Tuesday, November 26, 2013

Building Harmony

For Community Association Managers, often the largest and most intense parts of the job are enforcing the covenants, design standards and rules of the community.  Even though every homeowner signs a document acknowledging these regulations at the time of a home purchase, it is a daily struggle to enforce rules with some owners.  Most homeowners are great people to work with; however, there are always those “special” situations that are over the top.

In one Atlanta community, the Association has a rule stating no outbuildings are permitted.  A homeowner made several modifications to a property without approval, including installing an outbuilding.  Upon learning of this, the Association asked the homeowner to submit the modifications for approval to the Architectural Control Committee (ACC) (some communities call it an ARC).  As you may guess, the ACC approved the modifications that were within community standards but disapproved the outbuilding.  The homeowner attended an appeals hearing with the Board of Directors, as is often required in most Associations, where he made an impassioned plea to keep the unapproved outbuilding.  The Board reaffirmed the ACC decision to disallow the outbuilding as it did not meet community standards. 
After some time and many letters, the Association filed suit against the homeowner for removal of the outbuilding and damages.  So what makes this situation over the top?  It took over seven years to reach a resolution on this situation!  The outbuilding is now gone and has been replaced by a structure acceptable to both the homeowner and the Association.  The unfortunate outcome is the incredible amount of time and money involved in reaching this resolution, along with the needless stress everyone experienced. 

Lessons?  As a homeowner, it is very important to know and follow the rules of your Association when making any modification to your property.  Simply following the rules in this case could have avoided this entire confrontation.  As an Association, you need to be proactive in resolving disputes.  Be clear on why something is a violation and why it cannot be allowed to continue.  Try to drill down to find the heart of the dispute and work with the owner to find a satisfactory resolution for all.  Unfortunately, a situation like this cannot always be avoided, but in most cases it can.

A decade ago, another Atlanta community had a dispute with a homeowner over flagpoles.  The community rules explicitly stated, “No flagpoles in the front yard”.  The flagpole in question was installed without approval.  The Association required the removal of the flagpole.  Even given the protection of the right to fly the United States flag and the pitched patriotism in the midst of wars in Iraq and Afghanistan, the Association was able to obtain removal of the flagpole. 

Fast forward several years:  Same community, same rules, same situation; much different result.  The Association went to court on the second flagpole case and lost; the flagpole was allowed to stay and all accumulated fines were removed. 

Lessons?  Association rules may tread on the rights of citizens.  It is also true that citizens have the ability to relinquish some of their rights as is done when someone buys a home in an Association.  That being said, rules should be carefully reviewed with a critical eye.  Any rule that could be controversial or sensitive should be well considered. 

In this situation, fighting a veteran flying a flag is certainly not ideal and other options should be considered:  Alternative ways of flying a flag, such as on a pole attached to the house or on a porch, or perhaps determine a way to have flag poles as a harmonious part of an overall landscape plan. 

Proactively harmonizing regulations to reach key goals that enhance the community should be what every Association strives for.  

Tuesday, November 19, 2013

Hard @ Work

Do you know what your covenants say about home-based businesses?  Although covenants vary, most address the topic of commercial activity under the “Use Restrictions” section of the Declaration.

In this economy, homeowners have been very creative about how they earn a living.  Some are able to telecommute and others provide services that require them to store equipment or inventory.  Let’s not forget about the industrious stay-at-home mom who brings in a little bit of extra income on the side selling kitchen tools or adorable kids’ clothes.

This begs the question:  How do you know such business activity is taking place and does it comply with the covenants?  Often the covenants allow for a business so long as it is not visibly apparent to the community or there is not excessive traffic by clients or suppliers to the home. In other instances, the covenants allow Board of Director discretion when determining what is and isn’t acceptable.

When a home business grows into something more than what a house can contain, it’s time to address the problem with the owner.  What began as a favor for a sister-in-law turns into a full blown day care?  Is there excessive parking on the street from those piano students’ parents? Are employees coming to the home on a daily basis?  In all of these cases, other violations can stem from the original use-restriction of business activity.

If a homeowner becomes resistant to following the covenants in the name of earning a living, the board should first address the problem with a violation notice.  If that fails, the next step is to use any fining provisions in the covenants.  Another option is to seek help from local authorities, such as county code enforcement, the environmental health department or the business license office in the local city or county.  In some instances such as child care, even state agencies, such as Bright from the Start, can be involved.  The Board may also opt to sue for injunctive relief.

If a Board fails to act and the home-based business owner is causing a nuisance to his or her neighbors, these neighbors have the option of enforcing the covenants by taking the owner to court themselves. As long as there are deed restrictions on the property that haven’t expired, these will be enforced the judicial system.

Home-based business regulations drafted twenty years ago need to be applied in a fair and consistent manner that fits with today’s reality.  Balancing neighbors’ expectations with a homeowner’s livelihood requires a solution that is fair and respectful for everyone.

Wednesday, November 13, 2013

Making Amendments

Amendments to Association Covenants and Bylaws are very important for keeping up with the needs of a community.   Every community is unique, so it is important that the Community Association Manager (CAM) and Board of Directors monitor for situations where an Amendment may be beneficial.  This is especially true with older communities.  Because of court cases, Association attorneys are constantly refining the standard language that should be included in governing documents.   Another goal in updating documents would be to make them more user-friendly - as many older documents have provisions couched in confusing language.

When considering an Amendment, the CAM and Board of Directors must be sure to cover all bases of the logistics of drafting and presentation.   The most important item to review is the voting process required for passage:  Many Association documents require at least two thirds of membership approval for adoption.  Another important consideration for HOAs and townhome communities is the Georgia’s Property Owners Association Act or POAA.  The POAA is a legal structure drafted specifically for HOA’s to provide protection and enable them to enact critical Association functions not secured under common law.  If your community is not already under the POAA umbrella (not applicable to condominiums), make this a part of your amendment package.  It should be enacted prior to any other Amendments you consider.
Your Amendments should cover all needed updates at once:  Obtaining member approval is a huge undertaking, so it’s important to get the documents as updated as possible - at one time.  For example, if an Association knows that it needs to update its leasing provisions or wants to be in compliance with lender requirements, don’t just stop at that one Amendment.  Contact your Association attorney to do a full review and provide recommendations of other items that may need updating.  Each Amendment item can be voted on separately by the membership, but have the choices listed together on one ballot!

The toughest part of the process is getting people to actually cast their ballots.  Homeowners often don’t want to take the time to read through the Amendment paperwork.  Include a cover sheet that sums up each Amendment, hold special meetings to educate homeowners on each Amendment, and start an Amendment Committee to reach out and encourage homeowners to read over this important proposal, as it will affect each and every one of them.  This will require a Board or committee going door-to-door to remind, answer questions and collect votes.

As an Association, take the time to periodically review items brought to your attention and ask yourself if each of these are enforceable, how they would ideally be enforced, and how often they may arise in the future.  If the same situation comes up on a regular basis, it may be time to think about an Amendment to address it as a unique community need!

Tuesday, November 5, 2013

Violation Notices

Other than paying assessments, the most common reminder that one lives in an association is receiving a letter specifying a needed home maintenance action.  Pointing out contractual obligations can appear confrontational or seem to be a personal attack, more so because we are dealing with a person’s private living space. 

Community Association Managers perform inspections per an Association contract, with direction provided by the Board.  Communities without land covenants, or communities with unenforced covenants, often end up dilapidated, driving down home values.  Property reviews help identify improvements needed to increase aesthetics, keep up property values, and ensure that everyone, including homeowners, are doing their part in the community’s success. A well-maintained community also encourages neighbors to remain current on their assessments.
If the community has not been consistent with its inspections, it can be a very time consuming and challenging process to get the community back into shape.  This is even more difficult if there is no ability to fine or perform self-help (meaning that the Association comes in and performs work on the home, and bills expenses back to the homeowner).  In these instances it is a good idea to amend the governing documents to establish consequences for non-compliance.  Without consequences, notifications will be ignored and homeowners are much less likely to correct violations in a timely manner.   If your community finds itself having to start from scratch, the first action should be to provide a community-wide announcement, setting a date for enforcement activity to begin.  This announcement should list the most frequent violations, so that all homeowners can self-police.
This property review process requires the use of a formal violation notices.  Due to a recent Georgia court decision, it is recommended that the violation log be formally approved by the Board at each meeting.  Compliance letters prevent confusion and provide protection against challenges.  Such notices should carefully detail the violation and provide a solution, so homeowners may easily resolve a situation.  In contentious cases, you may need to file notice in the courthouse land records, so a prospective home buyer is made aware.  Otherwise, the new owner could potentially be exempt from addressing a violation left by the seller.  Another consideration is the two-year statute of limitations.  The clock starts ticking when the violation occurs, not when it is discovered.  If two years pass without the situation resolved, the violation may be unchallengeable.

When receiving a violation letter, a natural response is to look and see if neighbors are being cited for the same issues.  Ensuring everyone is held to the same standards is in the best interest of all – the homeowners, the Board, and the management team. If homeowners have confidence in an impartial process, they are more likely to respond in a positive fashion to violation notices.  Inspections are just a snapshot in time, and the manager is not aware of personal circumstances that may impact compliance.  If someone receives a violation letter that he feel is unwarranted, he should contact the manager to discuss.  Managers are reasonable people, and will work with anyone in the midst of a hardship or special situation.