Best of the blogosphere for June 2010

Here, for your early summer reading pleasure, are some of the most thought-provoking pieces from the condo law blogosphere last month. 

Community Needs Cosmetic Surgery -- Mike Inman of the Virginia Condo & HOA Blog suggests a good thought process for boards to follow in deciding whether and how to conduct renovations at their complex.

How to Effectively Run a Board Meeting -- Are you looking for a way to shorten those agonizing board meetings that go nowhere and don’t end?   Try some of the tips offered by Ashley Yorra of Vial Fortheringham and bring order to chaos.

Can Owners View Draft HOA Meeting Minutes? -- The answer is not cut and dry, according to this article on LeClairRyan’s Virginia Community Association Law Blog.

When the Board Should Really Call the Association Attorney – Part I --In a two part series, Donna Berger provides helpful examples about when to call the lawyers. Part II is here.   Don’t be penny wise and pound foolish!

Do Away With Community Directory -- Does any condo still publish an owners’ directory? If so, Ohio condo lawyers Kaman & Cusimano suggest that you rethink the wisdom of that decision.

Smoking in Community Associations -- This topic has grown legs in recent months and will continue to gain momentum.   The folks at HindmanSanchez’s HOA Legi-Slate blog feature a meaty NY Times article on the growing movement to ban smoking in multi-unit residential buildings.

“Smoking and condominium associations” -- Another smoking piece, this one from Patrick Brady at the MEEB law firm in Boston, discusses the developing trends in American lawsuits over smoking in close quarters and gives some insight into the state of the law on this growing issue and where it’s going.

Getting the Scoop on that Poop -- CSI comes to Condoland. The blogosphere and Twitter were abuzz last month with the story of the Baltimore condo considering (then rejecting) DNA testing to help identify the source of dog poop on common elements. Lincoln Hobbs of Utah reveals that the idea is not so crappy after all!

HOAs Going Green with a bit of Kicking and Screaming -- In a guest post on the Construction Law Musings blog, Arizona community association lawyer Roger Wood discusses the difficulties of “going green” from the perspective of boards of existing condos and HOAs. Whereas life is easier for the new developments that are built with green technology, existing associations seem doomed to stumble through the conversion process.

How to Deal With a "Crazy" Board of Directors -- After tackling the issue of dealing with crazy owners earlier this year, Daniel Zimberoff at the Northwest Condo and HOA Law Blog turns the tables and shines the light on the boards. 

Goat Dispute Highlights Best Practices for Covenant Enforcement -- Seattle condo lawyer Kevin Britt reminds boards to think carefully when confronted with a potential rule violation. 

Best of the blogosphere for April 2010

It's time once again to sample some of the best condo-related news from the blogosphere.

Spring has different meanings to different people – With winter behind us, it’s time to get to work on the year’s maintenance and reacquaint yourself with your neighbours.   Hats off to the Community Associations Network blog for some pleasant seasonal tips!

Owner posts website about his HOA problems and gets sued – The title says it all.   Check out the story and follow the links to the offending website to see what all the noise is about and whether you can get to the bottom of the million dollar question... oops, I mean “lawsuit.”

Proper Protocol for a Board’s Use of Emails – Everybody and their brother uses email these days and condo boards are no exception. Donna Berger offers some practical guidelines to avoid typical problems arising from condo boards use of email.

Condos/HOAs Have a Lot to Lose if Design Professional Protection Bills Become Law – Imagine if you couldn’t sue architects, engineers or surveyors if their negligence affects your condo.  That nightmare scenario may come true in Florida if legislators don’t give their heads a good shake. Sanjay Kurian sounds the alarm.   

Condominiums and Second Hand Smoke Claims – Mark Wiechnik of Stark & Stark summarizes the leading cases on second hand smoke in condos, including a Canadian case, and offers his prediction of what may result and how those cases might impact condos in New Jersey (and everywhere else!).

Spiteful Conduct by Board Member – This Q&A on the Virginia Condo and HOA Law Blog offers some guidance on the potential liabilities that arise by vindictive conduct of a board member.

 "Not by the Hair of my Chinny-Chin-Chin!" – Is this the answer your manager gets when trying to make entry to a unit?   Check out California lawyer David Swendelson’s suggestions before huffing and puffing.

When Condo Fires Strike...... – Lawyer Stuart Lieberman recites some of the considerations that come to mind when you put “fire” and “condo” in close proximity to each other.

Keeping Your Association Afloat: Implementing Hardline Collections Tactics – Effective collection of common expenses is critical.   Sarah Lappin at the Vial Fotheringham blog suggests that misguided soft-heartedness shouldn’t be allowed to destroy your condos finances.  

CMCA Program Achieves National Accreditation – The Community Associations Institute announces on their Ungated blog that their professional designation for community association managers (“CMCA”) has received special national recognition. Congratulations to CAI on this achievement!

The Challenge of Structural Distress in Aging Buildings – Florida condo construction litigator Alan Tannenbaum warns that most Florida condos are unlikely to meet the 50-year lifespan predicted by studies. He offers advice on how to stretch out those years.

Lenders and Squatters Accessing Homes Prior to Foreclosure -- Daniel Zimberoff of the Northwest Condo & HOA Law Blog highlights a common problem facing American community associations in areas where the housing market crisis shows no signs of abating.

5 lessons from Calgary condo fire

This month’s news featured a horrifying story of a serious fire at the Millrise, a 159-unit condominium building in Calgary.   Luckily, no one was seriously hurt, but 300 people are homeless and the 3-story wooden building was subsequently condemned by the city as uninhabitable. 

We carried the following related news articles on our microblog, some of which feature video footage of the fire and resulting damage:

Calgary condo built in 2008 condemned to demolition after major fire - (via CTV Calgary): http://bit.ly/9KtVOP

Burned-out condo likely to be rebuilt, but not all owners/occupants insured their possessions - (via @calgaryherald) http://bit.ly/9lQ1KZ

Cigarette in balcony flower pot started blaze destroying 159-unit wooden condo bldg; 300 homeless - (via @Calgarysun) http://bit.ly/blILwN

No plans to rebuild yet, but unit owners at burned-out Calgary condo must still pay their mortgages (via CTV Calgary) - http://bit.ly/cTRIo7

Owners at fire-gutted Calgary condo to hear reports then vote on rebuilding; work will take a year (via @660News) - http://bit.ly/9HcYuj

The Millrise condo was built a year before Alberta’s Building Code was amended to require installation of sprinklers in the attics and balconies of similar buildings. The building was built to the standards in the 2008 Building Code. As such, it did not contain sprinklers in the attics and balconies which, according to Calgary’s Chief Building Official, would have made a big difference in extinguishing this fire before it could get out of hand. 

The news articles also revealed that many of the 300 owners and occupants lost their worldly possessions and many people didn’t have proper insurance. All of them lost their homes and now face the unusual situation of deciding whether to rebuild the condo or terminate the corporation, divvy up the insurance money and walk away.   Unless the owners are of the same mind, a court application is probable, which will add to the cost, delay and frustration.

In Ontario, a condominium corporation that suffers massive damage must follow the procedure set out in section 123 of the Condominium Act, 1998.    Thankfully, the section is not needed often since there have been few or no cases where it has come into play. Since it’s not a well-known section, here is the full text:

Termination upon substantial damage

123.  (1)  The registration of a notice under subsection (7) terminates the government of the property by this Act.

Definition

(2)  In this section,

“substantial damage” means damage for which the cost of repair is estimated to equal or exceed 25 per cent of the replacement cost of all the buildings and structures located on the property.

Estimates of damage

(3)  If damage occurs to a building or a structure located on the property that, in the opinion of the board, may constitute substantial damage, the board shall have at least two persons, who shall have no affiliation with the board and who, in the opinion of the board, are qualified, make estimates of the damage within 30 days after the occurrence of the damage.

Determination by board

(4)  The board shall determine whether, based on the estimates, there has been substantial damage.

Notice of determination

(5)  If the board determines that there has been substantial damage, it shall give notice of its determination to the owners.

Contents of notice

(6)  The notice shall specify that,

(a) the owners have the right, in accordance with section 46 and within 30 days of receiving the notice, to requisition a meeting of owners; and

(b) the board is required to register a notice terminating the government of the property by this Act if the condition described in subsection (7) is met.

Vote for termination

(7)  The board shall register a notice terminating the government of the property by this Act if the owners of at least 80 per cent of the units, at the date of the vote, vote in favour of termination.

Form of notice

(8)  The notice shall be in the form prescribed by the Minister and shall be signed by the authorized officers of the corporation.

Time of registration

(9)  The board shall register the notice within 30 days of a vote in favour of termination under subsection (7).

Repairs if no termination

(10)  If there is no vote in favour of termination under subsection (7), the corporation shall, within a reasonable time, repair the damage to the building or structure located on the property.

Note that the threshold for terminating a condominium is a tough one – the owners of 80% of all of the units must vote in favour of termination.   If that threshold is not met in a case where a condo suffers substantial damage, then the corporation must repair the damage “within a reasonable time.”    Owners could be out of their units for a long time.

Consider also whether there may be difficulty serving notice of the board’s determination under section 123(5) in a case where residents are forced to live away from the building.   How could you practically serve the requisite notice so as to get a high level of participation at a special meeting for a termination vote when the owners of a large condo are out of their home due to a fire or catastrophe?   In such a case, management would need to think quickly and devise a special register to collect owners’ contact details.

One of the major factors that would likely decide the vote about whether to terminate a condo corporation is whether there is sufficient insurance money to repair or rebuild the place.  If the insurance is inadequate, the unit owners would need to pay the shortfall to repair or replace the building. This would create an even greater burden on owners who would already be paying for temporary lodging and still paying their mortgages.  Most owners in this situation would probably prefer to terminate the condo and take their share of the corporation’s assets, as per section 129 of the Act.   Owners would likely be even more inclined to terminate if it would take several months to restore the building to move-in condition. At the Millrise condo in Calgary, it’s expected to take a year to complete the necessary work for condo residents to return home. A year!

Here are five lessons that we can take from the Millrise condo fire story:

  1. Owners: Check whether you have properly insured yourself for the loss of use of your home and to repair/replace your unit improvements and personal possessions. We talked about this issue in detail in a previous blog entry here.
  1. Boards: Get an updated insurance appraisal for your building, particularly if it’s been a while since the last update. Remember that the HST is going to increase the cost to replace your building after July 1, 2010, so this year is a perfect time to get an updated appraisal. 
  1. Boards: Devise a disaster recovery plan so that the condo board and management can get back to work quickly after a catastrophe. Have off-site electronic backups of the critical information such as condo documents and drawings, contact lists, insurance policies and common expense collection ledgers. 
  1. Smokers: Use your brains -- extinguish cigarettes completely and safely.   You would probably prefer to avoid the guilt of putting all your neighbours into the street like the guy in the news story.
  1. Boards and Owners:   Make sure your fire prevention systems and measures are up to date and in compliance with the provincial and municipal codes. The Board should make sure that common elements are sufficiently protected and that such devices are routinely maintained and owners, if it is their responsibility, should ensure that their in suite alarms/extinguishers are properly maintained.  

Court of Appeal smokes the "private club" defence

Anyone still trying to circumvent Ontario’s anti-smoking laws by operating as a “private club” should consider this recent advice from our Court of Appeal: Don’t bother.

In Kennedy v. Leeds, Grenville and Lanark District Health Unit, 2009 ONCA 685 (CanLII), the court upheld convictions against the operator of a Smith Falls sports bar who tried to operate the place as a private club. “Members” paid monthly dues of $4.00 and submitted application forms saying that they didn’t mind second-hand smoke. The “club” was reported as having more than 500 members.

The local health unit received a complaint in September 2006 and sent an inspector to investigate. He found no “no smoking signs” and found ashtrays on tables and saw patrons smoking in the place. The proprietor then tried to bar the inspector from making further entry and was himself observed walking out of the place while holding lighted tobacco. This led to the proprietor being charged with a number of offences under the Smoke-Free Ontario Act (“SFOA”).

The SFOA came into force in May 2006. It prohibits, among other things, people from smoking or holding lighted tobacco in “an enclosed public place.” It also requires the proprietor of “an enclosed public place” to post “no smoking” signs, remove ashtrays, warn and then eject violators, and so forth.

After a trial before a justice of the peace, the proprietor was convicted on all counts. The central issue at trial was whether the proprietor’s bar constituted “an enclosed public place.” The court found that members of a private club were still members of the public and thus the bar came within the definition of “enclosed public place.” The proprietor was consequently found in breach of the SFOA and was ordered to pay a fine of $3,500.

The proprietor appealed the conviction. In dismissing that appeal, a judge of the Ontario Court of Justice considered a ruling in another case where the Court of Appeal found a condominium’s swimming pool to be a “public swimming area” even though its use was restricted to the 8,000 members of the condominium community. The judge also concluded that it was reasonable for the justice of the peace to find that the members of the proprietor’s “club” were still members of the public. (This goes to show that smokers are people, too!)

Not to be deterred, the proprietor appealed further to the Ontario Court of Appeal. That court had no difficulty in finding that private clubs are not exempt from the SFOA. In considering the purpose of that Act, the Court of Appeal found that:

Read as a whole, the Act is clearly designed to eliminate smoking in public places and thus protect members of the public from contact with second-hand smoke. The word “public” is not defined in the Act. There is no attempt to limit or restrict its application in any way. As I see it, people who join the club are as much members of the public as are members of a swimming club or tennis club.

The court also found that if the legislature had intended to exempt private clubs from the application of the Act it would have done so.

With this, the appeal was dismissed and the conviction was upheld. This decision now effectively destroys the “private club” defence.

For condominiums, the “private club” defence never offered any real protection from the operation of the SFOA to begin with. Section 9 of that Act provides, in part, as follows:

9(2). No person shall smoke or hold lighted tobacco in the following places or areas:
. . .

3. Any common area in a condominium, apartment building or university or college residence, including, without being limited to, elevators, hallways, parking garages, party or entertainment rooms, laundry facilities, lobbies and exercise areas.

. . .

9(6). Every proprietor of an enclosed public place or a place or area mentioned in subsection (2) shall,

(a) ensure compliance with this section with respect to the enclosed public place, place or area;

(b) give notice to each person in the enclosed public place, place or area that smoking is prohibited in the enclosed public place, place or area in accordance with the regulations, if any;

(c) post any prescribed signs prohibiting smoking throughout the enclosed public place, place or area, including washrooms, in the prescribed manner;

(d) ensure that no ashtrays or similar equipment remain in the enclosed public place, place or area, other than a vehicle in which the manufacturer has installed an ashtray;

(e) ensure that a person who refuses to comply with subsection (1) or (2) does not remain in the enclosed public place, place or area; and

(f) ensure compliance with any other prescribed obligations.

Section 9(2) leaves no doubt that smoking is entirely prohibited in all common areas of a condominium in Ontario.

It is equally clear that condominium corporations must comply with the requirements of section 9(6) on the basis that they are the “proprietor” of the common elements, which are places or areas specified in section 9(2). After all, condo corporations have a duty under section 17(2) of the Condominium Act, 1998 to “control, manage and administer the common elements and the assets of the corporation.”

While it may be tempting, unit owners who observe unlawful smoking in or around their condominium would be wise not to rat out the offender to the local health unit. Complaints should be made instead to the condo manager or board, who should then take steps to warn the offender and to ensure compliance with the SFOA. Making complaints directly to the local health unit may have the unintended result of charges being laid against the condo corporation, which can result in hefty legal fees and possible fines that are paid from common expenses.

The cost of failing to comply can be steep: A corporation convicted of breaching section 9(6) of the SFOA for the first time is subject to a maximum fine of $100,000. For second and subsequent convictions, the maximum fine is $300,000. An individual caught smoking in a restricted place is subject to a maximum fine of $1,000 on the first conviction and $5,000 on subsequent convictions.

Some people speculate that smoking will be banned in high-rise condo units one day, seeing as how vibration, sound and smell travel so readily from unit to unit in such buildings. That day may not to be far off, given that the anti-smoking movement has grown considerably more powerful in recent years while smokers’ “rights” are being marginalized. Consider, for instance, the 2008 enactment of section 9.2 of the SFOA, which prohibits smoking in a vehicle when accompanied by a person under age 16. When it comes to smoking, the “king of your own castle” concept is already under assault.

A complete smoking ban in condo units will likely arise once the civil courts begin routinely awarding damages in favour of non-smoking unit owners who sue their chain-smoking neighbours. Such a lawsuit was recently filed in New York City and has survived the first round of challenges by the defendant. See here. With society’s growing intolerance for tobacco smoke, it is probably just a matter of time until trial judges consider smoking to be a nuisance in the same way as pollution, flooding, loud noise or noxious odour. Once that precedent is set, condo corporations will have greater success in enforcing the typical “no nuisance” rules against smokers and in passing specific "no smoking" rules that will be upheld by courts as a stop-gap measure until a legislated ban is enacted. 

Condo dwellers who still smoke might consider making a new year’s resolution to quit the habit.