HOA dues debt relief from Oklahoma Housing Finance Agency

For Oklahomans struggling with delinquent HOA dues as a result of Covid-19 financial hardship, a relief grant may be available. The Oklahoma Housing Finance Agency, through the American Rescue Plan Act, presently has in excess of $73M available in relief aid. Online eligibility and application is here.

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Important Oklahoma Law Update

On November 1, 2007 an important change in employment/taxation law will go into effect in Oklahoma. In an effort to penalize illegal aliens in Oklahoma and the individuals and businesses who utilize alien personal services, the Oklahoma Legislature passed HB1804. The pertinent text of the new law is set out below.

The summary of a pertinent portion of HB1804 is:

1. Any community association contracting with someone for personal services (landscaping/mowing, construction/repair work, etc) on an independent contractor basis (i.e., not as an employee of the association) must now verify employment authorization of the independent contractor.

2. The hiring entity (the association) must verify employment authorization just as if the association were hiring the contractor as an employee (completion of Form I-9 with supporting documentation).

3. The association must retain records of the employment authorization.

4. If the independent contractor fails to provide proof of employment authorization, the association must now withhold income taxes from the independent contractor just as if the independent contractor were an employee of the association.

5. IF the association fails to verify employment authorization AND withhold income taxes from an independent contractor who is not authorized for employment, the association may become liable for the income taxes that should have been withheld from the independent contractor.

Not only does this new law require employment documentation from even independent contractors used by the association, HB1804 will severely penalize the association for failing to meet the dictates of the law. I just hope HB1804 won't be applied to my local pizza delivery person, because I'm sure my family orders more than $600 per year in pizza from the local restaurant.

posted by Matthew L. Winton, Oklahoma community association attorney

Conversion of voluntary association to mandatory

For older, established neighborhoods developed without a mandatory homeowners association, Oklahoma law provides a mechanism by which the owners of lots within the neighborhood may vote to create a mandatory association. A mandatory association is one in which each owner of a lot must be a member of the association simply by virtue of owning a lot within the addition. Typically, members will remit dues or annual assessments of a few hundred dollars to the association, and will elect board members to act on behalf of the association.

In most states, the courts have had to resolve the question of whether a neighborhood may vote to create a mandatory association after the fact (after lots have been sold to resident owners) - Colorado, Washington, Illinois, Nebraska, and Montana to name a few. In Oklahoma, the legislature adopted Oklahoma Statutes, Title 11, Section 42-106.1(D) to address the issue. In essence, 106.1(D) allows for the creation of a mandatory association by allowing lot owners within a neighborhood to add a new covenant with a 60% majority vote of the owners. If approved by the 60% majority, the new covenant is filed with the local county clerk, but a lot is not subject to membership within the newly created association until either 1) the current owner declares their lot subject to the association, or 2) the lot transfers from the current owner to a successor owner after the new covenant is filed.

Section 106.1(D) does require certain formalities to be followed, such as proper notice and a vote. It is highly recommended that owners wishing to embark on a conversion project seek competent legal counsel versed in such projects. Legal counsel would provide the owners advice on the legal requirements of the statute and advise the owners on the social and economic aspects of such a project. The conversion process requires at least one meeting of the owners, but typically more meetings are advisable to fully communicate the aspects and ramifications of the project to each owner potentially impacted by the new covenant.

Freedom to Display American Flag Act of 2005

Recently, Congress passed and Bush signed HR 42, putting into law the Freedom to Display the American Flag Act of 2005. The short and straight forward text of the new law may be found here. This is practically the same language introduced in the Oklahoma legislature a couple of sessions ago that should have passed but didn't.

In essence, the flag freedom act protects an American's liberty to display the American flag on their private property within a community association except for a couple of limited exceptions.  First, the display must comport with the United States Code pertaining to the flag display. Second, a community association may limit flag displays if such limitation is a) reasonable, and b) furthers a substantial interest of the community association. Presumably, state law may provide more but not less freedom to display the flag. The Act contains a definitions section tied to Section 528 of the Internal Revenue Code, of which every board member of an Oklahoma community association should be familiar.

Sex offenders cannot live within 2000 feet of "playground" or "park"

SECTION 11.     AMENDATORY     Section 1, Chapter 223, O.S.L. 2003 (57 O.S. Supp. 2005, Section 590), is amended to read as follows:

Section 590. It is unlawful for any person registered pursuant to the Oklahoma Sex Offenders Registration Act to reside, either temporarily or permanently, within a two-thousand-foot radius of any public or private school site or, educational institution, playground, park, or licensed child care facility. On the effective date of this act, the distance indicated in this section shall be measured from the nearest property line of the residence of the person to the nearest property line of the public or private school site, educational institution, playground, park, or licensed child care facility; provided, any nonprofit organization established and housing sex offenders prior to the effective date of this provision shall be allowed to continue its operation.

Nothing in this provision shall require any person to sell or otherwise dispose of any real estate or home acquired or owned prior to the conviction of the person as a sex offender. Any person willfully violating the provisions of this section by intentionally moving into any neighborhood or to any real estate or home within the prohibited distance shall, upon conviction, be guilty of a misdemeanor felony punishable by a fine not to exceed Three Thousand Dollars ($3,000.00) on a first offense, and any second or subsequent offense shall be punishable by incarceration, or by imprisonment in the custody of the Department of Corrections for a term of not less than one (1) year in the county jail in addition to nor more than three (3) years, or by both such fine and imprisonment. Any person convicted of a second or subsequent violation of this section shall be punished by a fine not to exceed Three Thousand Dollars ($3,000.00), or by imprisonment in the custody of the Department of Corrections for a term of not less than three (3) years, or by both such fine and imprisonment.

Limiting sex offenders by statute/covenant

Recently, the United States Supreme Court declined to hear a case from the 8th Circuit on whether a state may limit where a registered sex offender can live. Read the article. The case is Doe v. Miller, 405 F.3d 700 (8th Cir. 2005), where the appellate court found that a state legislature could constitutionally limit where a sex offender could live.

What makes this significant is the assumption one might make from the high Court's silence: certain housing restrictions are left to the discretion of the state legislature. It does not take much foresight to see this translated into the community association setting (i.e., community association documents with language prohibiting sex offenders from owning or occupying property within a community association).

In fact, one New Jersey court has already adjudicated this issue in favor of restricting sex offender occupancy. See, Mulligan v. Panther Valley Property Owners Assn., 766 A.2d 1186 (N.J. App. Div. 2001) [Although, the court does note that they might have held differently based on different or more complete facts].

The debate is certainly going to heat up as more states, municipalities, and eventually community associations take active steps to limit the occupancy of sex offenders.

Matthew L. Winton
Vaughn & Winton PLLC
405.478.4818

Satellite Dishes and FCC - OTARD

Today on the radio program, "Who do you trust," a caller inquired about the FCC regulations that could render your association's rules on restricting satellite dishes unenforceable. Below are some links to additional information about this subject.

The FCC regulates over the air reception devices (OTARD), by virtue of Section 207 of the Telecommunications Act of 1996.  While the rule has been in place for several years, many questions on how the rule affects community associations linger. To assist in understanding the regulation, the FCC puts out a Fact Sheet that explains the rule and its mechanics.

A number of interpretive rulings may be found here.

One law firm has written a plain language summary of the regulation, which may be found here.

Matthew L. Winton, Esq.

Bankruptcy Abuse and Consumer Protection Act of 2005

Effective for all bankruptcies filed April 20, 2005 and after, the Bankruptcy Abuse and Consumer Protection Act of 2005 will apply. For those owning property within a condominium or homeowners association, the Act expands the definition of the assessments a debtor may not discharge in bankruptcy. Previously, the Bankruptcy Code required a debtor to remain in residence within a condo or homeowner association lot in order for the association to claim a collection right to assessments. Under the recent amendment, the debtor must retain an ownership right in the lot or association to be liable for assessments.

For most associations, this amendment simply means a clearer picture of what assessments a debtor will be liable for in the event of bankruptcy. Of course, an association board should remain cognizant of the automatic stay as to collection proceedings once a debtor files for bankruptcy relief.

Bankruptcy reform and assssments

On Thursday, the United States Senate passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S. 256). This bill has received much press due to the credit card company lobby seeking to limit the dischargeability of consumer debts. What has received less press is the important language in the bill pertaining to condominium and homeowner association assessments. Language in the bill, specifically Section 412 of the Act would amend Section 523(a)(16) of the Bankruptcy Code, would provide that a debtor would not receive a discharge of certain community association assessments. Specifically, the bill provides a discharge does not limit a debtor's liability:

(16) for a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor's interest in a unit that has condominium ownership or in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case;

The House will next take up the measure, which President Bush stated he will sign. We will stay tuned to see if the quoted language above makes it through.

Oklahoma flag and political sign legislation

The Oklahoma legislature has two bills pending that should be of interest to condominium and homeowner associations. In what appear to be similar measures, HB1560 and SB0812 pertain to flag and political sign displays within condominium and homeowner associations. Generally, the measures if passed would expressly allow the display of flags and political signs on private property, despite architectural and structural restrictions limiting such displays.

The genesis of flag display bills probably comes from the spate of covenant enforcement litigation in states other than Oklahoma where a condominium or homeowner association has sued an owner for displaying a flag or political sign in contravention of a covenant prohibiting such display. These and other bills' status may be tracked at the Oklahoma legislature.