Communication Not Litigation

Our firm has built a reputation in Community Association Law on attempting to “communicate and not litigate. ”   We have a history of trying to keep the unity in community. Attached in as article from a national publication referencing our methods:

 

http://www.hoaleader.com/public/Pursuing-Fines-Part-II-Could-This-Board-Have-Won-Without-Litigation.cfm

Electronic Communication (Emails) Are Discoverable in Litigation

Our firm philosophy has long been "Communication not Litigation." This philosophy is based on the belief that disputes are best resolved in a voluntary and reasonable manner rather than through the time, expense and aggravation of a lawsuit. Recent developments in the law, however, may require Association boards to pay much more attention to how they "communicate" in the event they are compelled to "litigate."

Historically, when a lawsuit is filed, each party is entitled to "discover" evidence held by the other side. This "discovery" process typically involves producing copies of records and other documents possessed by each side to the dispute. In the case of an association, this would include among other things, correspondence to and from the board and its owners as well as between board members, financial records, board and owner meeting minutes, enforcement records, reserve studies and collections information. In today's world, much of this correspondence and records are in the form of emails, texts, databases and other electronically stored information, commonly called “ESI.”

Not surprisingly, lawyers have been very quick to seize upon the existence of ESI and have begun to diligently seek it out both prior to and after the filing of a lawsuit. Once an association's board becomes aware that the Association has been or is likely to become involved in litigation, it has a legal obligation to preserve all evidence, including ESI. We have received a number of letters from lawyers specifically requiring our association clients that may become involved in litigation to preserve any and all ESI under the threat of being sanctioned by the courts.

While none of this may seem to be problematic at first, it can become a great concern for boards who routinely conduct business by email from their home computers, work computers or personal email accounts, as each of these computers and email accounts are subject to discovery motions and subpoenas. This will invariably provide access to information, either personal or otherwise, that a board member assumed was private or confidential but is now being subject to the scrutiny of lawyers and courts. Computer technicians are now able to completely "clone" or duplicate all information on individual computers and computer systems, including attempts to delete or change information.  As a result, board members should avoid using personal email accounts to conduct Association business and limit the content and subject matter of email communications. (Ask yourself if you would feel comfortable having a particular email read in front of a jury.)

The most important thing to remember is that no matter how many times you press the "delete" button on your computer, nothing ever really goes away and may be able to be retrieved by some fairly sophisticated software and some fairly persistent lawyer.

Bad Legislation with an Adverse Impact Introduced as House Bill 574

While infrequent, every now and then a State Representative introduces proposed legislation that makes no sense and is totally adverse to the best interests of Ohio community associations.  Unfortunately, Representative Ted Celeste has just introduced such legislation as Ohio House Bill 574.  This proposed law would:

-Require all property managers to have a real estate broker’s license

-Require owners to approve of the association’s annual budget

-Require board members to register their names with the State

-Require every association to register with the State and pay an application fee that may be raised by the Division of Real Estate

-Create a Statewide dispute resolution board and give this board significant power to override the association’s board decision

-Create a State agency to hear and resolve owner complaints

Fortunately, this legislation was introduced during the summer recess and the current legislative session ends at the end of 2012.  We encourage Board members and property managers to contact Representative Ted Celeste along with Minority Leader Armond Budish at 77 South High Street, 14th Floor, Columbus, Ohio 43215 and indicate your opposition to this proposed law.

A copy of the proposed legislation can be found here:  http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_574

 

HEALTH DEPARTMENT NO LONGER OVERSEEING OHIO’S MARINAS

Either a blessing or a curse, owners and operators of marinas in Ohio no longer have to worry about State or local health departments looking over their shoulders. With the repeal of Section 3733.22 of the Ohio Revised Code, health departments no longer have the authority to provide oversight or assistance to Ohio’s marina operations.

 

 

Since the law’s enactment in 1975, anyone who wanted to construct or expand a marina had to apply for a license and pass an inspection. Any existing marina had to have its license renewed each March. Health department officials made sure the facilities were safe and sanitary so as not to create a health hazard or a nuisance. The principal goal was to protect Ohioans using recreational vehicles or those in the surrounding areas from unsafe drinking water and pollution hazards caused by improperly disposed wastes and other unsanitary conditions. 

 

 

But in September of this past year, the State’s authority to oversee operations and issue licenses was repealed. Some local boards of health have sent out advisory notices to nearby marina owners, suggesting that they use the former regulations as guidelines for continued operation. Time will tell how effective the honor system is at keeping marinas safe and sanitary.

 

 

If your association includes a marina, the board should adopt operating rules and requirements to maintain a safe and inviting facility that serves to protect owners and guests as well as property values.  And, if your association does not contain a marina but one is nearby, it still may be worth your while to keep an eye on the surrounding water—you might be the only one.  

The Growing Trend of Community Associations' Digital Record Keeping

Like any corporation, community associations generate a tremendous amount of paper records and documents.  Some larger and/or older associations must dedicate entire rooms to storing nothing but filing cabinets packed full of paperwork.  Because inflow of paperwork knows no ends, as long as the association continues to operate, the records will continue to accumulate.  Organization of records is an enormous task that normally falls on the board members or the management company.  Fortunately, as technology continues to evolve, the prospect of keeping digital records becomes easier and more affordable.  Aside from elimination of the amount of space required to store digital records, digital records are also more time efficient.

The process of “going digital” is two-fold.  First, the board must approve a plan to convert all of its existing, paper records to a digital format.  Second, the board must purchase technology or contract an outside firm to incorporate new paperwork into the digital records moving forward.  Conversion of existing records may present more challenges due to high volume of paper records.  As a result, the board may choose to hire a third party company that specializes in scanning and organizing records.

Experts recommend that an association first devise a plan as to what it wants to store digitally. Does the association intend to convert all of its files, including dormant files, or only the active files?  Typically, third party conversion companies recommend converting everything to a digital format, ensuring everything is stored in the same place.  The board must then budget for the costs and time needed to complete the project, including the cost to hire the third party, if needed.  Although hiring an outside company may eliminate a large amount of time the board is investing in the project, either a board member or the property manager must work oversee the process to ensure accuracy.

Finally, if an association chooses to make all records digital, a simple desktop scanner can be purchased for the association’s office or the property manager to continue the paperless process.  Each time a new document is received it can be scanned and added to the digital records and the paper copy thrown away.

Choosing to become a paperless association is something many boards are now debating, as the digital process will likely, in the long run, save space and money and will help to ensure easy, long term access to all association records.

Ohio Supreme Court Rules in Favor of Homeowners

In a unanimous decision, the Supreme Court of Ohio recently issued a favorable ruling for homeowners across the state.  The decision also benefits community associations facing unnecessary repairs as a result of poor construction practices by their developer. 

In Jones v. Centex Homes, the Ohio Supreme Court reversed a decision by the Tenth District Court of Appeals finding that homeowners may waive the builder’s obligation to construct the house properly in their purchase agreement.  The Court concluded that a homebuilder’s obligation to build in a workmanlike manner is a duty imposed by law that cannot be signed away by a homeowner in the fine print of a home purchase contract.  The Supreme Court went on to state that homebuilders do not have to be perfect, but they do have to construct houses “in a workmanlike manner using ordinary care.”

Prior to the Supreme Court’s decision, developers often argued that community associations were barred from commencing a lawsuit for construction defects because each owner within the association had waived his or her right to sue in a purchase agreement.  Developers will no longer be able rely on this argument, as the Supreme Court clearly concludes that builders cannot insulate themselves from claims for poor workmanship by inserting a waiver provision in a homeowner’s purchase contract.  By eliminating a potential defense for developers engaged in shoddy construction practices, Ohio community associations stand to benefit from the Supreme Court’s recent decision.