August 2017
In This Issue:
Recent Cases in Community Association Law
Failure to Follow Meeting Notice Requirements Strictly Invalidates Action
Failure to Anticipate Delays and Changed Conditions Leaves Property Without Access
Residential Lot Could Not be Used as a Road to Serve Neighboring Subdivision
Declarant’s Consent Required to Amend Declaration
Hazy Lot Boundaries Create Ownership Dispute
Private Club Exempt from ADA
Hearing Notice One Day Late Invalidates Lien
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Recent Cases in Community Association Law

Law Reporter provides a brief review of key court decisions throughout the U.S. each month. These reviews give the reader an idea of the types of legal issues community associations face and how the courts rule on them. Case reviews are illustrations only and should not be applied to other situations. For further information, full court rulings can usually be found online by copying the case citation into your web browser. In addition, the College of Community Association Lawyers prepares a case law update annually. Summaries of these cases along with their references, case numbers, dates, and other data are available online.

Failure to Follow Meeting Notice Requirements Strictly Invalidates Action

Tyra Summit Condominiums II Association, Inc. v. Clancy, No. 16CA1381 (Colo. Ct. App. May 18, 2017)

Association Operations: The Court of Appeals of Colorado held that the failure to give proper notice of a proposed declaration amendment as required by the Colorado Common Interest Ownership Act invalidated the amendment.

Tyra Summit Condominiums II Association, Inc. (association) governed a condominium in Breckenridge, Col. Katherine Clancy and Heather Clancy owned a unit in the condominium.

The association’s board of managers (board) decided to completely rewrite the original 1983 condominium declaration (the amendment) because it was outdated. In 2016, the association sought court approval for the amendment.

The Clancys objected to the amendment, arguing that it improperly changed their allocated ownership interest in the condominium. The trial court determined that the association met all statutory criteria and approved the amendment. The Clancys appealed.

A court may grant a petition to amend a declaration if it determines that the requirements of the Colorado Common Interest Ownership Act (act) have been satisfied. One of the requirements is that the association has discussed the proposed amendment during at least one association meeting. The act also requires that, at least 10, but not more than 50, days before an association meeting, the association must deliver written notice to each owner specifying the meeting date, time, location, and the agenda items, specifically including the general nature of proposed amendments to the declaration or bylaws.

In June 2015, the association notified the owners that the 2015 annual meeting would take place on August 1st. The notice stated that the board had been working with the association’s attorneys to rewrite the declaration. The notice indicated that when the attorney completed the final draft, the association would mail the draft amendment and an approval form. The notice further specified that the vote of 67 percent of the owners was required to amend the declaration, and all owners were urged to return the approval forms.

On July 28, 2015, the association sent a package to all owners containing a copy of the proposed amendment, a consent form, and a summary of the most significant revisions to the declaration. The proposed amendment was discussed at the annual meeting on August 1st.

The appeals court determined that neither notice met the act’s requirements. The first notice did not include the general nature of the proposed amendment. Rather, it simply indicated that changes would be proposed in the future. The second notice was not sent at least 10 days prior to the meeting.

Thus, the appeals court held that no valid notice of the meeting was given. Accordingly, the appeals court reversed the trial court’s order approving the amendment. It also ruled that the owners were entitled to recover their reasonable attorney’s fees and costs.

The trial court’s order was reversed, and the case was remanded for further proceedings.

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Failure to Anticipate Delays and Changed Conditions Leaves Property Without Access

Alpine Village, Inc. v. City of Oak Harbor, No. 74869-6-I (Wash. Ct. App. May 22, 2017)

Developmental Rights: The Washington Court of Appeals held that an easement that failed to anticipate a protracted development period and changed conditions left a successor developer with no access rights to its undeveloped property.

In 1991, Donna Mott executed a binding site plan (BSP) for eight contiguous lots she owned in Oak Harbor, Wash., upon which she intended to develop an eight-building condominium project. In 1992, she recorded a declaration of condominium for Pier Point Condominiums (condominium declaration) that established each lot as a separate phase.

Two days later, Mott recorded a declaration of easement (easement declaration) to provide for ingress, egress, and utilities to serve the Pier Point Condominiums phase one and to serve and benefit each successive phase. The easement declaration established ingress and egress over lot one necessary to serve each Pier Point phase constructed in accordance with the BSP.

The BSP required all phases to be completed by 1996, and the condominium declaration provided that no additional phases could be added more than seven years after the condominium declaration was recorded. Only four phases were completed.

In 2001, Mott sold the remaining undeveloped property to Alpine Village, Inc. (Alpine). Alpine submitted a preliminary site plan to the City of Oak Harbor. The city required Alpine to show that it had the rights to use existing ingress, egress, and utility easements or that its development plans did not rely on existing easements.

To establish its rights to use the existing Pier Point easements, Alpine sued the city, Pier Point Condominiums Association (association), and the condominium unit owners (collectively, the defendants) for a declaration of its rights. Finding that the easements were limited to the Pier Point development only, the trial court granted summary judgment (judgment without a trial based on undisputed facts) in the defendants’ favor.

Alpine appealed. The easement declaration provided that an easement was reserved for the benefit of the current and future owners of the eight lots. Alpine argued that, as a lot owner, it was entitled to the easement’s benefit.

However, the easement declaration plainly stated that it was intended to benefit the Pier Point development set out in the BSP. Such language explicitly limited the easement’s benefit to the Pier Point Condominiums and successive phases of the condominium as shown in the BSP. Since Alpine’s development would not be part of the Pier Point Condominiums, the appeals court held that its development was not a beneficiary of the easement.

Alpine contended that no rational developer would limit the development potential of its land in such manner. Rational or not, the BSP and the condominium declaration clearly provided that no further development was permitted after the expiration date. Thus, the risk that not all the property would be developed before the deadline was clearly evident when the easement declaration was executed. Yet, the easement declaration made no provision for the easement to apply to lots excluded from the BSP at its expiration.

Alpine next argued that the easement declaration should be modified under the changed conditions doctrine. However, Alpine raised this issue for the first time on appeal. The appeals court held that a modification request requires a fact-intensive inquiry that must first be heard by the trial court and declined to consider the issue.

Accordingly, the trial court’s summary judgment grant in the defendants’ favor was affirmed.

©2017 Community Associations Institute. All rights reserved. Reproduction and redistribution in any form is strictly prohibited.

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Residential Lot Could Not be Used as a Road to Serve Neighboring Subdivision

Trevillian Properties, LLC v. Etheridge, No. 0738 (Md. Ct. Spec. App. May 17, 2017)

Developmental Rights: The Maryland Court of Special Appeals held that a lot subject to a subdivision declaration restricting property to residential use could not be used as a road for access to a different subdivision.

In 2013, Trevillian Properties, LLC (Trevillian) purchased Lot 24 in the Arundell Hills Subdivision located in Anne Arundell County, Md. It also purchased a 4.71-acre tract known as Parcel 429 located behind Lot 24 outside the subdivision.

Trevillian applied to the county zoning office for approval to subdivide Parcel 429 into 22 residential lots to be known as the Enclave Subdivision. It proposed to access the new subdivision through Arundell Hills. Trevillian planned to demolish the house on Lot 24 and construct a road (which it would dedicate to the county) on the lot connecting to McHenry Drive, a public road in Arundell Hills. Under the plan, Trevillian would extend water and sewer lines from McHenry Drive under the new road to service the Enclave subdivision. 

Calvin Etheridge and the other Arundell Hills owners (collectively, owners) objected to the plan, asserting that building a road would violate Arundell Hills’ 1954 Declaration of Covenants (declaration) which stated the land could be occupied and used only for residential purposes.

In 2015, Trevillian sued the owners, seeking a declaratory judgment (judicial determination of the parties’ legal rights) that constructing a road on and utilities under Lot 24 would not violate the declaration. Both sides filed competing motions for summary judgment (judgment without a trial based on undisputed facts) as to whether using Lot 24 for a road to access a neighboring subdivision constituted residential use under the declaration.

The trial court viewed road construction that benefitted a different community as an entirely different matter than the function of subdivision roads. Concluding that using a residential lot in one subdivision to serve homes in another was not residential use, the trial court granted the owners’ motion. Trevillian appealed.

Trevillian asserted that when a proposed road is residential in nature, its use is not precluded by a residential use restriction. However, the appeals court cautioned that the restriction must be examined relative to the entire declaration and interpreted in a reasonable manner. In the appeals court’s opinion, allowing Trevillian to build a road where a house once stood for the sole purpose of connecting two different subdivisions would change the community’s character in a manner that goes against the owners’ expectations.

Trevillian asserted that the declaration’s prohibition on a building being erected for occupancy by more than two families only limited the number of families that could occupy Lot 24. It argued that the road would not violate the restriction since it was not a building, and no one would be occupying Lot 24. The appeals court found no merit in this argument.

Trevillian also argued that the proposed road would not be in violation because the declaration applied only to lots, not streets. The appeals court found this logic flawed because it did not acknowledge that the proposed road would benefit only the new subdivision. Thus, since the proposed road would serve multiple residences not included in Arundell Hills, it was prohibited by the declaration.

Accordingly, the trial court’s judgment was affirmed.

©2017 Community Associations Institute. All rights reserved. Reproduction and redistribution in any form is strictly prohibited.

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Declarant’s Consent Required to Amend Declaration

Vallagio at Inverness Residential Condominium Association, Inc. v. Metropolitan Homes, Inc., No. 15SC508 (Colo. June 5, 2017)

Documents: The Colorado Supreme Court held that a declaration provision requiring a declarant’s consent to amend the declaration did not violate the Colorado Common Interest Ownership Act.

Metro Inverness, LLC (declarant) developed the Vallagio at Inverness residential project in Englewood, Col. In 2007, the declarant recorded the project’s declaration and established Vallagio at Inverness Residential Condominium Association, Inc. (association) to govern the project.

In 2010, the declarant turned over association control to the owners. Shortly thereafter, a dispute over alleged construction defects arose between the declarant and the association. In late 2012 and early 2013, the association sent the declarant written notice of its claims. The parties proceeded with the Colorado Construction Defect Action Reform Act’s pre-litigation notice and settlement offer requirements, but they did not reach an agreement.

In September 2013, 67 percent of the owners voted to amend the declaration—an action provided for in the declaration—to remove a binding arbitration clause. However, the binding arbitration clause stated it could not be amended without the declarant’s written consent, regardless whether the declarant still owned property (declarant consent requirement). The association did not seek the declarant’s consent to the amendment.

In December 2013, the association brought a construction defect claim against the declarant, Metropolitan Homes, Inc. (Metropolitan) (the declarant’s manager and general contractor), and two members who had been appointed to the board by the declarant when it controlled the association. The declarant moved to compel arbitration, arguing that the arbitration clause was still effective since it had not consented to the amendment.

The association asserted that the requirement for declarant consent was void because it violated the Colorado Common Interest Ownership Act (CCIOA). It also argued that the construction defect claims were not subject to arbitration because the Colorado Consumer Protection Act (CCPA) expressly provided for a civil action, which the association asserted meant a lawsuit.

The trial court denied the declarant’s motion to compel arbitration, finding the requirement for declarant consent void because it violated the CCIOA. The declarant appealed.

The appeals court reversed in part, concluding that the requirement for declarant consent did not conflict with the CCIOA; therefore, the amendment was invalid. It also determined that the association’s claims could be arbitrated under the CCPA because the right to a civil action could be waived. The association appealed to the Colorado Supreme Court.

The CCIOA sets the maximum votes that associations can require to amend a declaration at 67 percent. It also prohibits a declaration from imposing limits on an association’s power to deal with the declarant that are more restrictive than its power to deal with other persons. The association argued that the requirement for declarant consent violated the CCIOA because (1) it required a vote greater than 67 percent, (2) it was a device intended to evade the 67 percent limitation, and (3) it imposed limits on the association’s power to deal with the declarant that were more restrictive than the limits for dealing with other persons.

The supreme court determined that the requirement for declarant consent did not exceed the 67 percent threshold. The supreme court found nothing in the statute’s plain language that precluded imposing additional non-percentage based requirements for amendments.

Further, the CCIOA’s other provisions expressly contemplated additional consent requirements. One section expressly envisions situations in which the declarant retains a right to object to a proposed amendment. Another section contemplates that a third party might retain the right to approve amendments. The supreme court concluded that adopting the association’s position would require that other CCIOA provisions be ignored, which it could not do.

Moreover, the CCIOA encourages resolving disputes by alternative dispute resolution, including binding arbitration. Thus, the requirement for declarant consent was consistent with the CCIOA and Colorado’s public policy favoring arbitration.

The supreme court pointed out that the association had no power to amend the declaration; only the owners could amend the declaration. Therefore, the requirement for declarant consent did not impose a limit on the association’s power to deal with the declarant that was more restrictive than its power to deal with other persons.

Finally, unlike similar statutes, the CCPA does not include a non-waiver provision. Therefore, the supreme court held that the CCPA’s right to a civil action was waivable, and the declaration’s arbitration clause operated as such a waiver.

Accordingly, the supreme court affirmed the appeals court’s judgment, and the case was remanded for further proceedings.

©2017 Community Associations Institute. All rights reserved. Reproduction and redistribution in any form is strictly prohibited.

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Hazy Lot Boundaries Create Ownership Dispute

Starling v. Lake Meade Property Owners Association, Inc., No. 30 MAP 2016 (Pa. May 25, 2017)

Documents: The Pennsylvania Supreme Court held that an association owned land not clearly identified on the subdivision plat as a lot or common area.

Lake Meade Property Owners Association, Inc. (association) governed the Lake Meade Subdivision, a gated community of more than 1,000 lots surrounding Lake Meade in Adams County, Penn. The community was established by Lake Meade Incorporated (LMI) in 1967 by a recorded subdivision plan.

That same year, LMI sold Lots 725 and 726 (Starling tract), which lay at the end of a peninsula jutting into Lake Meade. Access to the Starling tract was via Custer Drive, which terminated in a cul-de-sac. To the east of Custer Drive was the Starling tract, to the north was a narrow strip of land that descended to rip-rap along the lakeshore, and to the west was another narrow strip of land along the peninsula’s western shore (the two narrow strips are collectively referred to as the disputed property).

The subdivision plan did not identify the disputed property as lots, recreation area, or lake access, and did not show clear boundary lines. In 1968, LMI conveyed to the association all the roads, the dam, the lake and basin, and 36 specific lots by reference to the subdivision plan, but the deed did not reference the disputed property.

In 2002, Lowell and Nancy Starling purchased the Starling tract, which had never been developed. At the time of their purchase, the association used the disputed property for a community bulletin board, to store garbage cans, and for communal purposes. In 2006, the Starlings built a home and moved in.

Almost as soon as they moved in, the Starlings had problems with people fishing, picnicking, sunbathing, socializing, and parking on and around Custer Drive and the disputed property. The Starlings complained to the association of litter in the cul-de-sac and damage to their lawn.

The association initially took steps to address the Starlings’ concerns, including placing boulders and no trespassing signs around the cul-de-sac, but they did not place notices or barriers on the western edge of Custer Drive. Eventually, the association removed the signs since it was not enforcing the prohibition.

The association claimed it owned the disputed property, having acquired it by the 1968 deed. The Starlings disputed such claim, asserting that the Starling tract encompassed the property at the end of the cul-de-sac, essentially wrapping around the end of Custer Drive (the wrap-around theory).

In 2007, the association hosted an Independence Day celebration on the disputed property, which went late into the evening. Numerous vehicles were parked along Custer Drive for the celebration, including fire trucks. The association increased safety patrols of the area to discourage parking on the Starling tract.

The association again hosted Independence Day celebrations on the disputed property in 2008 and 2009. It also promoted fishing on the west side of Custer Drive, but asked fishermen to respect the private property on the other side of the street.

Eventually, the Starlings sued the association for trespass and for a determination that they owned the disputed property. The trial court found that the association owned the disputed property and granted partial summary judgment (judgment without a trial based on undisputed facts) to the association. The Starlings appealed to the Superior Court, which essentially adopted the Starlings’ wrap-around theory and determined that lot 726 encompassed some portion of the disputed property. The association appealed to the Pennsylvania Supreme Court.

The crux of the problem was that the subdivision plan did not clearly show the northern boundary of lot 726, and the lot was conveyed only by reference to the subdivision plan rather than by a metes and bounds legal description. Thus, it was not entirely clear where lot 726 ended and the common area began or whether there was any common area at all.

However, the supreme court found the lot lines more apparent once it applied the rule prohibiting interpretations that produce absurd results. In order for the Starlings’ wrap-around theory to succeed, LMI must not have intended for the line drawn between the cul-de-sac and the waterline to constitute a boundary. If that were the case, then the lot owners at both ends of the peninsula (lots 726 and 1020) would have viable claims in the disputed property since both ends were drawn in the same manner.

The supreme court considered this an absurd result since LMI could not have intended for the Starlings and the owner of lot 1020 to have competing claims in each other’s lot. Thus, LMI must have intended both lots to be bounded by their points of tangency with Custer Drive since that was the only explanation that created ascertainable boundaries for both lots.

The supreme court also determined that the association, as the owner of Custer Drive, could use the road in any manner so long as it did not interfere with the Starlings’ access easement. Accordingly, the superior court’s judgment was reversed, and the case was remanded for further proceedings.

©2017 Community Associations Institute. All rights reserved. Reproduction and redistribution in any form is strictly prohibited.

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Private Club Exempt from ADA

Lobel v. Woodland Golf Club of Auburndale, No. 15-13803-FDS (D. Mass. May 31, 2017)

Federal Law and Legislation: The U.S. District Court for the District of Massachusetts held that a country club was not subject to the Americans with Disabilities Act and did not have to allow a handicapped golfer to use a specialized assistance golf cart.

Woodland Golf Club of Auburndale (club) operated a country club in Newton, Mass. Robert Lobel was a 73-year old avid golfer who was invited to play golf at the club by Gerald Chervinsky, a club member.

Lobel had spinal stenosis and required assistance in walking. Despite his physical limitations, Lobel managed to play about 70 rounds of golf each year using a Solorider, “a specially designed handicapped accessible single rider golf cart with a pivoting and lifting seat which assists a disabled golfer.”

Chervinsky asked the club’s head golf superintendent whether Lobel could play golf using his Solorider. The superintendent responded that the Solorider would not be permitted because it would likely damage the greens.

In July 2014, Chervinsky asked the greens committee chairman for permission for Lobel to play using the Solorider. The chairman responded that the committee had investigated that type of cart and concluded it would damage the golf course. He stated that Lobel was welcome to use the Solorider without going onto the greens or in the bunkers.

In August 2014, the club agreed to test the Solorider’s impact on the greens. Afterwards, Chervinksy was informed that Lobel could use the Solorider on the greens one time if Lobel and Chervinsky signed an agreement promising that Lobel would never attempt to play at the club again. Lobel and Chervinsky declined to sign the agreement.

Lobel sued the club for discrimination under the Americans with Disabilities Act (ADA). Both sides moved for summary judgment (judgment without a trial based on undisputed facts). The club did not dispute that Lobel was disabled, but it disputed that the club was subject to the ADA.

The ADA prohibits discrimination on the basis of disability in the full and equal enjoyment of the “services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.” However, the ADA exempts private clubs that are not open to the public.

Whether an establishment can be considered a private club under the ADA is evaluated using an eight-factor test. The parties agreed that the club satisfied four of the factors. The four factors which remained in dispute were: (1) the genuine selectivity of the group in admitting members; (2) the membership’s control over the club’s operations; (3) use of club facilities by nonmembers; and (4) whether the club advertises for members.

The court found there was genuine selectivity in the admission of new members. Prospective members had to complete a lengthy application detailing education and employment history and describing involvement in social and civil activities. Letters of recommendation from three current club members were required as well as a personal interview.

The club was limited to a maximum of 350 golf members. A $55,000 non-refundable initiation fee and dues and fees averaging $14,000 a year were charged. While the fact that the club rarely denied membership to an applicant might indicate the club’s admission process lacked genuine selectivity, the court held that that one factor alone did not outweigh the other factors.

The court found that the club’s members sufficiently controlled the club’s operations to support private club status. While non-members, such as the general manager, ran the club’s day-to-day activities and made the daily decisions, the club’s members had not relinquished control to such non-member personnel. The members and member-elected board approved all significant operational matters, such as governing document amendments, dues increases, and unusual expenditures. Club members do not need to directly control every operations detail in order to qualify for the private club exemption.

Clubs that advertise and solicit new members do not qualify for the exemption. The club had a website, which allowed the public to request information. It also had a public Facebook page, but the court found that the club’s marketing efforts fell well below the threshold to contradict private status. Selectively attempting to increase membership did not rise to the level of marketing and advertising to the public.

Regular or indiscriminate use of club facilities by the public undercuts private status. The club allowed members to bring guests to the club, but there were limits on the number of guests and the number of times any one guest could come. The club allowed members to host occasional charity events or private functions such as weddings or work parties at the club. The club had also hosted a couple of golf tournaments and invited the general public.

For private events such as weddings or golf tournaments, non-members had no access unless invited by and accompanied by a member. Further, allowing local charities or civic organizations to use the facilities to host public events was not inconsistent with private status. The vast majority of such events were held on days that the club would normally be closed, and the banquet facilities were not available on a first come, first served basis. Rather, the general manager had discretion whether to allow events on the premises.

The court held that the club sufficiently showed that its facilities were not freely available to the public and intended for member use. The court concluded that a club could still remain private without cloistering itself away from the outside world. Finding that the club qualified for the private club exemption, the court held that the club was not subject to the ADA’s requirements. Accordingly, summary judgment was granted to the club.

©2017 Community Associations Institute. All rights reserved. Reproduction and redistribution in any form is strictly prohibited.

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Hearing Notice One Day Late Invalidates Lien

Dwork v. Executive Estates of Boynton Beach Homeowners Association, Inc., No. 4D16-1698 (Fla. Dist. Ct. App. May 24, 2017)

State and Local Legislation and Regulations: The Florida Court of Appeal held that substantial compliance with the Florida Homeowners’ Association Act’s notice requirement was insufficient to entitle an association to impose fines and a lien.

Executive Estates of Boynton Beach Homeowners Association, Inc. (association) governed a community in Boynton Beach, Fla. Jonathan Dwork owned a home in the community.

Over the years, the association notified Dwork many times that he had violated the association’s governing documents by failing to keep his roof and driveway clean and the fence in good condition. In 2013, the association sent Dwork a violation notice by certified mail, informing him that he had 30 days to comply with the requirements.

When Dwork did not respond, the association sent another notice by certified mail providing an additional 15 days to comply. On May 23, 2013, the association sent yet another notice by certified and regular mail informing Dwork that a hearing would take place on June 5th (13 days later), at which the fine committee would consider his violations.

On June 5th, the committee considered the violations and voted to levy fines. Dwork did not attend. The association’s board ratified the committee’s decision on June 25th. Two days later, the association notified Dwork that beginning July 2nd, a $25 daily fine would be imposed for each of the three violations if they were not corrected. Dwork did not respond.

In September 2013, the association demanded that the fines be paid and warned Dwork that it would place a lien on the property if the fines remained unpaid. In January 2014, the association’s attorney notified Dwork that a lien for $8,135 was being recorded against the property ($2,500 for each violation plus fees and costs).

The association then sued Dwork for foreclosure and to collect the outstanding fines plus attorney’s fees and costs. The trial court denied the foreclosure claim since none of the notices complied with the Florida Homeowners’ Association Act’s (act) 14-day notice requirement or the association’s governing documents, thereby rendering the association’s lien unenforceable. Nonetheless, the trial court awarded the association damages for the fines, reasoning that the equities were with the association and against Dwork. The trial court also awarded the association fees and costs. Dwork appealed.

The appeals court held that the act clearly and unambiguously required the association to provide 14 days’ notice—not 13—before fines could be considered, and that the act must be strictly enforced.

The association argued that substantial compliance (the many notices sent previously) was sufficient, and since Dwork had never responded, an extra day would not prejudice him. However, the appeals court held that substantial compliance was not sufficient. The requirement provided the homeowner with time to prepare an adequate defense, and it was not a mere technicality. Failure to provide the required 14 days’ notice deprived Dwork of due process and invalidated the lien.

While the appeals court agreed that the equities certainly favored the association, the act required 14 days’ notice without exception. The association was obligated to comply strictly with the act in order to impose and collect fines.

Accordingly, the trial court’s judgment was reversed, and the case was remanded for final judgment to be entered in Dwork’s favor.

©2017 Community Associations Institute. All rights reserved. Reproduction and redistribution in any form is strictly prohibited.

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