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New England 2011 Legislative Roundup Statehouses Tackle Issues from Finances to Flags to Clotheslines

Many of the issues contained within legislation in the 2011 session concern governance and membership rights during a time of economic stringency. They range from Maine’s regulation updates, and measures to alleviate foreclosure impacts, to efforts in Connecticut and Massachusetts to confine differences between residents and board associations to the condominium forum, rather than add government regulations.

In Vermont, unit owners in small condominium developments are seeking relief from the expense of installing fire and carbon monoxide monitors designed for larger public housing. In New Hampshire, a veteran’s right to fly the U.S. flag has been upheld, and in Rhode Island, intrusions into common space were on the table.

The following issues may be resolved, or dismissed, as each state’s legislature draws to an end:

Maine

LD 1332 would amend the 30-year-old Maine Condominium Act to provide better guidance to condo associations on governance procedures and membership rights, and takes steps to improve the financial stability of associations during foreclosures.

The act has not been substantially altered over the years, says Bruce McGlauflin of Petruccelli, Martin & Haddow of Portland, who serves as co-chairman of the Maine Legislative Action Committee for the New England chapter of the Community Associations Institute (CAI-NE). “Much has occurred and changed in the interim, and it is high time for an update of the Maine Condominium Act,” he says.

Its provisions address best practices for association governance and member rights; clarify a member’s right to receive notice of and to participate in board meetings; authorize boards to establish reasonable rules for regulating meetings and to hold executive sessions; and clarify the association’s obligations to maintain records and a member’s right to obtain those records, subject to exceptions for confidentiality.

LD 1332 also addresses provisions that no longer serve associations or membership adequately—such as the mediation process before foreclosure. Lawyer Joseph Carleton, co-chairman of the Maine LAC, says current law is ambiguous as to whether it applies between the bank and condo owner or the association and condo owner being foreclosed upon for non-payment of monthly fees.

In conjunction, delinquent members’ rights to services may be limited to essentials, the committee reports. “To ensure the financial well-being of the association, the amendment would … give the association the ability to recover foreclosure expenses and assessments for six months of common expenses.”

Supporters argue that this change benefits lenders, in that a financially-stable association is able to maintain the property, protect the banks’ collateral and attract more buyers and borrowers. “When a condominium unit is in foreclosure, the condominium association usually receives no payments on the delinquent unit,” McGlauflin explains. “Nevertheless, it must continue to provide insurance on the unit, perform maintenance and improvements on roofs, siding and other common elements, plow snow, and sometimes even pay for heat and utilities if the unit is abandoned. In some cases, this can go on for years during the foreclosure process.”

While most of this is non-controversial, lenders may oppose the six-month priority lien, resistant to legislation that would alter the first priority of a first mortgage. Similar legislation, however, has passed in five other New England states. A hearing before the Joint Committee on Judiciary was scheduled for early May.

Massachusetts

This legislature has a barrelful of bills in committee, many of which won’t emerge this year. Two of them hang on the returning issue of clothesline use: S589 and S1014. Matthew W. Gaines, a lawyer with Marcus, Errico, Emmer & Brooks, PC in Braintree, and a member of the CAI-New England’s Legislative Action Committee for Massachusetts, says one dictates that an association can’t prohibit line drying, while the latter excludes condominium common areas from drying.

He’s for exclusion, and for decisions that are made by associations, not state law. Gaines says S589 doesn’t make sense, as it doesn’t take location realities into consideration. “Where on Beacon Hill would you put a clothesline? It’s well-intended, but not workable for a lot of condominiums in Massachusetts,” he says.

S372 and H1248 seek to establish a commission regulating condominium regulations, but they’re not, Gaines says, well drafted—seeking to include attorneys for individual condo clients but not those representing property owners associations. “Each side is trying to exclude the other,” he says. “We need to have everyone at the table who should be at the table.”

In general, a lot of these bills come from individuals unhappy with the decisions of their boards or unwilling to accept majority decisions, who then go to a legislator for satisfaction. The legislator, seeking to please a constituent, files a bill.

Bills on the docket mainly concern openness and transparency of board operations; they’re generally scheduled for debate June 14. “We don’t really support any of them,” Gaines says. “The majority of these bills are dealing with isolated incidents. It’s difficult to dictate how all condos should operate under one system. The problem is dictating by law how a condo has to operate.”

He points to the unfairness of one law impacting small and large developments equally. “So then you have to have a separate set of laws; it doesn’t make sense. All condos are different, and there is already an avenue—you can amend your condominium laws, not make a state law out of it. If people won’t get behind it, then they’re not that disturbed by it; the majority isn’t upset.”

One bill in particular, H3356, sponsored by Representative William C. Galvin, D-Canton, reached the legislative floor at the request of longtime homeowner and community association advocate Warren Ross. Ross says he petitioned legislators to get this on the docket because of a situation at his own condominium where it became difficult to hold a proper meeting because of lack of a quorum. The bill would amend Section 23 of Massachusetts General Laws Chapter 183A to lower the percentage of owners necessary in attendance or voting by proxy. It reads: “A condominium association or organization of unit owners may hold a legal annual condominium association meeting with at least 25 percent of the unit owners present or voting by proxy at such meeting and any vote taken at such shall constitute a legal and binding vote.”

Previously, Ross says, you needed 50 percent or more majority depending on your governing documents to get anything passed or voted upon, and it was impossible to get such a turnout. “This is something that has always unnerved me. Not being able to hold a legal meeting. This is extraordinarily significant legislation to improve the lives of homeowners in community associations,” Ross says.

The bill will be before the Housing Committee for a formal hearing on June 14.

Rhode Island

CAI-NE’s Rhode Island Legislative Action Committee has re-submitted a bill which passed the Ocean State’s House in 2010 but died in the Senate for reasons unrelated to the bill itself. The bill allows a board to allocate portions of the common use areas for limited use by an individual, subject to approval by immediate neighbors and the association. This makes some long-standing intrusions on common space—like a garden or the length of a deck—subject to approval more readily than present law, which requires 80 to 100 percent of residents’ approval.

“You can’t get 100 people to agree that the sky is blue on a sunny day,” says Frank A. Lombardi of Goodman, Shapiro & Lombardi, LLC, a Providence, Rhode Island and Dedham, Massachusetts law firm. Additionally, the unit owner, once approved, has to reimburse the association for a share of the insurance, maintenance or repairs that include his or her unit. When the unit sells, the new owner has to understand the arrangement as well. So it gets complicated, but it’s still preferable to having one out of a hundred co-owners nix a deck or garden out of personal animosity, Lombardi says. “Only the people that really have an interest will have a say in whether that deck should be expanded onto the common element.”

If passed, Lombardi says, the bill will simplify the law and correct 25 years of shuffling back and forth on individual situations. These are generally not intrusive extensions, Lombardi says.

Connecticut

This state’s session ends in mid-June, and while some matters have been taken off the table—like an owner’s liability for a tenant, and a delay in initiating foreclosure proceedings—they could still make a guest appearance as a bill attachment, so condo association proponents remain watchful.

Scott Sandler, chairman of the CAI-CT Legislative Action Committee, represents a blend of unit owners, board members, attorneys, lenders and property managers, “looking at the broad interests of the associations and homeowners.”

A bundle of revisions exist to the Common Interest Ownership Act’s (CIOA) amendments that took effect in 2010. They clarify language surrounding insurance coverage, definitions of negligence (to conform to state law), inspection fees and association rules vs. business operating procedures. These are small, but needed clarifications, says Sandler, an attorney with the Farmington, Connecticut based law firm of Perlstein Sandler & McCracken LLC.

The season’s main conflict surrounds legislation to regulate manager licensing and provide an ombudsman program. The latter is currently at rest, and the Connecticut Chapter of CAI hopes it will remain off the table, as it has been hotly debated between those who represent condominium associations as a whole, and those who represent individual residents. HB6620 was reported out favorably from the Judiciary Committee (43-1) on April 14, without the controversial ombudsman provision attached.

“The ombudsman bill, as proposed, has been anything but balanced,” Sandler said; “it has been a way of giving a forum outside court for unit owners to complain about their associations and put the power of the government behind them in their associations, turning the state’s attorney general’s office into an advocate for the homeowner.”

At odds with this viewpoint is the Connecticut Condo Owners Coalition, a grassroots organization founded last year. CCOC is concerned with residents unable to seek satisfaction when boards are not listening or are abusive, and contends that some board members are “impossible” to replace. The failure to include that provision in the bill troubles the CCOC. CCOC member Steve Russo of Stamford, said, “This was a shortsighted decision by the committee members to water down the original proposed bill by removing the ombudsman and thus a non-court resolution process of complaints by owners that their respective condo boards are violating established common Interest laws, usually with impunity. How many condo owners can afford obtaining legal counsel and the long dragged out resolution by the CT court system to require a board's compliance with the law? This bill substitution removes the much need additional transparency of board's actions and accountability when needed.”

Sandler, however, argued, “that would turn the ombudsman into a judge and jury. … There are much larger issues that need to be addressed in community living than fussing over an owner who has an issue with the board, where the rest of the community isn’t unhappy at all.”

“They want the government to step in and superimpose their will on their neighbors,” he said.

CAI favors alternate dispute resolution, which they believe would be cheaper in the long- and short-run, as well as not involve government in the condo business. “No board member is going to serve with something like that (ombudsman proposal) hanging over their heads,” he says.

CAI remains alert for a reappearance of the ombudsman proposal. “The session doesn’t wrap up until June, so nothing’s dead until it’s over,” Sandler says, explaining that it could reappear in another bill. “It’s being pitched as a pro-unit owner bill, but … it would make it much, much more expensive to live in a community. What association in its right mind is not going to consult with a lawyer each time a complaint is filed? It virtually guarantees that every association out there is going to have to hire a lawyer to defend itself.”

New Hampshire

The State Legislature easily adopted a law to prohibit condominium association rules against flying the American flag outside one’s property. HB132 passed the House and, moved out of the Senate’s Public and Municipal Affairs Committee to also pass in the Senate. This bill adopts the U.S. Flag Code for New Hampshire.

The new law does allow size restrictions on the flag, and its manner of display, described in the law as “reasonable.”

This bill stemmed from a dispute with her condo association by the Gilford, New Hampshire wife of a soldier serving in Afghanistan. It becomes law on Jan. 1, 2012.

Vermont

Very little legislation in the 2011 session is aimed at condominiums.

Rep. William J. Lippert, (D-Chittenden), sponsored H 224, which proposes an exception for small (under 10 units) condominiums under the Uniform Common Interest Ownership Act, defining how owner associations are set up, their responsibilities, liability and voting, etc. The bill was referred to the Committee on Commerce and Economic Development.

Sen. Harold Giard, (D-Addison), sponsored S 39, which was read before the legislature, then transferred to the legislature’s Committee on Economic Development, Housing and General Affairs. S 39 excludes condominiums built before 2004—and not resold since then—from certain fire code safety regulations pertaining to public buildings.

It evolved out of the costly requirement for hard-wired fire prevention and carbon monoxide detection devices enacted on public housing, but somehow extended to even small condo units.

“It’s an interesting and emotional issue,” said Sen. Giard. Stemming from a tragedy in Burlington, Vermont, some years ago, the law is passed without much opposition, even from Rep. Giard. Years later, however, and in the midst of the economic straits affecting most states, residents of a very small condominium complex, with fewer than 10 units in the low- to mid-income range, seek relief from the estimated $1,200 to $1,800 cost of installation.

“They own their own units,” Sen. Giard says. “This is not public housing. I was surprised when condominiums were grouped in that category.”

The bill seeks not to avoid safety protection, he cautions, but to find a more affordable alternative for smaller units.

“To assume that everyone has that kind of money is wrong,” he says. “We’d be driven out of Burlington if we tried to make private homeowners pay to hardwire these things into their homes.”

The chances that this bill will emerge from a swamped economic development committee this year are next to nil, but it will return next year, he said. “We need to have this discussion.”

Ann Connery Frantz is a Massachusetts-based freelance writer and a frequent contributor to New England Condominium.

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