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Free HOA Law Advice of Solar Companies

Sales associates for solar energy companies get excited every time the general assembly changes the laws facilitating new solar energy systems. Some of them print out copies of the statutes to hand to homeowners with doubts whether their HOA would allow them to install solar energy systems. But be careful about the Free HOA law advice of solar companies. Salespersons for solar energy companies are not reliable interpreters of community association laws. The addition of solar panels in residential communities can be controversial when the legal reforms come years after the developer recorded covenants that impose restrictions on such systems. Some people view solar energy systems as desirable; others see them as an eyesore, many do not care one way or the other. Personally, I don’t own any but think that they are a good thing. What should a homeowner do if she wants to buy solar panels but the HOA leaders and the company’s reps are saying different things about the legalities?

The Virginia Property Owners Association Act contains amendments regarding solar collection equipment that are similar to HOA laws in other states. The statute reads, “No association shall prohibit an owner from installing a solar energy collecting device on that owner’s property unless the recorded declaration for the association establishes such a prohibition.” Va. Code § 55.1-1820.1(B). The recorded declaration is the central governing document that the courts treat as the “contract” between the lot owners and the boards and committees of the HOA. How could a HOA enforce such a prohibition if the declaration did not provide such? The POAA also allows the HOA board to adopt rules and regulations governing the use and improvement of lots in the subdivision, if the declaration so allows. So, what happens if a HOA tries to restrict solar panels through architectural handbooks or other resolutions? This POAA amendment goes on to say that “However, an association may establish reasonable restrictions concerning the size, place and manner of placement of such devices.” Va. Code § 55.1-1920.1(B). Many people, on both the “pro-HOA” and “anti-HOA” sides of the debate are attracted to laws that require HOA action to be “reasonable.” However, parties frequently litigate over whether something is “reasonable.” Ordinarily, the courts to look to the language of the statutes and recorded instruments themselves to determine what “reasonable restrictions” might mean in a given context (and not apply a generic view of what is “reasonable”).

The POAA solar amendment goes on to talk about what is reasonable: “A restriction shall be deemed not reasonable if application of the restriction to a particular proposal (i) increases the cost of installation of the solar energy collection device by five percent over the projected cost of the initially proposed installation or (ii) reduces the energy production by the solar energy collection device by 10 percent below the projected energy production of the initially proposed installation.” Va. Code § 55.1-1820.1(C).  Additionally, the owner has to produce a report by a qualified expert that satisfies the HOA that the restriction is not reasonable.

Why would the state legislature enact a law written this way? This is my blog, so I get to speculate if I want. I suspect the solar energy industry and the HOA industry got together and developed legislation that contained language that both sides wanted, with insufficient thought as to how this would impact lot owners and architectural committees in the real world.

In 2019, the Court of Special Appeals of Maryland considered a case where a homeowner installed solar panels without first obtaining HOA approval, and then tried to use Maryland’s similar version of HOA solar amendments to defend against covenant enforcement. Stoneridge at Fountain Green HOA wanted Jonathan and Megan Blood to remove the solar panels from the front side of the roof of their house in Hartford County, consistent with its desire to keep panels off of the front of houses. The Bloods argued that while they were supposed to apply to the HOA beforehand, they believed that their contractor would do that for them. The Bloods tried to defend the HOA lawsuit by arguing that to remove the panels from the front of their house would unreasonably increase the cost of decrease the efficiency of the solar collection equipment. At trial, the Vice President of the solar panel company testified that reducing the number of panels from 48 to 33 would reduce the systems performance and efficiency. In its analysis, the appellate court observed that the statute didn’t adequately define “cost” or efficiency”. The court found that there was no evidence that restricting the number of panels would increase the cost of the system (larger systems cost more, not less?). The court also found that reducing the size of the system made it produce less electricity, but didn’t make it less operationally efficient. The Court found that because the Bloods were supposed to obtain approval first, they can’t really argue that being forced to remove some of them was a kind of waste prohibited by the statute (the rule breaker should not get to keep what they built just because it would waste money to demolish part of it?). The court concluded that the Bloods’ reading of the statute would make any HOA limitations on solar equipment unenforceable because any rule that made the system smaller would result in a loss of cost savings that could be derived from more solar panel coverage.

The Stoneridge at Fountain Green HOA v. Blood case illustrates how these statutes don’t provide homeowners with as nearly the legal protections that some people think they do. The statutes aren’t really substantive rules, they are provide instructions on as how to interpret HOA governing instruments. However, the solar industry didn’t lose, they still have a statute that they can point to during their sales process with lot owners. In these situations, lot owners have to be very circumspect, because HOAs are apt to overstate their powers and adopt rules that are unenforceable (or unenforceable in the way that the HOA is trying to use them in a given instance). At the same time, a wise lot owner ought not to rely upon the legal advice of the company who is trying to sell them something. Unfortunately, some HOAs will adopt rules and make architectural decisions in an informal fashion, where they expect lot owners to live with decisions made during backyard BBQ’s or hurried email exchanges that don’t properly observe the statutes or recorded instruments that give them authority.

Discussed Legal Authority:

Va. Code § 55.1-1820.1

Blood v. Stoneridge at Fountain Green Homeowners Ass’n, 242 Md. App. 417 (2019).

Note: The photo associated with this blog post is a stock image that doesn’t depict anything discussed in the article.

Condominium Bylaw Liability Waivers and Claims for Water Damage

Many condominium unit owners experience water damage from leaks in pipes, walls or other common elements managed by the unit owners’ association. This happens in both new condominiums with construction defects and older associations with growing maintenance problems. Condominium associations have the privilege of controlling and the responsibility for maintaining the common elements. Unit owners must pay assessments to maintain the common elements, master insurance premiums, and other common expenses. The declaration and bylaws define the rights and responsibilities of the association and the unit owners with respect to the units, common elements and limited common elements. Although the unit owners hold title to the common elements as co-owners, the statutes and bylaws do not give unit owners rights to treat the common elements as their own. While the bylaws require the association to maintain the common elements, often the same instrument (or an amendment) includes a waiver relieving the association of liability for damages arising from a leak from a common element to a unit. Associations and unit owners often disagree over the scope of the liability waiver and the obligation to maintain. This is complicated by the failure of the association to properly fund its accounts through assessments.  While bylaw liability waivers may seem fair to the other unit owners voting for them or the boards relying on them, not all unit owners are affected in by a defect in the common elements in the same way. Efforts to keep costs down for the majority has the tendency to put particular units at higher risk later. Each condominium unit has a different location within the development. Just because something keeps costs down for most people, doesn’t make it intrinsically fair or wise. The District of Columbia Court of Appeals considered some of these issues in a May 2021 decision. Jennifer Baker owned a unit in the Chrissy Condominium on F Street, Southeast. Her unit began experiencing a severe water leak in May 2018 that forced Baker to offer her tenants free rent. Later the tenants left because of the water problem. The association ignored her requests for assistance. Ms. Baker retained a structural engineer who identified grading and waterproofing problems with the rear foundation wall that needed correction. This would cost in the range of $14,000.00 to $20,500.00. Ms. Baker passed this information on to the management company who said that they advised the association to complete the repairs to the foundation wall which was a common element. The association decided not to conduct the repairs because it would empty their reserve account. Ms. Baker could not sell, rent out, or use the condo unit herself because of the water infiltration problem. She could not unilaterally resolve the situation because the wall is a common element within the association. Baker sued the condominium association on a variety of claims related to the water infiltration problem, including damages for the diminution of the monetary value of her unit, pain and suffering, attorney’s fees and a request for an injunction that would require the association to complete the repairs. The D.C. Superior Court dismissed all of the claims. For reasons which are not clear, Baker did not appeal the dismissal of her claims for injunctive relief, damage to property values, and pain and suffering. With regard to the other claims, the association argued successfully in the Superior Court that the liability waiver in the condominium bylaws provided the association with a complete defense. That section, Provision 7.11, has language similar to that found in other condominium bylaws in D.C. and Virginia:

The Association shall not be liable for any failure of water supply or other services to be obtained by the Association or paid for as a Common Expense or for injury or damage to person or property caused by the elements or resulting from electricity, water, snow or ice which may leak or flow from any portion of the Common Elements or from any wire, pipe, drain, conduit, appliance or equipment.

Baker’s attorney argued that the association ignored other language in the Bylaws that expressly required them to maintain the common element wall. Baker pointed out that the association’s reading of the Bylaws, if correct, would leave Baker without any remedy for the failure to maintain this particular common element. Baker pointed out that there are other damages that arise out these actions beyond the damage to property resulting from water leaking from the common elements into her unit. Baker seems to be arguing for this liability waiver to be construed strictly or narrowly as an exception to a generally recognized duty of a condominium association to maintain its common elements. The Superior Court agreed with the association, ruling that the liability waiver language was not limited by the other provisions requiring the association to maintain the wall. The trial court and the association’s arguments relied heavily upon a 1998 D.C. appellate decision, D’Ambrosio v. Colonnade Council of Unit Owners. In that earlier case, the unit owner sued the association after a pipe burst and caused damage to the unit. The limited liability bylaw in Chrissy was functionally the same as the Colonnade Council’s instruments. The 2021 Baker decision, like the earlier D’Ambrosio case concluded that such liability waiver language does not allow the unit owner to recover for damage to the unit attributable to the deficiency with the common element. However, that’s not all that Baker sought in her lawsuit. Baker argued that the association’s persistent and continuing failure to repair the wall after timely notice resulted in extensive financial and emotional damage. This includes the diminished value of the condominium unit and the loss of rental income. Baker argued that these damages resulted from the failure to maintain and were not limited by the waiver language. In Baker, unlike some other cases, it was clear that the association was responsible for maintaining the thing at issue. The Court of Appeals rejected the association’s arguments that the consequential economic injuries alleged by Baker were not semantic reclassifications of damages from the water intrusion itself. The Court agreed with Baker that such damages could be traced to the association’s failure to correct the wall after it had been called to their attention. The Court found that the association’s obligation in the bylaws to maintain the wall was meaningless unless there was some way that breach of it could give rise to a cause of action with a legal remedy. The Court of Appeals concluded that the Superior Court incorrectly short-circuited this case before trial. The case is presently back in the Superior Court awaiting a new pretrial schedule. In 1989, the Supreme Court of Virginia considered analogous issues related to similar language in the instruments of the Ocean Owners’ Council in Virginia Beach. The Supreme Court held in the case brought by Arthur Nido that the liability waiver language was not void as against public policy, and effectively limited damages resulting from the events listed in the provision. However, like the D.C. Court of Appeals, the Supreme Court of Virginia also found that this kind of waiver did not completely absolve the association of all responsibility. The other language in the bylaws requiring the association to maintain the common element was enforceable. “This limitation does not leave the owners a right without a remedy. The owners retain the right to sue the Council for damages in instances where the damage arises from circumstances other than those enumerated.” The Superior Court’s dismissal of the claim for injunctive relief was not appealed. An injunction is an order by the court for the defendant to specifically do something or refrain from doing something. The liability waiver provisions limited the association’s responsibility for damages caused by the leaking itself, but that doesn’t prohibit injunctive relief, because as the court of appeals recognized, the provisions in the bylaws requiring the wall to be maintained must have some legal meaning. The duty to maintain the common areas and the exclusive right to manage them is what makes a condominium what it is, as opposed to some other kind of shared property arrangement. This is the justification for all of the debt collection tools that the D.C. condominium act gives the unit owners association. The District of Columbia’s laws regarding condominium unit foreclosure for the failure to pay assessments is much more board-friendly than the laws in Virginia and some other states. It makes no sense for Ms. Baker to lose her unit if she fails to pay her assessments, but there is no consequence if the association fails to uphold their end of the “bargain” reflected in the recorded bylaws. This is why unit owners and their attorneys ought not to give up if the association insists that the liability waiver provisions completely absolve them of all responsibility in the event that the failure to maintain causes a problem for a unit owner. Legal Authority: Baker v. Chrissy Condominium Association, 251 A.3d 301 (D.C. May 27, 2021) Nido v. Ocean Owners Council, 237 Va. 664 (1989) Media: The photo at the top of this blog post is something that I took with my cell phone camera of the back of the D.C. Court of Appeals during construction in June 2018.

Can HOA Boards be Overridden through Group Action by Owners?

Many owners want to know what options they have to overturn bad board decisions without using litigation and when waiting to the annual director election isn’t an option. This raises the issue of what legally binding results “community organizing” can accomplish when the board majority appears to have already made up their mind.

How a Lawyer Can Help Owners Protect their Rights in HOAs and Condominiums

According to trade association data, approximately 1,980,000 Virginians live in 778,000 homes in more than 8,7000 community associations (HOAs, condominiums, etc.). In the District of Columbia, approximately 111,000 residents live in 48,000 homes located in more than 1,300, community associations.

Can a Board of Directors Make Decisions for the HOA by Unanimous Emails?

Condominium and HOA leaders usually expect the owners and tenants to do what they tell them to do, and often struggle to back down when their authority is questioned. At the same time, boards and committees like to make decisions that affect others without being monitored or disclosing what was done.

Worlds are Colliding! When Attorneys Sit on HOA Boards

Before Jaime Harrison ran for U.S. Senate or became chair of the Democratic National Committee, he was a director on the board of a condominium in Alexandria, Virginia while I was an owner-occupant. We had annual elections for board positions. Sometimes there was an election, other times we left without voting because there was not quorum.