WORK IN PROGRESS - Draft Complaint against HOA

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 14^th 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 19^th 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.