Mediation Can Defuse Disputes with Owners

Owners in condominium and homeowners associations that view their boards as biased or oppressive often complain that there is no way to challenge the board other than expensive litigation. The intervention of a neutral party that is not a member of the association can cause unhappy owners and boards to see each other in a different light.

Mediation may be helpful if an owner is calling the board's impartiality or honesty into question. The mediator will listen to the board and the owner and try to help them understand the other side's point of view and the strengths and weaknesses of both positions. A mediator that raises the possibility that the board is merely trying to fulfill its obligations to the best of its ability can convince the owner to grudgingly conclude that the decision at issue is within the board's authority (even if the owner would have reached a different decision).

There are many local organizations that offer free or low cost mediation. The King County Dispute Resolution Center provides mediation services to the general public. The University of Washington School of Law's mediation clinic is another option worth exploring.

Using Board Meeting Minutes to Communicate with Owners

Condominium and homeowners association boards should strive to communicate effectively and often with owners. One of the main causes of discontent in such associations is boards that do not tell the owners what they are doing. Distribution of board meeting minutes is an excellent way to keep owners informed.

Board meeting minutes should reflect the meeting date, the persons that attended the meeting, the status of the previous meeting’s minutes, the general nature of each topic discussed at the meeting, and actions taken by the board. It is not necessary to record the comments or views of individual board members. Meeting minutes should be signed by the person that recorded them.

Many owners want to know about the decisions the board is making on their behalf, and sending them a regular stream of information about board activities reduces the potential for unfounded accusations and conflict. Making board meeting minutes widely available can also help boards better understand the wishes of their communities.

Fair Housing Act Requires Boards to Accommodate Disabled Residents

The Fair Housing Act requires condominium and homeowners associations to make reasonable accommodations for persons with disabilities to allow them to use and enjoy their homes. Any necessary modifications to the property should be performed at the disabled person’s expense. If an association refuses to make a reasonable accommodation, federal agencies can get involved to enforce the law and levy penalties.

In August, the U.S. Justice Department announced a $35,000 settlement with the Valley View Apartments in Longview, Washington. A handicapped tenant had asked to use two adjacent parking spaces until a handicapped-accessible space became available. The association refused to grant this request and began eviction proceedings. This proved to be a very expensive course of action when the tenant fought back with a complaint alleging discrimination against disabled persons in violation the Fair Housing Act.

In September, an administrative law judge ordered the Astralis Condominium Association in Carolina, Puerto Rico to provide accessible parking spaces to two disabled residents and pay $25,000. The judge determined that the association violated the Fair Housing Act by denying the residents’ request to use available handicapped-accessible parking spaces near their unit. The judge also concluded that the association harassed the residents by placing stickers on their car windows and filing a lawsuit to prevent them from using the handicapped parking spaces.

Responding to fair housing complaints can be expensive and stressful even when no misconduct has taken place. Boards should work with disabled residents when those individuals seek to modify the property to suit their needs, and boards should preserve written evidence of their efforts to do so. It may be possible for a board to identify alternative solutions that are less disruptive to the other owners than the original proposal.

FHA Update - Many Condominiums Will Lose Approved Status Next Month

The Department of Housing and Urban Development (HUD) recently postponed the effective date of its new requirements for Federal Housing Association (FHA) condominium loans until November 2. According to a number of real estate professionals, HUD has also clarified that only condominiums that were placed on the FHA approved list on or after October 1, 2008 will remain on that list on November 2. Condominiums that were placed on the FHA approved list before October 1, 2008 will lose their FHA approved status on November 2, and they must reapply under the new requirements to get it back.

Some (perhaps most) of the Washington condominiums currently on the FHA approved list will unfortunately not be able to meet the new standards. The requirement that no more than 15% of the unit owners can be more than 30 days delinquent will make a large number of condominiums ineligible. The requirement to have a current reserve study, update it annually, and fund at least 60% of the amount specified in the most recent reserve study will keep many condominiums from qualifying. The requirement that at least 50% of the units must be occupied by their owners will further limit the number of condominiums approved.

Once HUD’s new requirements take effect, all condominiums’ initial FHA approvals will expire after two years. Condominiums must then complete a re-certification process every two years to maintain their FHA approvals. This process often involves a large investment of time to collect information and produce documents. Boards will have to weigh the desirability of FHA loans against the cost of preserving access to them.