Evan McKenzie on the rise of private urban governance and the law of homeowner and condominium associations. Visit evanmckenzie.wikispaces.com for my published articles and services.
Now that the Nebraska law started allowing foreclosure for HOAs, you can bet you will see a rise in HOA lawsuits as HOA management companies and HOA attorneys race to see what kind of fees they can try to entangle with assessments. The newspaper article really understates the court's findings, see:Farmington Woods. This case had major problems that were immediately apparent including: statute of limitations, laches, waiver, and arbitrary, capricious, and discriminatory enforcement.The audio file is worth listening to. The covenants said "no business of any kind". What became quite clear is that "no business of any kind" meant unless you are the board president. In such case whatever business the president engages in is okay for the president but others aren't allowed to engage in business. The Wolfs had been operating a daycare for over 12 years at the time the president complained. The board president had been operating a business out of his own house for over a decade. There were even other homeowners that had operated daycares out of their homes. The victim homeowners in this case (Wolfs) placed the board on notice at the time they purchased the property over 12 years ago by speaking with the then-president and also providing plans that showed the improvements were being designed at the inception for the purpose of operating a daycare.The HOA had never sought to enforce a restrictive covenant before (HOA attorneys weren't able to impose their fees on the victims and demand foreclosure to collect them in Nebraska until about 2010). The HOA attorney tried to take the position that the HOA board claimed to have a policy of only responding when a complaint was made. This policy wasn't even formalized in writing. The HOA attempted to use this to excuse itself from any SOL or waiver defenses (i.e., the clock should only start running when someone complains not when the conduct starts or when the HOA board is aware of the conduct). In other words, the HOA took the position that its informal policies should pre-empt defenses applicable by statute or public policy.The HOA president ended up being the one that filed the complaint. So although he knew and although the HOA corp clearly knew, his argument is that the clock doesn't start running on the defenses of waiver, estoppel, statute of limitations, etc. until after a formal complaint is filed. NOT.The Nebraska Supreme Court didn't buy the arguments presented by the HOA corporation which clearly represented only the interest of the HOA president. Wonder how much assessment money the president spent trying to vindicate his ego? Thank goodness the Wolf family did not back down.
"The association said the Wolfs violated covenants against conducting 'business activities of any kind' out of the neighborhood's homes."Yet an HOA corporation is a business.And as regular readers of this blog know, the business of an HOA corporation is to extract money from the homeowners for the benefit the HOA corporation's vendors; ie, the property management companies and specialized law firms.
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