Community Associations Update - February 2013
"Let it Snow!" Practical Advice for Handling Ice and Snow in Community Associations
By: Tiffany M. Releford, Esq.
In 2010, D.C., Maryland and Virginia were paralyzed by historic records of snowfall. In addition to the general headaches of traffic jams, school closings, and lack of power and services, community associations had to deal with snow removal. Snowstorms in community associations often result in busted budgets, slippery sidewalks and parking lots, and the possibility of a slip-and-fall lawsuit. So how can a community association protect itself?
Budgets: Community association must carefully budget for snow removal. While thus far in 2013 we have not had a major snow event, who knows what lies ahead. When creating budgets, community associations should take into consideration the amount budgeted for snow removal the previous year and anticipated snow removal for the current year. If necessary, try to offset any snow removal budget deficit by determining if there was any snow removal surplus from the previous year. Likewise, the association should consider how it would like to be billed by its snow removal contractor. The contract may allow for the association to be billed by the hour, by the event, by the inches of snow and ice, or by a pre-determined contract amount. Knowing the method of billing beforehand will greatly assist the association with budgeting for snow removal. Moreover, since community associations cannot predict weather to come, to help minimize the unexpected, community associations should consider setting aside money in their reserve operating account for above-average snow and ice occurrences.
Standard of care: In addition to budgeting for snow removal, community associations should take measures to ensure that the snow removal contractor is competent and responsive. Make an effort to check the contractor’s references and reputation in the community, as well as consulting legal counsel for review of the snow removal contract. When it comes to liability for slip-and-fall accidents, community associations cannot solely rely on a snow removal contractor to clear ice and snow. If a contractor is negligent in failing to clear common areas, parking lots and sidewalks, the association can be held liable for that negligence.
Likewise, associations must also make an effort to clear away snow and ice if a contractor fails to do so. It isn't enough to rely just on your contractor. Depending on the maintenance responsibilities set forth in the governing documents, association employees or owners may need to shovel and salt the common areas around their units or lots. In addition, the Board of Directors and management need to keep an eye on conditions throughout the property. Community associations should document efforts to clean up hazardous conditions such as when and where areas were cleared of ice and snow, how salt or sand was applied, and other pertinent information regarding weather conditions. While it is impossible to guarantee that the association will never be sued for a slip and fall accident, with a little bit of care and attention, the association may have a better chance of defending against any lawsuit that may be filed.
If you need assistance in reviewing your snow removal contracts or policies, or if you have questions regarding budgeting for snow removal, please contact Tiffany Releford at firstname.lastname@example.org or 202-659-6764.
Enforcing Covenants in Maryland and the District of Columbia
By: Jennifer S. Jackman, Esq.
Summary: Having good rules is one thing; enforcing them is another. Particularly if your board has the power to impose fines on violators, you need to be careful to follow the correct process. In effect, your board is acting like a judge and jury, so local laws may require safeguards to protect the owners.
Governing documents: Every association should have a "due process resolution" that lays out how violations of the association’s governing documents will be handled, particularly if the association has the power to impose fines. Assuming your board has the authority under your governing documents to impose a fine or other penalty on a violator, what process should you follow?
Maryland condos: Under the Maryland Condominium Act, the association must issue a written cease and desist notice giving the owner 10 days to cure the violation. If the violation continues or if the same rule is violated again within a 12 month period, the association should schedule a hearing and give the owner written notice of the hearing. The notice must include the nature of the alleged violation, the time and place of the hearing -- at least 10 days after the notice, an invitation to attend the hearing and present evidence, and the proposed sanction to be imposed. The hearing should occur in executive session; that is, the hearing is not open to other owners. Finally, the minutes from the hearing should contain a written statement of the results and the sanction imposed, if any.
Maryland HOAs and DC condos: Neither the Maryland Homeowners Association Act nor the District of Columbia Condominium Act specifically requires a certain process to be followed prior to imposing fines. That said, we recommend that associations with the authority to impose fines and other penalties follow the process in the Maryland Condominium Act.
Montgomery County, MD: In Montgomery County, the Commission on Common Ownership Communities (“CCOC”) allows associations and owners to file Complaints arising from covenant violations with the CCOC. Before filing a complaint, the association or owner is required to have “exhausted its remedies”, meaning that the they have followed any process outlined in the association’s governing documents before turning to the CCOC for help. For associations, this means that the association must provide notice and a hearing before making a final decision (i.e., the process outlined in the Maryland Condominium Act set forth above), even if the governing documents don't actually require this. Once a final determination is made, the association can file a Complaint with the CCOC seeking enforcement of its decision. Please note that the Montgomery County Code imposes a duty on associations to notify owners in writing of their right to file a Complaint with the CCOC after an association determines that a dispute exists. Further, the association is not permitted to take any enforcement action against the owner for 14 days after it notifies the owner of its CCOC rights. Accordingly, in the letter notifying an owner of a Board’s decision after a due process hearing, the owner should be notified of his or her rights to file a Complaint with the CCOC. Please also note that if your association is located in Montgomery County, the Montgomery County Code requires the association to provide annual notification of the services available through the CCOC.
All jurisdictions in Maryland and DC: If, after a hearing, the association determines a violation exists and the owner refuses to comply with the governing documents, the association may want to consider seeking injunctive relief from the appropriate court. This requires filing a Complaint with the Circuit Court in Maryland and the Superior Court in the District of Columbia. Because attorneys' fees can quickly add up in these actions, the violation should be serious enough to warrant judicial relief. (Although it should be noted that the Maryland Condominium Act allows the prevailing party in such an action to recover attorneys' fees, as do most governing documents for associations in Maryland and the District of Columbia. So if your board wins in court and the owner has the funds, your fees may be paid.) Prior to seeking injunctive relief, counsel should review the history and facts carefully with the association to ensure litigation is warranted.
Finally, associations should remember that the purpose of issuing fines and sanctions is to gain compliance and this power should not be used for punitive purposes. In addition to fines, other sanctions that may be available, depending on the authority contained in the governing documents, include suspension of voting rights or the right to use recreational facilities such as pools and gyms. Once compliance is obtained, owners’ rights to vote and use facilities should be restored.
If you need assistance in reviewing your due process policies or if you have questions regarding enforcement options and/or notice requirements imposed by the Montgomery Code, please contact Jennifer Jackman at email@example.com or 202-659-6794.
Due Process Changes in Virginia
By: Kevin A. Kernan, Esq.
Takeaway: Review your declaration and bylaws carefully. The penalties that a board can impose for violations need to be based in those documents, not just your rules and regulations.
Discussion: For years, Virginia community associations have enforced their governing documents by suspending nonessential privileges or by imposing monetary sanctions against owners who violate association covenants. Associations typically establish the process they will follow to impose sanctions through adoption of resolutions called "due process resolutions." The resolutions typically outline the process for notifying the owner of the violation, an opportunity for the owner to be heard, and the remedies available to the association. Virginia law permits sanctions in the amount of $50.00 per violation, or $10.00 per day for continuing violation, but only for a period of ninety (90) days.
However, there have been recent Virginia court rulings that prohibit an association’s right to impose monetary sanctions or suspension of privileges unless there is express language in the association’s governing documents to establish such a right. Virginia law defines an association’s governing documents to include an association’s declaration (or master deed) and its bylaws. The Virginia courts are demonstrating a tendency toward restricting any powers exercised by community associations unless the power is expressly created by the associations’ governing documents.
In a recent case in Fairfax County Circuit Court, the court concluded that no homeowners association may recover charges imposed for covenant violations if neither the association’s bylaws nor its declaration expressly provide the authority for the association to do so. See Samir R. Farran, et al. v. Olde Belhaven Towne Owners Association. The judge concluded that Virginia law does not establish the right of a community association to impose sanctions against delinquent owners by adopting a rule or regulation, unless its bylaws or declaration expressly allow it to adopt rules and regulations that impose sanctions. The court refused to interpret Virginia statutes to allow establishing enforcement powers through rules and regulations.
The decision is contrary to a decision made on the same issue in Loudoun County Circuit Court. See Lee’s Crossing Homeowners’ Association v. Linzie Zinone. The court determined in the Zinone case that a plain reading of the applicable Virginia statutes allow associations to authorize charges in either the declaration or the rules and regulations. Although it appeared the Virginia Supreme Court would resolve this conflict in favor of lesser restrictions on community associations, it recently rendered an unpublished opinion that makes it unlikely that there will be a successful challenge to the Farran decision in the Virginia Supreme Court. See Shadowood Condominium Association v. Fairfax County Redevelopment and Housing Authority.
In Shadowood, the Virginia Supreme Court ruled that the association’s imposition of assessments for rules violations exceeded its authority as defined by its governing documents. The Court upheld the lower court’s ruling that fines assessed were beyond the association’s authority and the policy resolution authorizing the assessments was invalid. The Shadowood court made clear that it considers the Virginia statutes concerning community associations to be permissive in nature and that they do not confer authority to a community association beyond what is included in the association’s governing documents. In other words, if the declaration (or master deed) or bylaws do not expressly authorize imposing sanctions or provide authority to enact rules and regulations that authorize sanctions against delinquent owners or covenant violators, the Virginia courts will consider the rules to be invalid and unenforceable.
Since these rulings, the Virginia courts have been carefully examining governing documents and only allowing recovery of those sanctions or fees that the declaration or bylaws expressly provide that an association is entitled to collect. They have not been satisfied by rules and regulations that purport to add additional fees and costs to delinquent owners unless the declaration or bylaws expressly provide the authority for the Board to establish those additional fees and costs. Even if an association has given itself such authority in its rules and regulations, the Virginia Courts have ruled that such authority must be present in the governing document, otherwise such provisions in the rules and regulations are considered invalid.
The recent court rulings do not leave associations unable to enforce their covenants or pursue owners for breach of the governing documents. Typically, association documents provide the association a continuing lien against the property for unpaid assessments, including the right to bring a lawsuit against the delinquent owner and/or foreclose upon the lien. In either event, the association may claim interest, attorney's fees and costs as part of the delinquency.
The governing documents also typically give the Board the ability to correct violations and assess the unit owners for the costs in remedying the violation. It can then pursue the collection of that assessment, pursuant to its authority to pursue delinquent assessments under the association’s documents. It can also file suit to obtain an injunction to compel compliance with the covenants and recover a judgment for the attorneys' fees it incurred in pursuing compliance.
Enforcement of covenant violations may be pursued more quickly and efficiently because of a significant change in the Virginia Code in July 2011. The Virginia Code now grants the Virginia General District Courts jurisdiction to litigate covenant enforcement actions and allows the courts to order an owner to abate or remedy any covenant violation. The authority to award injunctive relief was previously reserved for the Virginia Circuit Courts and required associations to bring covenant enforcement actions in the higher court, which typically resulted in a more costly and time consuming endeavor. The General District Courts are the preferred venue for associations because the matters are heard on a more expedient basis and are typically less costly.
If you need assistance in reviewing your declaration and bylaws, please contact Kevin Kernan at firstname.lastname@example.org or 703-573-1031.