New Law requires Fidelity Bonds for Community Associations in Oregon

During the most recent legislative session, the Oregon legislature passed HB 2466, which modifies ORS 94.675 of the Oregon Planned Community Act and ORS 100.435 of the Oregon Condominium Act. The effective date for the new law is January 1, 2020.

The new law requires certain homeowner associations (as specified in the update to ORS 94.675) and all condominium associations to carry fidelity bond coverage for the following: (1) all persons with access to association funds; and (2) computer fraud and funds transfer fraud. This fidelity bond coverage must be in an amount that is at least equal to the combined amount of the following: (1) Funds maintained in the name of the association in accounts under ORS 100.480 or ORS 94.670, as applicable; and (2) Any obligation issued by the United States government purchased by the association under ORS 100.480 or ORS 94.670, as applicable.

If a community association does not want to maintain the required coverage, the board of directors, with approval of owners representing a majority of the voting rights present at a meeting, may elect for the following year to not maintain fidelity bond coverage as required by the new law.

Solar Panels in Planned Communities

In 2017, the Oregon legislature passed a law (specifically, ORS 94.778) relating to solar panels installed in planned communities. The following are a couple of common questions that arise as a result of the new law:

What kind of restrictions can an association place on solar panels in planned communities?

Associations may adopt and enforce a restriction that imposes reasonable size, placement, or aesthetic requirements for the installation or use of solar panels.

Are the restrictions noted above the only types of restrictions that the Association can enforce in relation to the installation of solar panels?

Yes, and further, any provision in an association’s declaration or bylaws that prohibits an owner of the roof or other exterior portion of a building or improvement on which solar panels may be installed from installing or using solar panels for obtaining solar access is void and unenforceable.

Why did the legislature pass a law to supersede association governing documents that prohibit solar panels?

The legislature determined that such provisions violate the public policy to protect the public health, safety, and welfare of the people of Oregon.


The Washington Uniform Common Interest Ownership Act Takes Effect

On July 1, 2018, the Washington Uniform Common Interest Ownership Act (the Act) became law. The majority of the Act applies only to common interest communities (such as condominium unit owners' associations and other planned communities) created after the July 1st effective date of the Act. Two sections of the Act described below also apply to most common interest communities created before the effective date of the Act as explained in RCW 64.90.080:

  • RCW 64.90.095 provides procedures by which common interest communities created prior to the effective date of the Act may amend their governing documents to opt in to the Act; and
  • RCW 64.90.525 sets forth new requirements related to budgets, assessments, and special assessments.

The Washington Uniform Common Interest Ownership Act can be accessed here

Legal Changes: Oregon Timing Requirements for the Review of Financial Statements

In 2017, the Oregon legislature made some changes to the laws governing Oregon condominium and planned community associations.  One change involved timing requirements for the review of financial statements.  The prior requirement was that associations that have annual assessments exceeding $75,000 (or associations that have less than that when requested by at least a majority of the owners) shall cause the financial statement required under ORS 100.480 or ORS 94.670 to be reviewed within 180 days.  Take note that the new statutory requirements give the Association more time: 300 days.  These new changes can be reviewed here.




Can I Abstain? Oregon Law and Meetings of Directors

Under Oregon law, for both condominium associations and homeowner associations, it is important for directors to note that if a director is present at a meeting of the board at which action is taken on any association matter, that director is presumed to have assented to the action unless the director votes against the action or abstains from voting on the action because the director claims a conflict of interest.  This is important for directors to keep in mind because inaction means approval, not disapproval. Further, for those who are taking meeting minutes during a board meeting, when action is taken on any matter at a board meeting, the vote or abstention of each director present must be recorded in the minutes of the meeting.


July 19th HOA Roundtable Event: CAI Oregon

Amanda K. Anderson will be participating as an expert at the CAI Roundtable Event focusing on reserve studies and financial planning on July 19, 2017 at 5:30 p.m.  The event will be located at the King City Civic Association Club House.

The following is a brief description of the program from CAI Oregon:

Please join CAI Oregon for its Board Member roundtable evening program. This is a free event and exclusively for Board Members, Association Volunteer Leaders, and Association homeowners.  Learn from other association members and ask your burning HOA questions to our three participating experts in the industry.   

You can sign up here.

We hope to see you there!

Fair Housing Act: Reasonable Accommodations Follow Up

On February 10, 2017, we described a recent ruling in a fair housing case entered in the Oregon District Court in relation to a family's suit against a Keizer community association.  That case involved a family's request for an accommodation to park an RV in front of their home to assist with transporting their daughter.  The request to the Association was accompanied by letters from two of the daughter's healthcare providers documenting the daughter's disabilities and explaining the necessity of the RV for transportation purposes. As explained in our prior blog post, the judge held that the Association violated state and federal fair housing laws by denying the family's request for a reasonable accommodation. As a follow up to that blog post, we are writing to note that the Oregonian recently reported that the family settled their lawsuit with the Association for $300,000.  The full Oregonian article can be found here.

Board Member Education Series: Building Community Involvement

Jennifer P. Ballard and Amanda K. Anderson are presenting on the topic of building community involvement for The Management Group's Board Member Education Series tomorrow, April 13, 2017 at 6:00 p.m. at the Courtyard by Marriott, 15686 SW Sequoia Parkway, Portland, OR 97224. We will be discussing best practices for board members in cultivating community involvement, committee formation, committee management, and tips for board member succession plans. 

If you are a board member and would like to attend the presentation, you can register here.

Washington Appellate Court Rules Board Appointment of Directors Appropriate When Board Elections Could Not Be Held

The Court of Appeals of the State of Washington Division II recently ruled that a community association board of directors appropriately appointed association members to the board to fill vacancies when board member elections had not occurred due to lack of membership quorum. The case, Parker Estates Homeowners Association v. Pattison, involved a 195-unit subdivision in Camas, Washington that is governed by the Parker Estates Homeowners Association. In 2009, William and Lesley Pattison purchased a home at Parker Estates, but failed to pay the monthly assessments charged to all Association members. The Association eventually filed a lien against the Pattison's property and later filed a lawsuit to recover the unpaid assessments and late fees.

The Pattisons filed counterclaims against the Association asserting that the Association lacked authority to impose assessments or late fees because the Association had failed to follow its Bylaws and Washington law with regard to the creation of the Association's board of directors. Specifically, the Pattisons argued before the Court of Appeals that 1) the Association had previously failed to obtain quorum of its membership to amend its Bylaws to create its board of directors, and 2) the Association lacked a valid board of directors as the Association had failed to obtain quorum of its membership for several years of annual meetings when board elections were held.

The Court of Appeals first determined that it was unnecessary for the Association to obtain quorum of its membership to amend the Bylaws to create its board of directors. Instead, pursuant to the Washington Nonprofit Corporation Act, the existing officers of the Association had the authority to amend the Bylaws to create the board of directors, so long as such action was undertaken by a quorum of the officers and approved by a majority of the officers. The Court determined that the Bylaws were properly amended by the action of a majority of the officers.

Second, the Court of Appeals rejected the Pattisons’ argument that the Association lacked a valid board of directors based upon the Association’s difficulty obtaining a quorum of membership when board elections were held. The Court noted that the Association had not obtained quorum at an Association annual meeting since at least 2007, and that in the absence of quorum, the Board appointed directors as needed to fill vacancies until a proper election could be held. The Court determined that this was a proper application of the Washington Nonprofit Corporation Act, the Washington Homeowners’ Association Act, and the Association’s Bylaw 3.4, which stated: “[a]ll officers shall hold office for a terms [sic] of one (1) year from the date of electio[n], or until the respective successor of each officer is elected.” The Court explained that the effect of Bylaw 3.4 was that until a valid election is held, the term of a director does not expire, and the board may continue to appoint volunteers to fill board vacancies.

Fair Housing Act: Reasonable Accommodations

A federal judge recently ruled in favor of a family in their suit against a Keizer community association.  In that case, the judge held that the Association violated state and federal fair housing laws as explained in detail in the judge's order that can be found here.  

In short, the case involved a family's request for an accommodation to park an RV in front of their home to assist with transporting their daughter.  The request to the Association was accompanied by letters from two of the daughter's healthcare providers documenting the daughter's disabilities and explaining the necessity of the RV for transportation purposes. In this case, an accommodation was requested because the Association's CC&Rs prohibited owners from parking large vehicles, including motor homes, in front of their houses. The Association denied the request for the reasons explained in the court's order, including that the Association was under no legal obligation to grant the accommodation because the accommodation did not relate to the daughter's ability to use or enjoy the home and because of safety concerns relating to the RV protruding onto the street and beyond plaintiffs' property line (the other safety concern related to the RV's blocking of a neighbor's view when exiting the driveway).  The family eventually moved and then sued the Association for violating state and federal fair housing laws. The court concluded that the accommodation request did relate to the daughter's ability to use or enjoy the home (and further agreed that the family had established the necessity of their requested accommodation), that the family had established that the RV would not protrude onto the street, and finally, that the family had purchased a parabolic mirror to assist the neighbor in relation to the potential view issue when exiting the driveway. Consequently and for the additional reasons explained in the court's order, the court held that the Association violated the state and federal fair housing laws by denying the family's request for a reasonable accommodation.    

This recent court decision provides us with another example of the type of situation where the state and federal fair housing acts apply.  It also reminds us of the importance of a careful review of requests for reasonable accommodation.  On that note, associations should be aware that a request for a reasonable accommodation may not use the words "reasonable" or "accommodation."  That language is unnecessary, so associations should keep an eye out generally for these requests and then work to ensure compliance with the federal and state fair housing laws. 

Can We Vote by Written Ballot?

Community associations often ask whether they can vote by written ballot in lieu of a meeting because it can be an easier and more efficient approach to voting.  In short, a vote by written ballot occurs when an association elects to deliver a written ballot to every association member that is entitled to vote on the matter in lieu of an association meeting. In Oregon, the Oregon Condominium Act and the Oregon Planned Community Act indicate that associations can vote by written ballot unless the association is prohibited from doing so or otherwise limited by the association’s declaration or bylaws.  Importantly, though, a vote by written ballot cannot substitute for the following meetings:

  •  A turnover meeting;
  • An annual meeting if more than a majority of the lots or units are the principal residences of the occupants;
  • A meeting of the association if the agenda includes a proposal to remove a director; or
  • A special meeting of the association called at the request of the owners in accordance with Oregon law.

If your association elects to proceed with a vote by written ballot, you should ensure that you have carefully reviewed the requirements in your association’s governing documents and the Oregon Condominium Act or the Oregon Planned Community Act.  Also, you will need to provide owners with at least 10 days’ notice before written ballots are mailed or otherwise delivered.  The notice that written ballots will be distributed must include the following information:

  • The general subject matter of the vote by written ballot;
  • The right of owners to request secrecy procedures as specified in ORS 100.425 or ORS 94.647;
  • The date after which ballots may be distributed;
  • The date and time by which any petition requesting secrecy procedures must be received by the board; and
  • The address where any petition must be delivered.

Next, the written ballot is sent to owners and it shall set forth each proposed action and provide an opportunity to vote for or against each proposed action.  If secrecy procedures are requested, the process for proceeding with a vote by secret written ballot are set forth in ORS 100.425 or ORS 94.647, as applicable.  Any solicitation for votes by written ballot must also meet the requirements of ORS 100.425 or ORS 94.647, as applicable. 

In general and unless otherwise prohibited by an association’s articles of incorporation, declaration, or bylaws, the votes by written ballot may be counted from time to time before the final return date of the ballots to determine whether the proposal has passed or failed by the votes already cast on the date the ballots are counted.

Robert's Rules of Order: Board Meetings

Oregon law indicates that unless other rules of order are required by the declaration or bylaws or by a resolution of the association or its board of directors, meetings of the association and the board of directors shall be conducted according to the latest edition of Robert’s Rules of Order published by the Robert’s Rules Association.  And that applies to both condominium and planned community associations.

Sometimes associations ask whether there is any difference between a board meeting and an association meeting in the eyes of Robert’s Rules of Order.  In fact, there are some differences.  Robert's Rules of Order note that in a board meeting where there are less than about twelve individuals present, some of the formality that is necessary in a large assembly would hinder business.

For example, in a board meeting, a board member may remain seated while making motions or speaking. As another example, and although it is a common practice in board meetings, a motion does not need to be seconded. One final example that also arises frequently is that at a board meeting, if the chairman is a board member, the chairman may speak in informal discussions and in debate, and may vote on all questions (not just to break a tie).

The practical benefit of complying with Robert’s Rules of Order comes into play most frequently during contentious meetings.  The rules can help meetings run smoothly and the formality can help maintain order. 

What’s Mine is Yours: Handicapped Parking Spaces and the Fair Housing Act

The latest in our new series of blog posts on cases involving the Fair Housing Act is from Illinois, where Morris and Thelma Weiner filed a lawsuit regarding a handicapped parking space against the Prairie Park Condominium Association, the Association’s management company, and the Basharimovs, owners of a residential unit and a handicapped parking space at the Condominium. The Weiners alleged violations of the Fair Housing Act, the Illinois Condominium Property Act, and breach of contract due to the defendants’ failure to exchange the Weiners’ standard parking space for a handicapped parking space owned by a non-handicapped owner once Mr. Weiner’s mobility declined to the point where he could no longer walk from his standard parking space to his condominium unit without significant pain and suffering.

The Association’s governing documents provided that handicapped parking units could be owned by unit owners who were not handicapped; however, within 30 days of a request from a handicapped condominium unit owner, the owner assigned the handicapped parking space shall exchange parking units with the handicapped owner, with both owners recording new deeds for the exchanged parking units. When Mr. Weiner directed his request for a handicapped parking space to the Association, the Association and its management company directed Mr. Weiner to confer with the owners of the condominium’s four handicapped parking units. However, the Weiners were not able to secure a transfer from any of the owners of the handicapped parking units. The Association and management company took the position that the governing documents required them to facilitate negotiations between the Weiners and the owners of the handicapped parking spots, but did not grant them the authority to transfer property or compel another to do so.

The Court pointed out that as pertaining to Mr. Weiner, the Fair Housing Act defines discrimination as “a refusal to permit, at the expense of a handicapped person,  reasonable modifications of existing premises occupied or to be occupied by such person if such modifications may be necessary to afford such person full enjoyment of the premises,” as well as “a refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling.” The Court declined to dismiss all of the Weiners’ Fair Housing Act claims, finding that if the Weiners’ factual allegations were true, the Association and its management company have refused to make the necessary reasonable accommodations that would allow Mr. Weiner to enjoy equal access to the condominium.

Further, the Court declined to dismiss the Weiners’ breach of contract claims against all of the defendants. The Association and its management company argued that they did not have the authority to mandate an exchange of parking space units between the owners. The Basharimovs argued that they could not be forced to exchange their parking space because they owned the handicapped parking space in the same way they owned their condominium unit. The Court responded that all of the condominium units were purchased subject to the condominium’s governing documents, which require a parking space transfer under specific circumstances. The Court explained that pursuant to the governing documents, the Board had the authority to take action against owners to enforce the declaration’s terms. The Court further elaborated that the governing documents also permit owners to sue other owners to enforce the terms of the declaration. 

It may be surprising to some that a court would require individuals to exchange privately owned property. However, it is important for community associations to recognize that courts have routinely required associations to comply with their duty to provide reasonable accommodations to owners who are entitled to protection under the Fair Housing Act. In some circumstances, associations may be able to amend their governing documents to clarify or simplify sections that are causing unintended difficulties. However, regardless of whether it is possible for an association to make sensible amendments to its governing documents, the association will still be subject to compliance with the Fair Housing Act. 

To see our previous post on a case involving the Fair Housing Act, please click here.

Does Oregon have any Statutory Qualification Requirements for Board Members?

Yes, both the Oregon Condominium Act and the Oregon Planned Community Act address the statutory criteria for board of directors membership.  In addition to the criteria set forth below, associations should also look to their governing documents to determine if there are any additional qualification requirements for joining their association’s board of directors.

Pursuant to both the Oregon Condominium Act and the Oregon Planned Community Act, the following are the qualification requirements for board of directors membership:

(1)  Each member of the board of directors must be an individual and, except as provided in subsections (2) and (3) below, an owner or co-owner of a unit in the condominium or a lot in the planned community.

(2)  A director appointed by a declarant during the period of declarant control need not be an owner or co-owner of a unit in the condominium or a lot in the planned community. 

              (3)(a) Except as otherwise provided in the bylaws, prior to election to the board of directors, an individual described in this subsection, upon request of the board, shall provide the board with documentation satisfactory to the board that the individual is qualified to represent the entity or is a trustee or is serving in a fiduciary capacity for the owner of a unit or lot.

                  (b) If a corporation, limited liability company or partnership owns a unit in the condominium or a lot in the planned community or owns an interest in an entity that owns a unit in the condominium or a lot in the planned community, an officer, employee or agent of a corporation, a member, manager, employee or agent of a limited liability company, or a partner, employee or agent of a partnership may serve on the board of directors.

                  (c) A trustee may serve on the board of directors if the trustee holds legal title to a unit in the condominium or a lot in the planned community in trust for the benefit of the owner of the beneficial interest in the unit or lot.

                  (d) An executor, administrator, guardian, conservator, or other individual appointed by a court to serve in a fiduciary capacity for an owner of a unit or lot, or an officer or employee of an entity if the person appointed is an entity, may serve on the board of directors.

             (4) The position of an individual serving on the board of directors under subsection (3) of this section automatically becomes vacant if the individual no longer meets the requirements of subsection (3) of this section.




Can Non-Owners Attend Community Association Board Meetings?

Clients routinely ask us whether individuals who are not community association unit owners are authorized to attend community association board meetings in Oregon. In general, non-owners may be excluded from board meetings. In fact, there are times when it may be prudent for a board to exclude non-owners from board meetings. For instance, if a board intends to hold a hearing regarding a sensitive issue, it may make sense for the board to limit attendance to only those individuals who have a legal right to attend. Furthermore, the board may always close its meetings to both owners and non-owners in order to meet in executive session to: (A) Consult with legal counsel; or (B) Consider the following: (i) Personnel matters, including salary negotiations and employee discipline; (ii) Negotiation of contracts with third parties; or (iii) Collection of unpaid assessments.

However, unless an association’s governing documents state otherwise, a board may permit non-owners to attend board meetings. There are certainly instances when it may be beneficial to invite non-owners to attend. For example, tenants of owners could be invited to a meeting where the board intends to explain new association rules and regulations. Furthermore, Associations may wish to invite vendors to board meetings to discuss work that they will be doing at the property, and it may make sense for tenants to be included so that they are aware of construction or maintenance schedules.  

In all cases, while boards have the right to exclude non-owners from their meetings, care should be taken to apply exclusions consistently against non-owners. Certain tenants should not be permitted to attend if other tenants will be excluded. However, if a non-owner attendee became disruptive at a board meeting, such an individual could be asked to leave.

How can we Resolve this Dispute?

Associations can often tell when a dispute with an owner has escalated to a point where a resolution may be difficult to achieve without outside assistance.  This can often involve a scenario where emotions are running high and it can be challenging for the parties involved in the dispute to view the issues through an objective lens. When a dispute gets to that point, the following are some options that associations consider:

(1) If an association’s community manager is not yet involved, the Board of Directors may reach out to the association’s community manager for assistance with the dispute;

(2) If an association has general counsel, the Board of Directors may reach out to their general counsel to discuss potential options for resolving the dispute; and/or

(3) The Board of Directors may consider mediation with the owner.

It is often the case that associations utilize one or more of the options above to attempt to resolve disputes with owners short of litigation.  As noted in our prior posts, litigation should often be a last resort (some circumstances could change that, but it is a helpful general guideline to keep in mind).  If your community association has a community manager, it is often best to involve your community manager as a first step because he/she may have encountered similar disputes and can offer helpful tips on next steps and an association’s options.  That first step may be all that is needed to resolve the dispute. 

If not, associations often consider the second and/or third options noted above. Sometimes associations and/or owners have an aversion to the mediation option because they believe, for example, that there is not any common ground between the parties.  An illustration of this point would be a circumstance where an owner has requested to build a fence between the owner’s home and his neighbor’s home and the association has denied the request.  Neither side will budge.  Mediation in this circumstance can still be helpful for two reasons: First, a mediator can review the association’s governing documents and help each side understand the strengths and weaknesses of their positions, and second, a creative mediator can sometimes find common ground even when neither side thought that was a possibility. 

In any event, when a dispute has escalated, associations should consider the three options noted above together with other options that are resolution-oriented if at all possible in the circumstance. 

Pet Restrictions: Another Cautionary Tale

In follow-up to our recent article on whether chickens can be considered pets, a recent case from the First Circuit Court of Appeals offers another cautionary tale for community associations with pet restrictions. In Castillo Condominium Association v. U.S. Dept. of Housing & Urban Dev.[1], Castillo Condominium Association (the “Association”) had a “no pets” provision in its bylaws. Upon learning in 2010 that Carlos Giménez Bianco (“Giménez”), a resident of the community, was keeping a dog in his home, the Association issued a warning letter that Giménez would be fined if the dog was not removed from the unit. Giménez, who suffers from depression and anxiety, responded to the board in writing that the dog was an emotional support animal that he was entitled to keep in his home under federal law. Giménez additionally provided the board with a note from his treating psychiatrist to substantiate his position. The board refused to grant Giménez an exception to the pet restriction and Giménez eventually vacated and sold his home of 15 years.

Giménez made a complaint of disability discrimination to the United States Department of Housing and Urban Development (“HUD”). The Fair Housing Act prohibits discrimination in housing and housing-related matters based on disability, and specifically states that discrimination includes the “refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling.” HUD conducted an investigation and subsequently issued a charge to the Association of unlawful discrimination against Giménez for its denial of a reasonable accommodation, effectively making Giménez’s housing unavailable to him.

The Association and Giménez participated in a four-day evidentiary hearing before an administrative law judge, which included testimony by Giménez, his psychiatrist, and his primary care physician, all of whom testified that Giménez suffered from a disability of chronic depression and anxiety, and that his symptoms were reduced by his emotional support dog. The decisions of the administrative law judge were appealed to the Secretary of HUD (“Secretary”), who ruled that Giménez suffered from a disability, and that the Association knew or should have known about his disability. The Secretary further found that Giménez had informed the Association that he needed an emotional support dog as a reasonable accommodation, that the Association had failed to engage in the required interactive process to discuss possible reasonable accommodations, and improperly denied Giménez’s requested reasonable accommodation. Furthermore, the Secretary awarded Giménez emotional distress damages of $20,000, and also assessed the maximum civil penalty of $16,000 against the association, citing the Association’s ignorance of the law as an aggravating rather than a mitigating factor in the decision.

The Association appealed the Secretary’s decision to the First Circuit Court of Appeals. The Court of Appeals upheld the Secretary’s decision, concluding that substantial evidence supported the Secretary’s finding that the Association’s failure to provide Giménez with a reasonable accommodation was discriminatory and in violation of the Fair Housing Act. The Court of Appeals further rejected the Association’s argument that it should be provided relief because Giménez sold his condominium at a “considerable profit”, stating that Giménez’s profit did “not excuse the Association’s failure to comply with the [Fair Housing] Act.”

Although outside of the community association context, the District Court of Oregon addressed a related issue in 1998 in Green v. Housing Authority of Clackamas County [2], where Sherry Green and her son Jeremy Welch, who was considered disabled due to deafness, were issued an eviction notice from low income housing based on a pet restriction. Welch had a hearing assistance dog, and filed a pet restriction waiver request, stating that the dog was a service animal rather than a pet. The Housing Authority of Clackamas County refused to reasonably accommodate Welch with a waiver to the pet restriction, arguing that Welch and Green were unable to provide any verification that the dog was certified in its training as a service animal.

The Court clarified that there is no federal or Oregon requirement for certification of service animals, further explaining that under federal law, the only requirements for service animals are that the animal is individually trained and works for the benefit of a disabled individual. The Court concluded that the Housing Authority failed to reasonably accommodate Welch, even though the Housing Authority would not have been unduly burdened or even impacted by permitting Welch to keep an assistance animal.

These cases remind associations of the importance of understanding the Fair Housing Act and being aware that a request for an accommodation could fall under the Fair Housing Act even if an owner does not use that terminology.  This awareness can go a long way in ensuring an association does not run afoul of the Fair Housing Act requirements. 

[1] Castillo Condominium Association v. U.S. Dept. of Housing & Urban Dev., Case Nos. 14-2139, 15-1223 (1st Cir. May 2, 2016).

[2] Green v. Hous. Auth. of Clackamas County, 994 F.Supp. 1253 (D. Or. 1998).

Can a Chicken be a Pet?

The short answer is yes, at least in New Mexico.  The New Mexico Court of Appeals recently held that chickens kept for pleasure could qualify as pets under a community association’s specific set of governing documents.[1]  The case at issue involved a dispute between owners who claimed their chickens were household pets and an association that disagreed.  The specific provision in dispute indicated as follows: 

No animals, birds or poultry shall be kept or maintained on any lot, except recognized household pets which may be kept thereon in reasonable numbers as pets for the pleasure and use of the occupants but not for any commercial use or purpose.

To determine whether the owners’ chickens were pets, the New Mexico Court of Appeals set forth a couple of definitions for “pet”, including the following: “a domesticated animal kept for pleasure rather than utility.”   In defense of the proposition that a chicken could be a pet, the Court noted that the definition does not state that a pet cannot also have utility.  In short, the Court was comfortable with owners having useful pets and was not ready to say a chicken could not be considered one. 

Next, the Court evaluated whether the chickens were “recognized” household pets.  For that analysis, and since the Court concluded that the term “recognized” was ambiguous, the Court noted the evidence that each side produced at the trial court level, including evidence from the association’s poultry expert who stated that "[p]oultry has not historically been considered 'household pets,' and traditional household pets, such as dogs and cats, are not regulated as agricultural animals by the USDA." Ultimately, the Court noted that the trial court should not have considered this and other extrinsic evidence and instead explained that the description of the community (as set forth in the association’s governing documents) as "pastoral" and "rural" appeared to lend itself to allowing animals, birds, and poultry as recognized pets.  As such, the Court concluded that the specific provision in dispute could not be enforced to preclude the owners from keeping their chickens as recognized household pets. 

To close out the issue and to address the association’s assertion that allowing chickens as household pets could open up circumstances of ruination, the Court offered a tongue-in-cheek response: “We are not persuaded that in permitting pet chickens ‘the sky will fall.’” The Court further noted that if the association wanted a different result, the association and its owners could effectuate an amendment to the association’s governing documents. 

Although the Court’s analysis relates to the laws in New Mexico, the case offers some helpful principles to keep in mind, which brings me to an important tip:  Before you find yourself in a circumstance where you are hiring a poultry expert, carefully consider the benefits of mediating the dispute instead. 

[1] Eldorado Community Improvement Association, Inc. v. Billings, Case No. 33,850 (N.M. Ct. App. Mar. 28, 2016).


Formal Board Resolutions: Do They Have to Be Signed and Dated to Be Effective?

We were recently asked whether a formal board resolution has to be signed and dated in order to be effective.  At the outset, we note that it is our recommendation that Oregon boards sign and date all formal resolutions that a board has approved.  This helps avoid subsequent confusion regarding the potential effectiveness of the resolution.  However, we suspect that the question is asking whether a previously adopted but unsigned (or undated) resolution can still be enforced. 

On that note, if a board properly approved a formal resolution during a meeting but did not sign or date it, the resolution is still likely effective absent a specific requirement in an association’s governing documents indicating that the resolution must be signed and dated and only in the event that the board can establish that the resolution was properly adopted.  A board could confirm that the resolution was properly adopted by, for example, reviewing their prior meeting minutes and confirming that the board voted and approved the resolution.  If the board cannot establish that the resolution was properly adopted, then the resolution would not become effective until the board approved and signed the resolution at the board’s next meeting.  Alternatively, a board may be able to pass the resolution outside of a meeting by unanimous written consent of the board, which generally becomes effective upon the date of the last board member’s signature (if you have interest in this alternative, we recommend that you take a close look at your governing documents to confirm the board’s authority to pursue this option).

In short, the focus in determining the effectiveness or enforceability of a formal resolution is whether that resolution was properly adopted.  In general, and because the passage of time can make that inquiry difficult, the purpose of the signature blocks and the date in a formal resolution is to establish that fact without reference to other documents.  Therefore, as noted above, we recommend signing and dating properly adopted formal resolutions to avoid questions or confusion regarding their subsequent enforceability.  

Legal Update: What about Assessments during the Redemption Period?

In Oregon, when lenders turned to judicial foreclosures more frequently over the last several years, an owner’s property would be sold at the completion of the foreclosure lawsuit, and the buyer, whether that was the lender or a third-party, would be entitled to possession of the property after the sale.  However, the buyer would have to wait six months before officially receiving the executed deed to the property.  That six-month period is called a redemption period, which is the time frame in which the prior owner can redeem the property. In order to redeem the property, the prior owner must pay the purchaser the following amounts plus interest:

(1) The price paid for the home at the execution sale;                        

(2) Any taxes paid;

(3) Any amounts paid to prevent waste;

(4) Any amounts paid to superior liens; and

(5) any assessments paid to an association.  

That last item is a new addition as of January 1, 2016.  Similarly, the Oregon Planned Community Act and the Oregon Condominium Act have been revised to clarify that the purchaser at the execution sale of real property in a planned community or condominium is solely liable for assessments imposed during the redemption period.  

Previously, and although fairly uncommon, lenders or purchasers would assert that the prior owner remained responsible for the assessments that accrued during the redemption period. Fortunately, this new law removes any remaining doubt on the issue, which is beneficial to associations both because of the clarity it offers and the outcome it delivers.