Community Associations Update - Fall 2009

Date: November 18, 2009

The Importance of Having a Modification/Accommodation Policy
By: Jennifer S. Jackman

Recently, we have seen an increase in the number of complaints that have been filed against condominium and homeowner associations arising out of requests for modifications and/or accommodations. Unfortunately, many associations do not have policies regarding such requests and do not have an understanding of the resident's rights, as well as the rights of the association. When the local human rights commission gets involved, the first question it will ask is, "What is the association's policy for handling requests for accommodations and/or modifications?" All too often, the association has no such policy.

Our recent experience with local human rights commissions in defending against fair housing complaints, as well as a recent opinion in a case filed by HUD against a condominium association, confirm the importance of having a policy, responding promptly to requests, and engaging in an interactive process with the requesting resident. In HUD v. Guillen, a case filed by HUD, the court entered judgment against the association in the amount of $25,000 and imposed a $10,000 civil penalty against the association for its "refusal to engage in the interactive process" and failure to respond to the request for accommodation. Since HUD and local human rights commissions are both focusing on accommodation/modification cases against associations, condominium and homeowners associations need to adopt and adhere to policies regarding such requests.

There is a difference between a request for an accommodation and a request for modification. A request for "accommodation" is a request for a change, exception or adjustment to a rule, policy or practice to accommodate a handicap. Examples of requests for accommodations include requests for service animals in no-pet associations and requests for parking accommodations. A request for accommodation should be related to the claimed handicap, and the association is required by law to make "reasonable" accommodations in its policy. Whether or not an accommodation is "reasonable" depends on the facts, and the person making the request for the accommodation needs to explain what type of accommodation is requested. Upon receipt of such request, the association is required to promptly respond and work with the resident to determine what, if any, accommodation is appropriate. A delay in responding can be considered a failure to provide the reasonable accommodation.

A request for a "modification" is a request for a structural change to existing premises to accommodate a handicap. For associations, such requests generally involve changes to the common elements, such as a ramp around an outside step or curb. An important fact unknown to many associations is that the requesting party is responsible for the costs of making the modification. The association's responsibility in handling such requests is to promptly respond and to work with the resident in allowing reasonable modifications -- at the resident's expense.

Many issues may arise when an association is faced with a request for an accommodation or modification. For example, (1) is the resident actually handicapped/disabled; (2) what information can the association request to determine whether the resident is handicapped; (3) what qualifies as a request; (4) who makes the determination as to whether the request is reasonable and will be allowed; and (5) how soon does the association have to respond and in what form?

Because so many questions can arise for both the association and the resident, it is best practices to adopt a policy for handling such requests, including a form to be used by residents making requests, to eliminate any ambiguity as to whether a request has actually been made. Once a policy is adopted, it is critical that it be followed. And finally, once a request is received, it is good practice to consult with counsel to ensure the request is being handled appropriately and in accordance with the association's policy.

Failure to adopt a policy and follow it properly increases the likelihood of a fair housing claim being filed against your association, along with risk of an expensive - and avoidable -- penalty.

Cable & Satellite Companies Can't Be Exclusive Providers in Your Community
By: Matthew L. Troiani

A cable or satellite company would love to have an exclusive arrangement with your community, and would even be willing to pay the association a fee for the right to be the only provider that your residents can use.

Unfortunately for the providers - and possibly the association's budget - the Federal Communications Commission (FCC) has decided that exclusivity is a bad idea. Even though it's on a small scale, an exclusive provider would have a monopoly on your community, and the lack of competition could ultimately lead to bad service and higher fees.

The FCC's position was recently upheld in federal court (National Cable & Telecommunications Association, et al. v. Federal Communications Commission and United States of America).

What if your community already has an agreement with a provider that grants it exclusivity? That provision is now unenforceable. The board and individual residents can ignore existing exclusivity agreements, and are free to seek out the services of other providers that are available to their home or condominium unit. The rest of the contract remains in effect.

What kinds of services are covered? Common carriers, cable operators, satellite cable and satellite broadcast vendors, and any other provider offering video programming directly to its subscribers.

What about an "exclusive marketing agreement"? Even though these providers can no longer stop their competitors from offering and your residents from buying services, they can still enter into an "exclusive marketing agreement" with your association.

Under such an agreement, the company will usually pay the association a fee to be given a leg up in reaching out to its residents. For instance, the company may host a "coffee and cookie" event in a common area or place flyers in common spaces to explain the special features of its service. Under the terms of the agreement, other companies will not be able to do the same.

These exclusive marketing agreements are still valid and allowed by the FCC and the courts.

Protecting Your Association From Identity Theft
By: Roberto Montesinos

Nearly nine million Americans suffer from some form of identity theft each year.

On January 1, 2008, the Federal Trade Commission (FTC) instituted a new regulation, known as the "Red Flags Rule," targeting the prevention of identity theft from financial institutions. Although it may seem counterintuitive, community associations qualify as "financial institutions" because they receive and hold funds from homeowners.

Under the new rule, financial institutions, including associations, must put in place a written Identity Theft Prevention Program. This program is designed to detect the warning signs - or "red flags" - of identity theft in day-to-day operations and to mitigate the damage it inflicts. Now that the rule is almost two years old, the FTC has begun an aggressive campaign to enforce it, so every association should be aware of the rule and take the necessary steps to comply with the law.

The FTC recommends a four step approach to ensure that your association is in compliance with the law and doing all that it can to protect itself from identity theft.

  • The first step is identifying the vulnerabilities in your financial systems. Associations, working in conjunction with their property managers, should identify the areas where their members may be susceptible to identity theft. Since many associations rely on their property managers for the handling of their finances, association members, and particularly board members, should examine the process by which their finances are managed by property managers. Specifically, property managers and association members should consider the types of accounts that are maintained and how access to those accounts is provided.
  • Once potential problem areas are identified, the second step in the program is to determine how "red flags" will be identified and communicated to the board. Some examples of "red flags" include: (1) alerts, notifications, or warnings from a consumer reporting agency, (2) suspicious documents, (3) suspicious personally identifying information, such as a suspicious address, (4) unusual use relating to an account, and (5) notices from various parties relating to recent identify theft.
  • Once a "red flag" is identified, the third step in the program is to develop appropriate response mechanisms. For example, if unusual activity is taking place in an account, a hold may be placed on the account to isolate the problem until it is resolved. Notification of the local police department may also be necessary.
  • The fourth and final step in the program is to identify a specific individual, preferably a board member, to essentially provide oversight to the identify theft prevention program. Such an individual would ensure that the program remains current and in compliance with the law.

Board members and property managers should take measures to discuss and implement the program, and then put it in writing. Reaching out to members of the association for their input may lead to a better understanding of where potential problem areas exist. For instance, members who have set up direct payment from their bank accounts for their annual fees may be vulnerable to theft of account information.

For more information on the "Red Flags Rule" please contact any of the Whiteford, Taylor & Preston LLP Community Association lawyers.