive or narrow, the association could be faced with a discrimination claim and hefty fines from HUD or from the Utah Anti-discrimination and Labor Division.

HUD will look at and often defer to a local ordinance for permissible restriction on occupancy.  In the case above, the county permits up to eleven occupants in the townhome.  So, the Association was not able to point to that ordinance as a defense.  HUD also looks at the size of the unit and number of bedrooms to determine if an occupancy restriction is discriminatory.  In this case, the Association only allowed one and a half people per bedroom.  At least two people per bedroom should be allowed generally (although other factors are relevant, as well).

Pay to Play, Literally?

In a separate matter, HUD charged a Massachusetts condominium association and property management company with discriminating against families with children.  HUD accused them of unlawfully charging fees to parents for allowing their children to play in the common area.

The families were informed by the Association that they were being fined $10 a day for two days for children playing in the common area, $10 a day for two days for allegedly causing damage, $25 to reimburse for the damage and $437.50 for attorney fees. Prior to this, the families had not received any fines or warning, and when an adult resident was having a party on the common grounds, no fine was issued.

It’s illegal to impose different rules and restrictions on families with children, unless they are directly related to issues of safety or health, but even then, caution must be exercised.  Always consult a qualified attorney when adopting or enforcing restrictions that may trigger a discrimination issue.


Home Ownership and Second Hand Smoke: the American Dream or a Health Nightmare?

January 20, 2012

By Curtis G. Kimble.

How far can a government or an HOA go to dictate what can and can’t be done inside of a homeowners own home? Is an owner of an attached dwelling or a condominium unit able to do whatever they want within the confines of their home as long as it’s not illegal? Is a homeowner entitled to create and distribute from their home a “Class A” carcinogenic substance, which causes cancer and respiratory diseases and disorders, among other problems and which is able to infiltrate neighboring homes?

This is a question being increasingly asked in other states where some state courts have held that smoke transferring between units is a nuisance. But others have determined that the cigarette smoke is like an odor intrusion, a condition of living in a community environment that residents simply have to put up with – a startlingly misguided mentality considering the fact that the EPA has determined that there is no acceptable level of exposure to Class A carcinogens, and considering that second hand smoke causes serious problems for children, including ear problems, middle ear disease, acute respiratory infections, wheeze illness, slowed lung growth, and more severe asthma, and that 430 American newborns die each year from Sudden Infant Death Syndrome (SIDS) caused by second hand smoke.

Incentives offered by the Federal Government have led cities from Austin to Boston to prohibit smoking in public housing. In 2006, a judge ruled that secondhand smoke could be a breach of “warranty of habitability” under New York law.  At least six California cities and counties have banned smoking in all condo units.

Fortunately for Utah residents who don’t appreciate dangerous and toxic chemicals being forced down their breathing passages, Utah law clearly states that smoke transferring between dwelling units is a nuisance and may be the subject of an action brought by “any person whose property is injuriously affected, or whose personal enjoyment is lessened by the nuisance” and “upon judgment, the nuisance may be enjoined or abated, and damages may be recovered.”

A nuisance under Utah law includes tobacco smoke that drifts into any residential unit a person rents, leases, or owns, from another residential or commercial unit and the smoke drifts in more than once in each of two or more consecutive seven-day periods, and is injurious to health, indecent, offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property.

The Utah Condominium Ownership Act states that restrictions in governing documents “regarding the use of the units may include other prohibitions on, or allowance of, smoking tobacco products.”

The Utah Community Association Act, which applies to non-condo HOAs, states that a rule of an association may prohibit an activity within a dwelling if there are attached dwellings, and the activity creates the potential for smoke to enter another lot owner’s dwelling, the common areas, or limited common areas.

Utah law is at the forefront of the national trend to protect the right of every individual to live in their own homes without being subjected to dangerous and toxic chemicals contained in second hand smoke. Contact us to take advantage of these laws and help your association adopt a policy regarding smoking.


Can a Board Use “Self Help” to Enforce the Covenants?

December 20, 2011

By Curtis G. Kimble.

How to obtain compliance when enforcing a violation of the governing documents can be one of the most vexing problems in a homeowners association.  One of the chief functions of a homeowners association is enforcement of the covenants and rules governing the community.  Even though the individual property owners ordinarily have the power to enforce the covenants, collective enforcement by the community is one of the main benefits of owning property in a common interest community.  However, every board must act reasonably in exercising enforcement powers and must pay careful attention to the law and the association governing documents.  The duty to enforce should not be confused with a requirement for maximum enforcement in all cases.

An association has the duty to use ordinary care and prudence in managing the property and financial affairs of the community, as well as the duty to act reasonably in the exercise of its discretionary powers, including rulemaking, enforcement, and design-control powers.  One aspect of these duties is the duty to avoid creating unreasonable risks of harm to property values by failure to provide for the long term protection and preservation of the property.  On the other hand, overzealous enforcement can create serious problems, including protracted litigation, divisiveness, and disaffection with the community, among other things.

Accordingly, a board must make an informed decision and exercise careful judgment in decisions regarding enforcement.  This fact was completely lost on a board in a Florida homeowners association in a case called Parton v. Palomino Lakes Property Owners Association, Inc.

The governing documents of the Florida association prohibited mobile homes.  A lot owner decided to install a modular home and attempted to have it delivered to the lot.  Three board members literally blocked the delivery of the home by blockading the entrance to the subdivision. This happened on three different occasions.

The lot owner sued the association and the board members individually and won.  The owner was awarded punitive damages of $40,000 against one board member, $50,000 against another and $60,000 against the other.  The owner was also awarded compensatory damages and their attorney fees.

Sometimes “self-help” by the board (correcting a violation directly) is allowed by an association’s governing documents.  For instance, it’s possible that a board may be able to have a professional come in and remove the three feet tall weeds on a lot and charge the cost back to the lot owner.

But how far is a board allowed to go?  Can a board prevent a non-compliant or delinquent homeowner from access to and from the owner’s lot or unit?  Generally, the answer is absolutely not and the failure of this Florida board to make an informed decision and exercise careful judgment before they acted had drastic consequences.  Such extreme personal liability could have been easily avoided if the board had consulted with a qualified attorney beforehand.


Fire Hazards: Can Policies and Covenants Help Prevent Them?

December 9, 2011

By Curtis G. Kimble.

Last month, I happened to catch several stories about fires that broke out in attached homes or condominiums.  Fires are especially worrisome in attached type housing where owners share walls and roofs because the potential for damage, injury or death becomes so much greater.

In one condo fire in Arizona, firefighters said hoarding fueled the fire after the homeowner lit a cigarette and then tossed his lighter to the side as he went into the kitchen.  Hoarding and fires are a dangerous combination, a combination that is apparently occurring more and more.  In a Murray fire in Utah a couple of weeks ago, firefighters blame a dryer for starting the fire, saying the fire was a reminder to make sure lint filters and dryer vents are kept clean.  In a Thanksgiving day fire in Midvale, two condos were damaged when a fire broke out, apparently caused by faulty wiring in an electrical socket.

The dryer fire story, coupled with a much more tragic story about a dryer fire in Salt Lake about a year ago where a 5 year old died, impresses upon us the importance of maintaining and periodically cleaning out dryer vents.  For boards whose associations perform that maintenance item, don’t forget to make sure this important task is carried out.

Are smoking, hoarding, dryer vents, and other fire hazards addressed in your association’s governing documents?  If not, should they be?  It’s always difficult to enforce restrictions on behavior within units and there is no magic solution to that, but the danger that fire hazards pose underscores the reality that when a person lives in close proximity, shared roof, shared wall housing, their actions and habits can have far reaching and dangerous consequences to more people and property than just them and their unit.  This is why covenants and rules are so important in these communities.

Contact us if you need help enforcing, reviewing or changing your association’s governing documents.


Who Can Act for the Association?

November 29, 2011

By Curtis G. Kimble.

One issue we see is the question of who can act for and on behalf of the association.  Who can bind the association to a contract?  Who can spend the association’s money?

These questions may come up frequently or infrequently in an association, depending on how well the board and members understand who has the power to direct the business and affairs, and exercise the powers, of the association.

The Board.

Homeowners associations are representative governments and are governed by a board elected by the association members (unless otherwise stated in the governing documents).  The board is entitled to exercise all powers of the association except those specifically reserved to the members.

As the Utah Revised Nonprofit Corporation Act puts it, “all corporate powers shall be exercised by or under the authority of, and the business and affairs of the nonprofit corporation managed under the direction of, the board of directors,” except when governing documents or a statute expressly require approval of members.

Does that mean unanimous consent of the board is required to act? No, if a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board.

Does that mean a homeowner can’t take action on their own to enforce the governing documents?  No.  A homeowner won’t have all of the remedies that the association will have, such as fining, but generally, the covenants are not just between the homeowners and the association, but between the homeowners themselves. So, as the Utah Condominium Ownership Act states, failure to comply with the governing documents “shall be ground for an action to recover sums due for damages or injunctive relief or both, maintainable by the manager or management committee on behalf of the unit owners, or in a proper case, by an aggrieved unit owner.”

The President and Other Officers.

But what about the association president, doesn’t he or she have the authority to bind or act for the association?

Not necessarily.  Officers, such as the president, must understand that they do not acquire any special power when they are elected or appointed to their position.  Each officer, including the president, only has the very specific authority and power (if any) given to that office by the governing documents or by the board.  In other words, each and every decision, no matter how big or small, must be made by a majority of the board unless decision making authority as to a specific issue has been given to an officer.

Consequently, if a board desires that officers or a manager have certain authority, it is important to specifically grant and define that authority.  If the board wants to enable the president to contract for minor repairs without advance authorization, it should adopt a resolution to that effect.  For instance, many associations allow their managers to contract for repairs or buy supplies so long as they spend less than $500 or $1,000 at a time, or allow the president to work with the landscaper and authorize necessary landscaping repairs or work (replace a shrub here, repair sprinklers there, etc.).

In acting for the association, what standard are directors and officers held to?

The Nonprofit Corporation Act, as well as common law principles, requires a director or officer to discharge the director or officer’s duties:

  1. in good faith;
  2. with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and
  3. in a manner the director or officer reasonably believes to be in the best interests of the nonprofit corporation.

The third standard requires that a director or officer put the interests of the association before their own interests, which is sometimes a difficult requirement because of simple human nature.  Consequently, every director and officer must be diligent in remembering that their own needs, motivations and desires (or lack of motivation or desire), cannot play a part in their decisions as directors or officers.


A Utah HOA Faces $96,000 in Fines in a Pet Policy/Companion Animal Clash

October 28, 2011

By Curtis G. Kimble

A Utah condominium HOA, its property management company and an individual property manager are facing $96,000 in penalties, plus other amounts, as a result of multiple charges of discrimination brought by the Dept. of Housing and Urban Development (HUD).  HUD is alleging that the HOA and property manager violated the federal Fair Housing Act by refusing to accommodate a resident who required an emotional support dog because of a disability and that they assessed illegal fees and fines against the resident for the presence of the assistance animal.

HUD is charging the association for violating the Act when the association required the resident to pay a “pet registration fee,” provide proof of liability coverage, sign a medical release for the board to obtain his confidential medical records, and when the association levied fines for failure to pay the pet registration fee.  The resident provided medical documentation of his need for the assistance animal and obtained liability insurance, but refused to give the HOA board access to his private medical information or to pay the $150 pet registration fee. Even after it acknowledged that the resident’s dog was a medically necessary assistance animal, the association continued to demand that he pay the fee.

This association and property manager did use an attorney during the events above, which just goes to show how important it is that an association use an attorney that can truly advise the board and not just act as a blunt instrument of enforcement.  In this case, there was little wisdom in pursuing a $150 fee at the risk of incurring $100,000 in fines, especially when the $150 was for a “pet registration fee” and, as we’ve explained in the past on this blog, assistance animals are not considered “pets.”

The Fair Housing Act requires HOAs to make reasonable accommodations to no-pet rules for residents with disabilities who need companion or assistance animals.  Don’t risk hefty fines and penalties, contact us for assistance whenever your association faces this tricky and complex issue.

UPDATE: The Justice Department announced a $20,000 consent decree and settled this case.  See the announcement here.


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