Condo Media - May 2010 - 44

FEATURE

ard times make people cranky. In community associations, where crankiness is sometimes elevated to an art form, hard times can make already cranky owners litigious — or even more litigious than usual. Ed Allcock and Janet Aronson, partners in the Massachusetts firm Marcus, Errico, Emmer & Brooks, have seen a clear upsurge in litigation at the community associations they represent, as owners and boards initiate lawsuits involving “just about anything — water damage, nuisances, noise, you name it,” Aronson says, someone is filing a lawsuit complaining about it. Some financially strapped owners are turning to the courts in the hope of winning a financial judgment “because they need the money,” Aronson says, but more often, she thinks, economic pressures are leaving owners with less patience and lower boiling points, making them more likely to lash out at their neighbors or governing boards. Simply because fuses are shorter and frustration higher, many disputes that might have been resolved otherwise are ending up in court. Not surprisingly, as community associations continue to wrestle with the fallout from a battered housing market and a sagging economy, much of the increased litigation activity involves efforts by boards to collect payments from delinquent owners. Few communities are immune from those problems, but associations in states without a “super lien” statute, ensuring their ability to collect unpaid assessments after a foreclosure, have been particularly hard-hit. “It’s a disaster,” Aronson says of collection problems in New Hampshire, which is among the states lacking super lien protection.

Chasing Owners and Banks
After chasing one delinquent owner for two years, the board at a New Hampshire association Aronson represents decided to exercise its authority to deny the owner access to common area services — including access to the

driveway. When efforts to alert the owner in advance were unsuccessful, the board proceeded with its plan and put a jersey barrier in front of the garage, where the owner’s car was parked at the time. The board “will be back in court next week” to defend that action, Aronson said. Some association boards are spending as much time chasing banks as owners — less so in New England than in areas where the foreclosure crisis has reached tsunami proportions. In Florida, which tops the crisis list, an association sued Deutsche Bank for intentionally delaying a foreclosure sale in order to avoid incurring the liability for paying the delinquent fees the unit’s owner had incurred. A Circuit Court judge sided with the association and ordered the bank to pay $7,300 in fees and penalties plus $2,000 to cover the community’s legal costs. While that outcome excited Florida community associations and their attorneys, suing recalcitrant banks is not a strategy Allcock recommends. In states with super lien laws, banks don’t usually need prodding to foreclose, because of the risk that an associationinitiated foreclosure sale could erase their claim. Where super lien protection is not available, “it really isn’t [usually] practical or worthwhile for an association to take a shot at a bank for a few thousand dollars,” says Allcock, noting that the ill will generated will almost always offset the limited financial benefits of any collection success. And even if an association is inclined to fight, Aronson adds, proving that a lender is intentionally delaying the foreclosure process will be difficult, at best. She advises communities in states lacking super lien protection to “budget for losses” and encourages them to “take whatever they can get” when a lender forecloses on a delinquent buyer. “Even 10 cents on the dollar is better than nothing,” she says.

attorneys in other New England states haven’t seen the litigation surge their Massachusetts counterparts are reporting. Perhaps because Maine residents tend to be relatively laid back, the state has been something of “a sleeper” in the condominium litigation area, according to Bruce McGlauflin, a partner with Petruccelli, Martin & Haddow in Portland and a member of CAI-NE’s Maine Legislative Action Committee. But he does see potential conflicts looming in at least two areas. • Smoking. This long-smoldering issue is more frequently igniting fullblown fights in community associations between smokers, who say they should be able to smoke within their homes; and non-smokers, who say they shouldn’t have to breathe the second-hand smoke escaping from the units of smoking residents. The tug-of-war between those competing sets of rights will challenge the limits of a board’s authority to restrict activities within owners’ units, McGlauflin says. He predicts that boards will come under increasing pressure from owners who want to ban smoking completely within their communities. Although he thinks boards generally have the authority “to do whatever the association is authorized to do,” McGlauflin advises boards that are considering smoking bans to implement them by obtaining the super-majority vote of owners required to amend the association’s documents. • Construction defects. Construction quality issues may surface in any new development, but quality is likely to be a particular concern for developments constructed during the past two or three years, in the throes of the economic downturn, McGlauflin observes. “It wouldn’t surprise me if whatever construction is being done is being done with an eye toward cutting corners,” he suggests. The advice for boards is the same in good economic times and bad: Pay

Smoldering Concerns
Aside from collection actions, which have been mounting almost everywhere,

CONDO MEDIA • MAY 2010

Condo Media - May 2010

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