PROPER TRANSITION,
BUDGET, AND ESTABLISHMENT OF THE RESERVE ACCOUNT REQUIRED UNDER ORS 94.595
ISSUE(S)
& VIOLATION(S) OF THE CC&Rs AND ORS
1.
No
reserve account established at the turnover meeting from the declarant to the
association
2.
No
reserve study conducted in order to substantiate the reserve account once that
account was established
3.
Inconsistent
funding of the reserve account from 1999 to 2005
4.
Funds
were stolen from the reserve account in 2005, no report filed with local law
enforcement and/or the homeowners of the OKHOA informing them of the theft
5.
The
Board of Directors, without the consent of the homeowners required under OR
94.595(8)(a) and/or (8)(b), eliminated the reserve account following the theft
of funds in 2005
6.
The
Board of Directors, without the required initial reserve study and maintenance
plan required under ORS 94.595(1)(a) and (b, re-established the reserve account
assessing $13,600 in the actual budget for fiscal year (FY) 2011 for non-common
improvements without the consent of the homeowners required under ORS
94.630(1)(E)(ii), (1)(F)(h), and (1)(F)(k)(B)
7.
VF,
via attorney Jason Grosz, admitted in a December 22, 2010, email that a reserve
study should have taken place prior to re-establishing the 2011 reserve account
8.
VF,
via attorney Jason Grosz, admitted in a January 5, 2011, email that both VF and
SCM were not aware of any Board of Directors vote to “opt-in” and establish a
reserve account in 1999; thus the OKHOA and SCM have failed properly maintain
records of the association required under ORS 94.670
On
July 19, 1999, I addressed the OKHOA Board of Directors, then President Bob
Rose, in writing, inquiring about several matters that the OKHOA had either yet
to establish subsequent to the turnover meeting from the declarant to the
association, or simply failed to do according to the CC&Rs, Bylaws and/or
ORPCA. A couple of those questions specifically applied to the reserve account:
“Where was the reserve account the declarant
was obligated to establish per ORS 94.595?”
“Why, in the provided expenses breakdown in
the July 2, 1999, letter is there no clearly identifiable reserve account
annotated?”
That letter went unanswered to which I
addressed the Board of Directors in another letter dated September 10, 1999,
readdressing the issue of the lack of funding for a reserve account:
“In the Annual Budget outlined in the
President’s letter…Where is the reserve account?”
A
written response dated November 12, 1999, from Kevin J. Kinney of Coran &
Kinney, LLP was received, and within this letter Mr. Kinney made the following
admissions:
“…the board has only been in effect a short
amount of time….it took over the duties of the association with a limited
amount of guidance from the Declarant. Many of the questions that you ask the
board cannot be answered by the board and should be directed to the Declarant.”
“After the 41 lots had been sold, NSP
provided those people with a letter that it wanted to make the change effective
on March 15, 1999. There was a meeting at the Newberg Hospital regarding this
issue with representatives from NSP and the homeowners present… A transition
team was established as well.”
“When the Association took over from NSP it
began to be responsible for the bills on that date. It took several months
before a budget was created and money was actually collected from the
homeowners.”
“At the time the budget was established,
there was no prior budget to review. Moreover, many of the exact amounts were
not available to the board when the budget was created because it did not know
what would be needed.”
“We do not have any information regarding a
reserve account from NSP. Please consult NSP directly for more information. The
board had taken this into consideration and has voted to establish account
effective November 9, 1999. The board will address in a future meeting whether
to utilize ORS 94.595(7) and recommend elimination of the account to the
homeowners.”
First,
Mr. Kinney admits that the Declarant failed to follow through with its own
Declaration under the following CC&Rs:
· Section 2.5,
regarding the turnover meeting, in which “The declarant shall deliver…”
· Section 2.5.4 “all
funds if any of the Association and control of all such funds;”
· Section 2.5.8 “an
operating budget for the portion of the planned community turned over to
Association administration;”
· Section 2.5.17 “In
order to facilitate an orderly transition during the three month period
following the turnover meeting, the Declarant or an informed representative
shall be available to meet with the board of directors on at least three
mutually acceptable dates to review the documents covered above.”
All
of the above are also in violation of ORS 94.616(3)(f), (3)(g) (3)(L), and
(3)(n).
In
addition to, the President’s initial letter to the homeowners dated July 2,
1999, declared that the association took over the responsibilities of the
association from the Declarant “in debt.” Under the CC&Rs Section 2 –
Homeowners Association Provisions, the Declarant was to have established a
Reserve Account, the required Reserve Study and Maintenance Plan to substantiate
that account, a bank account in the association’s name, insurance policies in
place, etc. (i.e. other violations of the Declarant’s contract with the City of
Newberg to be discussed later herein this formal complaint) as the precursor to
the association to be turned over to the homeowners at the turnover meeting in
March 1999.
Another
point of fact is that there were no “three mutually acceptable dates” made
between the Declarant and the new association of the homeowners; just the one
meeting where the turnover took place at Newberg Hospital on March 15, 1999.
Additionally,
not all of the documentation, accounts, reserve study, maintenance plan for
common improvements, among other required accounts and/or materials were not
properly established and/or provided to the association at the turnover
meeting.
In
2005, the funding of the reserve account established in 1999 suddenly
disappeared without explanation. It was not until the September 2011 Annual
Meeting that it was disclosed by the Board of Directors and Chris Tingey of VF
that those funds were stolen by a previous member of the OKHOA.
Under
ORS 94.595(8)(b), on an annual basis, the board of directors, “with the
approval of all owners,” may elect not to fund the reserve account for the
following year. From 2005 to 2010, this annual vote did not take place, nor did
any homeowner approve of such a suspension to fund the reserve account duly
established in November 1999 and carried through to its theft in 2005 with no
notice to the homeowners that the funds were in fact, stolen.
I
addressed the OKHOA Board of Directors via SCM regarding their proposed budget
line item for re-establishing the reserve account at $13,600 without the
required reserve study and maintenance plan under ORS 94.595. The subsequent
replies from both Judy Moshberger, CMCA, AMA from SCM and Jason Grosz of VF,
make it clear that neither understand the intent and purpose of the ORPCA, the
requirements outlined therein, and/or the CC&Rs as established by the
declarant.
In
an email dated December 01, 2010, from Judy Moshberger of SCM in response to my
email request dated November 29, 2010, requesting a copy of the reserve study
and maintenance plan, she writes as follows:
“The HOA does not have a reserve study or
maintenance plan. As a pre-2002 Unregulated Planned Community, the requirement
in ORS 94.595 that Planned Communities conduct a reserve study and updates does
not apply to Oak Knoll.”
I
replied on the same date outlining the statutory fact that Oak Knoll is a
regulated planned community as defined under ORS 94.550 Definitions for ORS
94.550 to 94.783, specifically (3), (3)(a), (3)(b) and (3)(B), the latter
clearly outlining the requirement of a reserve account. That reply went
unanswered and I was forced to address this matter with Jason Grosz of VF.
In
an email to Mr. Grosz dated December 21, 2010, I outlined, in part, the
following:
“Your client, the Oak Knoll Homeowners
Association via Superior management, cannot assess a reserve account without a
reserve study and maintenance plan as outlined under ORS 94.595.
Judy Moshberger with Superior Management
appear to be under the false impression that our association is not a regulated
planned community, when as a matter of legal fact it is.
As clearly acknowledged in the CC&Rs
section 2.1…acknowledges that the association is a planned community and is
unequivocally subject to ORS 94.550 to 94.783…
Moreover, ORS 94.570 and 94.572 make it even
more perfectly clear that the HOA is subject to 94.550 to 94.783, which
specifically includes 94.595(5)(a); however ever since the declaration of
CC&Rs was filed in 1995…the Declarant and the association in all is
successors has FAILED to establish a reserve account required under the
prevailing statutes throughout the Oregon Planned Community Act.”
Mr.
Jason Grosz of VF replied via email on December 22, 2010, in part, as follows:
“Thanks for your note.
First, I’m not interested in getting in a
protracted debate with you about how and whether to classify Oak Knoll as a
planned community. I don’t think that is a useful exercise, since we both agree
that ORS 94.595 applies to the Oak Knoll to some extent.
I think we just disagree about what portion
of ORS 94.595 applies and to what extent.”
Quoting
portions of ORS 94.595, Mr. Grosz makes it a point to bold the following
section:
“(5)(a) If a declaration or bylaws require a
reserve account, the reserve study requirements of subsection (3) of this
section and the maintenance plan requirements of subsection (4) of this section
first apply to the association of a subdivision that meets the definition of a
planned community under ORS 943550 and is records prior to October 23, 1999
when:
(A) The board of
directors adopts a resolution in compliance with the bylaws that applies the
requirements of subsection (3) and (4) of this section to the association;
(b) A reserve study and maintenance plan
shall be completed within one year of adoption of the resolution or submission
of the petition to the board of directors.”
Mr.
Grosz then went on to add, in part, the following:
“When you are dealing with a Homeowners
Association formed prior to October 23, 1999 the analysis is different. ORS
94.595(5)(a) provides that pre-October 23, 1999 Associations may “opt-in” to
the reserve study requirements in ORS 94.595(3)(a) but are not subject to those
requirements (aka do not have to conduct a reserve study) unless and until they
opt in [sic].
There are essentially four steps required for
an Association formed prior to October 23, 1999 to opt-in to the reserve study
requirement: First (1) your declaration or bylaws must require a reserve
account. (2) you [sic] must meet the definition of a planned community. (3)
Your declaration must have been recorded prior to October 23, 1999. Finally,
(4) The Board must adopt a resolution “opting-in” to the reserve study
requirement in ORS 94.595(3)…
If all of these criteria are met, the
Association will have the responsibility to comply with the Reserve Study
requirement on a go-forward basis.
Oak Knoll has not “opted-in” to the reserve
study requirement. Thus, your suggestion that Oak Knoll is somehow violating
ORS 54.595 is simply incorrect. Oak Knoll has a reserve account and has the
legally [sic] authority under the governing documents and ORS 94.709 to assess
all owners to fund those reserves.
Although there is no legal requirement that
the Association conduct a reserve study – I tend to agree with your basic
premise. A reserve study is a good idea! No argument there. I know that both
Judy and I have suggested that the HOA have a reserve study done although it is
not legally required.”
In
response to Mr. Grosz, I replied in a writing dated January 4, 2011, in part,
as follows:
“According to your “opt-in” argument premised
on ORS 94.595(5)(a) you stated that the following must be present for the
requirements of (3) and (4) of this statute to apply:
(1) That the declaration or bylaws must
require a reserve account.
FACT: The Declaration under section 2.1(b)
and 2.1(b)(B) does in fact acknowledge the requirement of a reserve account to
be established as a part of the budget of the association.
FACT: The Bylaws under Article III Section
3(b) states that the “assessment and collection of assessments as provided in
the Declaration and the making of related expenditures set forth in the
Declaration (which clearly states that a reserve account is required under ORS
94.595).
FACT: The Bylaws also states under Article V
that “Expenses and assessments shall be charged, assessed and collected in
accordance with the Declaration (which clearly states that a reserve account is
required under ORS 94.595).
FACT: The Bylaws further states under Article
VIII Section 5 that “These Bylaws are intended to comply with Oregon Law, and
the Declaration. In case of any irreconcilable conflict, such statute and
document shall control over these Bylaws or any rules and regulations adopted
hereunder.”
FACT: Both Oregon Law and the Declaration
require a reserve account.
CONCLUSION: The declaration and bylaws (via
the declaration) require a reserve account.
(2) That the association meets the definition
of a planned community.
FACT: The Declaration declares under section
2.1 that the Oak Knoll community is in fact a Planned Community as established
under the Oregon Planned Community Act (by citing the relevant statute defining
it as such).
FACT: ORS 94.550(3)(a) defines a Class I
Planned Community as one that contains at least 13 lots or in which the
Declarant has reserved the right to increase the total number of lots beyond
12. When this planned community was established, there were more than 13 lots
with the intent of the Declarant to exceed that number.
FACT: ORS 94.550(3)(b) states that a planned
community, as defined above, is one that has an estimated annual assessment,
including an amount required for reserves under ORS 94.595 exceeding $10,000
for all lots…The first adopted budget by the HOA in 1999 exceeded $10,000 that
which included a $2,500 reserve account.
FACT: ORS 94.550(18)(a) defines a “planned
community” as any subdivision under ORS 92.010 to 92.192 that results in a
pattern of ownership of real property and all the buildings, improvements and
rights located on or belonging to the real property, in which the owners
collectively are responsible for the maintenance, operation, insurance or other
expenses relating to any property within the planned community, including
common property, is any, or for the exterior maintenance of any property that
is individually owned.
FACT: Your firm via past correspondence with
Mr. Tingey admitted that the HOA was a planned community subject to the Oregon
Planned Community Act (i.e. ORS 94.550 to 94.783).
CONCLUSION: The Oak Knoll Homeowners
Association meets the definition of a planned community.
(3) That the declaration must have been
recorded prior to October 23, 1999.
FACT: The Declaration for the Oak Knoll
Community was filed on October 31, 1995.
CONCLUSION: The declaration was recorded
prior to October 23, 1999.
(4) That the Board must adopt a resolution
“opting-in” to the reserve requirements of 94.595.
FACT: In adherence to Declaration 2.1, the
Bylaws, and ORS 94.595 and 94.645(2), the first HOA established the first
budget in 1999 that included a reserve account (thereby inferring a resolution
was adopted in establishing this reserve account in accordance with the
Declaration, Bylaws, and requirement of ORS 94.595 as acknowledged within the
Declaration); in addition to a contingency/continuency fund that was later
comingled (in violation of ORS 94.595(6)(a)) with the reserve account.
FACT: Since the first budget established in
1999 and carried forward through 2005, a reserve account was a part of the HOA
annual budget.
CONCLUSION:
The HOA “opted-in” to comply with ORS 94.595 and ORS 94.645(2) in
compliance with the Declaration, Bylaws and Oregon Law with the adoption and
inclusion of a (de facto) reserve account in the first budget, that which was
carried forward an additional 5 years.
Therefore, according to your argument Mr.
Grosz, the HOA is subject to the requirements of ORS 94.595 (3) and (4), among
the other provisions of that statute, since it did in fact “opt-in” to follow
the statutory provisions outlined in ORS 94.595 and mandated by Declaration
2.1.
The other statutory provisions the HOA were
required to adhere to regarding the established reserve account in 1999,
maintained through 2005, include but are not limited to (2)(a)(B)(b);
(5)(a)(B)(b); (6)(a) and (b); and especially (8)(a) and (b). All of which the
HOA has failed to comply with since the first budget was established that which
included the required reserve account.
The first HOA failed to comply with 94.595
(3) and (4) in 1999 when it initially “opted-in” to establish a reserve account
in compliance with the Declaration, Bylaws and Oregon Law; it failed to make
periodic payments to that reserve account; it withdrew funds from the reserve
account in 2005, likely comingling funds; it did not obtain at least 75 percent
of the owners of the planned community to elect to reduce (in 2004 or 2005) or
increase future assessments (in 2011); and it most certainly did not, on an
annual basis, obtain a unanimous vote in 2006 to cease funding the reserve
account indefinitely or re-establish it upon an undisclosed future date.
In short, the HOA has failed to comply with
all cited statutory requirements in the proper establishment, maintenance,
cessation and/or re-establishment of the reserve account assessed against the
homeowners of this community.”
Mr.
Grosz replied to the above via email dated January 5, 2011, in part, as follows:
“…you assert that the Association has
“opted-in” within the meaning of ORS 94.595. I guess that is something new.”
“If you have something to back up your
assertion that the Association has opted in then please sent it over. Judy
Moshberger, the Association’s community manager tells me that she is also not
aware of any such resolution or vote. Still, I have an open mind, and if you
have such documentation, I would take another look.”
In
a March 12, 2011, email from Mr. Grosz he makes an interesting admission that
basically dispels his entire legal premise of the “opt-in” option of planned
communities filed prior to October 23, 1999:
“If memory serves, [sic] the opt-in portions
of the statute were not enacted until 2001. You must have had a very good
attorney indeed if he could predict future amendments to the statute.”
The
OKHOA was filed in 1995, and within the CC&Rs Section 2.1 Homeowners
Association Provisions, the Declarant declared the OKHOA a planned community
subject to the requirements of ORS 94.595.
In
a follow-up email to Mr. Grosz, I provided him the relevant portions of the
letter dated November 12, 1999, as written by attorney Kevin J. Kinney,
admitting that the then board of directors took the matter of a reserve account
under advisement, voted on it, and approved it. Therefore, pre or post the
enactment of the statute in 2001 affording a planned community filed prior to
October 23, 1999, to “opt-in” to the requirements of a reserve study and
maintenance plan was effectively rendered moot.
Mr.
Grosz went silent following receipt of the letter from Mr. Kinney, and by 2013
a reserve study was quietly conducted and added to the OKHOA budget; however
that reserve study conducted by Reserve Studies by Reserve Funding (official
report dated October 23, 2013) was inaccurately prepared and executed in clear
contradiction to ORS 94.595 and the OKHOA’s CC&Rs (to be discussed later
herein this complaint).
IMPROPER USE OF
ASSOCIATION FUNDS, SPECIFICALLY RESERVE FUNDS ILLEGALLY ESTABLISHED IN 2011,
FOR NON-COMMON IMPROVEMENTS OF THE ASSOCIATION WITHOUT THE REQUIRED APPROVAL OF
THE HOMEOWNERS
1.
The
Board of Directors took it upon themselves to landscape the traffic circle, a
common improvement, without the consent of the homeowners in violation of ORS
94.630 (citations above); and have since assessed every homeowner for this
common expense in contradiction to ORS 94.704 (6).
2.
The
Board of Directors, without the required consent of all owners, elected on June
15, 2004 to suspend payments to the Reserve Account in violation of ORS
94.595(8)(b), and every year thereafter
3.
The
Board of Directors, without the required initial reserve study and maintenance
plan required under ORS 94.595(1)(a) and (1)(b), re-established the reserve
account assessing $13,600 in the actual budget for fiscal year (FY) 2011 for
non-common improvements and/or modifications or additions to common
improvements without the consent of the homeowners required under ORS 94.630(1)(F)(A)
4.
The
Board of Directors admitted on several occasions, in meetings and in writing,
that the sidewalks and street trees along Foothills Drive are not a
common-improvement of the association; nevertheless they voted to continue
their status quo in providing for the repair, maintenance, and/or replacement contrary
to CC&R Section 7.1 and ORS 94.630 (citations above).
In
a letter dated November 12, 1999, Kevin J. Kinney responded in regards to the
expense and assessment of the traffic circle as follows:
“Please refer to CC&R 7.1, which
expressly describes the circle. In addition, the board continues to believe
that this area contributes to property values for all residents. It will
continue to be included in the assessments unless a vote by the homeowners is
made to amend the CC&R’s.”
CC&R
Section 7.1 states specifically the following in regards to the traffic circle
at Foothills Drive and Center Street:
“…traffic circle at intersection of Foothills
Drive and Center Street;”
Nowhere
in Section 7.1 does it state that the traffic circle is to be landscaped and/or
any additional expense to that “common improvement” must be assessed upon all
homeowners of the association.
ORS
94.704 Assessment and payment of common expenses, Subsection (6) clearly states
the following:
“Unless otherwise provided in the declaration
or bylaws, any common expense or any part of a common expense benefiting fewer
than all of the lots may be assessed exclusively against the lots or units
benefited.”
Mr.
Kinney’s response is legally inaccurate and to date the homeowners that do not
directly benefit from this traffic circle and the Board’s self-imposed
landscaping beautification project that costs the OKHOA up to $1,000 annually
to maintain is an illegal assessment upon homeowners that do not benefit from
this common expense.
CC&R
Subsection 7.4 clearly states the following in regards to the assessment of
common expenses identified in Subsection 7.1 (Common Improvements) and 7.2
(Alleys):
“Al sums collected shall be deposited into an
escrow account established by the Association. Such funds shall be used only
for the maintenance, repairs and any replacements required by this Section. The
Association may not accumulate excess funds from year to year unless
specifically budgeted for an anticipated “major” maintenance, repair or
replacement item which will occur in a future year.”
The
OKHOA Board of Directors has violated this CC&R, among the other cited
statutes of the ORPCA cited herein, in regards to both the reserve account and
general expenditures for non-common improvements without the consent of a
majority of the homeowners.
In
the July 2004 OKHOA Newsletter, under Board Actions, it was stated as follows:
“The following motions were passed:
suspending payment to the Reserve Account for the remainder of 2004…”
The
Board of Directors took this unilateral action without the consent of all
homeowners as required under ORS 94.595(8)(b), and then failed to make the same
motion and/or allow all homeowners to vote on a continued motion to suspend
payment to the reserve account every year thereafter in violation of the same
cited statute.
Then
in 2010, the Board of Directors moved to re-establish a reserve of exceptional
funding to cover costs of common and non-common improvements, all of which the
Board of Directors failed to get the required majority or all of the homeowners
approval.
In
a subsequent letter to the former management company prior to SCM, Northwest
Community Management responded to my written inquiry regarding the traffic
circle and what funding was being used to repair, maintain and/or replace any
damage. Mr. Eric Gordon, then Community Manager replied, in part, as follows:
“The irrigation maintenance and repair is
taken care of in the annual budget, so all you have left is the traffic circle
which is mainly concrete and concrete is not a reservable [sic] item. this
[sic] is due to the projected 50 yr. life span. Associations are only required
to reserve for item [sic] that have a life expectancy for repair or replacement
of 3 to 30 years.”
After
years of writing letters citing CC&R section after section in conjunction
with the appropriately related ORS attempting to get the OKHOA, SCM and VF to
understand that the Board of Directors have been consistently misinterpreting
the CC&Rs where Section 7 Maintenance and Assessments, specifically
Subsection 7.1 regarding the common improvements are concerned, the OKHOA, SCM
and VF, despite admitting that the applied interpretations have been patently
incorrect, continue the status quo regardless.
In
a letter dated August 22, 2011, from the Board of Directors in an attempt to
answer for their incorrect interpretation of the CC&Rs, Subsection 7.1 on
what is and is not a “common improvement” as clearly demarcated within that
section, the Board of Directors wanted to propose some amendments based, in
part, in the following admissions:
“Your Homeowner’s Association (HOA) Board of
Directors, with support of the HOA’s attorney, has reviewed the Association’s
governing documents and determined that the Covenants, Conditions and
Restrictions (CCRs) [sic] should be amended. The suggested amendments will
better reflect the Board’s long-standing interpretation of the CCRs.” [sic]
Just
to clarify, the governing documents of the Oak Knoll Homeowners Association are
titled “Conditions, Covenants and Restrictions,” not “Covenants, Conditions and
Restrictions.” And it is clear that the HOA’s attorney is trying, after all the
years of my (and other homeowner’s) complaints on the Board of Directors
consistent misinterpretation of the CC&Rs and misapplication of funding to
repair, maintain and/or replace selectively chosen common and non-common
improvements has in fact been contrary to the CC&Rs and in direct violation
of the respective statutes of the ORPCA.
Continuing
with their written explanation:
“The subject matter of the proposed
amendments is as follows:
1. Street Trees:
The current CCRs [sic] are written such that
the HOA is arguably responsible for maintaining all street trees within the
Association. Since the beginning of the HOA, the Board’s interpretation has
been that the Association is responsible to maintain only the street trees
along Foothills and within the Traffic Circle.”
“The proposed amendment would change the CCRs
[sic] to clarify that only the street trees along Foothills and within the
Traffic Circle are the maintenance responsibility of the HOA. For other streets
within the JOA, [sic] the homeowner is responsible for planting and maintaining
the trees on their frontage.”
CC&R
Section 7.1 states the following, and I quote:
“7.1 Oak
Knoll has or will have certain improvements which are for the benefit of all
Lots. These improvements include: Sign monuments 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. In
addition, Declarant and Adjoining Owners may dedicate common areas to the
Association for the use of all Owners. All of the common areas and improvements
are collectively called “Common Improvements.””
Nowhere
in Subsection 7.1 does it state that the HOA’s only responsibility in regards
to the street trees is strictly limited to Foothills Drive or includes those
planted within the traffic circle; the HOA’s responsibility includes “…street
trees on each Lot.”
In
contrast to the first sentence of Subsection 7.1, that certain improvements
“are for the benefit of all Lots,” is the following:
ORS 94.704(6)
“Unless otherwise provided in the declaration
or bylaws, any common expense or any part of a common expense benefiting fewer
than all of the lots may be assessed exclusively against the lots or units
benefited.”
Since
the inception of the HOA and the incorrect interpretation of 7.1 and the
Board’s illegitimate assessments upon all homeowners within the association
that do not directly benefit from the traffic circle and/or just the street
trees along Foothills Drive, ORS 94.706(6) overrides CC&R Subsection 7.1. A
fact that even the Bylaws attests to under Article VIII: Miscellaneous,
Subsection 5:
Conflicts
“These Bylaws are intended to comply with
Oregon law, and the Declaration. In case of any irreconcilable conflict, such
statute and document shall control over these Bylaws or any rules and
regulations adopted hereunder.
State
law precedes the CC&Rs and Bylaws, and to date the Board of Directors of
the OKHOA, SCM and VF have been and continue to perpetuation the violations
stated herein in despite not only my own attempts, but that of the homeowners
at various Annual and Board meetings voicing the exact same complaints.
The
Board of Directors repeated response, “we’re all just volunteers,” and
attorneys present from VF reinforce that bad excuse in the Board’s consistent
breaches of their fiduciary duties with bad legal interpretation directed at
both the homeowners and the Board of Directors.
The
following reasoning in the same aforementioned August 22, 2011 letter regarding
proposed amendments to Section 7.1 is written as follows:
2. Sidewalks
“There is a conflict between sections of the
CCRs [sic] regarding street tree maintenance responsibility and sidewalk damage
resulting from the street trees. As the CCRs [sic] are currently written, the
HOA is responsible for maintenance of the street trees, but the adjacent owners
are responsible for any sidewalk damage, including damage caused by street
trees. Thus, for example, if the roots of a street tree cause damage to the
adjacent sidewalk, there is a conflict of the documents in who is responsible
for the sidewalk repair.”
“The Board’s interpretation is that since the
HOA is responsible for maintaining and caring for the street trees, any damage
caused by the street trees to the adjacent sidewalk should be fixed by the HOA.
A large reason for this interpretation is to protect the Association’s interest
in street trees: an owner fixing a damaged sidewalk could cause significant
harm to a street tree during the sidewalk repair without ever notifying the
Association of the repair.”
“The proposed amendment would also mesh with
Oregon law on negligence. If the HOA is negligent in maintaining the street
trees and the trees causing damage to the sidewalk panels, the Association, not
the adjacent owner, should be responsible for repairing the damaged sidewalk
panel.”
It’s
interesting how the HOA’s attorney review and assisted the Board of Directors
and SCM with this letter that not one Oregon law was cited, nor any CC&R
sections identifying this alleged conflict. There is no conflict within the
CC&Rs, as they are written it is perfectly clear as to whose responsibility
it is to repair, maintain and/or replace the street trees on each Lot, and the
repair, maintenance and/or replacement of
the sidewalks should they become damaged by the street trees.
CC&R
Section 7 – Maintenance and Assessments
“7.3 After the Turnover Meeting, the Association
shall be responsible for maintaining and repairing the Common Improvements and
the Alleys on an “as needed basis…Each Owner shall be responsible for the
maintenance of the sidewalks abutting his Lot, including any damage caused by
the street trees.”
CC&R
Section 8 – Maintenance of Lots
“8.1 Each
Owner of any Lot in Oak Knoll shall main the condition of said Lot and any and
all improvements thereon including, without limitation, any House…landscaping,
sidewalks, driveways, trees…in a reasonably clean, neat, attractive and
visually pleasing manner so as not to detract from Oak Knoll being a high-class
residential neighborhood.”
Moreover,
the City of Newberg maintains local ordinances that not only compliment the
CC&Rs on the aforementioned responsibilities, but would supersede any
proposed amendment by the Board on this matter.
Article
V. Maintenance of Planter Strips, Landscaping, and Trees in the Right-of-Way
12.05.250 Required maintenance of planter
strips.
A. “Planter strip” is defined as the area
between the curb and sidewalk, between the sidewalk and property line, or
between the edge of the street and property line that contains or is designed
to contain landscaping or plant materials. Roadside ditches are generally not
considered planter strips.
B. It shall be the duty of the owners of land
adjoining any street or highway within the city to maintain planter strips
adjoining their properties. Maintenance shall include, but not be limited to,
removing or cutting weeds so the area is not overgrown, mowing grasses (except
ornamental grasses) to a height of no more than nine inches, irrigating as
necessary to establish new plantings, removing dead plants, pruning trees and
shrubs to keep them healthy and to keep sidewalks and streets clear from
obstruction, and removing litter.
C. If the owner of such land adjoining any
street or highway in the city shall fail to adequately maintain the planter
strip, a designated city employee shall notify the adjoining property owner of
the need to maintain the area. Notice may be mailed or personally delivered and
shall describe the required time frame to complete the maintenance. If the
owner fails to maintain the area within the time frame noted, the city may
perform the required maintenance, bill the owner for the maintenance costs and
assess a lien on the property for any unpaid maintenance costs.
D. No signs shall be placed within the
planter strip, except as allowed under NMC 15.435.110. [Ord. 2632, 1-3-06. Code
2001 § 96.60.]
12.05.260 Tree removal and pruning.
A. All street trees that were required to be
installed under a street tree plan or similar requirement shall be maintained
in a healthy condition by the adjoining property owner, or replaced with a tree
consistent with the approved street tree plan for that location or, if none,
with any approved street tree plan for the area or, if none, with any tree from
the city’s approved street tree list.
B. No person shall remove any tree greater
than two inches in diameter from the public right-of-way without first
obtaining a permit from the city to do so, except as noted below.
C. Because mature, healthy trees contribute
significantly to the beauty and character of the community, city staff
generally will not issue a permit to remove a street tree greater than eight
inches in diameter unless the tree is diseased, rotten, dead or dying,
significantly misshapen, an obstruction, or otherwise a hazard. The designated
staff person may require a report from a certified arborist to verify the
tree’s condition before removal.
D. No person shall top or severely prune a
tree greater than two inches in diameter in the right-of-way without first
obtaining a permit from the city to do so, except where such pruning is
required by city ordinances or requested by the city, such as to maintain
clearances from sidewalks, street signs, streets, or alleys. “Severe pruning”
is defined as severing the trunk, or cutting back the trunk or a limb larger
than four inches in diameter to a stub. The designated staff person may issue a
permit to prune a tree, remove trees which are dead, limbs or roots which have
been severely damaged by storms or other causes or which otherwise pose a
danger to the public health, safety or general welfare, to alter the shape of
trees located under utility wires or other obstructions where other pruning
practices are impractical, or to maintain the health and overall attractive
shape of the tree. The designated staff person may require that the pruning be
done by or under supervision of a certified arborist.
E. The designated staff person may require
that the tree removed be replaced with a tree in accordance with an approved
street tree plan or from the city’s approved street tree list.
F. The above requirements do not apply to
tree pruning or removal by city staff or agents. They also do not apply to
public utility agencies or their agents pruning or removing trees as necessary
to comply with applicable utility clearance standards. They do not apply in
emergency circumstances. [Ord. 2632, 1-3-06. Code 2001 § 96.61.]
Therefore,
no amendment to the CC&Rs were ever necessary regarding the repair,
maintenance and/or replacement of either the street trees or sidewalks adjacent
to each Lot within the Oak Knoll Homeowners Association; as the CC&Rs and
Ordinances of the City of Newberg already demarcate whose responsibility it is
for said repair, maintenance and/or replacement of the street trees and
sidewalks within the OKHOA.
Notwithstanding,
to date, the OKHOA, SCM and VF continue to violate the CC&Rs, Ordinances
established by the City of Newberg, and the cited statutory authority under the
ORPCA regarding these matters through an illegally established reserve account.
Case
in point is a letter dated March 11, 2013, in response to my written inquiry as
to “What budgetary item would this repair come from” referring to the sidewalks
damaged by trees along Foothills Dr.,, the Board of Directors replied as
follows:
“…the repairs would be paid from Reserves.”
To
date the OKHOA continues to fund the repairs, maintenance and/or replacement of
non-common property, common improvements selectively (not all street trees on
each Lot, but only those trees along Foothills Drive and those planted within
the traffic circle landscaped without a majority vote of the homeowners
required by statute), and assess each homeowner regardless of the fact that the
common improvements stated within Section 7, subsection 7.1 are not for the
common benefit of all homeowners under 94.704(6):
“Unless otherwise provided in the declaration
or bylaws, any common expense or any part of a common expense benefiting fewer
than all of the lots may be assessed exclusively against the lots or units
benefited.”
PANTING OF STREET
TREES REQUIRED BY DEVELOPMENT CONTRACT BETWEEN DEVELOPER (DECLARANT) AND THE
CITY OF NEWBERG BEFORE OCCUPANY PERMITS ISSUED – NO PERFORMANCE – DECLARANT
ILLEGALLY ATTEMPTS TO PASS ON ITS LEGAL OBLIGATION TO PERFORM IN PLANTING
STREET TREES ON EACH LOT ONTO THE HOMEOWNER WITHIN A PROVISION OF THE CC&RS
The
Subdivision Compliance Agreement Oak Knoll Subdivision Phase 4 signed and
agreed to on the 14th day of January 1997 between the City of
Newberg and PC Development, Inc., an Oregon Corporation DBA Raintree
Development Company, and filed with the County Clerk on January 16, 1997, was
never fully performed on the part of the developer and never enforced by the
City of Newberg whereas all improvements, sidewalks, and the required
landscaping was required prior to occupancy permits being issued to sell the
erected homes on each respective Lot.
The
Development Code of the City of Newberg, Landscaping and Outdoor Areas Section
151.580 Required Minimum Standards, Subsection (3)(b) and (3)(c) was violated
in the non-performance of the developer to plant the required landscaping, to
include street trees, within the Oak Knoll Subdivision per the Development
Contract.
Under
Subsection (C) Installation of
landscaping, it clearly states the following:
“All landscaping required by these provisions
shall be installed prior to the issuance of occupancy permits…”
And
for any landscaping not completed, the developer was to post a security to wit
all funds necessary to complete the installation of landscaping by the City of
Newberg would be completed, and any remaining security refunded to the
developer. Neither provision took place, as the developer was simply issued
occupancy permits without completing the required landscaping on 93 homes as of
August 2000.
In
order to escape its legal contractual responsibility with the City of Newberg
under the Subdivision Compliance Agreement and the Development Code of the City
of Newberg, the Developer unconscionably included a shrink wrapped provision
within the CC&Rs in order to pass on that contractual and financial
responsibility onto that of the homeowner in the following Subsection:
“4.6.7 Street
Trees. Each Lot shall have installed on it the number and type of street trees
required under any landscaping plan submitted by Declarant and approved by the
City of Newberg. Each Owner shall pay to Declarant, upon demand, the amount
necessary for Declarant to install the street trees on Owner’s Lot. Upon
receipt of payment, Declarant shall have the street trees installed. In the
event an Owner fails or refused to pay Declarant the cost of the street trees,
Declarant shall have a lien upon the Lot for the cost of the street trees,
which lien may be perfected and foreclosed as provided under Oregon statutes.”
The
first written notification of the deficiency in the lack of street trees upon
93 homes was documented in an August 2000 newsletter by the Board of Directors.
At the end of their reciting the above CC&R (conveniently leaving out the
aforementioned contract between the Declarant and the City of Newberg, in
addition to the Development Code), it was stated that, “After Jan. 01, 2001,
the tree issue will be turned over to the CC&R committee for resolution.”
January 01, 2001 came and nothing further was mentioned about the street trees,
that is until the April 2004 Newsletter.
Under
the Board Actions noted in the April 2004 Newsletter, it is stated as follows
regarding the lack of street trees that were not planted by the Developer:
5.
“The
Street Tree project has been given back to the city regarding species and planning
of the trees. The Board will monitor the City as to how and when the correct
species of trees will be planted.”
Then
in the May 2005 OKHOA Newsletter, published by the first management company,
Northwest Community Management, provided some actual attention to detail to the
contractual obligations of the Developer and the City of Newberg to force
performance on the part of the Developer was noted, in part, as follows:
“At the last count there were over 100
missing trees in our Association. During the April 19th meeting the
Board discussed the ramifications of CC&R rule 4.6.7.”
“The rule goes on to say that the Declarant
(the Developer) has the right to ask for payment from the owner for the cost of
these trees.”
“The problem with the Declarant putting in
the trees and making owner pay was that in most cases there was no owner, yet.
Most of the homes in our neighborhood were built speculatively.”
“To confuse things just a little more there
is also a city ordinance that states that a Final Occupancy Permit is not to be
granted until the proper street trees are planted. So, in parking strips where
there are no trees the City was negligent in enforcing its own ordinance.
Basically the city ordinance states that whoever is building the house, whether
it is a developer or an owner, they have to plant street trees.”
“The Board feels strongly that all home
owners should be treated equally. When a home owner submits a plan for changing
the landscape design of their parking strips, the board must require that the
correct street trees are part of the plan. The Board decided that it isn’t fair
that people who don’t submit plans for landscaping changes are not being required
to plant trees.”
“But because we think the City was negligent
by not enforcing the ordinance, instead of simply requiring all home owners to
plant trees, it was decided that first we would attempt to work with the city
to resolve the issue.”
“The Board has not decided what to do if we
are not successful with the City.”
Again
time passes with no further mention regarding the street tree issue, that is
until 2006 SCM began sending demand letters telling homeowners that they were
in violations of CC&R 4.6.7, and that deficiency had to be corrected within
a limited amount of time, otherwise they would remedy the matter and then
effectively bill the homeowner.
However
the OKHOA, SCM and/or VF had no legal right to not only send these demand
notices, they also had no legal standing to even make such a demand given the
fact that under ORS 94.780 Remedies:
“(3) A suit or action arising under this
section must be commenced within one year after the discovery or identification
of the alleged violation.”
The
initial “identification of the alleged violation” was printed in the August
2000 OKHOA Newsletter, and the OKHOA Board of Directors had only “one year”
from which to act or file suit to correct the alleged violation. That term
expired August 2001, therefore any written demands that were sent in the Summer
of 2006 and subsequently in the Fall of 2008 by SCM were without legal merit;
and any homeowner who planted the street trees under duress of a lien on their
home if they refused were without question coerced into doing so.
In
response to the 2006 and 2008 notification myself in addressing both SCM
initially, then later Christ Tingey of VF, who had the audacity to tell me, in
writing, that I as a homeowner was not allowed to cite ORS 94.780(3) in defense
of self, only the OKHOA can cite such a statute in correcting violations of the
CC&Rs and/or statutes under the ORPCA.
ORS
94.777 makes it unambiguously clear that:
“Each owner and the declarant shall comply
with the bylaws, and with the administrative rules and regulations adopted
pursuant thereto, and with the covenant, conditions, and restrictions in the
declaration or in the deed to the lot. Failure to comply therewith shall be
grounds for an action maintainable by the homeowners association or
by an aggrieved owner.
And
ORS 94.780 makes it equally clear that:
(1) Failure of the
declarant, association, any association member or any
other person subject to ORS 94.550 to 94.783 to comply with applicable
sections of ORS 94.550 to 94.785 shall be cause for suit or action to remedy
the violation or to recover actual damages. The prevailing party is entitled to
reasonable attorney fees and court costs.
The
failure of the OKHOA under either Northwest Community Management or SCM to take
action or file suit within one year of the initial discovery or identification
of the alleged violation expired in August 2001.
The
written communications between SCM and VF and myself were shared with legal
counsel for the City of Newberg in an effort to bring to their attention,
again, that if the City wanted street trees planted within the Oak Knoll
community, then they would have to force the developer to perform under its
contract to develop this phase of the Oak Knoll subdivision. Since that writing
to the City, I have never received a written response; but the City of Newberg
knew full well that the community was lacking the required street trees under
the Development Code and their contract with the developer, but did nothing
about it.
IMPROPERY
PREMISED/SUBSTANTIATED RESOLUTIONS PASSED BY THE BOARD OF DIRECTORS
Enclosed
with a letter dated June 25, 2003, from Northwest Community Management Company,
the previous management company prior to SCM was a Resolution of the Board of
Directors titled COLLECTION OF UNPAID CHARGES. This resolution was not passed
in accordance with the citations therein.
The
first part of this Resolution states the following:
“WHEREAS, Article III, Section 3(f) and (g)
of the Bylaws allows the Association to adopt rules and enforce compliance with
the Declaration, Bylaws and Administrative Rules and Regulations;”
The
OKHOA Bylaws Article III, Section 3(f) reads exactly as follows:
“Obtaining insurance or bonds pursuant to the
provisions of these Bylaws, the Declarant or law.”
The
second part of this Resolution restates the citation of (g) as follows:
“WHEREAS, Article III, Section 3(g) of the
Bylaws authorizes the Board to enforce provisions of the Declaration, Bylaws
and Rules and Regulations, including action to collect unpaid assessments;”
The
OKHOA Bylaws Article III, Section (g) reads exactly as follows:
“Adoption in accordance with these Bylaws of
reasonable administrative rules and regulations for use of the common areas.”
Neither
of these cited references to Article III empowers the Board of Directors to
adopt “rules and enforce compliance with the Declaration, Bylaws and Administrative
Rules and Regulations” of the intent and premise of this resolution, the
COLLECTION OF UNPAID CHARGES.
Furthermore,
the OKHOA has been on an annual not monthly assessment basis, yet this
resolution states:
“WHEREAS, assessments are currently due and
payable monthly in advance on the first day of every calendar month;”
Again,
since the inception of the OKHOA the assessments levied on each Lot has been on
a continual annual basis, never a monthly basis and never had been on a monthly
basis despite this provision of this falsely premised resolution.
Also
within this document is the following statement in direct conflict with
CC&R Subsection 2.2.3:
“All assessments shall accrue interest at the
rate of twelve percent (12%) from the date such assessment is first due.”
CC&R
Subsection 2.2.3 states, in part, the following:
“Any Lot owner failing to pay his or her proportionate
share of costs assessed by the Association within thirty (30) days after it
becomes due shall be liable for interest at the rate of the prime rate at First
Interstate Bank plus four (4) percentage points.”
The
Board of Directors cannot alter the terms of the Declaration (CC&Rs)
without an amendment passed by a majority (75%) vote of the homeowners
(CC&R Subsection 12.6.2 and 12.6.2.2).
Then
there is the assignment of past due accounts to an attorney for collection:
“WHEREAS, the Board deems it in the
Association’s best interest to adopt a uniform and systematic procedure for the
collection of unpaid assessments in a timely manner, and further believes it to
be in the Association’s best interest to refer these accounts promptly to an
attorney for collection so as to minimize the Association’s loss of assessment
revenue.”
Whether
or not the collection of past due assessments are deferred to an attorney or
other third party does not absolve the attorney from collecting that past due
account according to the Fair Debt Collection Practices Act (FDCPA).
A
homeowner that I have been in contact with has informed me that they have paid
over $7,000 in assessments, late fees, past due interest, and other amounts to
include but are not limited to charges in excess of $100 just for the law firm
to receive a voice mail message or answer their phone call demanding an
accounting of the alleged past due amounts, which under the FDCOA and ORPCA,
the attorney is required to provide.
This
COLLECTION FO UNPAID CHARGES resolution is invalidated on its face given the
false premise, incorrect citations to substantiate it, and the fundamental
change in terms found within that legally require an amendment to the CC&Rs
in order to become effective.
Another
questionable resolution passed by the Board of Directors came on June 10, 2003,
and again on October 19, 2004, having passed not once but twice with the same
language the same Financial Penalties Resolution equally based upon a false
premise and incorrectly cited sections of the Declaration (CC&Rs). The Financial
Penalties Resolution preamble states the following:
“WHEREAS the Oak Knoll Association of
Homeowners Board of Directors is empowered by statutory law [ORS 94.630
(1)(n)], and the Association documents including the Declaration of Covenants,
Conditions and Restrictions of Oak Knoll Association of Homeowners (“CC&R’s”)
[Article III, Section 3], to assess financial and other penalties against individual
members in order to remedy non-monetary violations by those members of the CC&R’s,
Bylaws of the Association, and Rules and Regulations,”
First
and foremost there is not “Article III, Section 3” to the CC&Rs of the
OKHOA; and ORS 94.630(1)(n) only authorizes the Association to do the
following:
“Impose charges for late payment of
assessments and attorney fees related to the collection of assessments and,
after giving written notice and an opportunity to be heard, levy reasonable
fines for violations of the declaration, bylaws, rules and regulations of the
association, provided that the charge imposed or the fine levied by the
association is based:
(A) On a schedule contained in the declaration or bylaws, or an
amendment to either that is delivered to each lot, mailed to the mailing
address of each lot or mailed to the mailing addresses designated in writing by
the owners; or
Finally,
there is no “schedule contained in the declaration or bylaws” or any amendment
on record that has ever been delivered to each (let alone any) lot clearly
outlining such a “schedule” of fines that are to be levied by the Association
to specifically “remedy non-monetary violations” of the CC&Rs.
Another
resolution recently passed without a clear legal premise or authorization to do
so comes by way of a VIOLATION LETTER(S) RESOLUTION #2014-3.18:
“WHEREAS the Board of Directors has the right
and responsibility under statutory law [ORS 94.630)] [sic] and further
supported by Association governing documents including the Bylaws
[Article III, Section 3] to adopt changes to benefit the association in their fiduciary
responsibilities.”
Note
no subsection for either the ORS or Bylaws Article III was specifically cited
to affirm and substantiate the “right and responsibility” of the Board of
Directors to “adopt changes to benefit the association in their fiduciary
responsibilities” in establishing this resolution.
While
ORS 94.630(1)(n) does allow for “…levy reasonable fines for violations of the
declaration, bylaws…of the association,” it is only justifiable so long as “…the
charge imposed or the fine levied by the association is based: (A) On a
schedule contained in the declaration or bylaws…”
The
last provision of this resolution states the following:
“5. (2) Lack of compliance with the above
regulation(s) will result in the assessment of fines per the Financial
Penalties Resolution.”
No
schedule of fees/fines specifically relating to violations of the CC&RS
and/or Bylaws are found in either document; and with no such schedule or amendment
containing said schedule, none of the above three referenced resolutions
passed by the OKHOA is valid.
OKHOA VIOLATION OF
ORS 94.670 ASSOCATION DUTY TO KEEP DOCUMENTS AND RECORDS…
As
identified herein, there have been certain documents that I have identified and
had to provide to SCM and VF in order to establish that the OKHOA Board of
Directors have not been following either the CC&Rs or the ORPCA,
specifically where the Reserve Account and required Maintenance Plan is
required.
Additionally,
in a recent request under this section of ORS 94.670 to examine the
Associations documents required to be kept under this statute, in written
response it was indicated that they may not have all of the documents requested
going back 15 years, to include “sufficiently detailed” financial records. This
is their admission of violating this statute in their statutory obligation to
keep documents and records of the association.
Also
in response to my request, despite the Board of Directors having never
exercised ORS 94.670(12), SCM responded in writing dated July 1, 2014, stating
that they were going to charge “$110 per hour for prep and oversight of the
review.”
SCM
incorrectly cited ORS 65.774 and 65.771 in order to substantiate this monetary
fine to examine the Association documents. Additionally, SCM cited Bylaw Article
VI, Section 5, which discusses a financial “audit” at the expense of the
homeowner. I am not requesting a financial audit by a CPA, but rather
exercising my right as a homeowner under ORS 94.670 to “examine” (not audit)
the documents and records required of the association to be kept.
Despite
the lack of any resolution adopting “reasonable rules governing the frequency,
time, location, notice and manner of examination…” of the Association
documents, I have been informed that the Board of Directors and SCM intend to “back
charge” me for the examination of the Association documents contrary to statutory
law governing same with the lack of any resolution having ever been based by
the Board of Directors.
IMPROPER CONDUCT OF
THE BOARD OF DIRECTORS AT ANNUAL AND BOARD MEETINGS
The
Bylaws specifically provide under Article II Meetings Section 12 Conduct of
Meetings:
“Except as otherwise provided herein,
meetings shall be conducted in accordance with Roberts Rules of Order.”
To
date for every meeting that I have ever attended, and those meetings
vicariously conveyed to me or learned thereof have never been conducted in
accordance with Roberts Rules of Order.
Meetings
are often chaotic, the Board of Directors rude and disrespectful to homeowners,
the attorney, when present, gives misinformation and provided incorrect
interpretation of the applicable laws as they pertain to the ORPCA and the
CC&Rs and Bylaws; and homeowners voiced concerns are quickly and easily
pushed aside in favor of the Board of Directors agenda premised on the
statement that “…we are just volunteers.” Volunteering does not absolve the fiduciary
responsibility of being a member of the Board of Directors.
The
enclosed CD contains an audio recording from the September 2011 Annual Meeting
wherein several of the proposed amendments to the CC&RS (previous discussed
herein this complaint) was address, and Mr. Chris Tingey from VF was present.
Below
are a few selected quotes and responses from that meeting:
Chris Tingey, clearly articulated that
Section 7.1 specifically states that the HOA is responsible for “street trees
on each Lot.” He then added that the HOA does not want to be responsible for
“each street tree on each lot.”
The homeowner who previously interjected
asked why Foothills was then the chosen street by the HOA to assume
responsibility for the street trees and sidewalk maintenance, repair, and
replacement. The speaker for the board replied as follows:
“This
street was chosen by a person when the HOA was created.”
When this homeowner continued to question
this decision, the Mr. Tingey read Section 7.1 and admitted, “Nowhere does it
say street trees on Foothills.”
Another homeowner spoke up, in addition to
the one who interjected, and stated that they were told by the City of Newberg
– in writing – that they were responsible for the street trees on their lot.
Mr. Tingey then stated the following:
“The city may do that. The reality is the
city can do that all the time, but you have a private contract that supersedes
the city.”
Here
is a perfect example of legal misinformation on the part of Mr. Tingey via VF.
A private contract cannot and does not legally supersede local Ordinances or
Codes, no more than such a contract superseding state or federal law. A private
contract is just that, private, and it is only bound upon the private parties involved,
meanwhile being subject to overriding (superseding) local, state and/or federal
law.
Mr.
Tingey continues his incorrect legal interpretation and bad legal advice when
making the following statements:
“The reality is, by contract, by covenant,
along…throughout the association, the association was responsible for
maintaining the street trees with the policy and practice, since Oak Knoll was
developed, was to do it solely along Foothills Drive, because that was the way
the property was set up, way back thirteen fifteen years ago. That’s where they
were having the entry into the community, that’s why it was set up that way. ”
A
homeowner than stated, correctly, it made no sense for other homeowners who do
not even use that street to have to pay towards the maintenance, repair and
placement of street trees and sidewalks along Foothills Dr. when many
homeowners do not even use that street to gain access to this community (in
response to Mr. Tingey’s assertion that since it was the entrance to the
community, that was the justification of the BOD to misinterpret the CC&Rs
and assume responsibility for those items not declared as common improvements
of the HOA).
There
was than a debate about the HOA’s responsibility to enforce the CC&Rs under
Section 8.1 to enforce the landscaping provisions vs. the fact that Foothills
being the ‘entry way’ into the community; this the BOD justified their position
because “80% of the residents” use Foothills Drive to access the community as
the “main entrance.”
Attorney
Chris Tingey then interjected the following:
“The entrance is on Foothills, so the board
has chosen to do it that way. That doesn’t make it right or wrong, it doesn’t
make it the only way it’s going to happen, but it’s the way it’s set up now.
And so the board…carrying on responsibility, and having obligations for
maintenance under the documents, and the interpretation has been in place for
15 years, whether or not that interpretation is right or wrong, doesn’t matter,
that’s what they’ve been doing for fifteen years; they developed that pattern,
now, such as the board recognizes it, they need to address how they’re going to
handle it. And that’s the purpose of the amendment.”
More
misinformation and misdirection in defense of the Board of Directors and SCM on
the part of VF for their misinterpretation and application of the CC&Rs and
Bylaws upon all homeowners of the Association.
As
the meeting continued, a homeowner questioned the attorney, Mr. Tingey, and the
BOD what the homeowners present are supposed to do about all the other
homeowners who did not show up or vote via email; and if the BOD are
responsible and if so in what manner are they responsible for those homeowners
who did not participate in this meeting or respond to the August letter
regarding the proposed changes to the CC&Rs.
Mr.
Tingey replied as follows:
“They do have obligation – a fiduciary
obligation by being on the board, to protect and act in the best interest of
the association. They no have legal advice – that they’re interpretation – may
not be the right interpretation. So how do they deal with that?”
“One way to deal with it was to correct it,
by…an amendment; but if they reached the conclusion there is no way they will
get the votes; then they have to go forward, either interpreting the way they
have been and acting on it, or changing their policy. And if they change their
policy and start maintaining every street tree, in the community, you’re
assessments going to go through the roof.”
“And I know they don’t want to do that cause
they live here to, and they don’t want to pay those assessments. But they are
kind of in a rock and a hard place, and um, and I am sure this is not going to
be the last discussion with the board about, what they’re going to do; because
there are people on each side of this issue. And um, at the end, I know there
is a policy in place fifteen years…and I would feel comfortable going into the
Yamhill, Yamhill County Circuit Court and arguing this.”
“But
that is not to say the judge would look at the plain language of the documents
that says completely otherwise; and saying ‘You’re right judge.’”
There
is no need to correct the misinterpretation of the CC&Rs by the Board of
Directors, admitted to by Mr. Tingey, with an amendment to restate what the CC&Rs
already state; again bad legal interpretation and advice on the part of the
Association’s attorney.
I
then raised the point that if the BOD did not get the 75% approval of the
homeowners, the BOD has the choice not to enforce Section 7.1 of the CC&Rs
where all the street trees within the association being common improvements;
and I cited a recent case ruled in December 2010 by the Oregon Appellate Court
of Appeals opinion upholding a trial court’s ruling in Levasseur vs. Armon and BOD of High Lostine Owners’ Association,
that the CC&RS are discretionary and the BOD has “no legal duty to enforce
the CC&Rs.” After a momentary silence, the main speaker for the BOD asked
Mr. Tingey what his thoughts were in response to this point, which he replied
as follows:
“CC&Rs are the law of the land, they are
essentially a contract a homeowner makes with their brethren. So, um, you got,
you got two issues. Got an association that is set up to allow the collective
group of homeowners to take action, with regards to the management issue you’ve
got; whether it’s the documents, um, application of, uh, CC&RS, hiring
landscapers, whatever it is…that that, association handles the collective.
Okay?”
“But – with that – with an association, each
individual who makes covenants, and receives covenants back, and um, because of
that…each individual owner has a right to enforce the covenants against anyone
else. But in reality, if my neighbors house were painted pink and the CC&Rs
said, no pink houses, and the association didn’t enforce that, I have a right
to sue her, and I have a right to sue the association for failing to enforce
those CC&Rs; because I have the contractual right, to the design being to
protect my property values. Okay?”
“Um, um, so…there are cases in Oregon, both
on the Supreme Court level and the court, court of appeals level, that talks
about CC&Rs; their purpose, their efficacy, and the Oregon Planned
Community Act where the legislators spoken as well. And quite frankly I
disagree honestly with the characterization. I don’t believe if the association
fails to enforce, that, um, there’s plenty of substantial case law and
statutory law that, would put the association at risk.”
“Furthermore, uh, I think it would put the
board at risk, because, you have an insurance policy…are going to look at that
and say the board willful, um, willful choice to ignore the CC&Rs to not
enforce them is a willful act it’s not a negligence and therefore we’re not
going to cover it.”
“So, that is my interpretation; that’s my
opinion, um, and, and…again I don’t agree with the interpretation there, but
I’m not saying you’re wrong; it’s something lawyers fight over all the time.
So, that’s my position.”
This
stated position is patently incorrect, as Mr. Tingey’s assertion that
homeowners create and enforce covenants on one another is legally inaccurate. The
declarant of the Oak Knoll Homeowners Association is the one who wrote the
CC&Rs and filed them with the Yamhill County Clerk, not any one individual
homeowner. Moreover, it is written within the CC&Rs and Bylaws of the HOA
that it is first the BOD’s responsibility to enforce the CC&RS, not the
individual homeowner.
The
members of the BOD went back and forth over the expenditure of this assessment
in proposing the CC&Rs, and Mr. Tingey interjected about how much risk they
are willing to take, but in the end the BOD voted down the motion to assess the
homeowners of the HOA the $5,000, and subsequent finalized legal fees, when it
felt, as a majority, they were not going to get the 75% homeowner approval.
In
response, Mr. Tingey then advised the BOD to continue with the status quo
regardless of the fact that they have been incorrectly interpreting the
CC&Rs and spending HOA funds on what they believed to be common
improvements under the CC&Rs when in fact they were not common
improvements; again bad legal advice from the OKHOA attorney provided by VF.
