May 20, 2020
Resolving Property Disputes through Mediation
Successful athletes, owners and coaches share a passion for winning. In 2020, ESPN aired a documentary about Michael Jordan’s Chicago Bulls basketball dynasty. Cancellation of professional sports during the Coronavirus is a disappointment to many Americans. Basketball Hall of Famer Steve Nash once said, “Nothing is black-and-white, except for winning and losing, and maybe that’s why people gravitate to that so much.” Attorneys and their clients also love winning, hate losing and look for things in black or white. When a client interviews a potential attorney, they want to know whether the attorney thinks that they can win, what that victory would look like, and what it would take to get there. The attorney is interested in learning what the client’s expectations are, what evidence exists, what the legal issues are and whether the client has the resolve and resources to take the case to trial if necessary. According to Ken Shigley, past president of the Georgia Bar, an attorney should, “Accept only cases you would be willing to take to trial.” The best time to have a “moment of truth” about the wisdom or meritoriousness of a lawsuit is before initial filing. The outcome of litigation is typically harsh for the losing side. Property owners value their sense of control, and submission of a case to a judge or jury means relinquishing control over major questions about the future. These are important considerations in cases among neighbors, HOAs, condominium associations, lenders, landlords, tenants, or contractors. Property and construction cases often include more than controversy over payment of a disputed sum. In property law, parties look to the court to resolve disputes concerning boundary lines, easements, walls shared among townhouses, the validity of legal documents, partition of property among multiple co-owners, injunctions against stormwater nuisances, and so on. After hearing evidence and argument, the court may make findings and rulings contrary to both sides’ legal positions. Whether the property represents an owner’s home, business or investment, there is always a “bigger picture” to their plans, needs and expectations that exceeds the scope of what could be won or lost in court.
Usually it is best for parties to settle the dispute on terms that all can live with. At trial, the judge applies the law to the testimony and documents entered into evidence in the context of the remedies requested in the pleadings. In settlement, the parties’ negotiations are not limited that way. It is not always enough for the parties to work out the terms of settlement simply by discussing the dispute with each other and the lawyers. It can be difficult to arrive at mutually acceptable terms by exchange or emails or letters. Settling disputes requires momentum in negotiations, which is difficult to achieve through emails or voicemails. Matters are in litigation because of pre-existing animosity that gave rise to the seemingly intractable dispute.
Fortunately, there are ways to resolve many legal disputes without the risks and expenses of further litigation or arbitration. Many property or construction cases are suitable for mediation as a form of alternative dispute resolution. In mediation, a retired judge or experienced attorney facilitates settlement negotiations. Some courts have institutionalized mediation programs. For example, in D.C. Superior Court, parties to go through a mediation program before the pretrial conference. The D.C. court mediators are local attorneys with stipends paid for out of the court’s budget. In courts that do not sponsor mediation, parties can obtain it through mediators who charge by the hour. Many judges go on to work as mediators after they retire from the bench.
The mediator does not decide the case or “rule” on any issues. What goes on in mediation is confidential. If the parties do not reach an agreement, then the case continues in court or arbitration. Both sides have the option of leaving at any time if they believe that the mediation is not working.
Mediation makes sense in the context of the coronavirus epidemic and the evolving changes in court operations. Virginia courts are just starting to reschedule in-person hearings and trials in civil cases. Private mediations do not require scheduling by the court or use of government buildings. If the court decides to push the trial date out 6-18 more months, the parties may want to mediate to get it over faster. Some mediators are willing to conduct sessions by remote meeting technology such as Zoom or Webex.
Before mediation, the parties submit copies of lawsuits, contracts, statements, etc. for review by the mediator. Mediation begins with the parties meeting at the court’s mediation center or the offices of a law firm. The mediator will explain how mediation works and answer questions. Mediators ask the parties to sign mediation agreements that spell out the confidential nature of the activity and the fees required, if any. After this, each side will break out into separate conference rooms. The mediator will go back and forth, listening to each side explain the facts, their expectations, and details of the settlement negotiations. It is a good idea to bring relevant documents and files to the mediation to facilitate these discussions. Parties who are well prepared are more likely to get their needs met. Some mediators tell participants that they will share with the other side whatever you share with the mediator, unless someone tells them to keep it confidential. Other mediators have the practice of only disclosing to the other side the confidence that someone expressly authorizes the mediator to share.
Mediation can take several hours. It is common for parties to be in mediation all day. It is a bad idea to schedule other things in the late afternoon or evening with the expectation that the mediation will be successful or abandoned by a set time.
Mediation is valuable in disputes between owners of neighboring parties. In family law, disputes between parents over child custody can be acrimonious. Challenges of shared custody are not placed on hold because litigation is threatened or pending. Sometimes new disputes can erupt during litigation that affect the case or the settlement negotiations. Disputes over boundary lines, easements, party walls, water channels, etc. are challenging in the sense that the parties need to maintain and use their property rights while the case has not yet been resolved. Often, one or both parties want to continue to live there for many years thereafter. Mediation offers a way out of disputes which have the potential to continue for years, even after the judge makes rulings at trial. In disputes between adjoining property owners, there is a value to cases being over in a fashion that is acceptable that well exceeds taking the matter to trial, after which there may be additional conflicts in court or on the premises. In such cases, the parties have interests that go beyond the exchange of money. I believe in exploring use of retired judges as mediators in disputes between owners of adjoining parcels of land. Mediation is also used to resolve disputes between lot or unit owners and their community association boards.
Sometimes the parties lack interest in mediation at the beginning, but later, for various reasons, become less reluctant to negotiate compromises. Mediation only works when both sides are willing to engage in a discussion that entails some compromise.
To be clear, I love winning and hate losing. That said, there is a bigger picture in property disputes than who wins and how big. Art Rooney, owner of the Pittsburg Steelers, once said, “The biggest thrill wasn’t in winning on Sunday but in meeting the payroll on Monday.” Whether they own a 500 square-foot studio apartment condominium unit or a large commercial property, landowners need to think more like Mr. Rooney and less like Vince Lombardy. Property cases are unique because they touch on such basic questions about human relationships, ambitions, and sense of safety. For many owners, mediation is the best route to secure their best interests and get past the current problems.
May 18, 2020
HOA Design Review Application Form
Most homeowners’ associations require owners to submit a Design Review Application Form to approve changes to exterior features of their lots, be it a deck, patio, fence, driveway, or addition. Some even require approval to remove or add trees or change the grading. Owners often misunderstand their rights because the Design Review Application form includes language that obscures the issues or confuses them regarding their obligations to the HOA. The form may not adequately inform them of the criteria that the committee ought to use to evaluate the submission. The application forms provided by the community manager may call for the owner to sign off on things that the HOA does not have any authority to demand. These forms play a prominent role in standardizing the process of controlling what people do with their land or to discourage disputes among neighbors.
Some of my readers may ask whether it makes sense, as a matter of policy, for non-governmental boards or committees to have the authority to make rules or exercise discretion to veto exterior changes to private property. Those are good questions that I have touched upon elsewhere on this blog. The focus of this article is on the interests of a lot owner navigating the HOA design review process or opposing a neighbor’s improper application.
Sometimes, HOA approvals or denials of design proposals resurface years later. These decisions ordinarily become a part of the HOA’s file (to the extent any records are kept) for that lot. Owners ought to pay close attention to the wording of these forms so that they can better protect their own rights in the event of a dispute or to challenge an objectionable application by another member.
Community associations law is about making, changing and supplementation of rules regarding the development, alteration, and maintenance of property, be it a common area or owner’s lot. A developer creates a HOA by encumbering property in the subdivision by recording a declaration of covenants. These contain rules about what lot owners, or the board of directors can or must do to use or maintain lots or common areas. Those rules may be changed by a formal amendment process. Also, the Property Owners Association Act allows boards to supplement the rules in the declaration with an architectural handbook, to the extent that the declaration establishes rulemaking authority. Newer declarations require an owner to first apply to the board or a committee to obtain approval for changes, even where they do not seek a variance from the covenants or rules. The HOA may be exercising discretion that goes beyond applying established general rules to a new application. These committees often seem to be more case-by-case legislating and less like ministerial gatekeeping. Many owners complete, sign, and submit the Design Review Application Form without considering the scope of the HOA’s authority over use and improvement of their property. This is risky since these forms often include requirements inconsistent with, or absent from, the HOA declaration.
Design Review Application forms vary widely from HOA to HOA, but they mostly keep to the same pattern. In Northern Virginia, there is a prominent law firm that represents many HOA’s and condominiums. A variation of the Design Review Application Form they prepared is the one many managers provide to lot owners. This Design Review Application Form is not based on any statewide laws (and it does not have to). Consideration of these forms illustrates how these HOAs exert control over their members.
First, the statements and disclaimers included in the language of the form may not accurately reflect the governing instruments of the subdivision. The text may mislead the lot owner regarding her rights and responsibilities. However, misleading language in the form presents added problems. The lot owner is expected to sign the Architectural Design Review Application form. The owner may later be accused of having waived certain rights that she had otherwise. Legally, the Board cannot force a lot owner to forgo her legal protections or to enhance its own power without the lot owners’ consent. Many HOAs use these little forms to frame issues in a way that is friendly to their own interests.
The Design Review Application Form provides space for the lot owner to summarize the changes. The declaration may in fact leave certain improvements, such as those for vegetation or repairs that will not change the appearance, to be “by right.” Lot owners ought to consider whether any application is necessary at all. To a lot owner with little experience, it may be unclear what level of detail is appropriate. It is common for architectural committees to approve applications that are unwarranted or incomplete or to deny ones that are sufficient. The declaration and handbook may require a specific description of the proposed location, color, design, features, illustrated in a written summary, a marked-up survey plat, a design from a builder or engineer, photographs or drawings of products or materials. To the extent that HOA architectural approval is legally necessary, the owner ought to put in the application what is necessary to fulfil the requirements indicated in the declaration. The owner wants to place himself in a position where, after the project is completed, the work cannot be successfully challenged on the basis that a material aspect of it was not disclosed or identified. From a lot owner’s perspective, the process can discourage or prevent later challenges. It is difficult to accomplish this if the application does not adequately describe the location, materials, style, design, et cetera.
HOAs have reoccurring problems with owners getting approval from the committee on an application, and then after the change is made the neighbor voices a complaint about the result and the lack of notice. The Design Review Application Form also provides space for adjoining neighbors to sign to acknowledge receipt. Often these forms specify that the adjoining owner only signs to acknowledge receipt of the document. The governing instruments usually do not state whether such adjoiner signatures are required as part of the application or what the legal effect is of signing the document and then not opposing the application.
Design Review Application forms typically include “Owner’s Acknowledgements” for signature by the applicant. For example, a form used by many Virginia HOA says,
I/we understand and agree 1. That such approval by the Committee shall in no way be construed as to pass judgment on the correctness of the location, structural design, suitability of water flow or drainage, location of utilities, or other qualities of the proposed change being reviewed.
What does this mean? The application form is required because management deems architectural approval of location, design, and other qualities to be carefully considered before the lot owner may implement them. “Passing judgment on correctness” seems to be whole point. Addition of this item seems odd. I understand that the HOA does not want an owner to come back later and complain that it approved a design that resulted in structural failure or wrongful water diversion. From the face of the document it may be unclear whether the design choices were requested by the owner or dictated by the HOA. To the extent that HOAs use the architectural process to impose design requirements on lot owners, the HOA does not want to be held responsible for liabilities to that lot owner or a neighbor in the event that there is resulting damage or impairment of use or enjoyment. The broad scope of Acknowledgement #1, interpreted generously in favor of the HOA, could mean that the owner applicant could later be asked to change or move the approved improvement. I would disagree with this interpretation because it would render the process meaningless. Owners can address the ambiguity by being specific in their design proposal regarding these issues. They can also provide details in a letter as to why the location, design and other details are chosen (as opposed to other designs or locations) to made it more difficult to challenge. An owner could try not initialing this item or using handwriting to change it. Again, if it is not in the declaration or reflective of common sense then the owner is not legally obligated to acknowledge it.
Another reason to make sure that the design application form and supporting materials are complete and accurate is because if the lot owner doesn’t like the decision of the committee, she may have to appeal to the board or ask the circuit court for judicial review. it is more difficult to achieve a desirable outcome on appeal or review if the application is haphazardly prepared.
Unfortunately, the HOA architectural design review process has gotten out of hand over the years – often it fails to prevent or resolve neighbor disputes, does not succeed in achieving harmonious or attractive effects for the whole neighborhood, or give lot owners a sense that they can rely upon the decisions made by the committee. Many owners discover that they need a professional or experienced person to help them prepare the materials or guide them through the process, or to review what a neighbor is doing with a project that poses a nuisance. If the HOA wrongfully denies an unobjectionable submission or approves an adversarial neighbor’s faulty application, legal counsel may be necessary to bring a timely challenge before the court or board. The assistance of legal counsel may be necessary to avoid waiver or abandonment of rights on procedural or substantive grounds.
May 1, 2020
Virginia Temporarily Relaxes HOA Open Meeting Statutes for Coronavirus
In March 19, 2020, I posted an article entitled, “Do HOAs Have to Meet Openly During the Coronavirus?” This explored how existing community association open meeting statutes might apply during the Coronavirus epidemic. The epidemic has since spread, particularly in the Washington, D.C. metropolitan region and other cities. On March 23, 2020, Virginia Governor Ralph Northam issued an emergency order directing citizens to stay at home, maintain social distancing, and restricting many normal public activities. That is expected to remain in effect for some time. Continuing effects of the epidemic and emergency orders are felt in community associations, particularly high-rise buildings where residents rely upon hallways, stairs, elevators, laundry rooms, and other common areas. Lobbyists representing the community association industry (lawyers, managers, and other HOA vendors) convinced the General Assembly to add community association boards to the list of “public bodies” that now temporarily enjoy relaxed restrictions on making their meetings accessible to their constituents.
These “open meeting” or “open government” statutes exist for good reason. HOA and condominium boards gravitate towards deliberating and deciding in an informal, nondisclosed fashion whereby affected landowners cannot determine what is going on and how they can participate. Normally, “open meeting” protections take the form of in-person, publicized meetings with an opportunity to record the meeting or make comments. For many reasons, there are challenges in translating this “openness” to a hearing conducted on ZOOM or some other audio or video-conferencing technology. However, owners’ interests can also be prejudice if legal or health considerations interfere with the boards ability to meet. As an attorney who represents lot or unit owners in disputes with neighbors or boards, I want the board to have timely, properly conducted meetings so that things can get done.
On April 24, 2020, Governor Northam signed House Bill 29 into law during a special legislative session. The General Assembly added to this budget bill some temporary laws facilitating use of remote meetings for official business. While HB 29 is in effect, when the Governor declares a state of emergency, any public body, including the governing boards of community associations governed by the Condominium Act or Property Owners Association Act may meet by technological means without a quorum physically assembled at a brick-and-mortar location. This relaxation of legal requirements only applies to the Board of Directors. HB 29 says nothing about committees, association architectural review boards, or meetings of the members at large. Many people will be confused by this and mistakenly believe that this confers substantive or procedural powers on community association boards that it does not. This blog post is to push back on any false “We can do whatever we want” viewpoint.
HB 29 says that they may only meet in such a fashion if,
(i) the nature of the declared emergency makes it impracticable or unsafe for the public body or governing board to assemble in a single location;
(ii) the purpose of meeting is to discuss or transact the business statutorily required or necessary to continue operations of the public body or common interest community association as defined in § 54.1-2345 of the Code of Virginia and the discharge of its lawful purposes, duties, and responsibilities;
(iii) a public body shall make available a recording or transcript of the meeting on its website in accordance with the timeframes established in §§ 2.2-3707 and 2.2-3707.1 of the Code of Virginia; and
(iv) the governing board shall distribute minutes of a meeting held pursuant to this subdivision to common interest community association members by the same method used to provide notice of the meeting.”
Of these four, (ii) raises the most questions for associations. First, does this mean that the HOA or condo board can only carry on “essential” business at these technology-driven meetings or can they conduct any business discussed in the governing instruments? How much deference should boards receive in determining what is necessary or essential? HOA boards typically have issues that they want to get resolved. Often there are directors who view certain things as urgent or important that could easily be deferred until after the epidemic is over. Landowners ought to remain vigilant and not disregard notices or letters from their HOA because the governors stay at home orders are in effect.
Second, under the Condo Act and the POAA, the recorded instruments define what is necessary and lawful for the board of directors. The declaration and bylaws provide the substantive rights and responsibilities of the board and individual owners. They also outline the procedural requirements to schedule and conduct meetings and hearings of the members, directors or committees. HB 29 does not overwrite any substantive or procedural requirements memorialized in otherwise valid HOA or condo governing instruments.
Third, under Virginia law, statutes are interpreted and applied by the courts by a rebuttable presumption that they ought not to be interpreted in a fashion to rewrite a deed or covenant. HB 29 relaxes certain “open meeting” statutes found in the Nonstock Corporation Act, POAA or Condo Act or other legislation. How to reconcile HB 29 with those statutes, and the particular “contractual” obligations found in governing instruments may present thorny legal questions for lawyers, owners, directors and courts to struggle with.
Many boards are adopting rules and regulations that outline temporary protocols for how to handle certain matters during the coronavirus epidemic. However, HB 29 and the “permanent” statutes do not give boards special powers to bypass the legal requirements to amend the declaration without the signatures of 2/3 of the members or whatever other criteria found in their governing instruments. The declaration may not give them the authority to adopt by board vote the language they have chosen in the emergency resolutions.
Item (iv) is also interesting. For many years, HOA and condo boards have been loath to post meeting minutes of director meetings on their websites. But under this temporary legislation, they must make the available to exercise these privileges.
If a HOA or condo board desires to use this statute, they are subject to the following further requirements:
1. Give notice to the public or common interest community association members using the best available method given the nature of the emergency, which notice shall be given contemporaneously with the notice provided to members of the public body or governing board conducting the meeting;
2. Make arrangements for public access or common interest community association members access to such meeting through electronic means including, to the extent practicable, videoconferencing technology. If the means of communication allows, provide the public or common interest community association members with an opportunity to comment; and
The nature of the emergency, the fact that the meeting was held by electronic communication means, and the type of electronic communication means by which the meeting was held shall be stated in the minutes of the public body or governing board.
Notice that this does not require boards to use technology that allows members to make comments, but merely suggests that they do. ZOOM or similar technology has many practical limitations that Americans are becoming more familiar with. I do not like the wording that seems to give HOA boards discretion to determine how much access they want to give their members into what business they are conducting on their behalf. Business conducted in HOA hearings tends to be document intensive.
HB 29 expressly prevails over prior contradictory laws. However, there are many provisions of the Condo Act or POAA that relate to these matters but do not directly “contradict” them. In Virginia, the courts attempt to reconcile seemingly contradictory statutes to give meaning and effect to all provisions. If owners were to seek legal challenge of HOA board action taken pursuant to HB 29, it is likely that the courts would interpret HB 29 in a fashion to avoid overriding existing law except when there is no real other rational way to resolve difficulty in interpretation. HB 29 does not mean that boards get to completely set aside the Condo Act or POAA.
HB 29 does not state whether technologically driven meetings may be used to hear an architectural application, alleged rule violation, or consider other action that directly impacts a member. Can the measures described in HB 29 be used in such an instance if that owner objects or is not permitted to comment or submit materials in respond to director or manager questions? Does HB 29 override the “due process” that owners are supposed to be afforded in rule violation hearings? I think that the answer is “no.”
Many HOA or condo boards already disregard the “open meeting” requirements imposed on them by statute. Some officers or directors with inadequate professional assistance may lead themselves to believe that HB 29 provides them with a mandate to do whatever they see to be expedient during the COVID-19 emergency.
Other boards may decide that HB 29 is simply too much trouble to implement or not worth the hassle and expense of purchasing the technology and training people in how to use it. Remember that most boards meet only once a month.
While the coronavirus epidemic continues and governor emergency orders are in effect, landowners ought to pay close attention to what their HOA and condominium boards are doing and seek legal advice as necessary to protect their rights. There are people, be they rogue unit owners, board members, vendors or other members of the community who may not be above attempting to exploit a crisis to settle a score or for personal benefit.