Here is a story of the joys of being in a Homeowners Association. It's a good thing they aren't all like this.
When a homeowners’ association board of directors misuses its authority, it can have costly consequences as some Redmond, Wash. residents are learning.
In a dispute about a fence color at a townhome community, an arbitrator ruled in favor of homeowners Marc and Kristina Weiss, resulting in an expense of more than $83,000 for residents of Sammamish Forest Manors (“SaFoMa”), a community of 167 homes.
After a three-day hearing and subsequent review of a series of briefs and documents supplied by both the plaintiffs and defendants, the arbitrator awarded the plaintiffs $39,560.87 for their attorney fees and costs. In his ruling he determined provisions of the Association’s Covenants, Conditions and Restrictions (CC&Rs) pertaining to such fees and costs are “unilateral award provisions and as such have been superseded” by state law (RCW 4.84.330).
The association incurred an additional expense of more than $42,000 for its own attorney fees and costs. When combined with the award to the plaintiffs, the total tab means a 12-foot section of a 46 foot T-shaped fence that cost around $400 in materials is theoretically valued at more than $83,000. The “objectionable” section that faces the street measures around 12 feet – now equaling around $6,800 per lineal foot.
“This case presents an egregious example of a few members on a homeowners’ board abusing and misusing their authority,” said attorney Malcolm S. Harris, who represented the Weisses. Harris, a partner at the Seattle firm of Harris, Mericle & Wakayama, PLLC, also believes the board acted in an “arbitrary and capricious nature” in its treatment of the couple.
In decisions issued on June 14 and Aug. 15, arbitrator Jerome O. Cohen of Seattle found the board had no authority to require the Weisses to recolor their fence (for a third time) and ordered the board to reimburse them for reasonable attorney fees and costs.
In the same ruling the arbitrator ordered the removal or reversal of charges for “late fees” and “late fee interest” that had been applied to the Weiss’ “Occupant Ledger” and directed the property managers to prepare new ledger pages showing only authorized charges.
The dispute dates to 2003 when the Weiss couple and a neighbor built a T-shaped cedar lattice fence to enclose their entry courtyards after obtaining approval from the association’s Architectural Control Committee. Such approval is required by the association’s CC&Rs.
The architectural committee granted permission for the fences to be built, but “for no apparent reasons,” denied the request to install gates. The Weisses appealed that decision to the full board, as allowed by association regulations. At a December 2003 meeting, the board approved a motion to allow the gates.
Marc Weiss, who is an architect and a past president of the SaFoMa board, testified he applied a natural cedar colored stain to the fence after discussing the color with the chair of the architectural committee. The question about color arouse in October 2003 when three homeowners complained to the chair of the architectural committee about the natural color. Questions about the color arose again at the December 2003 board meeting when a few members of the audience commented the “caramel” color that was used was too dark. During discussion, Mr. Weiss voluntarily agreed to attempt to lighten the color.
Although there was discussion about staining the fence a lighter color to match the color of the unit, the board secretary who took the minutes testified it was merely discussion, “not part of the motion.” There was no requirement during the meeting or in the motion to use a color called “pina colada,” which the board subsequently demanded be used.
In the fall of 2005, the board consulted the association’s attorney on the matter and began incurring expenses for attorney fees. The board also concluded it had the right to charge those fees to the Weisses. The Weisses later discovered their account had been charged more than $17,000 in attorney fees and were considered “delinquent.” Upon learning of the charges, they refused to pay. The board then threatened to foreclose the board’s “lien” on the Weisses home.
In an unrelated matter, the association received a substantial sum of money from the settlement of another lawsuit. Proceeds were distributed to members of the association, but the Weisses’ share was withheld and applied to their “delinquent account,” which attorney Harris called a “blatant act of conversion.” The Weisses were also told their votes for the election of officers at the annual homeowners meeting would not be counted because the board had declared them delinquent.
According to legal briefs filed in connection with the case, the Weisses on several occasions demanded to know how much had been charged to their “account” for the association’s attorney fees, but “the board and its management company steadfastly ignored those requests.”
In August 2006, Marc and Kristina Weiss commenced an arbitration request, under provisions of the association’s governing documents and state laws. In his arbitration brief, attorney Harris stated, “We want the arbitrator to understand that, although the Weisses initiated this arbitration, this whole controversy has been initiated by the actions of a few board members who seem determined to carry out a vicious campaign of harassing the Weisses.”
In his ruling, the arbitrator concluded the caramel color used by the Weisses was an appropriate color: "It is the arbitrator's conclusion that the color used by the Weiss's in re-staining their fence was so close to the color of their unit that the difference was not distinguishable upon reasonable observation"
The arbitrator also concluded the association’s board “improperly converted the Weiss’s funds” from the proceeds of the unrelated lawsuit settlement, and ordered those funds plus interest be remitted to the Weiss family. (“Article 17 does not allow the Association to assess attorney fees against a Homeowner until an adjudication has been made that the Homeowner is in fact in violation of the CC&Rs or Rules and Regulations. No such adjudication had been made at the time the Association withheld the funds, therefore the Association improperly converted the Weiss’s funds.”)
Other rulings by the arbitrator included:
<!--[if !supportLists]-->· <!--[endif]-->“The request for fence and gate made by Mr. & Mrs. Weiss was in conformance to the requirements of the CC&R’s and the policies established by the Board to maintain architectural uniformity.”
<!--[if !supportLists]-->· <!--[endif]-->“The specific color of the fence was not an issue at the time the fence was initially approved by the ACC. The caramel color used by the Weiss’s was an appropriate color. The caramel color was contained on one version of the paint schedule and it had been used on fences in SAFOMA previously.”
Under arbitration provisions, the decision is binding. Each party agreed to split equally the arbitrator’s fees. The arbitrator also found that the plaintiffs, as homeowners at Sammamish Forest Manors, must pay their “proportionate share of any amounts assessed against any other homeowners in pay for the costs of this litigation.”
At a special meeting on Sept. 20, the board of directors presented two options to homeowners. Members of the association approved a proposal to immediately pay the Weiss attorney fee from a reserve account. A second proposal, for a special assessment of approximately $83,500 ($500 per homeowner) to cover all legal fees (including the association’s plus the award to the Weisses) failed to get the number of votes needed for approval.
In addition to the association’s attorney, board members Bob Anderson and BJ Martindale represented the board of directors at the arbitration hearing, which spanned three days. Both Anderson and Martindale have since resigned from the board and the Martindales have sold their home in Sammamish Forest Manors.
Skidoodleski
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