Ott & Associates in Cleveland Ohio – Condominium lawyer and Homeowner Association attorney

Legislator: Bill would provide Ohio condo associations with more financial flexibility (from The Daily Reporter, Columbus, OH)

lindseyk — Thu, 18 Feb 2010 20:26:05 +0000

By JACKIE NASH (Daily Reporter Staff Writer)
January 19, 2010

Legislation was introduced last week in the Ohio General Assembly to provide state condominium associations with financial flexibility - made necessary by the rising rate of condo unit abandonment when foreclosure occurs.

House Bill 408 would provide that a portion of a condominium assessment is prior to other liens on condominium units.

Rep. Brian Williams, D-Akron, one of the bill’s sponsors, said he decided to work on HB 408 after he was approached by constituents about lost condo association fees. The bill simply “moves the condo fee situation up on the list of required payments” when a unit goes into foreclosure, he said.

Rep. Kenny Yuko, D-Richmond Heights, also a sponsor of HB 408, said the bill would mandate that when a condo unit goes into foreclosure, six months of community association assessments would be paid before all other liens - including the bank’s first mortgage.

Condo assessments - also known as association fees - can include expenses for gas, sewer, water, electricity, lawn cutting and landscaping, snow removal, hallway cleaning and parking lot management.

“(HB 408) is a mechanism to protect the groups of people who reside together in a condo complex,” Yuko said.

“Unfortunately, condominium homeowner associations have become another victim of the mortgage foreclosure crisis. When a foreclosure occurs in these communities, the remaining owners are left struggling to pay for services, maintenance and property preservation,” he said.

However, HB 408 would protect community associations’ solvency statewide and prevent homeowners who have not abandoned condos from being forced to operate on budgets with insufficient funds for building upkeep, Yuko added.

Assessments would not take precedence over property tax payments, under the bill, he emphasized.

Yuko said the motivation behind HB 408 came from discussing the issue with members of condo associations in his district. Due to the economy, several condo owners in his district and throughout the state have gone into foreclosure, and ceased to pay their association fees, he said.

“Whether you’re living in a low-income unit or a state-of-the-art unit, you’ve been affected … bottom line is, we have to protect our property values. Those property values affect the city, city services, and the programs we offer our senior citizens and our children,” Yuko said.

Rep. Tom Letson, D-Warren, a co-sponsor of HB 408, agreed that a lack of association fees affects surrounding communities, and the bill would help improve neighborhood aesthetics.

“I think this is the easiest way for the neighborhood to maintain its integrity while the (foreclosure) process is working its way through,” Letson said.

Kimberly Sutter, attorney at Ott & Associates Co., LPA, said she believes HB 408 would be a “victory” for Ohio community associations. However, the bill will likely receive strong opposition from the banking industry, she said.

“Many associations are experiencing an increase in delinquencies, some to the point where the association is unable to pay utility bills, or adequately maintain the common property,” said Sutter.

“This kind of ‘super-lien’ statute has been adopted in other states across the country with great success. If nothing else, (HB 408) gives the associations a fighting chance in a system where they are often the party left at the end with unpaid debts and bills for attorney fees,” she said.

HB 408- “Super Lien” Legislation Introduced for Condominium Associations

lindseyk — Tue, 19 Jan 2010 16:33:05 +0000

HB 408- “Super Lien” Legislation Introduced for Condominium Associations

The Ohio Legislature has introduced House Bill 408 into the General Assembly, which would give condominium associations in Ohio “Super Lien” status. Essentially, this bill would provide priority for condominium associations in foreclosure proceedings— the condominiums would be entitled to collect six months worth of maintenance fees plus attorneys fees ahead of any first mortgage holder.

For more information, please view the article written by Jackie Nash of the Daily Reporter in Columbus, Ohio and please feel free to contact our office with any questions.

Daily Reporter

Improper Rule or Regulation Pitfall

lindseyk — Wed, 13 Jan 2010 17:11:32 +0000

Many associations have provisions in either their Declaration or Bylaws/Code of Regulations that allow the Board to adopt reasonable rules and regulations for the association. However, beware a hidden danger to this common provision. It is very important to carefully read the provision granting that power to the Board to ensure that the rules you are trying to adopt are permitted under the provision.

Ignoring the precise language of the documents could put you in a position similar to a Wisconsin association that discovered, after lengthy litigation, that board did not have the authority to adopt the rules they implemented for the Association.

The board adopted a set of rules for the association, including rules regarding lot use, restrictions on lots and provided for fines for infractions. The court found that the specific language of the documents only provided for rules with regard to regulating common elements, and not for regulating individual lots.

It is important to have the association attorney review any proposed rules along with the provisions in the documents providing the power to adopt those rules to verify that the Association is not inadvertently adopting improper rules.

Case referred to: Concerned Neighbors of Lotus Lake Estates v. Lotus Lake Estates Homeowners Association, No. 2007AP1510, Wisc. App. Ct., Oct. 15, 2008.

The Right to Dry: The Next Attack on Association Regulations

lindseyk — Wed, 13 Jan 2010 17:10:36 +0000

It is commonplace to see a regulation or provision in the governing documents for associations that owner are not permitted to hang anything outside of their Unit, except for a properly displayed U.S. Flag, or some variation thereof.

However, the latest movement that has been gaining media attention nationally is the ban on clotheslines. Many associations prohibit clotheslines and hanging laundry out to dry outside. The “green” movement and the move to try to conserve energy has prompted the development of interest groups that are working to get laws passed that give residents the “right to dry”. One such organization is Project Laundry List.

Organizations of this type, which are growing, believe that cold water washing and air-drying of laundry can significantly help reduce power consumption and help reduce global warming. Support for these types of groups are meeting resistance from community associations and advocates on behalf of the associations. Many

residents have the mind set that they do not want to see their neighbors personal items and laundry when they look outside, walk or drive down the street.

Currently groups of this type are lobbying and working with legislators in Colorado, Hawaii, Maine and Vermont to try to pass right-to-dry laws. While the laws are not on the books yet, it is something to keep an eye on. If the idea gains support and popularity and if Project Laundry List or some similar entity comes to Ohio seeking to enact similar laws, it is something that community associations may have to deal with in the future.

Our Clients Ask Us: Fence Installation

lindseyk — Wed, 13 Jan 2010 17:09:07 +0000

Several owners in our association had fences put up while the developer was still in control of the association. Now, five years later, as a Board, we decided that we don’t like the looks of fences, even though our governing documents allow them. Are we allowed to now deny requests to build any fence?

Answer: Probably Not

If the Declaration states that fences are allowed but must be approved by the ARB (Architectural Review Board), or Board of Directors, then the ARB or board has to power to deny a request for a fence based on a design element (wrong height, materials, color, etc.). However, to outright deny a request because the Board doesn’t like fences will be inviting a lawsuit. If the Board feels so strongly about not allowing fences, then the Association would have to take a vote of the membership to amend the declaration to prohibit fences. If the membership agreed, those owners who already have fences (who received proper approval prior) would have to be grandfathered in.

Keep in mind that not only would be the denial of approval for any fence be contrary to your documents, but many of your neighbors bought property in your association with certain expectations. Maybe they want a fence so that their dogs can run around free, so that they have privacy from their neighbors, or for the safety of their children; and otherwise wouldn’t have purchased the property. These logistical issues, as well as the legal ramifications, would likely be brought before a Court.

2010 Community Associations Institute Seminar

lindseyk — Wed, 13 Jan 2010 17:06:36 +0000

This year the Community Associations Institute is holding its annual law seminar in Tucson, Arizona on January 21-23. Attorneys Kimberly M. Sutter and Brandy M. Slates will be attending this informative seminar this year.

Topics slated to be covered are statutory and case law updates, reserve studies, contested elections, along with collection of maintenance fees and other economy-related topics. New lending guidelines will also be a topic covered due to the recent changes in FHA lending in condominium associations.

Federal Red Flags Rule Update: Change in Effective Date

lindseyk — Wed, 13 Jan 2010 17:05:02 +0000

In a previous newsletter distributed in September 2009, an article entitled “Federal Red Flags Rule: Does it Apply to Community Associations?” indicated that all covered entities would be required to comply with the Red Flags Rule as of August 1, 2009. However, Congress urged the Federal Trade Commission (FTC) to delay the enforcement of the Red Flags Rule (RFR) until June 1, 2010. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

The updates on the rules also noted that timelines related to appeals and proceedings will not be affected due to the delay in enforcement of the Red

Flags Rule. In addition, any other federal entity conducting an investigation will not be affecting by

the delays in the FTC Red Flags Rule.

The FTC is working with trade professionals and other entities in order to establish specific, model policies regarding program outlines. Some trade-specific guidelines have been established, as well as conferences to educate covered institutions. If any model policies are adopted for community associations, we will be sure to update you immediately.

On October 20, 2009, the House of Representatives voted to extend the effective enforcement date of the Federal Red Flags rule to June 1,

2010. Due to a variation in the rules

specifically exempting legal, accounting and health care practices with fewer than 20 employees, Congressional members decided that enforcing the Red Flags Rule against

entities that would not be covered effective June 1, 2010, would be unfounded and expensive.

Moreover, the majority of enforcement will most likely be targeted at larger financial institutions and entities with frequent complaint filings.

For more information about the Federal Red Flags Rule, and any changes that your community association may need to know, please visit FTC’s website: http://ftc.gov/redflagsrule

Qualification for FHA Availibility

lindseyk — Wed, 13 Jan 2010 17:02:14 +0000

The Federal Housing Administration has once again changed its requirements for qualification of a condominium for FHA-insured loans. For any condominium to be approved, it must be in full compliance with State law. The project must be residential and cannot be a condo-hotel, a timeshare or a houseboat project.

1. For new construction, at least 30% of the total units in the condominium must be sold prior to the endorsement of a mortgage on any Unit. After December 31, 2010, the presale requirement increased to 50%, however this is a reduced presale requirement in new construction, compared with 70% for loans from conventional lenders.

2. At least 50% of the units must be owner occupied or sold to owners who intend to occupy the unit. In a proposed project, projects in construction or projects in initial marketing phase, the FHA is allowing a minimum owner occupancy of 50% of the presold units. Through December 31, 2010, bank-owned units may be disqualified from the percentage calculations.

3. Any project must have at least two units.

4. The condominium must be covered by hazard and liability insurance. Where applicable, flood and fidelity insurance will also be required.

5. No more than 25% of the total floor area can be used for a commercial purpose. Any commercial portion must be favorable to residential living.

6. No more than 10% of the Units can be owned by one investor. This also applies to vacant or unsold Units owned by the builder of developer that are subsequently rented out. If there are 10 units or less in the condominium, no single entity may own more than one unit and still qualify.

7. No more than 15% of the total units can be more than 30 days past due in the condominium association maintenance fee payments.

Position as an Officer- What Does it Really Mean?

lindseyk — Wed, 13 Jan 2010 16:53:40 +0000

You have been selected to serve as an officer for your association. So now what? Often times, officers have a title, but beyond that, they are not sure what their specific duties are and how those duties differ from those of a board member. If your by-laws fall silent on specific duties, here is a general synopsis of what is expected of each officer:

President

-leader/CEO of the association

-run board/other meetings

-must be familiar with declaration/by-laws

-spokesperson for the association

Vice-President

-assume duties of President in the event of an absence or resignation

-assist President with normal business

-act as liaison between board and other committees

Treasurer

-chief financial officer of the association

-collect association fees

-reconcile bank accounts and write checks

-give financial reports at meetings

-prepare financial statements

-maintain books for auditing

-ensure books are audited before a new treasurer takes over

Secretary

-keep records for the association

-send out meeting notices, letters, etc.

-prepare agendas

-record and distribute minutes

-bring to every meeting all minutes, a copy of the governing documents, board roster, agenda, ballots, etc. to run the meeting

-notify officers and committee members of their election/appointment

All Officers

-have a fiduciary duty to the association

-should deliver all records and files to their successor when they are replaced

-if a duty is handled by a vendor (such as a property manager, accountant, or attorney), the officer has an obligation to ensure that vendor is performing the duty adequately on their behalf.

Steven M. Ott Named as a Super Lawyer for 2010

lindseyk — Mon, 04 Jan 2010 19:35:30 +0000

Steven M. Ott has been named a Super Lawyer in Ohio for 2010. This is the second year in a row that Mr. Ott has earned this honor. Attorneys distinguished as Super Lawyers earn this title through a combination of peer recognition and professional achievement; including considerations in verdicts, settlements, transactions, representative clients, experience, honors/awards, special licenses/certifications, bar association/professional activities, pro bono/community service, scholarly lectures/writings, education/employment background and other outstanding achievements. Less than five percent of the attorneys in Ohio are considered for this distinction.