RogerB (Colorado)
Posts: 5,067
Posts: 5,067
Posted:
In today's Denver Post I laughed at the comic strip B.C. by Johnny Hart:
Miss Know-It-All was asked "For such a stressful job, How come lawyers always look so well-fed?"
She replied "Because their diets consist mainly of eating their own words."
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This reminded me of a legal seminar I attended by 40 managing agents and 6 attorneys. The following example was presented. I was very concerned because not one attorney nor any other property managers raised questions about nor commented on the obvious errors made by the association's Board, their HOA attorney, and the trial judge. Ultimately, after major legal expenses the Court of Appeals got it right!
The Castle Park Ranch Property Owners Association, Inc. wanted to pave their private road. The By-laws provided for assessments for road improvement without limitation. The HOA conducted two homeowners meetings and the members voted and approved a motion to pave the road and levy a special assessment of $17,500 against each lot. An owner, Quinn, challenged the special assessment and brought suit against the Association because the Covenants limit the average common expense liability to $300 for each lot.
The Trial Court upheld the special assessment of $17,500, finding that a combination of the member meetings results and the By-laws provision justified the special assessment. The Court of Appeals reversed, finding that following the By-laws provision would eliminate the common expense limitation set forth in the Covenants.
What lessons can be learned from this case?
1) The trial judge erred; the Covenants are always superior to the Bylaws. (Perhaps a failure in the Covenants to clarify the hierarchy of HOA documents contributed to the trial judge error.)
2) The HOA attorney erred. (The case never should have gone to trial! The HOA attorney should have known applicable laws; advised the Association that their actions were out of order; and should have advised on the proper procedures to follow to achieve desired results.)
3) The Association erred. (They needed a good property management company.)
4) The Covenants and By-laws are very poorly written. Both need to be amended to correct the inconsistency between the Covenants and create By-laws which include only the governing aspects of the organization.
As their property manager I would have recommended:
1) Conduct a valid vote to amend the Covenants in a manner which will provide for the special assessment with all owners voting by signed ballot. 2) When approved,
a) file the amendment to the Covenants with the appropriate County Clerk and maintain the original signed ballots in the Agent’s files; and
b) Conduct a valid vote of the members to amend the By-laws including removing everything related to assessments; and
c) Conduct a valid vote on the special assessment, preferably by signed ballot since a large sum of money is involved.
Miss Know-It-All was asked "For such a stressful job, How come lawyers always look so well-fed?"
She replied "Because their diets consist mainly of eating their own words."
----------------------------------------------
This reminded me of a legal seminar I attended by 40 managing agents and 6 attorneys. The following example was presented. I was very concerned because not one attorney nor any other property managers raised questions about nor commented on the obvious errors made by the association's Board, their HOA attorney, and the trial judge. Ultimately, after major legal expenses the Court of Appeals got it right!
The Castle Park Ranch Property Owners Association, Inc. wanted to pave their private road. The By-laws provided for assessments for road improvement without limitation. The HOA conducted two homeowners meetings and the members voted and approved a motion to pave the road and levy a special assessment of $17,500 against each lot. An owner, Quinn, challenged the special assessment and brought suit against the Association because the Covenants limit the average common expense liability to $300 for each lot.
The Trial Court upheld the special assessment of $17,500, finding that a combination of the member meetings results and the By-laws provision justified the special assessment. The Court of Appeals reversed, finding that following the By-laws provision would eliminate the common expense limitation set forth in the Covenants.
What lessons can be learned from this case?
1) The trial judge erred; the Covenants are always superior to the Bylaws. (Perhaps a failure in the Covenants to clarify the hierarchy of HOA documents contributed to the trial judge error.)
2) The HOA attorney erred. (The case never should have gone to trial! The HOA attorney should have known applicable laws; advised the Association that their actions were out of order; and should have advised on the proper procedures to follow to achieve desired results.)
3) The Association erred. (They needed a good property management company.)
4) The Covenants and By-laws are very poorly written. Both need to be amended to correct the inconsistency between the Covenants and create By-laws which include only the governing aspects of the organization.
As their property manager I would have recommended:
1) Conduct a valid vote to amend the Covenants in a manner which will provide for the special assessment with all owners voting by signed ballot. 2) When approved,
a) file the amendment to the Covenants with the appropriate County Clerk and maintain the original signed ballots in the Agent’s files; and
b) Conduct a valid vote of the members to amend the By-laws including removing everything related to assessments; and
c) Conduct a valid vote on the special assessment, preferably by signed ballot since a large sum of money is involved.