Electronic Privacy and Community Associations

Community associations, like many organizations, have caught the technology wave and are increasing their reliance upon the lnternet and other digital media for conducting business. As more and more of these associations migrate information from paper to electronic bytes, the specter of electronic privacy looms large. There are several legal and practical issues relating to electronic privacy that community association managers and board members should become familiar with as they conduct digital business via the Internet.

Back in 2012, I wrote an article on this subject which can be accessed here.   A synopsis can be found below.

A community association may look to the commercial industry to see how it is responding to electronic privacy issues. A review of web hosting and virtual community association company websites reveals “best practices” policies regarding protection of electronic privacy and personal identifiable information.  Such protocols include:

1. Strong firewall systems that provide defense against hacking by third-parties;

2. Assurances that all electronic information is kept confidential and never provided to any unauthorized persons;

3. All electronic information must be provided voluntarily with consent;

4. All electronic information may only be used pursuant to agreed upon and authorized purposes;

5. Set schedules to ensure accuracy of the electronic information; and

6. Establish retention and deletion schedules and policies.

Electronic privacy and security of personal identifiable information is a hot topic for community associations. Though there is a little formal guidance or laws for associations to follow, there are sound practices and other guidance offered by the business industry. A community association relying upon the lnternet, or other digitized systems for conducting business, should ensure it, or the company responsible for such services, follows proper protocols to protect its members and itself from unwarranted risk and legal liability.

Feel free to contact me or one of the other attorneys at Barker Martin if you have a question relating to electronic privacy and community associations.

 

Now, Therefore, Be it Resolved

Community associations often look to their declarations and bylaws for guidance on the governance of their community. Sometimes, though, associations want to clarify, supplement, or add to those governing documents. Depending on the circumstances, an association may be able to accomplish this through the adoption of resolutions. This week, we discuss some common situations when the Oregon Condominium Act, the Oregon Planned Community Act, and in some cases, the association's governing documents, require (or allow) the association to adopt resolutions.

The Oregon Planned Community Act and the Oregon Condominium Act generally require a resolution if an association intends to engage in or adopt rules relating to the following:

(1) Borrowing funds from the association's reserve account to meet high seasonal demands on the regular operating funds or to meet unexpected increases in expenses;

(2) If the board of directors adopts a resolution to borrow funds as set forth above, the board of directors must subsequently adopt a resolution establishing a written payment plan for repayment of the borrowed funds within a reasonable period;

(3) If an association intends to impose charges for late payment of assessments or levy reasonable fines for violations of the association's governing documents, the charge imposed or the fine levied shall be based on a resolution of the association or its board of directors (but only if the charge intended to be imposed or the fine levied is not based on a schedule contained in the association's declaration or bylaws);

(4) The board of directors, by resolution, may adopt reasonable rules governing the frequency, time, location, notice and manner of examination and duplication of association records and the imposition of a reasonable fee for furnishing copies of any documents, information or records;

(5) Depending on the information set forth in an association's governing documents, an association may be able to take advantage of the resolution-making authority relating to insurance deductibles and other insurance details set forth in the Oregon statutes: See our blog article here for details.

Some exceptions may apply and the list is not intended to be exhaustive; instead, it identifies common situations where, depending on the association's governing documents, a resolution is either necessary or recommended. There are a variety of other resolutions that might be recommended or particularly helpful to community associations.

To determine whether additional resolutions may be helpful (or necessary), associations should review their governing documents. Sometimes association governing documents will require the board of directors to adopt a specific resolution before the association takes a specific action. And sometimes the association governing documents (or Oregon statutes) require a resolution to be mailed out to all owners before the resolution becomes effective. It is always best to make sure you understand those requirements before attempting to adopt a resolution. Doing so will allow your association to move forward properly and efficiently. Please feel free to contact us if you have any questions.

Construction Defects: A Call for Accountability

Owners frequently ask why construction defects and building product failures are so prevalent these days. In his New York Times op-ed article, "They Don't Make 'em Like They Used To: Inferior Products and Labor Drive Modern Construction," Duke University engineering professor Henry Petroski considers that question. He concludes that the answer lies in the drive to make "quick money" via modern construction practices that favor inferior products and labor at the expense of craftsmanship. He calls for homeowners and legislatures to hold suppliers and contractors accountable for the quality of materials and work they promise.

For a link to the article please click here.

On the issue of accountability at the legislative level--and apart from our efforts litigating on behalf of homeowners--several Barker Martin attorneys remain highly active in the Washington and Oregon legislative process, including serving on legislative committees for homeowner association industry groups and testifying on behalf of bills affecting owner rights. On occasion, we also are asked to review and help draft prospective legislation. Keep checking this Blog to obtain the latest legislative developments affecting homeowners.
 

Accomodating Accomodations

Recently, while reviewing a Federal district court case from the Southern District of Florida concerning a dispute over a disabled resident’s request for a service animal, it occurred to me how challenging it can be for an association to properly respond to FHA requests for reasonable accommodation (or modification), even if the board is trying its best to do the right and reasonable thing.

The case I mention above is Sabal Palm Condominiums of Pine Island Ridge Association v. Fischer, 2014 WL 1092361 (S.D.Fla.)). In it, a condominium association with a no-pets policy was held to have violated the Fair Housing Act by constructively denying a disabled resident’s request for a service animal. Deborah Fischer, a condominium resident who was confined to a wheelchair due to Multiple Sclerosis, notified the board that she was bringing home a trained service dog to assist with her tasks of daily living. The association rightly treated the notification as a request for a reasonable accommodation from its no-pets policy, but from there, the association’s handling of the request ultimately landed it on the losing side of a Federal court case.

The Sabal Palm association requested extensive documentation of Deborah’s disability, such as medical records from all her healthcare providers, all documents related to the nature, size and species of the dog, as well as all documents regarding its training. Even though Deborah eventually provided a medical history form from her doctor that confirmed she was disabled and explained the nature of her disability and the limitations it imposed, along with a letter from the dog trainer detailing the dog’s training, the association still was not satisfied and requested more information. Deborah continued to provide information consistent with the information she previously provided: that Deborah’s medical condition rendered her severely disabled and required her to rely on the assistance of others to maximize her function status. Yet, more than 4 months after receiving the first medical records, the Association inexplicably failed to grant Deborah’s request and then compounded their error by suing Deborah, arguing that she was not entitled to keep a service animal at the condominium.

The court was not pleased. In its decision, the court found that the association had more than enough information to grant the request and allow the dog to stay, and held that the continuing delay asking for even more information amounted to constructive denial. The association was held liable for damages. In fact, the board president was held liable as well, because he was found to have “personally committed or contributed to a Fair Housing Act violation.”

So, how does an association comply? First, an association needs to know if the FHA applies to their complex. The Federal Fair Housing Act (FHA) prohibits discrimination in housing on the basis of race, color, religion, sex, national origin, familial status, and disability. It applies to multifamily dwellings of four or more dwelling units, so most condominiums must comply. A person with a disability is generally defined as any person who has a physical or mental impairment that substantially limits one or more major life activities; has a record of such impairment; or is regarded as having such an impairment. The FHA requires an association to make reasonable accommodations in rules, policies, practices, or services when such accommodations may be necessary to afford a person with a disability the equal opportunity to use and enjoy a dwelling or common space. Associations must also allow for reasonable modifications to structures to afford equal use and enjoyment. Failure to do so where an accommodation or modification is warranted can constitute discrimination.

One could fill a law school course with all of the points of law and interpretations of each of the many provisions of the FHA and how they apply to condominiums. Yet, there are a few simple things an association can do to best ensure requests are properly handled when received.  

First, there is no substitute for basic education on this topic in aiding board members and managers identify issues when they arise. To this end, there was a very helpful and informative Q & A statement published in 2004 called the “Joint Statement of The Department of Housing and Urban Development and the Department of Justice Reasonable Accommodations Under the Fair Housing Act.” A big part of the challenge of compliance is simply knowing what types of situations may fall under the FHA, and being informed on how these laws are interpreted. Here is a link to the Joint Statement: http://www.hud.gov/offices/fheo/library/huddojstatement.pdf. Reading it is time well-spent.

Second, remember that a request for a reasonable accommodation does not need to contain the words “request” or “reasonable” or “accommodation.” If you receive a letter, email, voicemail or other communication that might be a request for an exception, change or adjustment to a rule, policy, practice or service at your association, and there is a connection to a person with a disability and their equal opportunity to use and enjoy a dwelling or common space, you should immediately review the request through the reasonable accommodation lens. It may be that the request does not implicate the FHA, or does not meet accommodation standards, but it is a good practice to review the inquiry as if it is a request for a reasonable accommodation (or modification, if it involves changes to building structures). Also, if your association has any publically accessible facilities, you may also be subject to the Americans with Disabilities Act.

Third, as the Sabal Palm case teaches us, even unreasonable delay in responding to a request, or requiring unnecessary documentation or overly burdensome procedural hoops, can result in a constructive denial. Do not delay in analyzing requests.

Requests that concern disabilities can be challenging for community association boards and managers. How to gauge whether a request is reasonable, or who pays for a requested modification, can add complexities to an already testing scenario. Realize that when it comes to disabled residents, it is very often the case that making changes to your rules and policies is not only the right and kind thing to do, but may it be required under the law. If you have questions, we are here to help.
 

UCIOA Update

The Washington State Chapter of CAI is hosting its monthly chapter luncheon on Tuesday, June 24 at the Redmond Marriott Town Center From 11:30 to 1:30 - and we hope you can make it!

I will be leading a discussion on the Uniform Common Interest Ownership Act (UCIOA). The prospect of UCIOA becoming law in Washington has been on the horizon for several years and the drafting process is now at a point that we can expect legislation to be introduced in the next legislative session. This lunch program will include a summary of what UCIOA includes and does not include, with an emphasis on: Declarant Rights, Assessments, Collections and Consumer Protections.

For more information and to register for this lunch please click here.

We would love to have you join us and hope to see you there!
 

WSCAI's Made for Manager's Day

The Washington State Chapter of CAI is hosting its annual Made for Managers Day next Thursday, June 19th at the Lynnwood Convention Center - and we hope you can make it!

This is a great educational opportunity for community association managers to earn 3.75 continuing education credits and learn from industry professionals. In addition to a full day of interactive educational sessions, there will be a full Exhibit Hall occurring with fun booth giveaways and networking opportunities galore. Stop by the Barker Martin booth to meet the team and learn about our newly expended legal service offerings designed to aid both community associations and managers.

Presentation topics include:

--'What To Do When the Press Comes Calling or Social Media Turns On You'
--'Beyond Customer Service: The Art of Hospitality'
--'Management Ethics'
--'Legal Marijuana and Other 'Aromatic' Substances in Condominiums'
--'The Big Picture! Contemporary Issues and What's Happening in the Industry'

For more information and to register for the event please click here.

We would love to have you join us and hope to see you there!

Sudden Valley, Sudden Change for some HOAs

On the heels of the Washington Supreme Court's peculiar plurality decision in Wilkinson v. Chiwawa, Division One of the Washington Court of Appeals recently issued an equally perplexing decision relating to procedures employed by non-condo homeowner associations in establishing budgets and levying assessments. In the as-yet unpublished opinion called Casey v. Sudden Valley Community Association, the court held that a provision in the Association's bylaws requiring 60% approval of owners attending a meeting to raise assessments was not trumped by the HOA Act's budget ratification procedures.

As in Chiwawa, the court seemed to subjugate common sense and a basic understanding of community association law to its desire for a particular outcome based on the facts of the case. Apparently, the Sudden Valley community had, for years, attempted to give effect to both the bylaw provision requiring the affirmative vote for assessment increases and the HOA budget ratification procedure (which allows passage of a budget unless rejected by a majority of the votes in the association under RCW 64.38.025). While the budget consistently passed, the assessment was consistently voted down by a minority of owners (comprising a majority of those attending the assessment vote meeting). Frustrated with this consistent outcome, the board determined, by motion, to hold one ratification vote on the budget, which they would interpret as assent to the assessments.

In a paragraph that sums up the basic distaste for the statutory ratification process, the court seemed particularly offended that the board "combined the vote on dues and assessments with the vote on the budget" and thereby "achieved its goal of increasing dues and assessments despite the members' overwhelming vote to reject it."

In ultimately holding that the budget ratification procedure in RCW 64.38.025 does not trump a bylaw provision requiring an affirmative vote to raise assessments, the court held strong to the absurd contention that budgets and assessments are completely unrelated, which further required them to recognizing a board's ability to forego use of budgets and adopt unregulated "spending plans."

At the same time, completely absent from the opinion is any recognition of the difficulty of operating an aging association where a small but active minority of unit owners use the super majority attendee vote requirements ensure that assessments are never raised - even where the raises are objectively legitimate or even required to fund reserves. This is exactly the policy behind the statutory budget ratification procedure and why it has been interpreted to supplant affirmative vote provision.

As an unpublished opinion, the case technically has no value as precedent, but it remains to be seen whether the case will be published or appealed. If published, many HOAs in Washington may need to reverse long held positions that the HOA Act's budget ratification procedures trump affirmative vote provisions for assessments. Notably, the decision itself limits it applicability to non-condo HOA's, noting that the Condominium Act explicitly provides that assessments must be made against all units "based on a budget adopted by the association." Yet the court still refused to see the connection between budgets and assessments, meaning that for struggling associations with affirmative vote requirements in their governing documents, Sudden Valley may mean sudden death to fiscal responsibility.

As always, please contact us if we can be of assistance.

Who's Invited to this First Party?

A “first party claim” is simply a claim that a community association makes for coverage under its own insurance policies. Generally, these policies are intended to cover certain types of property damage. The coverages provided by the carrier and the exclusions from coverage are outlined in the insurance policy. Typically, exploding water tanks, bursting pipes, damage to the buildings from a car or other accidents are events that insurers routinely recognize as covered claims under an Association’s first party or property policy.

These claims differ from “third-party claims.” In third-party claims, a person sues someone and the person sued looks to his or her liability insurance for coverage. In that situation, the insured asks its insurer to defend and/or indemnify the insured against the claims.

But “first party claim” has become a buzzword as of late to describe a particular type of claim that community associations may be able to make against property insurance policies going back for many years. The specific type of claim may differ depending on the nature of the association’s insurance policy. The claim may involve “collapse” or property damage caused by a list of covered causes, such as “wind driven rain.”
This type of first party claim is especially beneficial for complexes that are beyond the general statutes of limitations for claims against developers or contractors for construction defects. If a building is outside of the statute of limitations but still suffers from substantial damage to building elements, your association may have a chance at recovering something by making a claim against your association’s prior property policies. Courts have recognized coverage under association policies dating back as far back as 10 years.

In general, insurance companies will tell you that property policies are not intended to cover damage due to “construction defects” or errors made during the original construction or reconstruction of buildings. In fact, most policies purport to exclude damage caused in any way by construction defects. When a construction defect or other excluded peril (such as rot) is specifically excluded by a policy, there may be other ways of demonstrating coverage. Depending on the type of insurance policy, you may be able to establish coverage if the damage was also caused in part by a covered cause such as collapse or wind driven rain.

Establishing coverage under old policies requires careful analysis of the complex and convoluted language of the association’s policies as well as a solid understanding of the interpretations given to the various policy terms used over the years. For example, the courts in various states interpret the exact same word – “collapse” – to mean very different things. Some courts require a building to be reduced to rubble whereas other courts only require that the building suffer from substantial impairment.

Because these types of claims are potentially high dollar claims involving the most convoluted sections of coverage, it is not uncommon for insurance companies to initially deny claims that appear in any way related to original construction defects. It is also possible that the very nature of the tender may jeopardize whether you are successful in triggering coverage. Thus, it is often necessary to get legal help before tendering this type of “first party” claim to your association’s insurer. In other words, make sure your attorney gets invited to the party.
 

Demystifying First Party Insurance Claims - Part 2: Oregon

When associations discover damage to their buildings, there are several potential sources for financing to effectuate the necessary repairs. One source is the homeowners, whether through built-up reserves or additional assessments. Another source is a banks or other lending institution. Sometimes a third-party, such as the project developer or a contractor, may be liable to the association for damages.

There is another potential source for funding repairs that may be overlooked: the association’s own insurance. First party insurance claims have become more prevalent as multi-family buildings (condominiums and apartments) age. There are more and more associations facing repairs as the exterior cladding systems on their buildings fail over time. Repairs are often necessary to address substantial rot and damage that is sometimes discovered hiding beneath roofs, siding and walls. Some of this damage may be covered by property insurance.

Due to the complexity and multiple factors involved in tendering and evaluating such claims, the team at Barker Martin is offering free webinars on the topic. Our first webinar, providing general information and Washington-specific case law, was given by Jim Guse and Dan Zimberoff last week and can viewed by clicking here.

Jim and I offered a second webinar focusing on Oregon-specific case law and issues this morning. That webinar will be posted on our website shortly.

Along with the webinars, the Barker Martin team will be writing a few blog posts and emails in the coming weeks.

Feel free to contact us if you have any questions.

As always, please feel free to contact me with questions related to insurance coverage for your association.
 

Demystifying First Party Insurance Claims - Part 1: Washington

First party insurance claims have become more prevalent over the past few years as multi-family buildings (condominiums and apartments) age. Tens of thousands of these types of buildings were constructed in the Pacific Northwest over the past 40-50 years.

As the exterior cladding systems on these buildings nears the end of their useful lives, and the associations and owners commence repairs, substantial rot and damage often is discovered hiding beneath roofs, siding and walls. Some of this damage may be covered by property insurance.

Due to the complexity and multiple factors involved in tendering and evaluating such claims, the team at Barker Martin is offering free webinars on the topic.

Our first webinar, providing general information and Washington-specific case law, was given by Jim Guse and me this morning. It was recorded and can be viewed on our homepage: www.barkermartin.com.

We are offering a second 45-minute webinar specific to Oregon next Thursday (May 22nd) at 10:30 a.m. Registration for the free webinar can be done through our homepage: www.barkermartin.com.

For both our Washington and Oregon webinars, we:

• Explain what a first party claim is and how it is distinguished from other types of insurance claims;

• Discuss the various types of first party claims;

• Run through a history of “collapse” claims;

• Provide a brief summary of state-specific case and statutory law;

• Provide hints and best practices for tendering claims; and

• Discuss practical considerations for tendering and pursuing first party claims.

Along with the webinars, the Barker Martin team will be writing a few blog posts and emails in the coming weeks (..stay tuned...).

In addition to input from me and my partners, the webinars and related materials were formulated by Jim Guse, whose practice focuses on the representation of individual and corporate policyholders in insurance coverage disputes, including insurance coverage for construction disputes. Jim recently joined the firm and we are very pleased to have him assisting our clients on first party and all other insurance matters.

And as always, if you have specific questions related to insurance coverage for your association, please feel free to contact me at www.barkermartin.com.