Monday, May 31, 2010

Adapting your community’s restrictions to today’s new reality


Last week a client asked me if they could or should overlook an amendment to their Declaration that was passed several years ago. That amendment placed a cap on the number of rentals that the Board could approve in the community; it was a restriction that was wholeheartedly supported by the membership at that time. Here’s the rub: that cap has now been achieved and there are several owners who are currently in danger of losing their units to foreclosure if they cannot rent out their units.

What should the board do in this instance? Amending the rental cap restriction at this time is not really an option for this community. If the board ignores the rental cap restriction in their governing documents do they risk a breach of fiduciary duty claim and/or do they risk being able to once again enforce this restriction when market conditions stabilize in the future?

My advice to this board was to weigh the pros and cons of rigidly enforcing a declaration restriction which does not really fit in with today’s new reality. The unique fact pattern surrounding owners who might lose their home to foreclosure might insulate the board from a selective enforcement argument in the future when foreclosure isn’t the issue and owners wanting what they want is. Moreover, the board can also republish the rental cap restriction in the future when market conditions no longer merit overlooking that cap.

If this situation teaches a community anything it is that every documentary restriction should contain a hardship exception to give the board the flexibility it needs to deal with changing membership needs and market factors beyond the board’s control.

5 comments:

  1. i NEED TO KNOW WHO I CAN CALL OR EMAIL TO REGARDING THE REMOVAL OF OUR ASSOCIATION PRESIDENT. HE WAS VOTED IN BY THE 800+PEOPLE IN MY COMMUNITY AND REMOVED BY THE BOARD.IT WAS A HORRIBLE SCENE RESEMBLING A KANGAROOO CT. COULD YOU POINT ME IN THE RIGHT DIRECTION?ALSO THE ELEVATOR IN MY BUILDING HAS BEEN BREAKING DOWN CONSTANTLY IN THE PAST 6 MONTHS. THERE ARE PEOPLE ON THE 3RD AND 4TH FLOORS WHO HAVE RECENTLY BEEN CONFINED TO WHEELCHAIRS BUT, THEY DO CONTINUE TO GO OUT AND VISIT THEIR FRIENDS AND GO TO THE DOCTOR. THE ELEVATOR IS NOW COMPETELY OUT OF ORDER. HIS RESPONSE WAS THAT IF YOU CANT WALK DOWN THE STAIRS GET OUT, THAT DIsabled people should just get out

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  2. Dealing with rogue board members is one of the most frustrating and difficult issues any community can confront.

    The first step is to make sure the rest of the board understands their resonsibilities and that they do not sheepishly abdicate their voices and authority to a powerful person who might not have the best intentions. The board can by secret ballot vote, remove and replace officers. Removing a rogue director as an officer is the easiest step to take. After that is done, the board should advise all association vendors (pool company, etc.) who can and can't speak on behalf of the association and put those vendors on notice that they are not to take direction from anyone else and if they do so they do so at their own risk.

    If that doesn't solve the problem, the membership can also vote to recall this individual entirely from the board. Certainly if he is as outrageous as the example you cite, others in the community must want him off the board as well. Lastly, you always have the option to reach out to the Condominium Ombudsman and the Division of Condominiums to file a complaint and seek advice. I wish you much luck. The starting point is to get others in the community concerned and engaged about what is going on with your elevators and your leadership.

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  3. I'm currently in a situation where the Board has the flexibility to allow for rental (hardship exception) but is refusing to even consider my request. They've stated that their attorney has advised them that the only type of rental they HAVE to allow is one to a direct family member, so they didn't even look at the candidate I recommended or reviewed my hardship claim. Is there any action I can take from this point on?

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  4. Have you looked at the pertinent sections of your governing documents to determine if the board's interpretation of their right to grant a hardship exception are correct? I would also suggest you request to see a copy of the lawyer's opinion letter. Since you are not in litigation with the association,and unless a supportable privilege is asserted, it would appear that the letter would fall within the catch-all provision under the inspection of records language found in 718, 719 and 720. You do not advise if you live in a condominium, cooperative or an HOA but if it is the first two, you can also reach out to the Ombudsman for advice as well.
    Good luck.

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  5. I currently own a condo in South Carolina that has a clause in the contract that prohibits all forms of animals except for owners are allowed household pets. I recently ran into a board member who wanted to know what unit I owned and said that there were problems with noise and pets in that building and that pets were not allowed for tenants. It is very hard to rent to families without the pets as they are expensive to board while on vacation. The bylaw are difficult to understand and are vague on this issue of leasing the condo and restricting the use of it with pets to owners. Can the board to anything to me individually and would they be discrimination if I know that others in the community have rented to tenants with pet. Can they do anything to me if I continue to rent to tenants with their pets?

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