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SMOKING ON
THE BALCONY
A CIVIL RIGHT?
 QUESTION:
Can the association make it a violation to smoke on your own balcony?
Wouldn't that violate your civil rights?
ANSWER:
Yes, associations can pass rules against smoking on balconies. No, restricting
smoking is not a
violation of a person's civil or constitutional rights. Associations have
good reason to regulate smoking--it is a health hazard, a fire risk, and a
nuisance. There is an increasing trend in associations to ban smoking
altogether.
NO ONE WILL
TAKE US TO COURT
QUESTION: Our association's
attorney said "The Davis-Stirling Act does not mean anything unless you are in
court!" And, "No one will take us to court because it costs too much money!"
ANSWER:
That's an interesting legal strategy. Let me know how it works out.
CENSUS TAKERS
 I've
been getting a lot of questions about census takers. Managers and directors have
raised security concerns about giving
census takers access to their buildings.
I understand the concerns but everyone should put
away their Tasers. The law requires cooperation with census takers. As provided for in 13 U.S.C. §223:
Whoever, being the owner, proprietor,
manager, superintendent, or agent of any hotel, apartment house, boarding or
lodging house, tenement, or other building, refuses or willfully
neglects, when requested . . . to furnish the names of the occupants . . .
or to give free ingress thereto and egress therefrom to any duly accredited
[census taker] . . . shall be fined not more than $500.
RECOMMENDATION.
The $500 fine is small, unless it is interpreted to mean per unit, then it
could be significant. Associations can require evidence that the person is a census taker
and photocopy their ID so there is a record of who entered the building. The census is
intrusive but it's only once every 10 years. I recommend compliance with the
law.
INJURED
COMMITTEE MEMBER
 QUESTION: Does D&O insurance cover
committee members as well as board members? For example, a committee member,
doing business for the HOA such as inspecting something on common area property,
falls, breaks an ankle and is disabled for a period of time. Who pays his
medical expenses?
ANSWER:
The injured committee member's health insurance carrier may decline coverage
claiming he was "at work" for the association and therefore
not covered. In that case, the committee member will want the association to
cover his medical expenses.
D&O Insurance. Although most Directors and Officers (D&O) policies protect committee
members who might be sued for negligence, they do not cover
injuries sustained by committee members. D&O policies
normally contain an exclusion for bodily injury so they do not duplicate the bodily injury
coverage in the
association's underlying general liability policy.
There are at least three other
avenues where the committee member's injury could be covered under the association's insurance:
(i) guest medical, (ii) commercial general liability, and (iii) workers'
compensation.
Guest Medical Payments. If the association
has "Guest Medical Payments"
coverage, it covers injuries in the common areas “regardless of fault.” The committee
member would not have to prove the association was negligent in order to
have his medical expenses considered. However, coverage is typically low
($5,000 per person) and the policy would not cover injuries that
occur on the premises the “person normally occupies.” If
the slip and fall occurred on the walkway leading to his unit or a portion
of the Common Area the owner frequently used (parking garage, swimming pool,
tennis court, etc.), the carrier might deny coverage.
Commercial General Liability. If the
association does not have "guest medical" or the injuries exceed limits, the
claim could be covered under the CGL policy. If the association's
negligent maintenance of the premises caused the injury, the medical expenses
should be covered.
Specially Endorsed Workers’ Compensation.
A small number of workers’ compensation
carriers have begun issuing policies with an endorsement that broadens the definition of “employee” to
include the board of directors, officers and “appointed committee members.”
If an association has this coverage, the committee member is covered if he was
acting on behalf of the association in his "official capacity" at the time of
injury. As a prerequisite to coverage, the board's minutes must clearly reflect the
appointment of the person to a committee.
RECOMMENDATION:
Boards should have their association's insurance reviewed by an agent who
specializes in homeowners associations. Insurance coverage is too important to
leave to inexperienced agents.
Special thanks to Tim Cline of the Timothy
Cline Insurance Agency and Michael Berg of the Berg
Insurance Agency, Inc. for their assistance answering this question. -Adrian
Adams
SHORT SALE
FEEDBACK
 Seller's Duty. Regarding the delinquent
dues on a short sale... it is the SELLER's responsibility to pay the amount
owed. The seller has been forgiven (or at least deferred) payment of the
difference between loan balance and sale price. The real estate brokerages
involved often have already reduced their fees to make the transaction work. The
seller has usually skipped at least a few house payments and should manage to
pay the HOA what they're owed. -Maxine C.
Disagreement. The difference between a
'regular' sale and a short sale is the lender has agreed to provide a demand to
escrow for less than the amount of loan outstanding. As far as escrow is
concerned they still contact me for a HOA payoff balance just like a 'regular'
escrow. I have never seen a HOA lose money from a short sale because of not
recording a lien. The association may agree to waive some of the outstanding
fees to get the deal done, but this has nothing to do with not having a recorded
lien. -Bill G.
RESPONSE:
I should have used the word "may" instead of "will" receive nothing from the
short sale. In some instances a sale can be all cash with a very
short escrow. The parties might "forget" to include the association (as happened
with one of my associations). If, however, the association records a lien, it can't
be ignored. So as to avoid this problem, boards should be diligent in filing
liens at the earliest possible date. -Adrian
Property Values. I am concerned
over the assessed property value when a home owner has a short sale or their
property is foreclosed. This is reflected in the value of all homes in the area,
when it is not the true value of the homes. What can we do to stop the use of
these properties to decide the value of all other homes? -Ronald W.
RESPONSE: I
don't think anything can be done. The market has to correct itself.
Unfortunately, that means clearing out the glut of foreclosed properties at fire
sale prices. Once the market hits bottom, it will start a slow climb to more
realistic price levels. The current administration (some readers don't like it
when I say Obama Administration) has been very slow to address ongoing problems
with Fannie Mae and Freddie Mac, which creates a continuing drag on the market. In addition, there
is disarray
when it comes to VA and FHA approvals. That means the housing recovery will
likely be anemic well into the foreseeable future. -Adrian
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