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 living within 1/10 of a mile can affect property values to 4%

As a follow up to my recent post on Oklahoma housing location restrictions for sex offenders, the National Bureau of Economic Research has published a paper that reports:

We combine data from the housing market with data from the North Carolina Sex Offender Registry to estimate how individuals value living in close proximity to a convicted criminal. We use the exact location of these offenders to exploit variation in the threat of crime within small homogenous groupings of homes, and we use the timing of sex offenders’ arrivals to control for baseline property values in the area. We find statistically and economically significant negative effects of sex offenders’ locations that are extremely localized. Houses within a one-tenth mile area around the home of a sex offender fall by four percent on average (about $5,500) while those further away show no decline. These results suggest that individuals have a significant distaste for living in close proximity to a known sex offender. Using data on crimes committed by sexual offenders against neighbors, we estimate costs to victims of sexual offenses under the assumptions that all of the decline in property value is due to increased crime risk and that neighbors’ perceptions of risk are in line with objective data. We estimate victimization costs of over $1 million—far in excess of estimates taken from the criminal justice literature. However, we cannot reject the alternative hypotheses that individuals overestimate the risk posed by offenders or view living near an offender as having costs exclusive of crime risk.

You may view an abstract of the report here. Interesting, and startling research.

Second Edition - Oklahoma Community Association Handbook

The 2006 second edition of the Oklahoma Community Association Handbook is completed and is at the printer. The second edition contains over 400 pages of commentary, law, forms, and checklists on community association issues. New to the second edition are: Chapters on association insurance and special issues such as leasing restrictions, satellite dishes, and anti-speculation clauses; expanded commentary on association meetings and elections; and new forms on voting, ballots, elections, and meetings. A table of contents for the Handbook may be viewed at: http://www.vaughnandwinton.com/handbook.html.

The Handbook is sold at $64.95 per book, and may be ordered by calling 405.478.4818 and reserving your copy.

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.

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.