Fulfilling the Duty to Address Dangerous Conditions in Common Areas

The Washington Court of Appeals upheld the dismissal of a negligence action against the City of Seattle in an unpublished opinion issued earlier this month. The case arose when a person fell on an icy sidewalk. The Court first noted that a municipality has a conditional duty to act if it has notice of a dangerous condition and a reasonable opportunity to correct that condition. The Court then decided that the plaintiff failed to satisfy her initial burden of demonstrating that the City may have created or had notice of the icy sidewalk. The Court pointed out that there was no evidence submitted about previous ice complaints at that location or about the length of time ice was present before the fall.

Washington condominium and homeowners association boards should pay attention when owners bring perceived dangers in common areas to their attention. If boards do not properly investigate owners' complaints and fail to take appropriate action to remedy legitimate problems, they leave their associations vulnerable to negligence lawsuits. It is also a good practice for association boards to periodically inspect the common areas to identify hazards before they result in accidents.

When Should Condo and HOA Boards Seek Legal Advice?

A Spokane homeowners association was recently fined $13,500 by the state for illegally burning a boat dock last June. The burning violated Washington state law because it polluted the air with toxic chemicals. It is presently unclear whether the association will appeal the fine.

Boards of condominium and homeowners associations should consult with their association's attorney before making major decisions like removing structures from their properties. An experienced community association lawyer may have identified the law prohibiting the dock burning, recommended a different method of proceeding, and saved the association a substantial amount of money. Boards considering other important matters like contracts with third parties, proposed amendments to the governing documents, and enforcement actions against owners should also give their association's attorney the opportunity to steer them clear of trouble and advise them regarding the best course of action.

Happy New Year to Washington Condos and HOAs!

2010 has admittedly been a difficult year for many Washington condominium and homeowners associations from a financial point of view. Associations have faced unprecedented struggles in collecting unpaid dues or assessments, funding new reserve accounts, and maintaining existing levels of services. It is impossible to know whether 2011 will be a better year for associations' finances, but there are encouraging signs that this will be the case. My office stands ready to assist your association if it is dealing with delinquency issues or needs guidance with regard to any other legal question. We look forward to helping our current and future clients solve their problems and improve their communities in the year to come.

New Law Limits Scope of Red Flags Rule

A new federal law has significantly limited the scope of the Red Flags Rule, a federal law that requires many businesses and organizations to implement a written identity theft prevention program. There has recently been a substantial amount of confusion about whether the Rule imposes new obligations on various persons and organizations (including community associations), and this new law clarifies who must comply with the Rule. The Red Flags Rule now applies to financial institutions and creditors that:

1) obtain and use consumer reports in connection with a credit transaction,

2) furnish information to consumer reporting agencies in connection with a credit transaction, or

3) advance funds to or on behalf of a person, based on an obligation of the person to repay the funds or repayable from specific property pledged by or on behalf of the person.

The third category is apparently intended to cover businesses like payday loan companies that sometimes lend without using consumer reports. Creditors who advance funds on behalf of a person for expenses incidental to a service provided by the creditor to that person are specifically exempted from the Red Flags Rule. Other types of creditors may be required to comply with the Rule if an agency determines that they offer or maintain accounts that pose a reasonably foreseeable risk of identity theft.

The Red Flags Rule does not appear to apply to condominium and homeowners associations under the new law. However, such associations may still choose to adjust their record-keeping procedures to comply with the Rule if they are concerned that it might be interpreted or amended to apply to them or if they want to obtain a heightened measure of protection against identity theft. More information about the Red Flags Rule is available here.

FHA Condominium Recertification Deadline Has Been Extended

The December 7, 2010 deadline for condominiums that were placed on the FHA approved list before October 1, 2008 to obtain the recertification necessary to allow them to maintain their FHA approved status has just been extended. Here are the new re-certification deadlines:

If approved between 1972 and 1985, deadline is 12/31/10.
If approved between 1986 and 1990, deadline is 5/31/11.
If approved between 1991 and 1995, deadline is 7/31/11.
If approved between 1996 and 2000, deadline is 8/31/11.
If approved between 2001 and 2005, deadline is 9/30/11.
If approved between 2006 and Sept. 2008, deadline is 3/31/12.

Condominiums must meet a number of requirements to qualify for FHA approval. For example, they must be at least 50% owner-occupied, and no more than 15% of their units may be delinquent. Their budgets must fund reserve accounts in an amount equaling at least 10% of those budgets. They must maintain property insurance in an amount equal to 100% of the current replacement cost of the condominium and comprehensive general liability insurance covering the common elements as well.

For more information regarding the FHA recertification process, please refer to my past posts on this subject:

New Requirements for FHA Condominium Loans Delayed and Revised

FHA Loans Will Soon Require Ongoing Approval of Entire Condominium

How to Protect Your Condominium’s Pipes From Freezing Temperatures

It’s cold out there, and it looks like it's going to get colder over the next few days. Condominium and homeowners associations in the Seattle area thankfully do not have to deal with extremely cold weather very often, but they should be aware of five simple steps that can help prevent the inconvenience of frozen pipes.

1. Disconnect hoses.

2. Insulate exterior pipes and faucets.

3. Insulate pipes and faucets in attics, basements, garages, and crawl spaces.

4. Drain irrigation and sprinkler systems.

5. Caulk around incoming pipes.

Boards should also encourage owners to leave their taps running slightly on particularly cold nights. If pipes freeze despite these measures, damage can be minimized by promptly shutting off the water until a licensed plumber arrives. Stay warm!

Should Your Association’s Attorney Be a Hired Gun or a Legal Navigator?

Community associations and the owners in them hire attorneys for many different reasons, but they often fall into one of two camps in terms of how they view attorneys’ primary purpose. Some view them as Hired Guns, while others view them as Legal Navigators.

The Hired Gun listens to the stated goal of the client and aggressively pursues that goal without questioning the goal, the likelihood of attaining the goal, or the method advocated by the client to attain the goal. This type of attorney resembles the classic “yes man” found in some corporate board rooms. Clients who want the Hired Gun want an attorney who will charge forward as they instruct with thoughts of nothing but success.

The Legal Navigator seeks to guide the client out of the wilderness it finds itself in by way of the most effective and efficient path. This type of attorney is quite willing to aggressively pursue the client’s goals using its preferred method when the situation calls for it, but he or she will also not hesitate to tell the client that it has made mistakes in the past that require compromise or that its favored plan of action is not the best one under the circumstances. In other words, the Legal Navigator will not shrink from telling clients things that they do not want to hear. In some cases, a well-timed “No” or “I advise a different approach” can result in lower legal expenses and better outcomes.

The “Charge!” approach of the Hired Gun is appealing to many. However, the clients of the Legal Navigator are much less likely to charge off cliffs.