June 2005
In This Issue:
Discriminatory Behavior Actionable Under HUD Regulations
Owners Cannot Park RV on Property
Association Is Entitled to Foreclose Lien for Plumbing Repairs
Association May Not Enforce Restriction if It Fails to Sue Resident as Restriction Requires
Mortgagor Must Repay Amounts Lender Paid for Past-Due Assessments
Owners May Present Evidence That Association Unreasonably Denied Approval
Architectural Committee Has Authority to Deny Approval of One-Story Residence That Obstructs the Views of Other Homeowners
Meeting Is Called When Notice Is Distributed
Developer Must Pay Owners Even Though Settlement Agreement Condition Was Not Met
Association Does Not Own Common Elements
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Discriminatory Behavior Actionable Under HUD Regulations
Halprin v. The Prairie Single Family Homes of Dearborn Park Association, 388 F.3d 327 (7th Cir. 2004)

Federal Law and Legislation: An association's and neighbors' offensive and hostile conduct against homeowner because the homeowner was Jewish supported a cause of action for harassment under a HUD regulation to the Fair Housing Act.

 

 

Robyn and Rick Halprin, who owned a home in the Prairie Single Family Homes of Dearborn, sued the Prairie Single Family Homes of Dearborn Park Association ("association"), the association's president, and other neighbors for harassment and discrimination under the Fair Housing Act (“Act”).  The district court dismissed the suit, stating that the Halprins had failed to state a claim.  Therefore, the Seventh Circuit Court of Appeals had to treat the allegations of the complaint as if they were true.

 

The complaint alleged that the association and the neighbors harassed the Halprins because they were Jewish.  The Halprins also alleged that the president of the association wrote on a wall on their property, "H-town property," short for "Hymie-town property."  The president further vandalized the property by damaging trees and plants and cutting down strings of holiday lights, according to the complaint.

 

The Halprins also contended that the president removed flyers they had posted offering a reward for the identity of the vandal.  When the Halprins tried to investigate the vandalism, the association allegedly destroyed minutes of its board meetings and erased a tape recording of a meeting at which the president had threatened to "make an example" of the Halprins.  The association applied chemicals to the Halprins' yard against their wishes and adopted rules restricting the use of their property, the complaint stated.

 

The appeals court first examined the application of Section 3617 of the Act, which makes it unlawful "to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by Section 3603, 3604, 3605, or 3606 of this title."  The court found that the Act did not apply because the only relevant section concerns people being prevented from acquiring property, which was not an issue in this case.  The court discussed whether the Act's language could be stretched to reach a case of "constructive eviction," and it reviewed several cases that analogized eviction by constructive discharge to "constructive discharge," a form of discrimination recognized in Title VII cases.  However, the court found that none of these cases gave a considered holding on the scope of the Act or its application to a case like the Halprins'.

 

The court found that, while "Title VII protects the job holder as well as the job applicant,…[the Act] contains no hint either in its language or its legislative history of a concern with anything but access to housing."  How to address discrimination after acquiring property simply was not at the forefront of congressional thinking when it enacted the Act because the primary problem at the time was discrimination in purchasing and renting homes.  Thus, the court ruled that the Halprins had no claim under Section 3604, which would seem to preclude any claim by plaintiffs under the language of Section 3617.

 

However, the Department of Housing and Urban Development issued a regulation that forbids, under Section 3617, "threatening, intimidating, or interfering with persons in their enjoyment of a dwelling because of the race, color, religion, sex, handicap, familial status, or national origin of such persons, or of visitors or associates of such persons."  While the court stated that the regulation may not be valid, as it may stray too far from the language of Sections 3604 and 3617, the only appeals court to address the issue previously held the regulation to be valid.

 

Since the validity of the regulation was not properly before the court in this case, the only question remaining was whether the conduct alleged in the complaint amounted to "threatening, intimidating, or interfering" within the meaning of the regulation.  While the association and the Halprins' neighbors argued that their actions were far less ominous, frightening, or hurtful than burning a cross in a neighbor's yard or physically assaulting the neighbor, the court found that there were "other, less violent but still effective, methods by which a person can be driven from his home and thus 'interfered' with in his enjoyment of it."

 

The court found that the allegations of the complaint, if taken as true, provided sufficient basis for a cause of action under the HUD regulation.  The court reversed the district court's decision and remanded the case with instructions to the district court to reinstate the case.

 

©2005 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

 

 

Owners Cannot Park RV on Property
Cimarron Foothills Community Association v. Kippen, 206 Ariz. 455, 79 P.3d 1214 (2003)

Use Restrictions:  In order for a recreational vehicle to qualify as an accommodation under the Fair Housing Act, homeowners must show that, if not for the accommodation, they likely would  be denied an equal opportunity to enjoy the housing of their choice.

 

 

James and Betty Kippen own a home in Cimarron Foothills Estates, which is governed by the Cimarron Foothills Homeowners Association ("association").  They operate an elder-care facility out of their home and use a large recreational vehicle ("RV") to transport their residents to doctor appointments and outings.  The Kippens park the RV on their property but do not keep it in a garage or other enclosure as required by the community's covenants, conditions, and restrictions ("declaration").  The association notified the Kippens that they could not park the RV on their property because doing so was in violation of the declaration.  Although the Kippens put the RV in storage for five weeks, they brought it back to their lot because this was more convenient for their residents.

       

The association then sued the Kippens, seeking an injunction to force them to comply with the declaration.  The Kippens filed a counter-claim, alleging that under the Fair Housing Act ("Act"), parking the RV on their lot was reasonable and necessary because it allowed their disabled residents an equal opportunity to use and enjoy their home.  The trial court ruled in favor of the association and permanently enjoined the Kippens from keeping the RV on the property except in a garage.  The Kippens appealed the trial court's judgment.

       

The appeals court noted that the homeowner had the burden of proving that the accommodation requested was necessary.  Citing a Ninth Circuit case, the court stated that homeowners must prove that without the accommodation they would be denied an equal opportunity to enjoy the housing of their choice.  In this case, without a causal link between the association's policy and the Kippens' injury, the association was not obligated to accommodate the Kippens' parking the RV on their property.

       

At trial, the Kippens testified that it would be a financial burden to build a garage for the RV but presented no evidence as to whether the cost would render the elder-care facility financially nonviable.  The court ruled that without such evidence, the Kippens failed to demonstrate the necessity of the RV and therefore were not entitled under the Act to a waiver of the declaration provisions.

 

©2005 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

 

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Association Is Entitled to Foreclose Lien for Plumbing Repairs
Twenty-Four Merrill Street Condominium Association, Inc. v. Murray, No. CVO20813753, Conn. Superior Ct., July 14, 2004

Assessments/Powers of the Association/Covenants Enforcement:  A Connecticut court ruled in favor of a condominium association that sought to foreclose a statutory lien for fines and assessments levied against a unit owner for failure to repair faulty plumbing.

 

 

Michael and George Murray own Unit C-3 at 24 Merrill Street Condominium.  The Murrays had faulty plumbing in their unit, which leaked into at least one unit below theirs.  Because the Murrays failed to repair the leak, the association had it repaired and levied fines against the Murrays' unit in accordance with the association's bylaws.  When the Murrays refused to pay for the repairs, the association sued to foreclose the lien on the assessment and fines.

     

At trial, the Murrays presented six special defenses and a counter-claim against the association.  The court dismissed four of the defenses as having no basis in law or in fact.  Considering the first defense of res judicata, the court found that the charges in a prior action were for common assessments, not for repairs.  The Murrays' second defense was that the association failed to provide the written notice of the assessment procedure required by the bylaws.  Evidence was presented at trial that notice was provided to Michael Murray but not to George Murray. 

     

The court found that the Murrays did have a leak that damaged at least one other unit in the condominium.  It further found that the Murrays failed to repair the leak, forcing the association to make the repairs.  The court determined that the fines levied by the association were in accordance with the terms of its bylaws, although in calculating the amount of the judgment, it considered the charge paid by the association for the repairs to be excessive. 

     

The court entered a judgment in the amount of $3,422 (the total cost of the repairs actually charged by the plumber, and the fines assessed by the association) against Michael Murray only, since it acknowledged that George Murray did not receive proper notice.  The court found in favor of the association on the Murrays' counter-claim and awarded attorney’s fees to the association.

 

©2005 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

 

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Association May Not Enforce Restriction if It Fails to Sue Resident as Restriction Requires
Sherwood Forest Citizens Association, Inc. v. Newkirk, No. 2003, La. App. Ct., June 25, 2004

Covenants Enforcement: An association cannot enjoin the construction of a resident's fence because it failed to commence a suit in a timely fashion and in accordance with the terms of the building restrictions.

 

 

Peter and Margaret Newkirk were residents of Sherwood Forest Subdivision. On Dec. 12, 2001, the Newkirks met with the board of directors of the Sherwood Forest Citizens Association ("association") to present plans and pictures of a fence they proposed to install. According to the Newkirks, those at the meeting agreed that an amendment of the subdivision's building restrictions was necessary to approve the plan for the fence.

     

However, on Dec. 20, 2001, the Newkirks received a letter from the association president informing them that the board officially opposed the plans for the fence and had no choice but to uphold the current restrictions. The Newkirks responded that the building restrictions had been legally amended to allow the fence. The association then sued the Newkirks, alleging that the erection of the fence was a violation of certain provisions of the building restrictions.

     

The trial court decided that the association's suit was untimely under the terms of the building restrictions and that the fence was in compliance with the building restrictions. Specifically, the building restrictions provided that if the association failed to approve or disapprove plans within 30 days of their submission, or if the association did not file suit to enjoin construction prior to the completion of the project, then the project was deemed to be in compliance, and approval was not required.

     

On appeal, the association argued that the building code's time restrictions did not apply in this case because construction of the fence was a short-term project. The court disagreed, reasoning that another resident had noticed the construction of the fence when it first began, that the fence was under construction for several weeks, and that the association was aware of the construction. In fact, the Newkirks informed the association of their plans for the fence and their intent to complete the fence after the building restrictions were amended. For these reasons, the court affirmed the trial court's decision that the association failed to commence suit in a timely fashion to enjoin construction of the Newkirks' fence.

 

©2005 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

 

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Mortgagor Must Repay Amounts Lender Paid for Past-Due Assessments
Santos v. Countrywide Home Loans, Inc., No. CV040287435S, Conn. Super. Ct., January 4, 2005

Contracts/Assessments:  In an unpublished opinion, a Connecticut court granted summary judgment in favor of a lender that paid past-due assessments on a condominium unit to settle a foreclosure action because the borrower failed to produce evidence of any oral agreement that the lender would not pay the association on her behalf.

 

 

In July 2000, Damari Santos purchased a unit in Summerhill Condominium.  After signing the purchase agreement, but before she received title to the property, she received a Resale Certificate from Summerhill Condominium Association ("association") indicating that the property was not subject to any special assessments. 

       

Santos obtained a mortgage loan from Countrywide Home Loan ("Countrywide"), which was secured by the property.  After she acquired title, Santos discovered that the association had filed a lis pendens against the property for nonpayment of common assessment fees and demanded that Santos pay the fees.  Santos contested the lien because the association had not given her the proper notice required under Connecticut law.  The association then sued Santos, seeking to protect its lien. 

       

Santos asserted that Countrywide entered into an oral agreement with her that, before taking any action, Countrywide would "await the outcome of the pending foreclosure action and accept monthly scheduled loan payments from her in the interim."  In May 2002, Countrywide paid the association the past-due assessment fees, and the association withdrew its foreclosure action. 

       

Santos later sold the property.  In order for her to complete the sale and obtain a mortgage release from Countrywide, Countrywide required that she repay the amount it paid to the association to remove the lis pendens. 

       

In a two-count action, Santos sued Countrywide for breach of contract and the association for unjust enrichment.  On July 9, 2004, Countrywide petitioned the court for summary judgment as to Count I of Santos' complaint.  Its petition was supported by a memorandum of law, a copy of the complaint, and the affidavit of Countrywide's vice president attesting that Countrywide did not enter into any oral or written agreement with Santos that modified the mortgage or condominium rider, including any agreement by which Countrywide would not pay the amount due for the unpaid assessments. 

       

The court determined that Connecticut law provides that summary judgment shall be rendered if the pleadings, affidavits, and any other proof provide the court with evidence that there is no genuine issue of material fact.  The "genuine issue" aspect of summary judgment requires that the parties present evidence at trial from which material facts alleged in the pleadings can be reasonably substantiated.

In deciding the motion, the court viewed the evidence presented by Countrywide in the light most favorable to Santos.  Santos offered no documentary evidence to support her allegation that the parties entered into an oral agreement.  Therefore, the court determined that Countrywide met its burden in demonstrating an absence of an oral agreement between Countrywide and Santos, and ruled in its favor.

©2005 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited. 

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Owners May Present Evidence That Association Unreasonably Denied Approval
Gonzalez v. Flamingo Estates Maintenance Association, In., 874 So. 2d 1198, Fla. Dist. Ct., App. 2004

Covenants Enforcement/Use Restrictions:  A court's summary judgment was reversed because genuine issues of fact remained to be determined about whether the association capriciously and unreasonably withheld approval of architectural changes to a home's exterior.

 

Mariano and Rene Gonzalez appealed an order granting an injunction to Flamingo Estates Maintenance Association, Inc. ("association") requiring them to comply with architectural plans originally approved by the association.  The order required that the Gonzalezes alter the dimensions of their patio, relocate their hot tub, remove unapproved landscaping, and build a screen enclosing the hot tub and Tiki hut they had erected.

       

The Gonzalezes appealed the decision, alleging that the association's actions in denying their request for deviations from the approved plan were arbitrary, capricious, and unreasonable.  In its review, the appeals court found that there remained genuine issues of material fact contained in the Gonzalezes' affirmative defense of the association's suit, and, therefore, reversed the trial court's judgment and remanded the case for further proceedings.

       

The court affirmed the trial court's determination of all other issues that the Gonzalezes raised.

 

©2005 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Architectural Committee Has Authority to Deny Approval of One-Story Residence That Obstructs the Views of Other Homeowners
Patterson v. Beuligmann, No. G031980, Ca. App. Ct., October 13, 2004

Architectural Control/Covenants Enforcement:  In an unreported opinion, a California appeals court found that an architectural committee has the authority to withhold approval of plans and specifications for a one-story residence on grounds that it would obstruct views enjoyed by other residents.

 

 

In 1998, Joseph Patterson purchased a house in Prestwick Estates, a development in San Diego, California.  The property was subject to a declaration that established an architectural committee to provide control over architectural improvements and preserve the architectural standards of the community.  Patterson acquired the property subject to the terms and conditions of the declaration. 

       

In 2000, Patterson applied to the architectural committee for approval to build a new one-story residence on his property.  The committee consisted of Raymond Beuligmann, Ernest Wenkert, and Barbara Groce.  The declaration required that he obtain the committee's prior written approval of the building plans and specifications before construction could begin.  The committee denied Patterson's application on the grounds that the proposed one-story structure would impair the views of neighboring homeowners, two of whom were members of the committee.  In August 2000, Patterson submitted revised plans and specifications to the committee, but in September, the committee denied those on the same ground.

       

Patterson sued the committee and its individual members, alleging that it had acted unreasonably and had violated the declaration by considering view impacts for proposed one-story structures when the committee was authorized by the declaration to consider only view impacts of structures higher than one story.  Patterson also alleged that two members of the committee, Beuligmann and Groce, refused to recuse themselves even though they owned neighboring property.  Finally, Patterson argued that the committee had approved other structures on the same side of the street that exceeded the height of his proposed residence.

       

The trial court interpreted the declaration to prohibit the committee from denying an application to construct a one-story residence on the basis of its view impact.  The court's interpretation of the declaration was that the committee did not have the discretion to prohibit a party from building a single-story home, notwithstanding the fact that it might adversely affect someone's view or privacy.  The court ruled in Patterson's favor, awarding a judgment of $168,265 and providing an injunction allowing Patterson to build his proposed house.  After the jury's verdict on Patterson's case-in-chief, the court decided nuisance and breach of fiduciary duty causes of action in favor of the committee.  Both parties appealed.

       

The committee argued that the trial court erroneously interpreted the declaration to limit the committee's authority to consider the view impact of only buildings that exceed one story in height, contending that the committee was authorized to consider view impact of all plans submitted for approval. 

       

The appeals court used the rules of contract interpretation in reviewing the trial court's interpretation of the declaration.  Paragraph Three of the declaration reads in part:

PLANS AND SPECIFICATIONS. No construction of any building or other improvement shall be commenced on any of the lots located within said Real Property until the complete plans and specifications of such building or other improvement have been approved in writing by the Architectural Committee.

 

The court considered that California courts and other jurisdictions have long upheld general covenants vesting broad discretion in homeowner associations or boards to grant or withhold consent to construction. 

 

Paragraph Four of the declaration reads:

HEIGHT LIMITATION OF BUILDINGS. No building or other improvement shall be more than one story in height without the prior written approval of the Architectural Committee, and no such approval will be given if such building or other improvement of more than one story in height will interfere with the view or invade the privacy of surrounding properties.

       

The court found no provision in the declaration limiting the committee's power to approve or disapprove a one-story building.  Patterson argued that other provisions in the declaration demonstrated the developer's ability to impose specific height limitations, but that the absence of any language authorizing the committee to regulate one-story buildings because of view considerations demonstrated that the declaration could not be construed to grant that authority.  He further argued that restrictive covenants should be construed strictly against persons seeking to enforce them and should be resolved in favor of the free use of the land. 

 

Citing Hannula v. Hacienda Homes, 34 Cal. 2d 442 (Ca. 1949), the court found that restrictions on the use of land will not be read into restrictive covenants by implication.  However, if the parties express their intention to limit the use, that intention should be to effectuate the desires of the covenanting parties.  In the court's opinion, the stated purpose of the restrictions in the declaration in this case was to protect and benefit all homeowners.  Paragraph Three of the declaration provides that the committee must approve all proposed structures, and Paragraph Four prohibits the committee from approving a proposed structure greater than one story in height if it would interfere with the views of the owners of surrounding properties.  However, the court found no provision in the declaration that would prohibit the committee from disapproving a proposed single-story structure on the basis that it affected the views of other homeowners.  In its opinion, it could not imply such a restriction.

 

The appeals court determined that the trial court's erroneous interpretation of the declaration resulted in prejudicial error in its jury instructions.  Therefore, the court ordered that on retrial, extrinsic evidence be considered and the declaration be interpreted in accordance with its opinion on review.  The trial court's judgment was reversed, and the case was remanded with directions for retrial solely on Patterson's actions for breach of the declaratory relief, with the committee to recover its costs on appeal.

 

©2005 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

 

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Meeting Is Called When Notice Is Distributed
Orange Landing Condominium Association, Inc. v. Paul, No. CV0304769055, Conn. Super. Ct., September 24, 2004

Association Operations:  In an unreported case, a Connecticut court ruled that a meeting is officially called when written notice is sent to all members, not when the meeting date is set.

 

 

On Feb. 26, 2003, Gary Beane delivered a petition to the Orange Landing Condominium Association, Inc. ("association") requesting a special meeting to elect a new board of directors.  On March 5, 2003, the association's president, Yasir Hamed, sent an e-mail to the property manager instructing her to send notice to the members of a special meeting set for April 24, 2003.  The property manager never sent the meeting notice, but there was no evidence of any collusion or conspiracy between the manager and any of the parties.

       

On March 14, 2003, Beane sent notice of a special meeting for March 26, 2003 (the date of a regularly scheduled board meeting) to members of the association.  When Hamed realized that the manager had not sent the meeting notice, he sent a notice on March 18, 2003, to the members regarding the special meeting set for April 24, 2003.  On March 26, 2003, Beane and the other defendants held their special meeting and elected a new board of directors.  On the same day, Hamed and the other plaintiffs chose not to attend Beane's special meeting but conducted their regularly scheduled board meeting at another location.

       

The association sued Dwayne Paul, Gary Beane, and others to determine the validity of the March 26, 2003, election and the validity of the newly elected board's actions at that meeting.  Connecticut law provides that if a call for a special meeting is not issued within 15 days after receipt of a member's request, the requesting member may call a special meeting.  The plaintiffs argued that the meeting was called within 15 days of Beane's request because Hamed asked the manager on March 5, 2003, to send a meeting notice.  They argued that this e-mail request took precedence over the March 14, 2003, notice sent by Beane.

       

The court looked to Robert’s Rules of Order to determine when a meeting is "called." Robert’s Rules provides that "[t]he call of a meeting is a written notice of the time and place, which is mailed or distributed to all members of the organization a reasonable time in advance."  Thus, the meeting had not been called before the board's exclusive time period to call the meeting expired on March 13, 2003.  On March 14, Beane was entitled to set a special meeting and send notice to the members.  The court determined that the meeting held on March 26, 2003, was valid, that the election during that meeting was valid, and that the persons elected at that meeting had the right to hold the office to which they were elected.

 

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Developer Must Pay Owners Even Though Settlement Agreement Condition Was Not Met
McGraw v. Marchioli, 812 N.E.2d 1154, Ind. App. 2004

Developmental Rights:  A developer who signed a settlement agreement with unit owners regarding easements across common area must pay to use the easements even though one of the conditions of the settlement agreement was not satisfied.

 

 

Louis and Susanna Marchioli and Edward Kisscorni (“owners”) own units at Jamison Residential Condominiums.  The condominium sits on land ("residential property") that was originally a portion of a larger parcel owned by Francis Smith.  In 1987, Smith sold the residential property to Jamison Inn Partnership, which developed the condominium.  The deed conveying the residential property reserved an easement over the property that specifically prevented the other portion of the original property from being landlocked.  However, the deed did not designate the location of the easement on the residential property.

   

During the time that Patrick McGraw, P.J. Mac, Inc., and Jamison Inn Partnership (collectively, "McGraw") developed a seven-unit condominium on the other portion of the original property, construction vehicles used the landscaped portion of the common area located on the northern portion of the residential property to access the construction site.  Susanna Marchioli saw that vehicular activity as an invasion of her enjoyment of the common area of her condominium, and the Marchiolis and Kisscorni sued McGraw, asking the court to enjoin the developer from improving, in any way, the common areas.  After the suit was filed, the parties agreed to mediate the dispute.

     

The owners and the developer decided that the owners would grant McGraw three new easements and would cooperate with him in obtaining an easement from the owners of another lot.  In turn, McGraw agreed to pay the owners $15,000.  The settlement agreement also contained a provision that the agreement was contingent on the parties securing the easement on the adjacent lot within 90 days of the date of the agreement.

     

Although the owners assisted McGraw in obtaining the easement over the adjacent lot, McGraw thought the cost of that easement ($3,000 per year) was exorbitant and decided not to use the easement to access the site.  McGraw then began using two of the three easements but did not pay the owners the $15,000 to use the easements.  The owners sued McGraw, asking the court to enforce the settlement agreement.  The trial court determined that the settlement agreement should be enforced, and McGraw appealed.

     

On appeal, McGraw contended that the trial court should not have enforced the settlement agreement because one condition necessary to make the agreement enforceable had not been met.  Specifically, McGraw maintained that because the new easement was not obtained the settlement agreement was defunct.  On the other hand, the owners argued that because McGraw utilized the original easements, the developer waived the condition that the new easement be obtained.  Therefore, the owners maintained that McGraw could not avoid his obligation to pay them.

     

In its analysis, the court noted that contract law governs construction of settlement agreements.  The parties in the dispute all agreed that obtaining the new easement was a condition precedent that was included in the settlement agreement.  A condition precedent is a condition that must be met before the agreement actually becomes binding, or before the duty to perform a specific obligation arises -- in this case, the new easement was to be obtained before McGraw paid the owners.  However, performance of a condition can be waived, and the court in this case determined that McGraw's conduct waived obtaining the new easement.

McGraw contended that when he paved the western easement, he was merely asserting the easement rights in the Smith deed and was not waiving any rights or ratifying the settlement agreement.  The court called that notion self-serving and affirmed the trial court's decision.

©2005 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Association Does Not Own Common Elements
Jensen-Re Partnership v. Superior Shores Lakehome Association, 691 N.W.2d 42, Minn. 2004

Construction Defect: The statute of limitations does not protect an association against a suit for construction defects because the association was not an "owner" of the common elements in the condominium, as defined in the statute.

 

 

In 1998, Jensen-Re Partnership ("Jensen") purchased a condominium unit in a building in the Superior Shores Resort. The Superior Shores Lakehome Association ("association") is the resort's homeowner association. In early 1999, after Jensen found cracking in some tiles on the floor of its unit, and later discovered significant sloping of the floor, it notified the association. The association allocated $2,500 to Jensen to fix the floor temporarily and acknowledged that if the sloping was a result of problems with the foundation, the association had the obligation to fix any problems that resulted.

     

In 2002, the association learned that the sloping floor and other damage to the building was the result of the corner of the building settling five inches. The association began soliciting bids to correct the settling, but did not include in its estimate the cost of repairs to the sloped floor in Jensen's unit, because it claimed that the sloped floor pre-dated Jensen's purchase of the unit.

     

Jensen sued the association for breach of contract and breach of duties under the Minnesota Uniform Condominium Act ("Act") for failure to repair the floor in its unit. The association responded with a motion for summary judgment, arguing that Jensen's suit was barred by the two-year statute of limitations for actions arising from defects in improvements to real property. Jensen argued that the statute of limitations did not apply to actions by individual owners against an association, and that the association was stopped from using the statute of limitations as a defense because it had already stated that it would pay for any repairs resulting from defects in the foundation. Jensen also asked the court to rule that the association had an obligation to pay to repair Jensen’s sloped floor under its own bylaws and the Act.

     

The trial court ruled in favor of the association, holding that Jensen's suit was barred by the statute of limitations since the settling that caused the sloping occurred around the time the building was constructed in the mid-1980s, and therefore, had existed longer than the limitation period. Jensen appealed.

     

The issue on appeal was whether the two-year statute of limitations prevents a claim against an association for damages arising from construction defects. The statute provides that no action arising from the defective condition of an improvement to real property may be brought against any person performing the construction or the owner of the real property more than two years after the discovery of the defect. Jensen argued that, because the association was not involved in the design or construction of the condominium, and is not the owner of the condominium, the statue of limitations did not apply to this suit.

     

The association contended that it is an "owner" pursuant to the statute; therefore, Jensen's suit was barred. The association reasoned that because it had an easement to enter and a duty to maintain the common elements of the condominium, it should be considered an "owner" of the common elements, and therefore, it was protected by the statute of limitations. The appeals court disagreed and ruled that, based on the plain language of the statute, an association created to manage and maintain the condominium was not an "owner" of the common elements within the meaning of the statute. Accordingly, the statute of limitations did not bar Jensen's suit.

 

©2005 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

 

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