Oklahoma Community Associations Handbook - Second Edition

Many have inquired as to when I will have copies of the Oklahoma Community Associations Handbook for sale. I am in the process of completing the second edition and should have the book to the printer around the first of June, with copies available for sale before the first of July. The second edition will have over four hundred pages of commentary, forms, and law relative to Oklahoma community associations. To my knowledge, the Handbook is a one of a kind resource for Oklahoma community associations. You may pre-order your copy by contacting Sean at Vaughn & Winton (405.478.4818), and giving him your name, telephone number, email or mailing address.

Fundamental rights and Associations

A while back (Nov. 29, 2005), I discussed on this blog the Panther Valley case and the potential constitutional limitations on an associations' ability to limit certain behaviors and activities within a community. If you recall, Panther Valley is a New Jersey case. Interestingly, New Jersey has produced another blockbuster of a decision in the community association area.

The Twin Rivers case was decided by a New Jersey appellate court (not the court of last resort in New Jersey) on February 7, 2006. You can read the decision here. In essence, the dispute arose over whether the HOA could limit the placement of political signs within the neighborhood. The appellate court finds that the New Jersey constitution, under the facts of the case, balances a person's fundamental right to political speech over private property rights (i.e. the association's governing documents allowing the association to administer the common areas).

The Twin Rivers case is sure to continue up the appeals process (Panther Valley was denied a hearing by the U.S. Supreme Court). We'll see where it goes.

Oklahoma Assessment Liens & Foreclosure

Often, community association governing documents will provide that the periodic assessments payable to the association are lienable claims. This means that if an owner fails to pay the assessment, an automatic lien (due to language in the covenants) or the right to file a lien will ensue.

Once a lien is created or filed, the lien secures the claim against the property. Theoretically, the property cannot be sold without the claim being discharged or passed to the successor in title.

Under Oklahoma law, the lien may be foreclosed. 60 O.S. 852. Whether the association should foreclose on their lien depends on the facts and circumstances of each case. The association may also seek to collect the assessment in court other than by a foreclosure action. In fact, the Oklahoma Court of Civil Appeals has said that the Real Estate Development Act does not limit collections to foreclosure only. Falconhead v. Frederickson.

Vaughn & Winton - Texas Office

Posting on the COA/HOA blog has been slow due to our opening a North Texas office of Vaughn & Winton. The office is located in the Carter Burgess building in downtown Fort Worth. Matthew Winton will be managing the Texas office. You may contact him at 817.887.8019, or any attorney in the Edmond, Oklahoma office at 405.478.4818.

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

Association elections; forms

Many homeowner associations, condominium associations, and community associations will be engaging in the election of directors for their board this fall. As many community associations gear up for fall elections, your association board might find the following information and forms useful.

In 2004, the legislature added subsection E to 18 O.S. 1060 to allow for the submission of electronic voting ballots. Without an abundance of provision, the legislature provided:

E. If authorized by the governing body, any requirement of a written ballot shall be satisfied by a ballot submitted by electronic transmission, provided that the electronic transmission shall either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the member or proxy holder.

Each board would need to determine what would constitute "information" sufficient to determine the ballot was in fact cast by a member or proxy holder. While electronic voting does pose some unique problems, allowing members to vote via email, fax, or other electronic transmission could allow the association to garner more participation from members than the association would otherwise.

Another helpful tool for elections may be the use of candidate surveys. For a sample, you can Download form_bod_election_survey.pdf . A survey allows the members to know a little more about a candidate before voting. In larger associations, the members might not know the qualifications of a particular candidate. The survey provides the member with information on which to base an informed decision.

A final tip regards the inspection of elections. For incorporated associations, Oklahoma law requires elections to be administered with at least one inspector. To read the applicable statute, click here. One provision in 18 O.S. 1075.1 requires inspectors to execute an oath of inspection. For a sample, you can Download form_inspectors_oath.pdf.

Matthew L. Winton, Esq.

Leasing Restrictions

For both new and old community associations the issue sometimes arises as to whether the owners within a condominium development or housing addition may adopt an amendment to restrict or limit occupancy and/or leasing within the development. From a national perspective, the answer is that a majority of state appellate courts have approved of such covenant amendments, even retroactive application. For Oklahoma, the question is maybe, because Oklahoma appellate courts do not report a case specifically deciding the issue.

The crux of the issue arises when owners seek to adopt an amendment to their covenants that would, say, limit leasing within the development to 10% of the total units. The purposes generally cited for such an amendment are: owner occupied units are generally more well-kept than tenant occupied units; the secondary mortgage market underwriting guidelines will not allow a loan to fund on property within a development with a certain percentage of leased units; owners generally demonstrate more participation within an association than tenants; etc.

In one Florida case, the court approves of an amendment limiting leasing within the addition, even application of the leasing restriction to owners holding title to their units prior to the amendment's adoption. The court states: We note that the majority of courts in other jurisdictions have held that a duly adopted amendment restricting either occupancy or leasing is binding upon unit owners who purchased their units before the amendment was effective. The court goes on to state that owners are on notice when they purchase their units that the covenants may change, and that there is no vested right in the status quo ante (meaning one cannot rely on the covenants remaining the same forever). To read the Jahren case for yourself, you may find it here. To read an unofficial transcript of the oral arguments, click here.

Interestingly, the Florida legislature "overturned" the appellate court with a legislative enactment providing certain parameters on the adoption of leasing restrictions. See, Florida Condominium Act, Section 718.110.

Matthew L. Winton, Esq.

Who do you trust - Schedule

There is a slight modification to the radio schedule for October/November 2005. "Who do you Trust" community association issues will air on October 23, when we will continue our discussion of covenant amendment projects.

On November 6, I will have special guest Kraettli Epperson to discuss 11 OS 42-106.1(D) and converting voluntary associations to mandatory community associations.

Tune into NEWSRADIO 1000 KTOK on these dates for this informative and challenging community association radio programming.

Matthew Winton, Esq.

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.

Covenants, Articles, and Bylaws

Here is a short primer on the three most common governing documents, Covenants, Articles, and Bylaws: what they are and what they do.

1. Covenants. Covenants are real property covenants, also called servitudes, and sometimes may take the form of an easement, either negative or positive. In general terms, a real property covenant prevents (negative) someone from doing something with their property, or requires (positive) someone to do something with their property. Covenants come in two forms: use and structural. A use restriction limits or requires a certain uses of property. A structural restriction limits or requires certain improvements to a property.

2. Articles. Articles of Incorporation are the founding document for the corporate entity of a community association. The Articles would be filed with the Oklahoma Secretary of State, usually outline the basics or fundamentals of the corporate existence. You can read the law on Oklahoma corporations here.

3. Bylaws. Bylaws are the rules and regulations by which a corporation operates. In analogy, the Articles are like a constitution, whereas the Bylaws are like laws. The Bylaws will determine voting rights, meeting times, and other procedural matters relative to the business of the corporation. The law on bylaws may be read here.

Each of these three documents are amended in different ways. Advice from someone trained in governing document amendments should be consulted prior to undertaking an amendment process.

Matthew L. Winton, Esq.

Associations and disaster preparedness

In light of the recent Katrina and Rita effects, and the continued threat of terrorist acts, the issue of disaster preparedness is one that each association board should put on their agenda.

Associations may be able to serve as an important information source about their community and residents in the event such information becomes crucial in times of disaster. Further, the association may serve as a conduit for reminding residents of important contact information for relief, recovery, and emergency services.

For ideas on how your association may act to prepare its residents for emergencies, take a look at the following resources:

Disaster recovery articles and resources

Ready.gov

Association disaster management publications

Matthew L. Winton, Esq.

Amendments: following radio program

This is to follow today's radio program on amending governing documents. In Oklahoma, we amend covenants pursuant to the terms contained within the covenants themselves. For example, a covenant might provide:

"Change in Covenants: These covenants are to run with the land and shall be binding on all parties and all persons claiming under them for a period of twenty (20) years from the date hereof after which time said covenants shall be automatically extended for a successive period of 20 years unless an instrument signed by sixty percent of the then owners of the property has been recorded, agreeing to change said covenants in whole or in part."

Under this language, the covenants can be amended within the 20 year restrictive periods with only a unanimous approving vote. See, In Re Wallace, 1994 OK CIV APP 73. Thus, even the most necessary covenant amendment would have to wait until the end of the next restrictive period term in order to have a chance at approval (assuming in most cases that unanimous approval would be impossible).

To provide some relief from the harsh result of such amendment clauses and the In Re Wallace case, the Oklahoma legislature passed a remedial statute at 11 O.S. 42-106.1. Essentially, the statute allows property owners under a set of covenants to amend the covenants with a 70% majority if the covenants have been on file for 10 years, and with a 60% majority if the covenants have been on file for 15 years.

So, one of the first questions to answer in regards to a covenant amendment project is "What percentage of owner approval must the proposed amendment obtain?" If within the first ten year term of the covenants, the project may have to wait until the end of the covenant restrictive period, or until the expiration of the ten year filing period in order to obtain a 70% voting percentage under 11 O.S. 42-106.1.

Tune into "Who do you Trust" on NEWSRADIO 1000 KTOK on October 16 and 23 where we will continue our discussion of governing document amendment projects.

On the October 23, 2005 show, I will have a special guest Kraettli Q. Epperson, Esq., a colleague and esteemed OCU law adjunct professor, to discuss the special issue of converting voluntary neighborhoods to mandatory associations under Oklahoma Statute 11 O.S. 42-106.1(D).

Matthew L. Winton

Parliamentary procedure websites

For anyone within any organization, particularly community associations, you have to spend some time digesting the information contained on Rod Davidson's parliamentary procedures websites here and also here. You can learn more about Mr. Davidson and his important work here.

For the curious, parliamentary procedure describes the rules under which meetings are conducted. For our Oklahoma associations, there is a considerable vacancy when it comes to formalized and standardized meeting procedures. Even the most experienced will have something to learn from Mr. Davidson and his websites.

MLW

"Who do you trust" radio programming

Here are a couple of items relative to the Vaughn & Winton radio programming each Sunday from 2-3 p.m. on AM1000 KTOK.

1. We have had some confusion in our use of two names for our radio program, "Who do you trust" and "Love thy neighborhood." To make it easier to know when we will be on air and what show our listeners are tuning into, we will be using the name "Who do you trust" from this point.

2. I will be hosting "Who do you trust" on September 11 and September 25, where we will be discussing community association document amendments. We will discuss how to amend governing documents, specific amendments addressing issues such as flag displays, and also a very particular type of amendment dealing with converting a voluntary neighborhood association into a mandatory association.

I look forward to your continued response to the radio program and your on-air questions and comments.

Matthew L. Winton

Cross-post - Estate Planning

Although this does not relate to community associations, the topic of good estate planning does relate to preserving community. Check out attorney Michael Clark's timely and authoritative articles on estate planning at www.okestateplan.blogs.com.

MLW

Budgets 101 - A FAQ

I recently received an email asking about associations and budgets. In Oklahoma, we have no community association-specific guidance from the legislature on budget requirements or how an association might formulate its budget.

If you are new to an association board or have questions about budgets as we enter into budget season, you might Download faq_budgets.pdf for some general tips and information.

Love Thy Neighborhood - August Schedule

In August, Love Thy Neighborhood (LTN) will be broadcast on two dates. The radio show devoted to the discussion of community association issues and questions will air on August 14 and August 21, on AM 1000 KTOK from 2 p.m. to 3 p.m. On LTN in August, we will be discussing association financial issues, such as assessments, reserves, taxes, and collections. Tune in for the discussion and call in with your questions.

As a reminder, several weeks ago Georgie Rasco with the Central Oklahoma Neighborhood Alliance, Inc. was a guest on LTN. She discussed how her group helps associations with, among a multitude of services, placing thousands of dollars in grant money to associations for beautification and other projects. Deadlines for the grant applications are coming up, so be sure to contact her to see how your association may benefit from these programs. Visit the Neighborhood Alliance website or call Georgie at 405.528.6322.

Listener Question - Publication of delinquent dues names?

A couple weeks ago on Love Thy Neighborhood, the treasurer of a community association asked about whether the association should publish the names of delinquent dues owners within the association newsletter. Unfortunately, we ran out of time and my response was somewhat hurried.

While an association board could make the decision to  list the names of delinquent dues owners within the association newsletter, there is a method I have seen that in my opinion is preferable. Some associations provide members in good standing with small, tasteful signs to place in the owners' yards designating that the owner has paid their dues for the year. Another method commonly used is to publish the percentage of owners who have paid according to street or block.

I prefer these methods because they work to congratulate those who have paid their assessments rather than single out those who have not paid. For me, this passes the "does this promote community" test.

Records and Requests

Often, the issue of document retention and inspection arises within a community association.  An association board might consider the question from a business practices standpoint as well as an opportunity to provide a service to members. A clear document retention and inspection policy will be one that communicates the recordkeeping practices of the association and provides a member a reasonable outline for making a records request.

For a short article on the topic and a sample recordkeeping and request resolution, see this Article and Sample Resolution: Download 1.pdf .

Love Thy Neighborhood radio on 1000 KTOK

This coming Sunday, July 17, 2005 from 2 p.m. to 3 p.m., Matthew Winton will be hosting a radio show devoted to the discussion of community association issues. The show is called "Love thy Neighborhood" and airs on 1000 KTOK. Tune in and call in if you have any questions to discuss on air. Love thy Neighborhood is a portion of the weekly Vaughn & Winton law firm radio program broadcast Sundays from 2-3 p.m. as a part of the KTOK Business Block.