Ohio Condo & HOA Law Blog

Requesting Your Association’s Federal Tax ID Number

2011-09-13T10:00:00.001-05:00

Condominium and homeowner association board members and property managers are often asked for their association’s Federal Tax Identification Number. Community associations in Ohio are not-for-profit corporations that are registered with the Ohio Secretary of State. Just because an association is not-for-profit, however, does not mean that an association’s income is non-taxable; therefore, the association still may have to pay income taxes. As a result, every association is assigned a Federal Tax ID Number, also known as an Employee Identification Number (EIN). Similar to an individual's social security number, a corporation's Federal Tax ID Number is a unique number that government agencies and other institutions, such as banks, use to identify individual corporations.

When paying taxes, filling out mortgagee questionnaires, receiving payment from a bank on a delinquent account, or opening a bank account and/or certificate of deposit, associations are often asked to provide their Federal Tax ID Number, but many board members are unaware of the assigned number. To obtain your association’s Federal Tax ID Number, board members may either call the Internal Revenue Service’s Business & Specialty Tax Line at (800) 829-4933 or visit http://www.irs-ein-application.com.

Association Thief Released From Prison

2011-06-29T11:53:00.000-05:00

After serving 44 months of a 51 month sentence in federal prison for stealing more than $3.4 Million Dollars from over 40 of Ohio’s community associations, former MultiVest Management owner Kathleen DeSalvo is being released today. By her production of fraudulent bank statements and online fund transfers, the losses related to Ms. DeSalvo range from a few thousand dollars to almost $300,000 per association, with at least four associations losing $250,000 or more. While Ms. DeSalvo may have “paid her debt to society,” the losses sustained to many communities will likely never be repaid.

Despite this alarming wake-up call for associations, many Ohio community association still remain vulnerable to financial threats. To guide association board members in making sound financial decisions, partner Darcy Mehling Good, authored a Kaman Report Article entitled “Safeguarding Association Funds.” This article provides 10 suggestions that boards should seriously consider to reasonably protect the community’s money including lock box systems, segregated accounts, proper insurance, and regular audits. Kaman & Cusimano, LLC service option clients can view the entire article in the Client Articles section of ATLAS. Please click here to log into ATLAS.

Aurora Management Theft Leads to Prison Sentence

2011-06-15T07:56:00.000-05:00

As a result of her theft of over $1 Million Dollars, Tracy Reed was sentenced to seven (7) years in prison yesterday by Judge Judith Hunter in the Summit County Common Pleas Court.

Bob Kmiecik attended the hearing and reports that Judge Hunter appeared fully informed about the economic, emotional and other harm that Tracy’s theft caused for hundreds, if not over a thousand homeowners. The Judge had read all of the letters submitted by Board members and had reviewed the matter at length with the prosecutor and Tracy’s defense counsel.

In addition, she listened to statements presented in Court by two board members and allowed Bob to speak as well. Bob informed the Judge that not only had Tracy’s criminal acts caused harm to the associations and their owners, but that a “secondary loss” occurred when Tracy gave a “black eye” to her colleagues in the Professional Property Management industry. Bob noted that Tracy was well aware of the great harm caused by the Multivest loss, but that apparently she was not deterred by the 5 year Federal Prison sentence handed down to Kathleen DiSalvo.

Tracy spoke briefly and softly in her own defense and said “I have no legitimate excuse; I betrayed my “customers’” trust; It is a difficult business; It got out of control; I have no way to repay it; I have no way to make it right.”

In sentencing Tracy to 7 years out of a maximum of 8 years, the Judge specifically noted Tracy’s apparent lack of genuine remorse and rejected Tracy’s request for a couple of weeks to arrange for the custody of her children. Noting “we will take care of your children” the judge ordered Tracy to be “immediately” taken to jail as she was led out of Court in handcuffs.
Although the Court will issue a restitution order, it was generally agreed by the prosecutor, the Judge, and Tracy’s lawyer, that she does not have any substantial assets to satisfy the order.

Condo Associations Get Tough on Fees

2011-05-26T15:32:00.002-05:00

The increasingly large, grassroots push for community association rights to delinquent fees is beginning to receive national attention. The May 25, 2011 edition of the Wall Street Journal features a story entitled “Condo Associations Get Tough on Fees.” The story features communities in Nevada and Florida that have taken proactive steps to collect delinquent fees as a result of new legislation in both states. According to the Wall Street Journal:

Condo associations, which have been struggling as troubled homeowners stop paying their condo assessments, are becoming increasingly aggressive about finding ways to recoup unpaid fees. And they have lawmakers on their side.

Closer to home, we are optimistic that Ohio lawmakers will similarly respond as a result of increased national attention and greater pressure from community association constituents. Legislators are still being sought to reintroduce the updated Ohio Community Association Preservation Act (formerly called the “Super Lien”).

In the meantime, Ohio community association continue to be aggressive in pursuing delinquencies by filing liens, foreclosing on properties, and requesting that a Court appoint a receiver to collect rent from a delinquent owner’s tenant. By following this strategy, Kaman & Cusimano clients have recovered over $3,972,802 over the last twelve months for Ohio condominium and homeowner associations.

To view the complete Wall Street Journal report, please visit:http://online.wsj.com/article_email/SB10001424052748704281504576327693591415736-lMyQjAxMTAxMDIwNTEyNDUyWj.html#articleTabs%3Darticle

Ohio Introduces Legislation Protecting Service Flags

2011-04-19T09:12:00.000-05:00

Recently, the Ohio General Assembly introduced House Bill 189 that would affect all condominium and homeowner associations within Ohio. If passed, this legislation would prohibit all community associations, through their rules or recorded declaration provisions from restricting the display of blue star banners, gold star banners, and other service flags.

This prohibition would be in addition to the restriction on associations prohibiting the American flag already found in Ohio law. The intent of passing this bill follows the common sense approach to patriotic flags that Kaman & Cusimano has advised its clients to follow in the past. In these times of great national pride, associations should consider permitting such displays of patriotism to honor those serving in the armed forces and their families here at home, whether or not required by law. While the board for a community association may implement reasonable restrictions how such flags may be displayed, just as they do now with the American flag, an outright ban would be unreasonable and may lead to angry, upset owners and even negative media attention.

HB 189 enjoys broad, bi-partisan support with two sponsors and 25 co-sponsors. As a result, there is a significant chance that it will be approved in both the House and Senate and signed by the Governor this year. If, for some reason, it does not become law, we still recommend that all Ohio condominium and homeowner associations create reasonable rules for permitting service members and their families to display these patriotic flags.

To view a full copy of the bill, please click here.

New ADA Pool Regulations Generally Don’t Apply to Associations

2011-02-21T12:34:00.000-05:00

Recently, the US Department of Justice revised its Americans with Disabilities Act (“ADA”) regulations regarding pools. These new regulations require that public pools have sufficient access for the disabled, including ramps or lifts. Some pool companies have sent notices to community associations informing them of the new requirement, but neglecting to inform the association that the ADA regulations do not apply to them.

These new pools regulations are found in Title III of the ADA. Title III of the ADA applies to private entities that operate places of public accommodation, such as a hotel or local health club. As neither the association nor any individual owner is operating a place of public accommodation, Title III does not apply. As a result, community associations, generally, do not have to comply with this new requirement.

On the other hand, if your association opens your pool up to persons outside the community, then the pool must comply with ADA regulations. For example, the hosting of swim meets, selling of memberships to people outside the association, or providing swim lessons to people outside the community are all “public” activities that trigger the ADA requirements. If your association is conducting these types of activities, then the association must comply with all ADA regulations, including pool, parking space, and restroom requirements.

Again, these new ADA regulations do not generally apply to Ohio community associations because the association’s pool is reserved for the exclusive use of the owners and their guests. If you believe that your association is conducting activities that may subject the association to the ADA’s requirements, contact your association’s attorney for further analysis and information.

Impact of “Robo-Signing” on Association Foreclosures

2011-02-04T08:19:00.001-05:00

Recently, there has been significant media attention regarding banks’ “robo-signing” procedures and the impact on pending foreclosure cases. In response, many Ohio judges have imposed strict new guidelines for banks and their attorneys to follow in an effort to ensure accuracy of loan documents. On Monday, the Columbus Dispatch reported that multiple Franklin County Court of Common Pleas judges have joined with other judges from across Ohio to require banks and/or their attorneys to file certifications that their documents are accurate, or the case will be dismissed.

In response to this news, many association board members and property managers have contacted our office questioning the impact on their associations’ pending foreclosure cases. To be clear, these requirements and the banks’ errors will not affect association foreclosures, provided the board followed Kaman & Cusimano’s recommendation to either file a foreclosure complaint or an answer and cross-claim.
Kaman & Cusimano has strongly encouraged its service option clients to be aggressive in pursuing delinquencies. To do so, the firm strongly recommends that an association file a lien and then either 1) file a complaint to initiate foreclosure proceedings when a balance become high, or 2) join take action through the bank’s foreclosure by filing and answer and a cross-claim. Using this approach is a proven method for protecting the associations’ interest and enabling the association to proceed, if necessary, to a sheriff’s sale. In fact, by following this procedure, Kaman & Cusimano collected over $3.97 million, including the costs of collection and attorney fees, for its clients in 2010.

Again, when an owner fails to pay, filing a lien, then a complaint or an answer/cross-claim enables the association to push the foreclosure, continue the court proceedings, and order a sheriff’s sale regardless of the status of the bank’s claim. The owner has no choice but to pay the association to save his/her home. If your association has aggressively pursued its delinquent accounts and followed Kaman & Cusimano’s recommendations, the banks’ foreclosure problems will not affect your association’s ability to obtain a judgment on its claim and ultimately order a sheriff’s sale.

NPR Columbus - Condo/HOA Special Report Part II

2011-01-18T09:32:00.000-05:00

For those of you who were unable to listen live to Kaman & Cusimano, LLC Attorney Marie Rutkowski's appearance on WOSU Columbus, the show's archives are now available online. To listen and watch the round table discussion, please visit:

http://www.ohiochannel.org/MediaLibrary/Media.aspx?fileId=128655&returnTo=Collection

On Wednesday, January 12, Marie appeared with host Ann Fisher on “All Sides with Ann Fisher.” The topic discussed: “Condominium and homeowner association finances. Are condominiums still a good investment?”

NPR Columbus – Condominium/HOA Special Report

2011-01-10T15:35:00.000-05:00

We are pleased and honored to announce that attorney Marie Rutkowski will be appearing this week on WOSU Columbus. On Wednesday, January 12, from 10 – 11 AM, Marie will appear with host Ann Fisher on “All Sides with Ann Fisher.” The topic to be discussed: “Condominium and homeowner association finances. Are condominiums still a good investment?” The show will address how condominium owners and condominium and homeowner associations can deal with the challenges of the foreclosure crisis.

This is a great opportunity to highlight ways that central Ohio association board members and property managers have worked tirelessly to protect our communities. To listen, please either tune your radio to WOSU 89.7FM or listen on the internet at www.wosu.org. If you are unable to listen live, please stay tuned to Kaman & Cusimano, LLC’s Ohio Condo & HOA Law Blog at http://www.ohiocondolaw.com/ or http://www.ohiohoalaw.com/ after the show for information on how to listen to an archived version.

2011 Community Association Outlook is Bright!

2010-12-29T15:56:00.000-05:00

In 2010, condominiums and homeowner associations faced a number of significant economic challenges outside their control. Yet, in representing hundreds of condominiums and homeowner associations throughout Ohio, we worked with board members who overcame these challenges, proving that one aspect rings more true than ever: “Community association board members are not paid, not because they are worthless… but because they are priceless!”

Two of the biggest challenges boards tackled were collecting from delinquent owners and safeguarding association funds. In some parts of the country, unpaid assessments have resulted in deferred maintenance and cuts in services. Here, most boards have diligently enacted aggressive collection policies, proposed amendments to fortify provisions in the governing documents, and joined together to introduce “Superlien” legislation, which would protect condominiums from unrecovered losses in a foreclosure. Additionally, board members have taken steps to safeguard the associations’ money and ensure that they and their property managers are covered by the Association’s fidelity insurance.

The next time you see your volunteer condominium board member or property manager, say “Thank You!” Because of their hard work finding creative solutions, your community not only survived 2010, but will thrive in 2011.

Kaman & Cusimano, LLC: we do one thing and do it well: Ohio condominium and homeowner association law.

Super Lien Lives to Fight Another Day

2010-12-10T14:32:00.000-05:00

Ohio’s legislative session ends at the end of 2010, and any legislation that is not enacted must be re-introduced in the new legislative session, beginning in 2011. While progress was made, Ohio’s Super Lien legislation was not enacted this year. A community association Super Lien would, in the event of a foreclosure sale, mandate that the association be paid six months of fees prior to all other liens, including the bank’s first mortgages. Due to the importance of this legislation to thousands of Ohio communities, we are seeking to have this legislation re-introduced in 2011. It is our desire to ensure that the 2011 legislation will apply not only to condominiums, but homeowner associations as well. To accomplish this, wide spread support is certainly needed.

With the recent elections over and the new Republican controlled legislature, this effort needs board members who are friends with, or have influence with, Republican State Representatives or State Senators. If you know such a legislator, please contact us at superlien@kamancus.com for more information on how to volunteer and solicit sponsorship and/or support for this much needed legislation.

For the most up to date news and information, please continue watch this blog on our websites: http://www.ohiocondolaw.com/ or http://www.ohiohoalaw.com/

David Kaman Featured in Story Regarding Safeguarding Association Funds

2010-11-10T07:55:00.000-05:00

On Monday, November 8th’s 11:00 p.m. news, News Channel 5 in Cleveland featured Kaman & Cusimano attorney David Kaman in a story about the safety of condominium and homeowner association funds. According to the story:

David Kaman is one of Ohio's leading attorneys specializing in protecting associations and its members. He recommends associations be insured for their funds so they are protected against theft, and encourages members voluntarily pay for yearly audits. [Kaman said] "If anyone is thinking of stealing the association's funds, but they know that a review or audit is being done on a regular basis -- they're going to think twice about it."

To read the complete story and watch the entire feature, please visit: http://www.newsnet5.com/dpp/news/local_news/investigations/ohio-condo-homeowner-associations-easy-targets-for-theft-embezzlement

Impact of Chase Foreclosure Freeze

2010-10-01T10:49:00.002-05:00

Recently, JP Morgan Chase, the third largest home loan servicer in the United States, announced that it has frozen all of its pending foreclosure cases, so that it may review the accuracy of documents filed with the courts. In response to this news, many association board members and property managers have contacted our office questioning the impact on their associations’ pending foreclosure cases. To be clear, this freeze will not affect association foreclosures, provided the board followed Kaman & Cusimano’s recommendation to either file a foreclosure complaint or an answer and cross-claim.

Kaman & Cusimano has strongly encouraged its service option client community associations to be aggressive in pursuing delinquencies. To do so, the firm has always recommended that an association either 1) file a complaint to initiate foreclosure proceedings when a balance become high, or 2) join the bank’s foreclosure by filing and answer and a cross-claim.

Filing a complaint or an answer/cross-claim enables the association to push the foreclosure, continue the court proceedings, and order a sheriff’s sale regardless of the status of the bank’s claim. Additionally, filing these documents enables associations to participate in mediation, to be active in loan modification negotiations, and to receive any excess proceeds from the sheriff’s sale.

Again, if your association has aggressively pursued its delinquent accounts and followed Kaman & Cusimano’s recommendations, the Chase foreclosure freeze will not affect your association’s ability to obtain judgment on its claim, and ultimately order a sheriff’s sale.

FHA Fidelity Insurance Requirement

2010-09-28T09:48:00.000-05:00

Property managers and board members have routinely been receiving “mortgagee questionnaires” from the lenders of potential purchasers, asking the association a variety of questions ranging from reserves, number of delinquent accounts, number of investor owners, and amount of casualty, liability, and fidelity insurance coverage. When filling out this form, many Ohio condominium associations have been asking our office if they possess sufficient fidelity insurance to comply with Federal Housing Administration ("FHA") requirements. Currently, FHA requires sufficient fidelity insurance to cover all of the money in an association’s reserve account, plus three (3) months worth of assessments. For many associations that have been planning and saving for reserves, this amount may be significant, so it is important to verify the amount in the association’s reserve accounts and determine the exact amount of the association’s current fidelity insurance coverage from the association’s insurance policy or agent.

FHA also requires that the association maintain this fidelity insurance for all officers, directors, and employees of the association and all other persons handling or responsible for funds administered by the association. This includes property managers and bookkeepers. Thus, in addition to verifying the dollar amount of coverage, the board should also verify who is covered by the policy. Regardless of whether or not your association desires to be FHA eligible, Kaman & Cusimano strongly recommends that all associations have a Managing Agent Rider (MAR) attached to its fidelity insurance. This will help to ensure that the association’s assets are adequately protected.

For any potential purchasers to close on an FHA insured loan, the association must be able to demonstrate that it maintains this level of fidelity insurance. If the association’s fidelity insurance does not meet FHA requirements, the board must decide whether or not it should raise the association’s coverage, by balancing the increased premiums with the possibility of FHA insured financing.

It is very important to fill out the mortgagee questionnaires accurately and correctly to avoid any disputes or allegations of impropriety in the future. Again, the association must have enough fidelity insurance to cover all of the money in an association’s reserve account, plus three (3) months worth of assessments. If you have any additional questions regarding fidelity insurance, or if your association would like to apply to be on the FHA list of approved condominiums, please contact Kaman & Cusimano for more information.

Ohio Planned Community Act Now Effective!

2010-09-13T14:36:00.001-05:00

On Friday, September 10, 2010, the Ohio Planned Community Act became effective. The law, which established Ohio Revised Code Chapter 5312, provides for the statutory framework of the governance and operation of Ohio’s planned communities. Similar to the statute enacted for condominiums, Ohio’s community association owners now enjoy significant consumer protections designed at preserving their communities and property values.

Also important for community associations is that the new law requires that all community association bylaws or code of regulations be recorded within one hundred eighty (180) days after the law became effective. If your association’s bylaws or code of regulations are not recorded, please contact our office immediately for more information regarding the easiest and most cost effective way for your association to be in compliance with the new law. More importantly than the simple act of recording, the Bylaws or Code of Regulations must reference the Declaration and incorporate proper language so that it appears in the chain of title of all homes within the community.

Kaman & Cusimano, LLC Service Option Client community association board members recently received a “special edition” Kaman Report detailing all of the important components of this new law. This includes information on the new laws governing reserves, cost of collections and enforcement, board powers, and records reviews. If your community association is not a Kaman & Cusimano, LLC Service Option Client, please Contact Us for more information on how to receive this important edition of the “Kaman Report.”

A full copy of the law is available at http://codes.ohio.gov/orc/5312

Delayed EPA Lead Paint Regulations Effective October 1

2010-08-24T11:33:00.000-05:00

To protect owners and occupiers of structures that could contain lead based paint, the Environmental Protection Agency (EPA) released new regulations governing the construction and remodeling of buildings constructed before 1978. The regulations apply to anyone who hires or is paid to renovate, repair, or disturb lead based paint. This specifically includes community board members, managers, painters, electricians, drywallers, and plumbers. Homeowners working on their own homes are not included. The regulations require that renovations involving lead based paint need to be performed by an EPA Certified Firm using Certified Renovators or employees trained and supervised by a Certified Renovator.

Originally slated to become effective in February 2010, the EPA has delayed enforcement of these regulations until October 1, 2010. At that time, any Association constructed prior to 1978 conducting renovations must have the work performed by an EPA Certified Firm using Certified Renovators or employees trained and supervised by a Certified Renovator. Therefore, if any Association constructed prior to 1978 is contemplating renovations or is obtaining bids, please be sure that the Contractors have obtained EPA Certification, and include this requirement in any remodeling based contracts the Association enters into. After October 1, Community Associations could face significant fines and/or legal action if they fail to comply – thus, the best policy is to require Certification.

For more information on these new regulations, please see the EPA’s Lead Based Paint Compliance guide on the “Resources” page Kaman & Cusimano, LLC website, at: http://www.ohiocondolaw.com/resources.htm

Do Away With Community Directory

2010-06-23T09:56:00.002-05:00

As society has changed, Ohio’s community associations have also been forced to change. One previously positive act of the association, which unfortunately has now become a negative, is the publishing of a community directory.

In the good old days now gone by, many communities would publish a directory listing the names, addresses and phone numbers of all residents within the association. Some associations went so far as to even list the names, and sometimes the ages, of children residing in the community. The directory was used to get to know ones neighbors and facilitated “over the fence” neighbor to neighbor discussion.

In recent times community association directories have switched from a positive impact to a negative impact. Criminals have used directories to determine who lives alone and/or which residences are occupied only by a female resident. Instead of calling neighbors, some residents have taken to calling all association members for solicitation of sales of items such as cosmetics, tools, baskets, and candles. Instead of mailing holiday cards, some residents have taken to mailing all association members for solicitation of charitable donations or to obtain real estate listings. Email addresses have been grouped and used to make anonymous disparaging comments about management and/or the board. One member of a 260 home complex even duplicated and attempted to sell the directory to local contractors even though the directory advertised itself as “not being available to anyone outside the community.”

A well-intentioned board does not want to learn that its directory was tied to a break-in or worse type of crime. Boards should recognize the potential liability and/or the potential for a significant negative impact of publishing a directory. At a minimum, provide an “op-out” provision permitting residents to choose whether or not to be included in a directory. A community association board has many duties. It does NOT have a duty to publish a community association directory. A wise board would STOP.

Governor Signs HOA Bill Into Law!

2010-06-10T17:30:00.002-05:00

Great News! Today, Governor Strickland signed the Ohio Planned Community Act into law, which will become effective in 90 days. The Act, which established Ohio Revised Code Chapter 5312, provides for the statutory framework of the governance and operation of Ohio’s community associations. Similar to the statute enacted for condominiums, Ohio’s community association owners now will enjoy significant consumer protections designed at preserving their communities and property values.

Kaman & Cusimano, LLC “Service Option” clients and property managers will soon be receiving a detailed Kaman Report newsletter on the new law.

In the meantime, to see a complete copy of the Act, please visit: http://www.legislature.state.oh.us/bills.cfm?ID=128_SB_187

Ohio Planned Community Act Passed by House!

2010-06-03T11:56:00.003-05:00

This morning, the Ohio House of Representatives voted 95-1 in favor of the Ohio Planned Community Act. In the next few weeks, the Senate should vote to concur with the House's bill, and then it will be sent to Governor Strickland for his signature. A very big Thank You to all of Ohio's community association board members and property managers who urged the general assembly to pass this important bill.

This landmark legislation will give Ohio's homeowner associations a statutory foundation, similar to Ohio's condominiums. The Act will provide Ohio homeowners with the consumer protections they deserve by protecting their investment through statutorily organized associations creating strong neighborhoods and communities. This includes the ability to amend a declaration, require annual elections, inspect the association's records, and to handle rule enforcement issues in-house to avoid litigation. Stay tuned to www.ohiohoalaw.com for more information and updates as they become available.

Kaman & Cusimano, LLC will soon be distributing to all managers and HOA boards a special edition Kaman Report detailing the new law and its impact.

Super Lien Status Update

2010-05-27T07:45:00.001-05:00

This week, Kaman & Cusimano LLC attorney Darcy Mehling Good testified before the Ohio House of Representative’s Civil and Commercial Law Committee. Advocating on behalf of Ohio’s thousands of condominium associations and tens of thousands of Ohio citizens living in community associations, Attorney Good urged the House to join with 15 other states and pass the vital “Super Lien” legislation. I copy of her testimony is as follows:

Good afternoon, Chairman Okey, Vice Chairman Murray, Ranking Minority Member Oelslager and other distinguished members of the Civil and Commercial Law Committee. Thank you for allowing me to give testimony today on this important piece of legislation, which is designed to help level the playing field for condominium associations who, through no fault of their own, are literally caught “holding the bag” in the unfortunate situations where units are sold at sheriff’s sales.

Allow me to start by telling you a little about myself: My name is Darcy Good and I am a member of the Community Associates Institute, which is an organization that works for the betterment of community associations with local chapters throughout Ohio and across the country. I also volunteer and serve as the Vice-chair for the Ohio Chapter’s Legislative Action Committee, which promotes legislation to improve community associations in Ohio. Professionally, I am an attorney that represents hundreds of condominium associations across the state and, as a practitioner for over 12 years, have had a front row seat in witnessing the devastating impact that sheriff’s sales have had on these neighborhoods. Finally, I owned and lived in a condominium, serving as Board Secretary for 6 years.

From my personal and professional experiences, I am here today to voice my strong support for this legislation because I know it will help protect and even improve the property values of Ohio’s condominium associations for the direct benefit of its owners, residents, and, although they do not want to admit it, the lenders.

Over the last few months, I have heard the questions asked by even those in support and the arguments raised in opposition. I am here to answer as many of those questions as I can and to set the record straight regarding the myths and falsities circulated by the opposition.

Rep. Murray has asked for statistical evidence to prove that the “super lien” legislation as similarly passed in the other states has had no negative impact on lending. As everyone knows, it is nearly impossible to disprove a negative. Still, as evidenced by the letter that was submitted last week on behalf of CAI and the letter that I attached to my testimony today, there is NO evidence of any reduction of lending or increase in money to be escrowed. I refer you to the letter from Mr. Lombardi from Rhode Island – a state that had a 6-month priority lien in place for almost 20 years before the legislature amended it to strengthen its priority even more. If the lenders in Rhode Island have not required fees to be escrowed after dealing with the law for almost 20 years, why would they in Ohio? CAI is for the betterment of condominium associations. If we didn’t believe this was good for condominiums in Ohio, I wouldn’t be standing here today with the full support of the national organization behind me.

Last week, we heard testimony from the Ohio Bankers League (OBL) and the Ohio Mortgage Lenders Association (OMLA) and I would be remiss if I didn’t correct a number of misrepresentations so not to lose sight of the real issue before us.

First, the condominium model is not “broken” as Mr. Adelman tried to suggest. Even with the number of foreclosures on the rise, the vast majority of condominium owners (approximately 80% of the cases we handle) pay in full to stop the foreclosure process and ultimate sale of their unit. And, all you have to do is drive around Greater Columbus to see the number of condominium associations that are still being built to know they are still a viable product. Second, there is no “taxation without representation” in condominium association as Mr. Adelman surmised. The Ohio Condominium Act mandates that the Board of Directors consists of unit owners elected by the members of association. This is the same mandate that is proposed in SB 187, which you recently passed unanimously out of your committee. Third, if passed, the “Super Lien” is not limitless, as Mr. Steed suggested. Anyone who has a basic grasp of how a condominium operates knows that, also by statute, the common expenses must be charged proportionately in accordance with the assigned percentages of undivided interest and, therefore, an association could NOT raise the fees on just the unit in foreclosure in some devious attempt to recover a greater amount from the lender of a unit sold at sheriff’s sale. Fourth, it boggles my mind how the OMLA could think that the additional fees, such as attorneys, paralegals, and court costs, could be limitless when it knows that in Ohio, we have judicial foreclosures and none of the fees are collectible unless deemed reasonable by the Court and awarded in the Decree of Foreclosure.

Lastly, I want to address the money tree issue. The point that is being missed is that the money tree already exists, just not for condominiums. It has, in fact, long existed for single-family homes. In fact, lenders have provided it voluntarily as every mortgage includes provisions that, if the mortgagor (borrower) fails to do any number of things to protect the property, for example not maintaining sufficient casualty insurance, the lender will step in and pay those costs to ensure that its investment in the property is protected. When necessary, the lender will even hire contractors to maintain the landscaping, snowplowing, and exterior maintenance while the foreclosure case is pending.

When a lender approves a loan in a condominium association, however, it knows that the association bears those costs. In effect, it is shifting the responsibility of protecting its investment to the association and, in reality, requiring the rest of the owners to pay for the maintenance that the lender would pay for in a single-family home. Yet, I am not aware of lenders requiring borrowers of single-family homes to escrow fees to cover those potential costs nor am I aware of any discount offered to borrowers for condominium units on their loans since they do not get the same benefit. So, I believe it is the lenders’ business model that is broken and needs to be fixed. It has put an unfair burden on condominium associations for far too long and, as you are aware, many states have already righted this wrong. It is time Ohio did the same for the hundreds of thousands of its citizens who call condominiums their homes.

And so I conclude with my request that you support this legislation so to level the playing field for condominium associations so that they may continue to properly maintain the condominium property for the benefit of their members and even the lenders by protecting their investments, and the property values of Ohio’s condominium homes.

Pre-1978 Constructed Buildings must NOW abide by New EPA Lead Paint Regulations

2010-04-26T07:05:00.003-05:00

The EPA has issued new regulations for dealing with lead-based paint. The new law became effective April 22, 2010. The regulations apply to anyone who hires or is paid to renovate, repair, or disturb lead based paint. This specifically includes community board members, managers, painters, electricians, drywallers, and plumbers. Homeowners working on their own homes are not included. The regulations require that renovations involving lead based paint need to be performed by an EPA Certified Firm using Certified Renovators or employees training and supervised by a Certified Renovator.

The first step is to determine the age of your building. If the condominium or homeowner association was constructed post-1978, lead is not a concern. If the construction is pre-1978, the building should immediately be tested for lead based paint. All testing must be done by an EPA certified analysist. A certified analysist is able to ascertain if there is lead based paint and if so, whether it will be disturbed, and what precautions must be taken. Many projects on pre-1978 structures should NOT require any additional work beyond initial testing and a finding of no lead based paint.

If the testing does indeed reflect the existence of lead paint, lead-safe practices need to be followed. The regulations specify that the work must be done by a Certified Renovator or workers trained and supervised by a Certified Renovator. The regulations require specific notification requirements to residents, dust control, warning signs, specific clean up requirements and then more testing. Additionally, if lead based paint is present, practices like sanding, grinding, planning, needle gunning, blasting and other activities that create large amounts of dust are prohibited. After Completion of the project, the Certified Renovator must prepare and deliver test results to the owners and maintain records for 3 years.

Do not perform ANY construction, renovation, repairs, etc on any property that was constructed pre-1978 unless you have an EPA certified professional involved. Fines for doing so can be as high as $32,000 per day and the health concerns are even more significant.

A helpful brochure explaining this new law is available on the “Resources” page of the Kaman & Cusimano websites, www.ohiocondolaw.com or www.ohiohoalaw.com

Kaman & Cusimano Storms Capital!

2010-03-22T11:49:00.000-05:00

In support of H.B. 408 - the "Super Lien," and S.B. 187 - the Ohio Planned Community Act, several staff members and lawyers from Kaman and Cusimano, LLC stormed the Ohio State House last week in support of these two essential pieces of community association legislation. Attorney Darcy Mehling Good met with numerous legislators on an individual basis and Attorney David w Kaman testified before the House's Civil and Commercial Law Committee. Attorneys Kaman and Good answered numerous questions in an attempt to try and garner as much support for both bills as possible.

While S.B. 187 enjoys bipartisan support in the House after it was passed 29-1 in the Senate, H.B. 408 still faces strong opposition from the banking lobby and many Republicans. As 15 other states have shown, however, supporting America's community associations through a "Super Lien" is a not and should not be a partisan issue. Therefore, if you have not yet done so, please express your support for H.B. 187 to your local State Representative, and urge him or her to vote yes! A copy of the sample letter is available on the Kaman & Cusimano, LLC website: www.ohiocondolaw.com

HOA Bill Passes Ohio Senate!!!

2010-02-17T15:45:00.005-05:00

Great News! In a victory for all of Ohio's homeowner associations and communities, the Ohio Senate voted 29-1 to pass S.B. 187, the Ohio Planned Communities Act. The Bill will now be referred to the Ohio House of Representatives, where it will be assigned to a committee for further consideration and a vote.

If passed by the House, the Ohio Planned Community Act would give Ohio's homeowner associations a statutory foundation, similar to Ohio's condominiums. The Act will provide Ohio homeowners with the consumer protections they deserve by protecting their investment through statutorily organized associations creating strong neighborhoods and communities. This includes the ability to amend a declaration,require annual elections, inspect the association's records, and to handle rule enforcement issues in-house to avoid litigation.

Thank you for your continued support. Stay tuned to www.ohiohoalaw.com for updates on this important legislation for Ohio's communities.

Collection Action Pays Off!

2010-02-15T10:40:00.005-05:00

In 2009, Kaman & Cusimano, LLC collected over Three Million, One-Hundred Thousand Dollars ($3,100,000.00) in 2009 for its community association clients! This figure represents all money collected as a result of bankruptcies, foreclosures, and liens for which we handle the payoffs. It does NOT include the money recovered by the associations directly for countless other liens and collection letters.

As part of the effort to weather and manage the economic crisis, Kaman & Cusimano, LLC has consistently recommended that community associations be aggressive with delinquencies. Collection action is a process. A key part of the process is a foreclosure action. A foreclosure sometimes takes time, but it ultimately yields the best financial result of Ohio's condominium and homeowner association. By taking prompt collections action, associations stop the bleeding of bad debt and give delinquent owners a strong reason to pay. After a foreclosure, related actions such as wage garnishments and bank attachments also prove successful when available information shows the individual is employed or has other resources.

Delinquent maintenance fees and assessments have a tremendous, negative impact on the entire community. Our results have proven that if a Board is proactive and takes strong collections action, the best interests of the community and the property will be preserved and protected.

Attorneys Attend Law Seminar

2010-01-26T09:31:00.002-05:00

From January 21-23, several of the Kaman & Cusimano, LLC attorneys attended the national Community Association Institute Law Seminar. The attorneys learned about a variety of topics including Association collections, case law updates, legislative updates, the new FHA guidelines, zoning restrictions, expert witnesses, and the Board's exercise of business judgment. Presented by the College of Community Association Lawyers, to which attorneys David Kaman and Jay Cusimano are members, this seminar provides community association attorneys with a forum to tackle national community association legal issues.

Additionally, Kaman & Cusimano, LLC partner Darcy Mehling Good presented a section of the seminar entitled "Keep Fraud’s Ugly Head Out of Your Community Association." This section included "explaining the factors that foster the opportunity for fraud and discuss and identify proactive measures that an association can take to protect itself."

Kaman & Cusimano, LLC prides itself on its "communication not litigation" philosophy. Attending these national law seminars provides our attorneys with yet another valuable resource in representing our community association clients.

Super Lien Introduced!

2010-01-20T13:05:00.003-05:00

Great news! The Ohio General Assembly has heard the voice of Ohio’s community associations. On January 12, 2010, House Bill 408 was introduced by Representatives Ken Yuko and Brian Williams and is co-sponsored by eight (8) other representatives. House Bill 408 contains the “Super Lien” language that would give Ohio’s condominiums lien priority. If the “Super Lien” legislation is enacted, it would mandate that the condominium lien has priority over the bank’s first mortgage in a foreclosure. This legislation is vital for Ohio’s community associations, especially during the current economic climate. You can find a copy of this important legislation at

http://www.legislature.state.oh.us/bills.cfm?ID=128_HB_408

While House Bill 408 does not contain a “Super Lien” for homeowner associations, our legislative sources have informed us that once the condominium “Super Lien” and Senate Bill 187 (the HOA legislation) have each, respectively been passed by the General Assembly, it will be easy to move through similar “Super Lien” legislation for homeowner associations. Therefore, it is vital that all Ohioans living in community associations voice their support of this bill to their State Representative.

The “Ohio Needs a Condominium and Homeowner Association “Super Lien” Now! Grassroots Campaign” is currently underway. As you know, this is the second phase of our campaign – a grassroots effort where we ask that you contact your State Representative. A sample letter to send to your Representative indicating support for this vital legislation can be found on the Kaman & Cusimano, LLC website: www.ohiocondolaw.com. In addition, please make copies of the letter and provide it to all unit owners so that they too may send it to their State Representative. To find out who your state representative is and his or her mailing/email address, please visit http://www.legislature.state.oh.us/index.cfm

Association Gets Creative with Dogs

2010-01-05T15:01:00.003-05:00

Kaman & Cusimano receives many of its Service Option Clients' newsletters in the mail. One in particular recently struck our eye. As you can see, Town Square Condominium has developed a unique way to clean up after dogs:

Too bad every association does not have dogs that are this well trained!

If your Association is a Kaman & Cusimano Service Option Client, you can now see many great sample newsletters of other Ohio associations in the "Client Articles" section of our website: www.ohiocondolaw.com

Foreclosures Lead to Rise in Homeowners' Association Fees

2009-12-18T15:36:00.003-05:00

Recently, WKYC Cleveland ran a "focus" story entitled "Foreclosures Lead to Rise in Homeowners' Association Fees" featuring Kaman & Cusimano, LLC Attorney David Kaman. The story details the plight of Ohio's associations in the event of a foreclosure and highlights the grassroots effort to pass a "Super Lien" in Ohio.

When a unit goes into foreclosure and an owner stops paying the association's fees, the other members of the community often have to "foot the bill" to ensure that all necessary services of the neighborhood are carried out. According to Attorney Kaman, "[Ohio's] associations are bleeding bad debt, with no bank bailout to help them and so they have to act aggressively in foreclosures." A "Super Lien" would ease this burden on community associations by giving the association's lien six months priority over a bank's first mortgage. Joining the fifteen other states that have similar legislation, a "Super Lien" would not only preserve property values, but also the vibrancy of Ohio's neighborhoods and communities.

To watch the story please click on the following link: http://www.wkyc.com/video/default.aspx?aid=94514

SB 187 Hearings Held

2009-12-03T17:33:00.004-05:00

On Tuesday, December 1, 2009, Kaman & Cusimano, LLC attorneys David W. Kaman and Darcy Mehling Good attended Senate Bill 187’s proponent hearing before the Ohio Senate’s State & Local Government & Veterans Affairs Committee. David Kaman testified and answered questions before the committee, elaborating on the bill’s benefits to Ohio’s homeowner associations and Ohio’s homeowners. This was a crucial first step to getting this legislation passed in the Senate.

If passed, SB 187 would establish the Ohio Planned Community Act, giving Ohio’s homeowner associations a statutory foundation, similar to Ohio’s condominiums. The Act will provide Ohio homeowners with the consumer protections they deserve by protecting their investment through statutorily organized associations creating strong neighborhoods and communities. This includes the ability to amend a declaration, permit spouses to serve on the board, and affirm the association’s right to file a lien.

As this bill progresses through the Ohio General Assembly, your support will be crucial to show Ohio legislators that Ohio’s communities and homeowners need this important law. Stay tuned to this blog for how you and your community can help, and for updates on the progress of this legislation.

To view a full text version of the bill, please visit http://www.legislature.state.oh.us/bills.cfm?ID=128_SB_187

Board President Convicted of Theft

2009-11-11T10:53:00.004-05:00

According to an article in the Middletown Journal, an Ohio Association's board president was convicted of embezzling association funds. To learn about the steps your board can take to help protect your Association's assets, Kaman & Cusimano, LLC clients should read the article "Safeguarding Association Funds" by Attorney Darcy Mehling Good. The article can be found on the client articles page of the Kaman & Cusimano websites: www.ohiocondolaw.com or www.ohiohoalaw.com

Jail time for man convicted of embezzling $44K
By Denise G. Callahan, Staff Writer

LEBANON — A 49-year-old Maineville man was sent to jail for 60 days and ordered to pay the remainder of the $44,029 he stole from the Fosters Pointe subdivision.

Warren County Common Pleas Judge James Flannery gave Phillip Enrich a severe scolding before imposing the sentence, following Weinrich’s guilty plea Thursday, Aug. 27.

“I’ve decided that sending you to prison in this case won’t be necessary,” Flannery said. “It’s justified, you deserve it, but I’m not going to impose that consequence ... You have shamed your children, your wife, your parents and the very good people who wrote letters on your behalf, that counts for something, that is some consequence.”

Weinrich was the subdivision’s homeowners association board president when other board members found something was fishy with the books. It came to light that Weinrich had set up a secret HOA checking account and was paying his credit cards with those checks, his attorney Mark Krumbein said.

Flannery said in his 36-and-a-half years on the bench he has never had so many correspondence on one case, not even in death penalty and rape cases. He said 42 people took the time to write him and it was an even split between those who vilified and those who supported Weinrich.

Krumbein told the judge that his client, before the lapse in judgment, was a good neighbor, helping anyone in need. He has worked for Habitat for Humanity and performed other charitable works. He also said Weinrich tried to start paying back the money just before he was caught. He has paid back $24,500 of the money he grabbed.

Krumbein said Weinrich works as a traveling sales manager for a large company. The Weinrich home on Kelso Drive is valued at $359,280 by the Warren County auditor.

Flannery noted if Weinrich still has a job after this, he will serve his 60 days on work release, so he can earn the rest of the money he stole. Weinrich will be on community control for three years and also is not allowed to hold any position that involves handling money.

In a letter read during the hearing, members of the HOA board asked Flannery to throw the book at Weinrich, who faced a maximum 18 months in prison for the felony four charge. Members of the HOA board declined to comment after the hearing.

First Assistant Prosecutor Andy Sievers told the judge the best outcome would not be prison, but repayment of the money. Flannery said it mattered little to him that Weinrich intended to repay the money — embezzlers almost always do, he said.

“And you’re an embezzler, you’re a thief,” he said. “There is no polite way to say this and I’m not going to mince words with you. You stole from people who trusted you.”

Weinrich was cuffed and led out of the courtrom. Krumbein said Flannery’s decision was just.

“I feel Judge Flannery’s sentence was fair,” he said. “He respected the victims and was still fair to Mr. Weinrich by allowing him to continue working so he can repay the money.”

Red Flag Rules Delayed

2009-11-06T18:31:00.004-05:00

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During our current seminar series, entitled "Success Basics for Community Association Board Members," our attorneys have been asked about the new "Red Flag" Rules. The Federal Trade Commission (FTC) has announced the implementation of "Red Flag" Rules which would require financial and creditor institutions with certain types of accounts to implement various rules, regulations, and safeguards to protect against identity theft.

While these new rules were intended for financial institutions such as banks and mortgage companies, the language of the regulations was so broad that they may also apply to certain community associations and property management companies. In part due to this expansive language, the FTC has delayed enforcement of the Red Flag Rules until June 1, 2010.

In order to clarify its positions, the FTC plans on issuing additional guidance to parties effected by these new rules. In the meantime, the Community Association Institute will continue to communicate its concerns to the FTC regarding the implications these rules will have on community associations. As soon as the FTC releases its guidance, the attorneys at Kaman & Cusimano will review it and advise our clients on how best to comply with the rules and reasonable safeguard against identity theft. Stay Tuned to this blog for more information.

FHA Regulations Delayed

2009-11-05T09:39:00.003-05:00

This past summer, the Department of Housing and Urban Development (HUD) announced that it was proposing new regulations for the condominium approval process of FHA loans and insurance. These new regulations, as initially proposed, would eliminate the "spot approval" process currently in place and would require existing associations to complete a new, comprehensive application process to obtain FHA approval. Once an association completes this process, it would be on a list of approved condominium associations whose units are eligible for FHA financing for two years.

Unsurprisingly, these sweeping new regulations have met with considerable resistance from both the lending and community association communities. As a result, implementation of these new guidelines has been delayed a second time, to December 7, 2009. In the coming weeks, FHA and HUD promise to release additional guidance on how to best transition an association to the new regulations. The attorneys at Kaman & Cusimano, LLC will continue to monitor this progress and will update readers on any developments. If and when the new guidelines are issued, we will provide information on how best to proceed with FHA financing. In the meantime, the "spot approval" process continues to be the easiest way for a potential unit owner to obtain FHA financing.

The Community Association Institute (CAI) has been an integral part in lobbying Congress, HUD, FHA, and the administration to make the FHA financing process as easy as possible on the millions of American community associations. Please check back to this blog in the coming weeks for additional updates from the CAI, HUD, and FHA.

HOA Legislation Introduced!

2009-10-16T11:48:00.003-05:00

The Ohio General Assembly has introduced legislation that will govern Ohio’s homeowner associations. Senate Bill 187, entitled The Ohio Planned Community Law, enjoys bi-partisan support, sponsored by Senator Seitz (R) and co-sponsored by Senator Sawyer (D). Getting this legislation passed into law is essential to preserving and protecting Ohio’s homeowner associations, and their owners, residents, and guests, far into the future.

For some time, Ohio’s condominium associations have had a state statute, the Ohio Condominium Act (O.R.C. 5311.) The Ohio Planned Community Law does not contain new law. It takes the currently existing condominium law and applies pertinent provisions to the operation of planned communities that are not condominiums. This includes important provisions such as requiring the developer to file a declaration and bylaws with the county recorder, providing that boards be elected from among the owners or spouses of the owners, allowing amendments to the declaration and bylaws with a seventy-five percent (75%) vote, requiring associations to maintain adequate reserve funding, and giving associations the statutory right to file a lien for delinquent assessments.

This bill, if passed, will provide Ohio homeowners with the consumer protections they deserve by protecting their investment through statutorily organized associations creating strong neighborhoods and communities. While the legislation does not currently include "Super Lien" language, we are working with legislators to amend the bill and insert a homeowner association "Super Lien."

Kaman & Cusimano, LLC is now reviewing the bill and as soon as our review is complete we will be posting a bill summary and a sample letter for homeowners supporting the bill to send to legislators.

To view the full text of the bill, click here: http://www.legislature.state.oh.us/bills.cfm?ID=128_SB_187

Bill Introduced to Permit Patriotic Flags

2009-10-13T06:33:00.002-05:00

The Ohio General Assembly has introduced House Bill 289, which if passed would prohibit Ohio community associations from passing an amendment or rule banning "A service flag approved by the United States secretary of defense for display in a window of the residence of a member of the immediate family of an individual serving in the armed forces of the United States. A service flag includes a blue star banner, a gold star banner, and any other flag the secretary of defense designates as a service flag."

This prohibition would be in addition to the restriction on associations prohibiting the American flag already found in Ohio law. The intent of passing this bill follows the common sense approach to patriotic flags that Kaman & Cusimano has advised its clients to follow in the past. Even before this bill becomes law, in these times of great national pride, especially for those serving in the armed forces, associations should consider permitting such displays of patriotism. While the association may require that the display conform to some reasonable restrictions, an outright ban will lead to angry, upset owners and even significant media attention.

This legislation is sponsored by Representatives DeGeeter and Coley and Cosponsored by Representatives Book, Boose, Murray, Gardner, Evans, Harris, Uecker, Harwood, Gerberry, Letson, Adams, R., Lundy, Luckie, Stebelton, Mecklenborg, Lehner, Ujvagi, Yuko, Phillips, and Dodd. To view the full text of the bill, click here: http://www.legislature.state.oh.us/bills.cfm?ID=128_HB_289

Super Lien Status Update

2009-09-25T10:58:00.011-05:00

Many of Ohio's condominium and homeowner association board members and residents have been inquiring as to the status of the "Super Lien" legislation. Thanks to everyone for your interest, help and support! We are happy to report that the process is moving forward, and we hope to have the bill introduced into the Ohio legislature soon.

Over 30 individuals came forward and presented the Super Lien Information Packet to legislators all around the State of Ohio. Many of these legislators expressed a strong interest in sponsoring and introducing the proposed law. Now that the Ohio General Assembly has returned from its late summer recess and finishes up the state's operating budget, we are very optimistic that the "Super Lien" will be introduced soon. When this happens, we will post an update on this website.

Once the legislation is introduced, we will contact all of the volunteers who signed up to be part of the "Super Lien" team. At that time, we will need as many letters, phone calls, and personal appeals to legislators as possible to ensure that the General Assembly is aware that this legislation is vital to Ohio's community associations.

Again, we will keep you informed with any updates regarding the "Super Lien" or any other condominium or homeowner association law changes.

Uncooperative Owner Forced to Comply with Association's Remodeling Rules and Pay Attorney's Fees

2009-09-23T15:51:00.004-05:00

On September 17th, in the case of Acacia on the Green v. Gottlieb, (No. 92145), the Ohio 8th District Court of Appeals affirmed the trial court’s ruling and held that a Unit Owner must receive the Association’s permission prior to engaging in a construction project, and failure to do so requires the Unit Owner to pay all of the Association’s legal fees (which in this case amounted to $18,442.55). Arguing on behalf of the Association was Kaman & Cusimano, LLC Attorney Cullen (CJ) Cottle.

The Court cited Ohio Revised Code Section 5311.081(B)(5) which states: The Board of Directors may “adopt rules that regulate the use or occupancy of units, the maintenance, repair, replacement, modification, and appearance of units, common elements, and limited common elements when the actions regulated by those rules affect common elements or other units.”

In this case, the Defendant had extensive electrical, plumbing, cabinetry and flooring work done to his unit without the prior authorization of the Board. The Acacia on the Green Declaration required prior written approval prior to making any structural improvements to a Unit, and the Board passed a rule requiring each Owner to obtain a permit from the Board prior to construction. The Association repeatedly tried to be accommodating to the Unit Owner by sending multiple notices and attempting to resolve the matter with him without litigation. However, the Association was left with no other choice but to litigate after the Unit Owner started another new project after being notified of his failure to obtain a permit from an earlier remodeling project. In ruling for the Association, the Court of Appeals found that the statute applied to the Unit Owner and the Declaration and rule provisions were reasonable.

Additionally, the Court found that the Ohio law required the Defendant to pay all of the Association’s attorney’s fees. According to Revised Code Section 5311.19(A): “All unit owners, their tenants, all persons lawfully in possession and control of any part of a condominium property, and the unit owners association of a condominium property shall comply with all covenants, conditions, and restrictions set forth in a deed to which they are subject or in the declaration, the bylaws, or the rules of the unit owners association, as lawfully amended. Violations of those covenants, conditions, or restrictions shall be grounds for the unit owners association or any unit owner to commence a civil action for damages, injunctive relief, or both, and an award of court costs and reasonable attorney’s fees in both types of action.”

Based on this provision, the Appeals Court held that the defendant is required to pay all of the Association’s attorney’s fees relating to the enforcement of the Declaration and Rules, which total $18,442.55!

Ultimately, this case is another victory for Ohio’s condominium associations. Unit Owners must follow the condominium statute in the Ohio Revised Code, AND the provisions of each association’s Declaration; and more importantly, failure to comply will require the violating Unit Owner to pay all of the Association’s legal fees – even to the tune of $18,000!

To read the entire opinion, click here: http://www.sconet.state.oh.us/rod/docs/pdf/8/2009/2009-ohio-4878.pdf

Associations Left Empty-Handed After Foreclosure

2009-09-08T19:35:00.005-05:00

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This past weekend, the Cleveland Plain Dealer ran a front page story on condominium sales in Ohio. Stagnant condo sales often have a negative impact on the association and the surrounding condominium community. In response, Ohio's community association boards have been working tirelessly to preserve their community's property values and community spirit. Reporting on these actions, the paper published another story about how Ohio's condominium associations are asking legislatures for help by joining 13 other states and enacting a condominium "super lien." According to the story by Michelle Jarboe:

CLEVELAND, Ohio -- Condo associations in Ohio want legislators to put them first in line for money when homes in their buildings are foreclosed upon.

The recession, the housing slump and job losses have meant more foreclosures and delinquent monthly fees for condos. Owners pay these fees - ranging from a few hundred dollars to more than $1,000 a month - to cover landscaping, building maintenance, utilities and other services. When owners stop paying, associations with tight budgets have two options: cut services or raise fees for all residents.

This year, the boards that represent condo communities have asked the Ohio General Assembly for relief in the form of "superliens."

Traditionally, the bank that provides the mortgage on a home has the primary lien, giving it first priority on money from a sale of the property during the foreclosure process. But when a home is sold after a foreclosure, the sale price may not cover the mortgage, especially after several years of declining home prices. In those cases, the bank recoups only part of its investment. And other lienholders, including the condo association, are left empty-handed.

Superlien laws generally require that the condo association be paid up to six months of delinquent fees before the primary lender and other creditors receive money. Such laws have been approved in at least 13 states and the District of Columbia. Ohio condo associations hope lawmakers here will take up the issue this fall.

In Northeast Ohio, most condo associations are fairly healthy, said David Kaman, a[n]... attorney who represents homeowners associations. But some associations, staggering under the weight of unpaid fees, left their swimming pools closed this summer, cut back on landscaping and started talking about payment plans with their utility companies and service providers.

"Right now, the condos in Ohio are keeping their head above water," Kaman said. "But if the economy continues to get worse, we could see that change. By enacting this legislation now, we will avoid condos' drowning."

Court Clarifies Lakefront Land Ownership

2009-08-31T11:02:00.001-05:00

Associations that border Lake Erie and other bodies of water have often wondered where along the lakefront the Association’s property ends and the public’s property begins. Recently, The Ohio 11th District Court of Appeals in the case of State ex rel Marrill v. ODNR (Case # 2008-L-007) helped to answer that question.

The Plaintiffs, a group of landowners that border Lake Erie, argued that their property rights extend to the “shoreline” of the water, wherever that line may be. The Defendants, the State of Ohio and others, argued that the State of Ohio owns and holds in trust for the people of Ohio the lands and water of Lake Erie up to the natural location of the ordinary high water mark, regardless of the shoreline’s current state.

Siding with the Plaintiffs, the court held that the public owns the land beneath the water at any given moment, and the lakefront property owner owners the dry land above the water. In other words, the lakefront owner owns all of the lake up until the water line. Therefore, as the water levels of Lake Erie rise and fall, so too does the lakefront property line.

This ruling is good news for Ohio’s condominium and homeowner associations which wish to keep lakefront property “private.” Absent a superseding law, agreement, or further review by the Ohio Supreme Court, this court’s ruling provides important clarification regarding where an association’s property ends and the public’s begins. As an association generally has the ability to place reasonable rules and regulations on the comment element property, an association would be able to regulate individual access and activities that takes place on land up until the shoreline.

It Takes a Judge to Invalidate an Election

2009-08-19T09:03:00.003-05:00

While it takes a judge to invalidate an election, generally owners may recall a board. Recently, we attended an annual meeting with a very close election. Nine candidates were nominated to fill four positions. While all the proper election procedures were followed, several of the candidates were unaware of their ability to solicit proxies from their fellow homeowners. As a result, two incumbents were re-elected as well as two candidates who generally favored the actions of the current board. The election results were achieved even though the vast majority of owners in the room opposed the current board and their courses of action.

Two days after the elections, a few of the defeated candidates circulated a petition among the owners aimed at calling a special meeting. The defeated candidates not only wanted a new meeting, but also wanted a new election.

The bylaws of every association must be carefully reviewed in the instance of a contested election. At this association, signatures of 25% of the owners are required to call a special meeting. The defeated candidates had no trouble getting the 25% owner signatures, however the bylaws make no provision for invalidating an election. As a result, the only way the defeated candidates could invalidate the election would be through judicial proceedings. (remember Bush v. Gore)

Bylaws of most associations do contain a provision for removing board members. At this association, removal of board members requires a vote of a majority of owners in the entire association. Last week, the special meeting of the owners was called and 85% of the owners were present in person or by proxy. Again, the results were very close, however, only 45% voted to remove the recently elected board members, while 40% voted they retain their positions. While some may think the vote to recall the board succeeded, it is important to note that the bylaws mandate that a "majority of the entire association" is needed for removal and the 45% obtained was shy of a "majority of the association." As a result, the recently elected board members remain in their positions.

If the governing bylaws had been silent as to removal, the disgruntled owners would have been left with no alternative but to go to court to invalidate the election. However, as history has shown and caselaw clearly indicates, absent out right fraud, forgery, or gross procedural injustice, courts are weary of mandating a new election.

Associations Benefit from Bailouts

2009-08-11T08:09:00.001-05:00

As many of Ohio’s condominium and homeowner associations face many financial challenges, there has been one indirect source of relief: federal bailouts. The positive effect this generates has been noticed by many local communities, and now the press. The following is an excerpt of an article published in the Columbus Daily Reporter on 8/10/2009:

Homeowners Associations Indirectly Benefiting From Bank Bailouts, Insiders Say

RICK ADAMCZAK
Daily Reporter Staff Writer
08/07/2009

Many banks and troubled homeowners have been helped by the federal government's bank bailouts, but other beneficiaries of that assistance are homeowners and condominium associations.

During the peak of the housing crisis, which was coupled with the onset of the recession, homeowners associations started to see their revenues fall as some of their members, who perhaps lost their jobs, struggled financially and couldn't afford to pay their association dues.

In severe cases, home mortgages would be foreclosed upon.

Homeowners associations themselves, in fact, can start foreclosure proceedings against a homeowner if that homeowner has fallen far behind on its dues or fees, which can range from a few dollars a month to hundreds of dollars a year depending on how much common space and amenities need to be maintained.

But following the bank bailouts, banks started working more with their borrowers to help them keep their homes and therefore they also can keep up with their association dues, said David Kaman, a partner at the law firm Kaman & Cusimano LLC, which has an office in Columbus and specializes in homeowners and condominium legal issues.

"We've seen a tremendous impact from the bank bailouts," he said. "The biggest thing going on is the banks with bailout money. In mediation they sit down with the unit owner and work out new terms."

He said the law greatly benefits homeowners associations in foreclosure cases. If a condominium is in foreclosure the bank pays past-due fees and must also pay any associated legal fees.

Dues and fees collected by homeowners and condominium associations are used to pay for the upkeep of common areas, ponds and even community pools in some cases. For condominiums, maintenance of the buildings themselves is paid for by the dues.

Typically, if a homeowner starts to fall behind on dues payments, the homeowners associations - many of which are operated by property management companies - will send a collection letter to the delinquent homeowner.

"Usually they'll owe from $1,000 to $3,000, which isn't much when compared to losing your home," said Kaman.

If that fails to resolve the issue, a letter is sent threatening to put a tax lien against the home or condominium.

For several years many homeowners or condo owners would take out home equity loans to pay off the balance owed, but as banks cut back on those loans some owners were put in difficult situations.

"When they get the letter, most people pay. We see a lot come in at the lien stage, too," said Kaman.

In a worst-case scenario the association files a foreclosure against the owner.

"We do, by statute, have that power. We have filed hundreds of those," said Kaman.

He said the biggest mistake homeowners associations make is to wait for the bank to take action instead of taking action themselves.

"They might be losing tens of thousands of dollars in those cases. As a result the other owners have to pay the dues," Kaman said. "We get hired by some associations and find that they have $30,000 or $40,000 worth of outstanding fees. It got that high because the board was not taking aggressive action."

While many homeowners or condo associations are run by property management companies, others are run by volunteer boards of directors composed of members.

Homeowners falling behind on their association payments are only hurting their neighbors, he said, especially if it's not a large development.

"If you have a 40-unit complex and four people are not paying, the other 36 have to cough up the money," said Kaman. "We take the 'pay or lose your home' attitude. That owner is hurting his neighbors."

Every Board Needs Officers!

2009-08-03T07:40:00.002-05:00

Kaman & Cusimano, LLC was recently hired by a condominium association in Delaware, Ohio. The association owners had validly elected its five (5) member Board of Directors. However, each Director was currently serving in an “at-large” capacity, meaning the Board had no elected officers.

Ohio Revised Code Section 5311.08 governs Ohio condominium associations. This law specifically states that “The board of directors shall elect a president, secretary, treasurer, and other officers that the board may desire.” (Emphasis added)

In other words, Ohio condominium association boards MUST elect officers. A President is needed to chair meetings. A Secretary is needed to ensure that proper minutes are kept reflecting board decisions. A Treasurer is necessary to be responsible for an association's finances. Even with a manager or management company, a board and officers are still required.

While there is currently no similar law that applies to Ohio homeowner associations, our office recommends that HOA boards follow the mandate for officers contained in the condominium law as this practice promotes good decision making, good record keeping, and proper fiscal responsibility.

For a general guide on officer responsibilities, Kaman & Cusimano clients who have attended our recent Orientation/Success Basics for Board Members Seminar should turn to page 10. Additionally, Kaman & Cusimano clients can view the article “Owners Elect Board - The Board Elects Its Officers” from the Client Articles section of our website. (www.ohiocondolaw.com)

Amendments MUST be Recorded to be Valid

2009-07-21T08:07:00.005-05:00

Our Firm was recently hired by an association in Westerville, and another in Dayton, Ohio. Both associations were under the impression that they had enacted valid and legally binding amendments to their Declarations. The Westerville association thought they enacted a "no-leasing" amendment. The Dayton association was under the impression that they had properly reduced their quorum requirement of their annual meeting to "those Owners present in person or by proxy."

Both associations were surprised to learn their amendments were not valid or legally binding because the associations never properly recorded the amendments with a filing at their local County Records Office.

Ohio Revised Code Section 5311 clearly mandates that amendments must be recorded to be valid. Community association boards would be wise to be aware of the two step process to be followed to enact a valid and legally binding amendment. An overview of the two steps are as follows:

STEP 1

A. Decide on topic needing amendment

B. Cover letter to all owners explaining reasons for amendment (Kaman & Cusimano provides)

C. Consent form ballot for each owner (Kaman & Cusimano provides)

D. Board reviews, approves, and distributes to owners

E. Enclosed self-addressed stamped envelope for return of consents

F. Meeting to answer questions (caution - some documents require a meeting)

G. Count percentages* to determine if required approval achieved

*Some documents establish one vote per unit/lot

H. Repeat until passed or defeated

STEP 2

A. Notify Kaman & Cusimano of percentage obtained

B. Amendment document prepared for recording by Kaman & Cusimano

C. Board executes amendment document which must be notarized

- Affidavit as to number of consents received

- Affidavit as to mortgage consents (if required)

D. Mandatory recording with County

E. Distribute copy of recorded amendment to all owners (caution - some documents require distribution by certified mail)

$250,000 FDIC Insurance Limit Extended

2009-07-11T07:47:00.005-05:00

As discussed in our recent seminar entitled "The Financial Crisis - What Every Board Member Needs to Know," the FDIC Insurance limit on bank accounts was increased from $100,000 to $250,000. This increased limit was set to expire on December 31, 2009. However, the FDIC recently extended the higher insurance limit of $250,000 through December 31, 2013. An association's board would be wise to make certain that no more than $250,000 of association funds are in any one FDIC Institution.

It is also crucial that all association funds are deposited in an FDIC insured account. As of July 11, 2009, fifty-three (53) banks have failed nationwide. If a bank fails and its accounts are FDIC insured, the FDIC will reimburse the account holder for the amount in the institution, up to $250,000. If funds are placed in non-FDIC insured accounts, when a bank fails, the account holder could lose all deposited funds.

In light of the above, association boards are clearly fulfilling their obligation to the owners by making certain that association funds are deposited only in FDIC insured accounts and in an amount no greater than $250,000 in any one institution.

Super Lien Article in Columbus Dispatch

2009-07-07T10:01:00.007-05:00

On Sunday, July 5, 2009 the Columbus Dispatch ran a feature story reporting on the Ohio Super Lien. That story, which reported on the progress of getting this legislation passed, can be viewed by clicking the following link:

Columbus Dispatch Super Lien Article

We will keep you updated on this blog with further status updates and will inform you as soon as this proposal has been introduced.

Don't Rain on Owners' Patriotic Parade

2009-06-29T06:35:00.002-05:00

Most Community Association governing documents prohibit exterior modifications, including the placement of banners, flags, and signs. However, as pointed out in Chapter 1 of Kaman & Cusimano LLC's booklet, "A Guide for Board Members," there is a hierarchy of laws and in several instances there are federal and state laws that supersede and overrule Community Association declarations.

One such instance is the placement of the American flag. Ohio Revised Code Section 5311.191 states that:

"No declaration, bylaw, rule, regulation, or agreement of a condominium property or construction of any of these items by the board of managers of its unit owners association shall prohibit the placement of a flagpole that is to be used for the purpose of displaying, or shall prohibit the display of, the flag of the United States on or within the limited common areas and facilities of a unit owner or on the immediately adjacent exterior of the building in which the unit of a unit owner is located."

Community Association boards would be well advised to liberally allow signs of patriotism during our nation's 4th of July celebration. I recommend that boards not only permit American flags, but also flags of our armed forces, blue star banners, and/or any other reasonable, patriotic displays.

Wall Street Journal Reports on Possible Changes to Condo Loans

2009-06-22T10:56:00.004-05:00

In today’s Wall Street Journal, there is a report that two Congressmen are calling on Fannie Mae and Freddie Mac “to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing market recovery.”

Freddie Mac and Fannie May will no longer guarantee mortgage loans to new certain new construction condominium projects, where greater than 15% of owners are delinquent, or where one owner owns more than 10% of units. These lawmakers hope to relax these new regulations. However, until that happens, there are a few things associations can do to ensure that potential buyers can still get a loan for their unit. First, boards should continue to implement and enforce a strong collections policy to keep delinquencies low. This was a main topic at the recent Financial Crisis seminar presented in April by Kaman & Cusimano, LLC. While keeping delinquencies low in a difficult market can often be challenging, the alternative could be catastrophic for the community. Second, boards often ask if they should consider reversing a no leasing amendment to the Condominium Declaration. Absent critical and unique circumstances, our answer continues to be no.

By doing these things, an association can successfully navigate through the Fannie Mae and Freddie Mac regulations so that potential owners may still get financing for their units.

The Wall Street Journal article is available online on a free basis for a limited time here:

http://online.wsj.com/article/SB124562533240635581.html

1500+ Board Members Attend Financial Crisis Seminar

2009-06-16T07:52:00.004-05:00

The desire of volunteer board members to benefit community associations continues to amaze and impress. In April, over 1500 board members attended Kaman & Cusimano, LLC's spring seminar series entitled "The Financial Crisis - What Every Board Member Needs to Know." This seminar detailed ways for a board to manage the financial crisis and not let the financial crisis manage the board. Topics covered included a new investment tool known as "CDARS," FHA lending requirements and their impact on community associations, creative funding sources for community associations such as loans and donations, and successful collection techniques and policies.

Community Association board members from all over the state of Ohio all share the common goal of financial stability and posses the drive to make that goal a reality. Through education, planning, hard work, and diligence, there is no doubt that Ohio's condominium and homeowner associations will emerge from this crisis in a stronger fiscal position that they were before. Thank you, board members, for all of your time and hard work to make these goals a reality.

"Super Lien" Status Update

2009-06-09T08:36:00.002-05:00

As a result of our seminars and newsletters, over 130 individuals have come forward to volunteer to help get “Super Lien” legislation enacted in Ohio. As many of you already know, condominium and homeowner associations throughout Ohio struggle to pay for necessary services. That struggle gets even worse when you and your neighbors are forced to make up for the loss of funds when a fellow homeowner is delinquent. “Super Lien” legislation would help to protect community associations in the event of a foreclosure. “Super Lien” legislation will safeguard the solvency of community associations throughout Ohio so that they may continue to provide maintenance, services, and property preservation that all owners deserve.

We are in the process of asking some volunteers to make contact with the representatives they know in an attempt to get this legislation introduced. The process of introducing legislation often takes several months. As soon as it is introduced, well will provide another status report on this blog and provide a link to the pending legislation. We will then begin a grassroots lobbying campaign. At that point, we will ask everyone to call, write, or email as many senators or representatives as possible. The Ohio General Assembly needs to be informed that a “Super Lien” is integral to the continued well-being of Ohio’s community associations.

It is hoped that the Ohio Legislature will respond to all of the volunteers’ efforts and will enact the "Super Lien” law. Stay tuned to this blog for further developments.

Pool Safety Reminder

2009-06-01T07:45:00.004-05:00

The days are getting longer and hotter and school is almost out, which leads to but one conclusion: summer is upon us. With summer comes the opening and enjoyment of many community association pools across the state of Ohio. Kaman & Cusimano, LLC would like to take this opportunity to remind everyone that there are some new and important safety laws associations with pools must follow.

The Virginia Graeme Baker Pool and Spa Safety Act is now in effect and applies to pools in Ohio. This new law was created to decrease the number pool drownings, especially by children, caused by pool draining systems. The act requires that all pools must be equipped with federally approved safety drain covers. The act also requires that pools with a single main drain have automatic shut offs or a Safety Vacuum Release System installed. Association pools must comply with these requirements. If your pool is not in compliance with the act, it is legally not allowed to open and the association could face significant fines, or worse, an injury. After all, the goal of everyone involved is for a safe pool environment. For more information on this act, and other important pool safety information, visit the Consumer Product Safety Commission’s pool website at www.poolsafety.gov, or talk to your pool service company.

Don’t Fret Over Moratorium Bill

2009-05-26T07:51:00.002-05:00

Our office has been getting numerous calls from board members and managers concerned with the proposed foreclosure moratorium in the Ohio legislature. As has been widely reported across the State, the Democratic controlled House passed House Bill 3, which would place a six month moratorium on mortgage foreclosures. At this time, Kaman & Cusimano, LLC does not believe Ohio’s community associations have cause for concern. First, the legislation appears to only apply to mortgage foreclosures (i.e. lender banks) and not any other type of lien holder such as a condominium or homeowner association foreclosure. Additionally, this moratorium legislation now faces the daunting and extremely unlikely task of passing in the Republican controlled Ohio State Senate. With the Senate busy trying to fix the budget crisis and many senators questioning the constitutionality and effectiveness of moratorium legislation, House Bill 3 does not appear to have enough support to become law.

Even if a six month foreclosure moratorium would become law, prior experience has shown that a foreclosure moratorium may have a positive effect on community associations. As indicated at our recent Financial Crisis Seminar, the good news for community associations is that moratoriums often give the lender bank a chance to work out a payment plan and revised mortgage terms with the unit/homeowner. In order to file the new mortgage, the lender bank is usually paying the association in full, including attorneys’ fees and court costs, to remove the association’s lien and stop the association’s foreclosure.

As is indicated above, there is no need for Ohio community association board members or managers to fret over the impact of the passage of Ohio House Bill 3.

Mortgage Modification Legislation Dead

2009-05-04T11:37:00.007-05:00

Good News! Last week, the Senate defeated a bill which could have had a negative impact on community associations across the country. Many board members, property managers and attorneys have been concerned about the possibility that this legislation would have allowed a federal judge to modify a owner's financial obligation to the association. Essentially, a judge may have been able to drastically reduce or even eliminate the fees owed by a delinquent owner to an association. While finding remedies for the financial and foreclosure crisis remains a national priority, this legislation had the potential to create a new crisis: crippling America's communities.

Realizing the gravity of the situation, the Community Association Institute's (CAI) Government and Public Affairs Team worked very hard to lobby Congress against this bill. Ultimately, their efforts, along with grass roots opposition from board members across the country, proved to be successful. This is a legislative victory for community associations all over America!

For more on the story, read the CAI's press release: Mortgage Modification Legislation Dies in Senate (word document)

You Can Make a Difference!

2009-04-20T13:43:00.002-05:00

It often seems like as just one person, you cannot make a difference, but as a board member, you really can! Greg McNeil, a board member at Ashbrooke in Hudson, petitioned the government and received federal stimulus money on behalf his association. His story was reported in the Cleveland Plain Dealer on Saturday April 4, 2009.

Greg McNeil of Hudson got $168,323 in stimulus money to silence train horns at crossing near his homeFederal money to help create train quiet zone
Saturday, April 04, 2009
Karen Farkas

Hudson -- Greg McNeil competed with city, county and state officials for Ohio's federal stimulus money and wound up winning $168,323 to silence train horns at a crossing near his home.

McNeil's project, on behalf of his homeowners association, was one of only 149 chosen last week by the Ohio Department of Transportation from 2,222 eligible to receive $774 million in infrastructure money. His is the only submission from a private citizen to receive ODOT's nod.

"I tell you, we were ecstatic," he said. "This was just tremendous." Norfolk Southern owns the tracks that cross Twinsburg Road in Macedonia, where the number of trains has increased to 76 a day. Nearby residents in Hudson, Macedonia and Northfield Center Township don't mind the trains, just the horns.

McNeil, who owns a Web site design company, has lived in Hudson's Ashbrooke East subdivision just west of the tracks for four years. As vice president of his homeowners association, he volunteered in January of last year to find out how the crossing could become a quiet zone.

A 2005 federal rule sets standards for quiet zones, which can be designated by the Federal Railroad Administration if safety measures at railroad crossings are sufficiently upgraded.

Norfolk Southern did an engineering study of the Twinsburg Road crossing for $7,500, with half the cost paid by Macedonia and the remainder split by Northfield Center Township and Hudson, McNeil said.

The engineering report last September recommended dividers in the center of the road and circuitry upgrades to lower the gates based on the speed of the train instead of when it reaches a certain point on the tracks. The cost for those improvements was $168,323.

McNeil appealed to public officials for state or federal help but struck out.

On March 3, he talked to Heidi Swindell, government-affairs liaison for the Summit County engineer's office, and she suggested he apply for stimulus money. Only one problem - the deadline was that day. McNeil enlisted the help of his daughter Amy, a senior marketing major at Kent State University, and they submitted the online proposal 15 minutes before the deadline. "I kind of looked at it as a 'Hail Mary' pass," he said.

The Ohio Rail Development Commission recommended grade-crossing safety projects to ODOT for stimulus funding, said spokesman Stu Nicholson. "There was some pretty hefty competition," he said. "For a homeowners association to go through that process and win out is not a small victory. It's pretty significant."

McNeil hopes the crossing project is finished by Labor Day. Swindell, who said the engineer's office will help in any way it can, was amazed that McNeil's project was one of the six in Summit County to receive stimulus funds. "I was so impressed at his tenacity," she said. "Here is a private citizen, instead of complaining about something wrong in his neighborhood, trying to find ways to fix it."

Welcome!

2009-03-09T13:19:00.000-05:00

Welcome to the new, redesigned homepage of Kaman & Cusimano LLC! We have kept all of the same great features such as news, articles and seminar registration, while making the site easier to use and nagivate.

One great new feature is the Ohio Condo & HOA Law Blog. On this page, we will keep our clients and readers abreast about current trends in the law, answer commonly asked questions, report on important community association news, and share some of our most recent successes! This is just another way we want to communicate with board members and their property managers to make sure everyone has the most and best information possible to keep your association running smoothly.