 Aloha, everybody. I'm Richard Emory. I'm your host for today's condo insider show. And many of you know that for a long time I've been a member of the Legislative Action Committee, the Hawaii Council of Community Association Board of Directors and have been actively engaged in issues affecting the Association of Living in Hawaii. I recently was appointed to the National Task Force by Community Association Institute, looking at defining public policy with regard to reserve studies. And this all stems from the collapse of the surfside condominium in Florida, which now every legislature across the country is looking for ways to get credit for introducing a bill and how they will singlehandedly solve this problem with respect to condominiums and mandating condominium inspections and mandating engineering reports and things along that line. So I want to talk about that because it's been an interesting, I just had a third committee meeting today. It's been interesting to hear from all the different states, the different problems they have and how their legislators approach this particular issue. For example, in one of the counties next to Surfside County in Florida, their city council has already passed a rule that if you're a condominium, and you get an engineering report on your building for any purpose. You have to provide a copy to the building department of that county. We, a couple years ago in Hawaii, had a bill established that they wanted to mandate structural engineering valuations of buildings over 10 stories every five years and both the building department as well as the industry department, because it's too often and structural issues sometimes are hidden. It doesn't necessarily solve the problem and every time they, they pass many things of mandatory structural inspection, mandatory sprinkler system mandatory this mandatory that they indirectly make condominiums too expensive to live in, and we're not sure that they satisfy what the original issue was. So they had a condo association in Surfside. They had nothing to do with reserve study. They identified they had building cracks, and they had engineers look at the building cracks, and they had government officials say, yes, it's a problem and it's not that bad. The problem was that the owners under their requirements would never approve alone to fix the building. And so the industry was looking at that in this national task force and one of the questions was, should we as an industry support or not support owners rights to prevent a building repair from being made and overwhelmingly the people in this task force said, no, you have to fix the building in the law shouldn't allow owners to opt out of fixing the building because they don't want to spend the money. This is catastrophic loss of life and in Florida may not be as bad somewhere else but doesn't make sense, you know, and other issue came up was developers. Should developers be required to do a reserve study on new buildings and the consensus again was 90% said yes they just can't improperly or artificially give owners estimate of maintenance fees and don't have any real basis for what the real reserve should be, meaning you get owners to buy with one expectation only to find out once they do a reserve study more money is required, and then they don't want to go along with it because that wasn't in their original budget so should developers be required to provide accurate maintenance fees, including reserve contributions and should reserve contributions be my national standards, and everybody overwhelmingly said this is true. The problem is when you start getting always different states some people were saying, well the reserve study has to be done by a licensed reserve professional. Okay, well, how about a two year economy and more 20 an economy and only has a road. You're going to impose that requirement on smaller condominiums and someone the task force and yes, it has to be a licensed professional, and they have to pay the money Well, Hawaii, you know, let's the board have to do a reserve study by law but it lets the board do the reserve study if they feel it's appropriate based on the size and complexity of the association. So it's been very eye opening this whole thing but what I've learned is I've participated in many, many, many issues on national level of how associations we run is that number one, one size doesn't fit all. Number two, every state kind of addresses us a little differently. Most states, I think there's only 10 states that have a mandatory reserve law. And but now that we have this attention because of the building collapse. I can see all this stuff coming out of the woodworks that we're going to have to find a acceptable measure to deal with this and I give CAI a lot of credit for setting up a task force to look at a national policy and what we feel is appropriate. Recognizing all the one size doesn't fit all type of issues, but that led me into my thoughts that I'm going to apologize in the beginning. You might find it interesting to see some of the most recent legislation or litigation across the country on condo or association issues with the results were another state. And then maybe give a little short comparison with how that would have maybe worked and why, and my apology is going to be because I have to look at the, the nine examples I have here and hopefully we can get through all nine examples. I want you to look and I want to read two or three sentences. So I don't get this wrong so I'm going to look down from the screen. Well I read this to you and I apologize. And, but it's the only way I can figure out how to do this, but this is this month's 2021 August notable legal decisions. First one. In channel view east condominium association versus Ferguson, the Michigan Court of Appeals ruled that neither the Michigan condominium act, nor the association's bylaws permitted the association, the file a lean against the unit for unpaid fines. That's an interesting situation because the keywords are unpaid finds the lean was filed. You may remember last year when we talked about act 187 was 187, where associations here and why used to have to pay first dispute later so so station can find someone you had no legal right to dispute that. Unless you paid it first. And so if you didn't pay it then the old days association would put pressure on you by foreclosing on you, then by non judicial foreclosure. The law was changed in Hawaii. And the difference is that the association certainly has the right to put a lean on you in Hawaii, and foreclose on you if you aren't paying common assessments made to speed special assessments, apply to everybody. On the other hand, other charges against you, such as a fine or late fear legal fee. They don't have the ability under Hawaii law to put a lean on your unit without first offering you the right to mediation. And the mediation must be conducted within 60 days. If you get a mediation, of course I wouldn't ignore it because if in fact you go through mediation and you're unable to solve it. Then in fact they can pursue the issue of collecting the fine, although they can't put a lean on your unit and foreclose on it. And everything I just said doesn't apply to active service members in Hawaii. You can see the problems kind of common across the country, where associations want to find people. There's not much leverage because it's, it's a $50 fine is not much leverage get people to pay it but they got to have people follow the rules. It's kind of a common problem with how to deal with it and in Hawaii I've already discussed what it is. The board's got to give you the right to mediation, and they have to be mediated within 60 days so if you're an owner you think you're going to stall them out forever, that's not going to work. In Hawaii then they can pursue a collection action against you and exclusive foreclosure and and and certainly they can get a judgment and court theoretically for you. But the best thing is to try to work with your board and to get it to happen. But that was the Michigan case. Let's look at the next case. Here versus cat the lotto the Florida Court of Appeals held that the Florida homeowner station act, not require dispute between homeowners to be immediate. That's kind of a similar situation that the association upon a mediation in Florida against another they didn't want to go to mediation, and, and they made a request that they went to court. The Court of Appeals said the way their Florida act was written. It didn't require them to do mediation. Well you know in Hawaii it's mandatory. Mediation is mandatory by the board is mandatory by the person following the mediation which should be an owner in this case. So you don't have a choice you have to go to mediation. And yeah you cannot show up. And, but you're going to be in violation and under Hawaii law, they could then say, I'm finding a motion in court, force you to go to mediation. And if the judge agrees, you're going to have to pay all the legal fees they had by statute. We're not showing up and going to mediation and forcing the association or the owner forcing the association to file a claim in court and force you to go to mediation but you can see this all to dispute thing is, is a problem nationwide and, and frankly Hawaii has more options than any state I know. They give you facilitated mediation, evaluative mediation, non binding arbitration. And yes you can go to a board meeting that have a talk story session. Before you file the negation so you have lots of ways to resolve disputes here. And there's prevalent being a value of the mediation which is funded by the real estate commission here in Hawaii, and you have to pay half of the first hour of mediators time, about 175 bucks under a value of the mediation that judge you think the judge off retired judge takes the gloves off and tells each party directly what he thinks and tries to drive a resolution to the problem very successfully or the way. The third case is may versus Spokane County. The Washington State Court of Appeals ruled that the court order was sufficient to declare a discriminatory covenant void without physically altering the recorded documents. And even though a state law provided a mechanism for doing so, erasing a store record of racism would be a dangerous because at risk for getting and denying the horrible truths of racism. In this case what happened. There was a court order. But the governing documents were never changed to record the discriminatory language was in the governing documents and this court ruled, rightfully so, that fact that the documents are not amended and corrected to correct the proper discrimination had no effect on the courts order and future discrimination claims that the court order trump the fact that they weren't in the document. The fact you didn't put them in your documents doesn't give you a reason to look at that one discriminatory conduct and claim that association lost as a single issue within the court. And the court basically ruled the governing documents were were unconstitutional and requiring us so that's basically a written argument about whether you have to. If you have a court judgment or a court order is it only limited to the one case you just try it or is it, you have a problem down the road that because the documents were amended that you still committed a discriminatory practice because you haven't corrected this and the Florida court said yes probably rightfully so, seems to me pretty logical if you're governing documents are are unconstitutional or violate state law that you can't enforce them number one number two, it holds out to now and everybody in the future. And yeah you should amend your documents but whether you did amend your documents or not doesn't affect the order of the court and and future claims so pretty interesting but pretty predictable in that case. And we'll do one more than we're going to take a short break in turn mills LLC versus leisure acres association. I'm looking up these names by the way this is exactly what it is. The Indiana Court of Appeal ruled the property owner lost the right to complain about the association forcing their company documents, because the owner had complied with them for 13 years. I have a similar case on an expert in right now that where an owner buys in and wants to go back and say procedures who use when you amended your documents 10 years ago were incorrect. And so these documents don't apply to me. It's hard to believe people say that. But in this case, you have a situation where the government documents are there and provided to you when you moved in, you comply with them for 13 years. And then you try to say well they're not proper. And in this case the court said too late. You bought in. I don't know what the statute of limitations is on these issues, but you bought in you comply with them for 13 years with throwing your case out of court because you. This case is clear you understood them you comply with them. You never raised the issue before. Now because things have changed you want to not comply with them. So you assume the association. And at the end of the day that owner with cyan are you've lost. So on that note, we're going to take a one minute break. So I can again get myself organized and I apologize for having to look down and read this but I won't get it right. I don't do that so we'll be back in one minute and review a couple more cases and call it a day and look for a bottle of wine. I was the head coach for the Punahou Boys varsity tennis team for 22 years and we were fortunate to win 22 consecutive state championships. My show is based on my book also titled beyond the lines and it's about leadership, creating a superior culture of excellence and finding greatness. I feature a wide range of amazing guests who share valuable insights about how going beyond the lines leads to success in everything you do in life. I'm looking forward to you joining me every Monday at 11am Aloha. Welcome back to condo insider we've been talking a little bit about the surf side condominium and and the reserves and all the issues are going to surface out of that legally and otherwise. And then on top of that I said I want to share some of the most recent notable legal decisions across the country and what the courts ruled in other states and kind of related to Hawaii and how it kind of fits in and apologize anymore but I've got to read these things so I get them accurate so here we go. Westgate town home association versus curse. I don't know a pellet court ruled that the association board was not protected by the business judgment rule. When it decided an owner violated the rules, because the board failed to provide the owner, all the evidence of the alleged violation. So the board went after an owner for alleged violations of the rules but refused to provide him any evidence on how they came up with that conclusion. And the board took the position well it's our business judgment it wasn't necessary to tell the owner what he did well. I know you're probably looking at yourself for in the mirror and saying, he make this up no I didn't make this up. The board said the board because the owner was seeking damages, because he's saying I'm entitled to know what the finance and what I cause and I'm right to a hearing and and they wouldn't tell me if there was the business judgment will they just find me. I don't care where you're from I know we're a very liberal state and very much in the protecting owners right which I agree with by the way. Does that make sense to anybody. I mean I read that I had to read it a couple of times like you're telling me I'm going to find you but I'm not going to tell you what would cause us to give you the fine but the fine stand that some merit you did whatever you did and we didn't provide you any evidence or hang because it was our judgment it wasn't necessary. This doesn't sound very American to me, but anyway, the point I say don't try that in Hawaii. That's not going to go very far because you know how schools learn religiously overturned by the courts. The board was weren't given a right to appeal and weren't given all the information and, and in many cases house rules were declared moot. In some cases they were declared that households were abandoned you can't enforce any of the house rules, because the board didn't follow a proper protocol on exercising as house rules and it's fine policy, giving everybody a right to appeal everybody's right to appeal. It's pretty common sense to me that. Anyway, I find some of these things hard to believe. In fact, some of the ones coming up I find hard to believe let me give you another one. All right, Jeffrey Moise versus the Williamsburg Townhouse Corporate Cooperative Michigan Court of Appeals ruled that a housing cooperative wasn't level for residents injuries from slipping on an icy sidewalk in a common area, because winter conditions should have alerted the resident of the potential risk. So anyway, it's snowing heavily Michigan I thought Williamsburg be Virginia but anyway, it's snowing heavily and the guy goes outside he slips on the sidewalk. The snowy icy condition. As soon as the association for the injuries and the Michigan Court of Appeals said. Oh, you knew it was snowing out there is icy. You know associations can't have every sidewalk clean it all the time every second. They're not liable. You knew the risk when you went out there, and people who walk an icy roads the streets and sidewalks should be careful. They're not their responsibility. I'm a little surprised that in some ways insurance just didn't step in the liability insurance and pay the guy off, you know, I mean, it's, it's most associations will have liability insurance. Certainly I would tell you if the sidewalk was damaged and it was broken or tilted or something with need to repair that so safe responsible for may not have had the same result. Here they're saying based on weather conditions, you know, I guess it's kind of like if you go outside on your sidewalk during a hurricane, you get hit by a coconut. It's responsible the association because the coconut blew off the tree and hits you on the sidewalk. You should have known better. I guess this is a should have known better case with the Williamsburg thing but they ruled. I'm actually surprised in some cases, the people file these lawsuits because if you know what I'm saying these are all from appeals courts. This means they had a underlying judgment from a trial court before this. I have a case right now in Kauai where the public path is on private property but it's a weird set of circumstances the association owns and they have an easement with the city but it's not quite clear the documents. Anyway, they've had several injuries. The county approved putting up with two signs at the entrance and once at the very top, and they saying, this is a dangerous jail the county has closed it, do not proceed high risk. And I've now had two injuries on that trail, people saying well I saw the sign but other people were doing it. So I thought it was okay and I broke my ankle in three places. It's not going to happen with the insurance in the courts yet but I mean give me a break you know there's two big signs saying no trails close this dangerous. They climb around the sign and the fence and go down and then trip and fall and break three places in their ankle. And it's like, how'd that happen must be the association. Anyway, onward. Board of Directors of Winnett Park condominium versus boardage. Illinois appeals court ruled the fines and legal costs were improperly billed to an owner, because the board did not set a reasonable date and time for a hearing and didn't give the owner any notice. That's going back to what I said earlier on the other case. You have these fines, you have to notice the owner. And then they're titled to a hearing and most people should say if you want to appeal this, you have I don't know what Illinois rules are collecting fine. I know in Hawaii, you can clap fine if you have to have this mediation and you have to give the notice and they have to write to a hearing and you have to go through some steps but in this case, the association didn't give the owner any notice of when the hearing would be, and went ahead and actually keep it on the fine anyway. I can't believe this happens. I said to people I talked to all these tasks for someone. You know why is kind of like the melting pot of the future condominium. We have 1800 condominiums in Hawaii. And I've seen about everything you can imagine in lawsuits and arbitrations and disputes but anyway, moving along. To Harmony House Westlake LLC versus Parkstone Property Owners Association. The US Court of Appeals rule that allowing a sober living facility to operate in a community restricted to single family residents was a necessary accommodation under the Federal Fair Housing Act, but the sober living facility operator be able to justify the number of residents desired there. And we kind of see that with childcare facilities people in a single family homeowner association want to have a childcare facility. And this case was a sober living facility. And with the federal court says well you know, it's a reasonable combination of that owner to come to the association say, I want to operate a sober living facility, but what the owner didn't do is justify so it's kind of partial win partial lot didn't justify the number of people he wanted to have in the home and, and those types of things but you know we always see these discrimination issues under fair housing. We caution boards all the time to be careful about when they get these complaints for emotional support animals or parking stalls or think to be very careful what they're doing and we suggest they talk with a lawyer because we have the Hawaii Civil Rights Commission here whose job is to defend the rights of the disabled. And I support that we need to defend the rights. There's a lot of touch and go stuff. I see some of these claims that go through this, but in this case, it was real, having a facility was deemed a reasonable combination, but the other hand, the operator didn't justify how many people he would be allowed to have in his facility. Moving along and we're running out of time. The last one is isn't all versus shadow grand home was association. The California Court of Appeals ruled an association was not liable for injuries to a visitor, walking across street after parking on a busy road. Because guest parking was not available. Pretty self explanatory as parking wasn't available and I kind of he parked on a busy road, walked across the street, I'd hit. It's not the association's fault that the guest parking was full. So, you guys are all amazed at some of the stupid cases I see. I'm just, I'm just amazed at some of the things that people think they can say but maybe it's the lawyers fault because I think the lawyers are. Oh, if they got if they got a client, I'll give them a check they'll take any case. The reality of this is that that's kind of the kind of legal stuff that's going on. I would tell you you can expect next year's Hawaii legislature to address the engineering issues of surf side and reserve studies and developers responsibilities. I sure go anywhere, but we as an industry monitor all the lawsuits across the country and try to educate our boards and owners, as well as promote proper laws, rules and regulations and defend our industry. Now that note, I want to thank you for tuning in today. I hope you learn something. And we hope you enjoy our show condo insider. And we'll have another show next week, Thursday, 3pm. Thanks to all of our supporters who make this show possible.