Friday, March 29, 2013

Former U.S. Marine told his flagpole violates Hypoluxo code |

Former U.S. Marine told his flagpole violates Hypoluxo code | And it’s not the first time Palm Beach County residents have been told their American flags may have to come down because of code violations. Schaffer joins a group that includes a former Marine from Jupiter, a North Palm Beach businesswoman, a car dealer magnate and even Donald Trump, all who’ve had their run-ins with code violations over their American flags.
Now muni officials are instigating flag flaps that are widespread in Privatopia.

Security door fight swings in homeowner's favor - Houston Chronicle

Security door fight swings in homeowner's favor - Houston Chronicle: According to a letter from the HOA, the board of directors voted to allow any security door that was installed prior to July 1, 2010, the date AMI Houston assumed the association's management. (At least two other homeowners have installed burglar bars because of crime issues, HOA officials confirmed.)

"I appreciate the homeowners association and [developer and president] Mr. Michael Johnson for working with me. I am glad to see this matter is solved," said Babineaux, 57. "I just wanted them to leave me alone about my door."

The lesson here for homeowners and HOAs is that Texas law has a four-year statute of limitations on deed restrictions.
I guess treating deed restrictions as giving rise to legal claims and subjecting them to a statute of limitations makes sense given the frequency of regime change in Privatopia.

Wednesday, March 27, 2013

What is S.B. 1062 about?

I testified at the Maryland State Senate hearing yesterday in support of S.B. 1062. The hearing was long and emotional at times, as unit owners told how they have been subjected to foreclosure actions by association lawyers seeking up to $70,000 in fees on top of fines in the hundreds of dollars.  The current draft of the bill was done in haste because of legislative scheduling issues, and it will be redrafted.  As written, it doesn't clearly explain what is intended.

Senator Muse is the sponsor.  The work to date has been done by attorney Larry Holzman, who represents Brian Hanrahan, a unit owner who has been through an incredible experience with his association and who testified at the hearing about his case.

Here it is in plain language, the way I understand it.

1.  Association governing documents usually contain fee-shifting provisions that allow the association to recover its attorney fees from unit owners if the association prevails in an action to enforce the governing documents.

2.  This would happen in two kinds of cases--either assessment collection, or enforcement of non-monetary provisions of the documents (pets, parking, architectural review, etc.)

3.  Existing statutes and rules in Maryland already authorize judges to do a "reasonableness" review of these claims, but only concerning the amount of the fees. In other words, judges already have the power to refuse to shift the association's fees to the owner, if the fees are excessive. This is what the court did in the recent case of Monmouth Meadows Homeowners Association, Inc., v. Tiffany Hamilton, 416 Md. 325 (2010).

4.  But what if the association lawyer is able to document that the amount of fees is reasonable, in the limited sense of satisfying the existing criteria--skill, hours billed, rate, and so forth--but the issue is whether the legal expenses are grossly disproportionate to the alleged offense?  For example, the association runs up $70,000 in fees over a $250 charge for a (bogus) parking violation  (as happened to Brian and Judith Hanrahan--Brian testified at the hearing; and see also Farran v. Olde Belhaven Townhome Association, where a political sign led to gazillions in fees).

5.  As I understand it, the point of S.B. 1062 is to give judges the power to deny or reduce attorney fees to association lawyers who manage to win a case that never should  have been brought in the first place.  The court would assess not just the reasonableness of the amount of the fee, but the reasonableness of the action itself, when you compare the incredible cost to the nonexistent or trivial alleged benefit.

6.  The focus of this bill is not assessment collection, but covenant enforcement cases.  The language in the bill about a rebuttable presumption of reasonableness is not (as I understand it) going to be in the next version (the Judicial Council opposed the bill because they think it tinkers with existing law on how courts review attorney fees, and this issue needs to be addressed). But the bill will still treat the two kinds of cases differently.   This is because associations need their assessment stream in order to remain solvent. If they have to hire lawyers to collect assessments, they should be able to recover their collection costs and fees, but judges need to scrutinize the amount of the fees to make sure the lawyers aren't churning and the costs and fees are reasonable.  Judges already have that power in Maryland (see Monmouth Meadows for the way they do that in Maryland).  [note: I realize that some people who read this blog want to wreck all associations financially, so they think association shouldn't be able to collect fees in court, but I think that position is irresponsible and morally objectionable and I won't argue it with you.] But associations don't need the money they get from fines. They don't become insolvent because somebody doesn't pay a $50 fine for painting their mailbox the wrong shade of beige.  And when a lawyer seizes on a case like this and runs up thousands of dollars in fees in the course of suing the owner, a judge should be able to say, "OK, you win on the paint job, but the association has to pay its own attorney."  Why?  Because fee shifting is an exception to the general rule that parties pay their own lawyers, and it should be allowed only when there is a real purpose to shifting the fee. Making lawyers wealthy isn't a good enough reason to shift the fees. As the court said in Monmouth Meadows, quoting the United States Supreme Court, “fee shifting statutes…are not intended as ‘a form of economic relief to improve the financial lot of attorneys[.]’”  [416 Md. 336]

7.  This would discourage associations from intimidating or persecuting unit owners, it would keep ridiculous cases that only enrich lawyers out of the courts, and it would force association boards to think for themselves and exercise some independent judgment instead of suing every time their lawyer tells them to, influenced by the promise that the association won't have to pay for it.

8.  Predictably, CAI showed up and opposed the bill. They send a non-lawyer from the Maryland legislative action committee who claimed that she didn't know about any abusive cases, boards are responsible, CAI wants to be involved in the conversation, and so forth. The usual fare. It was not an effective performance, but you can expect them to roll in the big guns (i.e., the lawyers who have gotten rich using fee-shifting provisions) if this bill goes forward.

So that's the general idea. I think this is a good bill that focuses attention on a problem that I have been writing about for decades.

Tuesday, March 26, 2013

About to testify in support of S.B. 1062

So here I am in Maryland, getting ready to testify before the Judicial Proceedings Committee of the Maryland State Senate in support of S.B. 1062, summarizes as follows:

"Prohibiting a governing body of a homeowners association or council of unit owners of a condominium from demanding, collecting, or seeking to recover attorney's fees from a lot owner or unit owner unless the amount of the attorney's fees is reasonable in relation to the amount in controversy or the nature of a specified violation; establishing that, in a specified action against a lot owner or unit owner, there is a specified rebuttable presumption that attorney's fees sought are reasonable; etc."

The bill is sponsored by Sen. C. Anthony Muse, whose district is in Prince George's County.

Monday, March 25, 2013

Bimini bay: arrested bimini bay developer taps HOA funds -

Bimini bay: arrested bimini bay developer taps HOA funds - The developer of the half-built Bimini Bay resort in Davenport withdrew more than $16,000 from the homeowner association's accounts the same day he was arrested earlier this month and accused of stealing from homeowners' utility payments, according to association records.
Privatopia sometimes resembles a company town -- the developer's.