March 13, 2013 Response to Board on Illegal Reserve Account Spending

Oak Knoll Homeowners Association

Board of Directors

c/o Superior Community Management Co.

PO Box 4585

Tualatin, OR 970062

RE: March 11, 2013 Letter Responding to my November 26, 2012 Inquiries

Dear Board Members,

The answer provided in response to my questions regarding how the damage to the sidewalks caused by the street trees along Foothills Drive is to be paid for is unacceptable.

94.595 Reserve account for maintaining, repairing and replacing common property; reserve study; maintenance plan. (1) The declarant, on behalf of a homeowners association, shall:

      (a) Conduct an initial reserve study as described in subsection (3) of this section;

      (b) Prepare an initial maintenance plan as described in subsection (4) of this section; and

      (c) Establish a reserve account as provided in subsection (2) of this section.

      (2)(a) A reserve account shall be established to fund major maintenance, repair or replacement of all items of common property which will normally require major maintenance, repair or replacement, in whole or in part, in more than one and less than 30 years, for exterior painting if the common property includes exterior painted surfaces, for other items, whether or not involving common property, if the association has responsibility to maintain the items and for other items required by the declaration or bylaws.

Nowhere in CC&R Section 7 – MAINTENANCE AND ASSESSMENTS, 7.1, are the sidewalks mentioned in any language so as any reasonable person reading this section would come to the conclusion that the sidewalks were in fact “common property” of the Association.

 The ONLY items demarcated as “Common Improvements” (i.e. common property) are as follows:

“Sign monument to be installed on Lot 29, Oak Knoll; traffic circle at intersection of Foothills Drive and Center Street; planter strips along Foothills Drive; and street trees on each Lot.”

However, under CC&R Section 7 – MAINTENANCE AND ASSESSMENTS, 7.3, it does in fact clearly state the following:

“Each Owner shall be responsible for the maintenance of the sidewalks abutting his Lot, including any damage caused by the street trees.”

Given this clearly written statement in the CC&Rs as to whose responsibility any damage to the sidewalks, even the sidewalks along Foothills Drive, the Board cannot justify any claim that the Association has responsibility to maintain just the sidewalks along Foothills Drive and none other.

The Oregon courts are pretty clear on its interpretation and implementation of the term “shall” when put into contracts or statutory law. In other words, there is no room for your subjective interpretation of the CC&Rs to say what you want it to say or mean.

The CC&Rs are clear as to the responsibility of the repair of sidewalks, including any damage caused by street trees; juxtaposed with ORS 94.595 as to what the intended purpose of the reserve account is for – common property – of which the sidewalks along Foothills Drive are not designated as such and cannot be claimed as the responsibility of the Association. As such, you will NOT fund any repairs for the sidewalks along Foothills Drive out of the Associations Reserve Account.

At the appropriate time I will be requesting either an appointment to review the financial budgetary items paid for during fiscal year 2013, or I will make a formal request for copies of all documents pertaining to such. If and when I find any repair of the sidewalk along Foothills Drive being paid for out of the Reserve Account, this will be cause for legal action against the Board of Directors for a cut and dry breach of the CC&Rs, a breach of your fiduciary duties as members of the Board of Directors, and a clear violation of ORS 94.595.

This is not a threat, but rather a promise.

For far too long this Board of Directors has consistently violated the CC&Rs – in more ways than one – for which I have documented over the years, to include the lack of a Reserve Account and the required Reserve Study most of all per ORS 94.595 (which the Board has admitted to subsequent to my repeated written correspondences proving this fact, something that even your lawyers at Vial and Fotheringham LLP could not rebut, clearly advising you to do what you have long since been legally obligated to do since 1999 when the (then) Board voted in a Reserve Account).

Each and every time you and I have had to come to the point of a legal question in interpreting the CC&Rs and the Oregon Revised Statutes, you have lost each and every time (case in point is the street tree issue, which had nothing to do with the legal costs at your end in a vain attempt to force the matter but rather you were advised by counsel it was a losing battle as I was right, legally, and you were not), to include our recent disagreement over the missing Reserve Account that suddenly appeared in 2011 without a Reserve Study, and the fact that the Board was legally obligated and required to have conducted one before assessment of a Reserve Account, which the Board is now implementing into the Association budget.

While you may think you have the legal authority to continue paying for repairs of the sidewalks along Foothills Drive via the Reserve Account just because you all voted to follow the “status quo” (i.e. illegal conduct in breach of both the CC&Rs and ORS 94.595), it does not make it right or legal. You have no authority to supersede the CC&Rs and statutory law.

You’re all nothing but a bunch of “volunteers,” as you always claim (rather make as an excuse for any failures or errors on your collective part) at each meeting when your actions, or lack thereof are called into question by homeowners.

So if you really want to face a losing legal battle in this matter, go ahead and use funds from the Reserve Account for damage to the sidewalks along Foothills Drive in direct contravention of the clear and plain language of CC&R 7.3 and ORS 94.595 and we will see one another in the Yamhill County Circuit Court where you will lose.

Sincerely,

OKHA WatchDog