HOA, Condo, Co-op Policy and Legal News Briefs (Dec 2016)

By Deborah Goonan, Independent American Communities

A collection of newsworthy happenings in common interest, association-governed housing communities.

Legal decisions and case law

Failure to Hold Formal Board Votes Dooms Two Charlotte HOAs

There are times in the practice of homeowners’ association law when courts make rulings with which we as attorneys disagree but where an underlying principle or best practice is affirmed. A prime example is the N.C. Court of Appeals’ opinion of November 1, 2016 in the case of Willowmere Community Association Inc. and Nottingham Owner’s Association Inc. v. City of Charlotte and Charlotte-Mecklenburg Housing Partnership. As is generally the case whenever an HOA case reaches the North Carolina appellate courts, the HOAs lost.

The two associations filed suit to challenge the rezoning of land that was approved for the development of moderate-income multifamily housing adjacent to their single-family subdivisions.However, the Mecklenburg County Superior Court never reached the merits of the challenge, instead ruling that the HOAs did not have legal standing to bring the challenge at all. It stated that the associations “did not have standing to bring the action because they failed to follow the requirements in their respective bylaws with regard to their decisions to initiate this litigation.”

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Associations Rejoice: Florida Appellate Courts Breathe New Life into Controlling Documents for Community Associations

by: Jeannie A. Hanrahan
Devon A. Woolard
Marshall Dennehey Warner Coleman & Goggin, P.C. – Fort Lauderdale Office

Regardless of whether one is a condominium association governed by Florida Statutes Chapter 718 or a homeowners’ association governed by Florida Statutes Chapter 720, the governing documents, including declarations, bylaws, articles of incorporation and amendments thereto, control. Florida’s appellate courts have clarified that any challenge to the validity of these controlling documents, including amendments, must be brought within five years. Based upon the foregoing holdings, associations should be aware that once a governing document or amendment thereto is recorded, the clock starts to run on a challenger’s ability to contest the validity of its controlling instrument.

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Legal Responsibility for Icy Sidewalks (IL)

Can you be held liable if someone slips and falls on ice outside your house? The Illinois Supreme Court says … maybe.

An Illinois Supreme Court opinion gives owners of icy sidewalks a reason to bust out some more salt. A 2007 case involves a suburban Chicago condo association and a woman who slipped on its sidewalks. The court said Illinois’ Snow and Ice Removal Act that says a reasonable effort is enough to protect you from a slip-and-fall lawsuit, but not in every situation.

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In this case, water runoff from ice and snow pooled on the sidewalk, then froze solid when temperatures dropped. The case has been sent back to trial, but may be settled out of court.

South Carolina Court of Appeals Rules on Jury Trials and Class Action Waivers in Master Deeds

Nexsen Pruet
USA December 19 2016

The South Carolina Court of Appeals has offered insight into its opinion on the issue of whether a developer may contractually create and enforce jury trial and class action waivers in a master deed. The Court’s position is good news for developers and those who represent them.[i]

In The Gates at Williams-Brice Condominium Association and Katharine Swinson, individually, and on behalf of all other similarly situated v. DDC Construction, et al, 2016 WL 4537655, the Court specifically examined whether jury trial and class action waivers included in a master deed are enforceable. The Court, reversing the circuit court, found the waivers enforceable.

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From the article: “See Ellis v. Taylor, 316 S.C. 245, 449 S.E.2d 487, 488 (1994) (“The court’s duty is to enforce the contract made by the parties regardless of its wisdom or folly, apparent unreasonableness, or the parties’ failure to guard their rights carefully.”)” Well, that pretty much says it all. A “contract” – in this case, the Declaration of Condominium – can say just about anything and the court will enforce it. If the homeowner/consumer is not sophisticated enough to understand its implications, the court will grant no mercy.


Federal Housing Policy News

Trump Treasury Nominee Revives Talk of Privatizing Fannie Mae, Freddie Mac

Surprise Announcement Sends GSE Housing Finance Agencies’ Stock Prices Soaring
By Mark Heschmeyer
November 30, 2016

Call it an early Christmas present for Fannie Mae and Freddie Mac shareholders. President-elect Donald Trump’s nominee to head the Treasury Department, Steven Mnuchin, in his first interview since his announced appointment said the two housing finance agencies should not be under government control and added that the Trump administration would make it a priority and get it done reasonably quickly.

Fannie Mae shares jumped $1.25 per share to $4.33 and Freddie Mac’s share price soared $1.24 to $4.26 per share.

Fannie Mae and Freddie Mac provided about $90 billion in multifamily financing combined last year, and are on that pace again this year.

Speaking on Fox News, Mnuchin said, “We’ve got to get Fannie and Freddie out of government ownership. It makes no sense that these are owned by the government and have been controlled by the government for as long as they have. In many cases they displace private lending in the mortgage markets,” said Mnuchin.

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Trump Picks Carson for Top HUD Post
Industry leaders react to the unconventional choice for HUD secretary.
By Donna Kimura
Editor’s Note: This story was updated on Dec. 6, 2016.

Despite a lack of housing experience, retired neurosurgeon Ben Carson has been tapped to be the nation’s next top housing official.

President-elect Donald Trump announced today that Carson is his nominee to lead the Department of Housing and Urban Development (HUD). The move had been expected for weeks as Trump builds his cabinet.

Carson, who ran against Trump in a large primary field for the Republican presidential nomination, is an unconventional choice for the job. He has little experience in housing policy or in running a government agency.

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C. Scott Canady – 12/14/2016

The 114th Congress has finished all legislative business and H.R. 1301, legislation concerning HAM radio in community associations, was not approved by the Senate. This means the bill is dead and the legislation’s sponsors must begin the process again in the 115th Congress, which will be sworn in on January 3, 2017.

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Ham Radio Legislation Fails in the 114th Congress

It will be interesting to see if the change in control of Congress results in a very different bill, or successful passage.


State Legislation

Indiana: Recent Changes in Indiana’s Statutes Governing Condominiums and Homeowners Associations

Bingham Greenebaum Doll LLP, USA December 19 2016

Recent changes in Indiana’s statutes on condominiums and homeowners associations may make it more difficult for owners to seek judicial remedies for disputes with their property associations. However, other changes in the statutes allow for greater transparency between owners and their associations.

Prior to the changes in 2015, grievances between owners of condominium and homeowner associations were brought directly to a court. Now, detailed procedures for grievance resolutions are codified in the Indiana Code. Both IC 32-25-8.5 and IC 32-25.5-5, enacted on July 1, 2015, contain similar language that require that an owner must exhaust all the grievance resolution procedures described in the chapter (negotiation, mediation, and binding arbitration) before seeking redress through a court.

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This legislation makes due process more elusive, delaying or preventing owners from having their day in court.


2016 was another fertile year for Illinois legislation affecting condominium and common interest community associations. This is the first of two columns that provides a summary of the amendments to the Common Interest Community Association Act and to the Condominium Property Act that will be effective Jan. 1.


Ability of the board to pledge association assets

Section 18.4(m) of the Condominium Property Act is amended by removing language that gave the board of manager’s power, subject to owner approval if required by the declaration, to assign the right of the association to future income from common expenses or other sources — and to mortgage or pledge substantially all of the remaining assets of the association. Thus, the assignment of the right of the association to future income from common expenses and to pledge all or substantially all of the remaining assets of the association can be approved by the board alone, even if the declaration requires owner approval.

This makes this section of the Condominium Property Act consistent with section 18(b)(13)(ii) regardless of whether the declaration requires owner approval. This will make it easier for condominiums to obtain loans.

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Another example of state legislation that hands over more power to the board members of an Association-Governed Community, and gives owners/members fewer rights and less power.

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