By: Nena Groskind
Condominium attorneys field a seemingly endless stream of questions from the community associations they represent. The topics are varied, wide-ranging, often complex and occasionally unique. We’ve compiled a list of the ‘top 10’ legal questions posed by association boards, based on discussions with attorneys and on articles CondoMedia has published in the past. If we’ve missed any of your favorites, let us know and we’ll make sure to include them next time. Just one caveat about this list – the answers are, necessarily, abbreviated – accurate, but lacking the nuances and complexities you would find in articles focusing on a single question rather than summarizing ten of them. Here we go!
1. How do you determine where the board’s responsibility for maintaining common areas ends and where the owners’ responsibility for maintaining their individual units begins?
Given a winter from hell that deposited record levels of snow on grounds and roofs, made ice dams a leading topic of discussion, and triggered damage claims that are still being tabulated, it’s not at all surprising to find this question and those that follow (about insurance and insurance deductibles) topping the list.
The short, though often unsatisfactory, answer is: The condominium’s bylaws or deed of trust should describe the boundaries between common areas and individual units and specify how the resulting maintenance obligations are divided. The problem, of course, is that the documents are often unclear or silent on these questions, making it difficult for boards to calculate how the maintenance and repair obligations and costs should be allocated.
To provide that clarity, if it is lacking, attorneys recommend that boards either ask owners to amend the documents (which can be difficult) or adopt a maintenance resolution, which doesn’t require owner approval.
2. Who is responsible for paying the deductible when the master policy covers damage to owner’s units rather than to common areas?
Owners don’t much like this answer, but: The owners whose claims are covered by the master policy are responsible for paying the deductible, or a proportionate share of it, if several units are involved. To make that obligation clear, which it isn’t always in older condominium documents, attorneys suggest either amending the declaration or bylaws or adopting a board resolution specifying that owners are responsible for the deductible.
That isn’t an option in Rhode Island, Frank Lombardi, a partner in Goodman, Shapiro & Lombardi, LLC, explains, because the state’s condominium statute and most condominium documents make the master policy deductible a common area expense. This is particularly problematic and inequitable, he says, when a damage claim results from the negligence of owners — for example, if an owner fails to repair or replace an old water heater that leaks into the unit below. In that case, he says, the association would have to cover the deductible, but it could sue the negligent owner to recover the cost. However, boards can shift the deductible obligation to owners in this way, Lombardi emphasizes, only if the documents specify that boiler maintenance is the owner’s responsibility. If owners don’t have a maintenance obligation, he notes, they can’t be deemed negligent for failing to fulfill it.
3. Can associations require owners to purchase insurance to cover their units?
There is no question that owners should have this insurance (it’s called an HO-6 policy) to protect their personal belongs, which aren’t covered by the master policy, to eliminate coverage gaps if the master policy falls short and (crucially) to cover their share of master policy deductibles that are soaring (some are up to $10,000 or more) as associations try to keep their premium costs downs. But opinions vary on whether associations should: a) require owners to obtain this coverage; and b) enforce that requirement.
Some attorneys recommend insurance resolutions or amendments requiring owners to purchase insurance, mainly to put them on notice of the liability they face without it. But they advise boards not to enforce the requirement, to avoid the potential liability they incur by accepting that responsibility. Lombardi disagrees. He advises boards to secure owner approval of a bylaw amendment requiring owners to obtain insurance and to submit evidence annually that they have a policy in place. He also suggests including language authorizing the board to “force place” the insurance ¯ that is, to purchase the coverage on the owner’s behalf if the owner fails to obtain it or if the policy lapses, and to assess the owner for the cost.
Lombardi thinks the responsibility to adequately insure the community creates plenty of justification to require owners to purchase insurance and gives the board plenty of authority to enforce the requirement. If board members can’t convince owners to approve the necessary bylaw amendment, he advises, “Do a better selling job.”
4. Do associations have to bend their rules for residents who have special needs – or claim to have them?
Many legal questions create room for debate, but not this one. The answer, according to Charles Perkins, a partner in Perkins & Anctil, P.C., is yes. The Fair Housing Act requires associations to provide accommodations for owners who have physical or emotional disabilities that “substantially limit” one or more major life activities, as long as the requested accommodations are reasonably related to the disability and don’t impose an undue financial or administrative burden on the community. So, Perkins notes, the board must assign the close-in parking space to a wheel-chair-bound owner, provided that the space isn’t deeded to someone else; it must allow a blind owner to have a seeing-eye dog; and it must allow an emotionally disabled owner to have the “comfort animal” a therapist recommends to help him or her cope with that disability.
5. Can boards prohibit pets?
This falls under a general category Perkins labels “the three Ps” – pets, parking and pools — responsible for the lions’ share of the rules enforcement challenges boards face. He emphasizes the need to distinguish between issues boards can address through rules – generally anything that involves behavior in common areas; and issues affecting what people can do with or within their units. Policies barring pets and smoking in the community would fall in this category, as would measures prohibiting rentals or regulating their terms.
Pet policies are always fractious, Lombardi says, because they generate strong emotions on the part of people who own pets and those who don’t want them in the community. He notes the dilemma faced by a board if the condominium developer, concerned about selling units, had allowed owners to have pets despite a no-pet policy. Pet owners probably wouldn’t have moved into the community had they known their pets would be barred; but the board also has to consider the feelings of owners who chose the community precisely because they thought pets weren’t allowed. If a large majority of owners support the no-pet policy, Lombardi suggests that the board either grandfather pet-owners – allowing them to keep their existing pets but prohibiting them from acquiring others – or give them plenty of time either to sell their units or to find homes for the pets they have to relinquish.
6. Can boards withhold amenities from delinquent owners?
They can, Perkins says, but they need a rule or a bylaw provision authorizing them to do so. He thinks amending the by-laws is preferable for associations that want to pursue this policy, but he doesn’t think withholding amenities is the best way for boards to manage delinquencies. They are better-advised, he says, to adopt effective collections policies, moving quickly on delinquencies to preserve their rights under the Superlien and maximize their ability to collect delinquent payments.
7. Are owners allowed to see financial records?
Most state condominium statues, including those in New England, define broadly the records to which owners must have access, and those definitions typically include financial records ¯ budgets, invoices and accounting reports among them. But the statutes (and industry practice, where the statutes are silent) also allow boards to exclude some records, among them:
• Documents covered by attorney-client privilege – for example, communications about pending litigation.
• Information about contracts currently under negotiation (although signed contracts should be available to owners who want to review them).
• Records of board executive sessions.
• Communications that might violate individual privacy rights, for example, disciplinary actions or medical issues involving association employees, or records related to individual units or individual owners, other than those related to the owner requesting the information.
8. Must boards inform owners if a convicted sex offender is living in the community?
This is a classic “sued if you do and sued if you don’t” issue for boards. Owners harmed by a predator would almost certainly sue the board for failing to disclose the predator’s presence. But boards that identify predators might be sued for violating their privacy rights. And if they err, the liability potential is immense. Attorneys offer this general advice:
• Establish procedures for dealing with sexual predator information.
• Designate a board member to check the registry periodically – at least once a year – and compare that to the list of known residents in the condominium.
• Consider sending notices periodically to owners unconnected to a specific predator alert, explaining how they can consult the registry themselves.
• Don’t name names. If the board believes, based on its review of the registry, that a resident is a convicted predator, it should relay that information to owners, but without identifying the individual. Simply tell owners that the board thinks it is likely that a predator is living in the community and remind them that they can obtain more detailed information from the state sex offender registry.
9. Who’s eligible to vote?
The condominium’s governing documents should tell you, Lombardi says. His rule of thumb: “Whoever pays should say.” Only the owner of record should vote and only one vote should be allowed per unit. If a husband and wife are co-owners they can cast only one vote. He makes an exception to this “only owners vote” policy for situations in which parents deed their unit to their children as part of an estate plan that allows the parents to continue living in the property, though they don’t technically own it. “I have no problem with a life-tenant voting in that situation,” Lombardi says, as long as the owner can document the arrangement. He also has no objection if investor owners give their proxy to a long-term tenant residing in the property. But he emphasizes, “Only one of them (the owner or the tenant) can vote.”
10. How should boards handle ‘rogue’ members?
What board members can’t do, Lombardi says, is remove a board member on their own initiative. What they can or should do, he says, depends on what the “rogue” is doing or not doing. If he/she doesn’t play well with others, or is perpetually obstructive, talking endlessly at meetings and opposing everything – the remaining board members should explain the problem to owners and urge them to vote for someone else at the next election. If the ‘rogue’ is an officer, other board members can vote to remove him from that position, Lombardi notes, though they can’t remove him from the board. And if he or she is “a mole” – disclosing confidential information about a pending law suit to owners or (even worse) to litigants on the other side — board members can create a special committee for those discussions, from which the mole could be excluded.
The most common rogues, Lombardi and other attorneys agree, are those who don’t understand their obligation to support a majority decision they opposed, and who try to rally other owners against it. This undermines respect for the board, causes dissension in the community and can be costly – as was the case several years ago with one of Lombardi’s condominium clients, when a dissident board member launched a campaign to block a loan the board had negotiated to fund a major capital improvement project. The delay ultimately added $50,000 to the cost.
The solution, again, is to encourage owners to replace the board member. If the situation is serious and the annual meeting still several months away, Lombardi says, the board can schedule a special meeting and an earlier removal vote. In most cases, if other board members are pushing actively and publicly for a rogue’s removal, Lombardi has found, “he gets the message and usually changes his behavior or resigns.”