HOAleader.com - Tip of the Week - May 20, 2011
Published: Thu, 05/19/11
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Can Your HOA Turn Back Time with a Retroactive Rule Change?
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Brand-new special report!
HOA Management Companies:
A Practical Guide for Homeowners Association Boards
http://www.hoaleader.com/public/568.cfm
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In this week's tip, we address a question from the HOAleader.com
discussion forum asking whether an HOA can change its rules
after it's embroiled in a dispute over those rules.
Let's start with some basics. Our reader asks about a retroactive
rule change, which is different from "grandfathering in" some
owners when a rule is being been changed. "Grandfathering in"
occurs when you're changing a rule, and you want to create an
exception to allow some people to break the new rule. In our
reader's situation, the reader's association is being sued and
wants to change its rule to make its owners' actions permissible
after the fact.
Retroactive rule changes are permissible. "Generally an
association is free to change its rules so that previously
prohibited conduct becomes permissible," says Jed L. Frankel,
a partner at Eisinger, Brown, Lewis, Frankel & Chaiet PA in
Hollywood, Fla., who advises community associations. "We
frequently see this with architectural restrictions where
requirements are changed, such as allowing for the outside
display of holiday decorations. I have had several cases where
unit owners have actually gotten rules changed after they've
been cited for non-compliance."
That's also true in California. "If an association isn't
enforcing a particular provision and the board doesn't want to
enforce it, my recommendation is always to amend your documents,"
says James R. McCormick Jr., a partner at Peters & Freedman LLP
in Encinitas, Calif., who represents associations. "If you're
not going to enforce it, it's not a provision you want in your
governing documents."
McCormick was involved in a lawsuit over a change in the
governing documents after the threat of a lawsuit. "We had a
challenge to rental restrictions," he explains. "The association
had them in its rules but not in its CC&Rs. Some owners had
challenged the restrictions, but while the challenge was in
mediation, the association voted to amend its CC&Rs to include
the restriction.
"It missed the approval by something like seven votes, so it
petitioned a court to approve the amendment, which associations
in California can do through a 'Greenback petition' named after
the legislator who created it," explains McCormick. "That's
permitted if an association doesn't meet the supermajority
required to pass an amendment but had at least a majority
approval, and if it meets a few other requirements set forth in
the code. The owner challenged the petition process, and the
court found that was a reasonable and enforceable amendment.
The case went up on appeal, and the association won again."
That doesn't mean retroactive rule changes don't raise problems.
To learn about the risks, see our new article,
http://www.hoaleader.com/members/579.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Can You Make Retroactive HOA Rule Changes? Discussion Forum
Follow-Up
A reader asks: "If a tenant is trying to sue the HOA for allowing
families to violate the CC&Rs by installing wood floors, can the
HOA simply 'retroactively' change the CC&Rs to accommodate the
families with wood floors? Nineteen out of 20 units have violated
the CC&Rs. What power does the HOA have to change the CC&Rs after
the complaint/violation?" Here, we offer our reader some answers.
Click here to read full article:
< http://www.hoaleader.com/members/579.cfm >
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How and When Should You Bid Out Homeowners Association Work?
At most HOAs, bidding out work is an on-the-fly type process.
It's not uniform, and sometimes the process works better than at
other times. Why does that matter? Because when your bidding
process doesn't work well, your HOA is probably losing money.
Instead of an unplanned process, your board should have
guidelines covering when it will request bids for work and how
the bids will be solicited and reviewed. Here, we show you how.
Click here to read full article:
< http://www.hoaleader.com/members/576.cfm >
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HOA Management Companies: A Practical Guide for Homeowners
Association Boards
In this exclusive HOA management special report, we offer insight
and guidance on finding a good HOA manager and determining
whether you need an onsite manager, must-have and must-not-have
contract language, and tips for responding when your management
company isn't doing its job, including guidance on when to cut
ties or work toward a better relationship. We also educate going-
it-alone boards on best practices for self-managed homeowners
associations, and much, much more.
Click here to read full article:
< http://www.hoaleader.com/public/568.cfm >
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"Force-Placed" Insurance: What Your HOA Board Must Know
In this week's tip, we warn you of the possibility of surprise
insurance costs if your HOA has taken out a loan. It's called
"forced-placed" insurance, and it can be costly to your HOA.
Click here to read full article:
< http://www.hoaleader.com/public/571.cfm >
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Can Your Lender Buy HOA Insurance and Charge Your HOA for It?
HOA boards beware: If a lender holds a mortgage on your HOA
property or on an owners' property, it can enforce its
requirement that your HOA carry adequate insurance coverage for
its assets--regardless of whether you want that coverage or can
afford it. Here's what you should know about this practice so
that you can protect your HOA and avoid spending unnecessary
money.
Click here to read full article:
< http://www.hoaleader.com/members/570.cfm >
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