Expired CC&R's/ Invalid Membership Agreements - Happy Hour at Office

Iowa Code Chapter 614 - Previsions (several) and “Chipman‘s Subdivision Homeowners Association,” Iowa Court of Appeals Case No. 1-867/11-0545 were part of the Small Claims case prior to the decision.

It was discovered in a current lawsuit that our CC&R’s expired at least 21 years ago and probably longer. They cannot be reinstated. The Board and HOA attorney have been aware of this. The HOA attorney and HOA board knew the possible problems regarding Membership Agreement and expired CC&R’s before the they filed the latest suit against this particular member from this particular member. The HOA/HOA attorney were also the ones who entered documents concerning both into evidence during this last case. There is also a small claims judgment dismissing the HOA case against the member and that her Membership Agreement is not valid.

The Small Claims Judge also directed the HOA/HOA attorney to produce rule books from 2006-2011 as proof of notice an dissemination to the various member/.land owners affected by the same. No such “notice” documentation seems to exist and has not been presented.

This is not about insulting the attorney for entering this into evidence, the member/lot owners, who did not say anything, the member/lot owners who voted these things in, or the person/people who refuse to pay. We would just like any answers if you have been in this situation or insight you may have.

There have been lengthily searches of our county recorder where membership agreements need to be filed, per the membership agreement and part of the Small Claims ruling. Since 1990 only 8 of approximately 225 agreements have been verifiably filed. The case, as it is assumed all cases, was dismissed based on the membership agreement or the lowest level the Judge had to base his opinion on. This decision was appealed by the HOA/HOA attorney and oral arguments heard. We are waiting on the appeal decision. The HOA vowed to appeal to the Supreme Court if they loose again and of course no further evidence can be submitted.

The lot owner/member who was sued, brought this suit and Judgment to lot owner/members attention last weekend when she found out that this suit or ruling was on the agenda for the Annual Meeting and many lot owners/members did not know about it. (Or other lawsuits) Before anyone says “She should have paid“, a judge heard the evidence and dismissed the case. We have all heard about board bullying people and unfair practice. For the sake of argument, lets just stay that is true here and she does have a valid judgment She has had 4 cases now dismissed against her by the HOA. Please realize, you can only give people information, you cannot make them read it or act upon it.

The HOA attorney was at the annual meeting yesterday. The question is shouldn’t anyone who owns property be notified by their HOA/HOA attorney of this litigation and that CC&R’s expired since CC&R‘s concern all member/lot owners? If membership is also proven invalid, on the appeal, wouldn’t that mean any vote since at least 1990 needs to be revoked since the lot owners/members who voted were not a valid members except for possibly 8 people? By the way, we do not know if the 8 people even still all live here. But, was/is the board even legitimate? Were any of their decisions valid since none of the “Board‘s” membership agreements were on file? How about the new Board voted in yesterday, are they able to do anything since their membership agreements are not on file either? The filing may be only a small part of the membership agreement issue. This was brought to the board’s attention prior to the annual meeting and dozens of voting members sent emails. Everything went on as usual at the annual meeting without any mention. One person tried to bring up some things regarding this but was told to sit down because it was not on the agenda. This was the predicted concern prior to the meeting. The board knew or should have known in advance these questions were coming as many if not all were on the email lists- It is agreed, if it was not on the agenda, the board did not have to discuss it. But in all the months/years the board and their attorney knew about this issue, shouldn‘t some notification been issued at some time? Does anyone know what legal requirement if any they had to disclose this as it pertains to Iowa?

Most lot owners or members, call them what you will,, refused to look at the recent court order or other legal documents. They were also provided information where to search for these documents, the links online, phone numbers and email address to the government agencies to verify information for themselves.
Is it true, they could be living next to neighbors soon with cows and chickens, dilapidated cars, and boarded up trailers with 14 people tenting in their front yard? If and only if, the ruling stands, please leave any comments like “They get what they deserve” or the “could haves, should haves, would haves“, needs not be said. Many tried in vain and no luck. This will probably effect everyone, including those of us who tried to provide information. No matter the outcome of the membership agreement, the CC&R’s have expired. How can any bylaw or rule be changed on something that has expired at least 21 years ago?

Right now the ruling only affects the one person. Since this was appealed and argued in district court, won’t the ruling affect everyone who owns property if it is dismissed again and the ruling in favor of the Defendant? If it is dismissed, meaning only 8 people are members etc. what would it take to get the board to stop trying to collect, and enforce rules and bylaws? Wouldn’t the expired CC&R’s alone effect your property even if it does not effect every corporation bylaw? There are actually two hurdles to jump through. Membership agreement and expired CC&R’s. What does it take for the board to stop collecting on just the CC&R part if it is proven the bylaws are still in effect? They also passed a bylaw yesterday giving the HOA the right to put a lien on your property without serving any type of notice. It is believed most if not all the CC&R’s are under Rules and not bylaws. Under Building, zoning, Health and Sanitation regulations. It, in part, states must comply with all governing agencies codes, regulations, conditions and restrictions…..To shut this down, is it just the district court Judges ruling? If this is appealed to the Supreme Court, and it will be, what happens during that time? Is there a government agency that can cease the CC&R enforcement with or without a Judges order? How can prevention of member/lot owners from getting liens take place without them also having to go to court since many member/lot owners could not vote? We realize this is not a good situation, the attorneys are the winners, we need to get everyone together …… but do to the suit the association filed, the information is out there and cannot not be taken back. No need to remind us. Civil suit is probably coming, again we are not looking for the obvious, just what happens if…..

Per Iowa Secretary of State, Non-Profit laws you may revoke your membership. A couple of people apparently visibly foresaw the legal issues and the mess. The lot owners/membership voted yesterday that this can no longer happen. If the Iowa Code states it is legal, isn’t it legal? The Iowa Code does state you may be responsible for any past obligations. It was also part of the suit mentioned above. It is understood the Corporation and their paperwork are still “legal” and correctly filed with the Iowa Secretary of State. Is it true just because their corporation paperwork may be correct, it does not necessarily have any impact on any bylaws or CC&R’s. This is about the CC&R’s regarding the land and any votes, the membership took per the membership agreement.

If you can answer or give insight to any of the above that would be wonderful. If you are not overwhelmed and can give insight to any of the “smaller” issues below, that would be great.

Despite certified letters, writing emails, going to the office during normal business hours, lot owners/members totaling paid and current, the books are not available for review. Discovery will be needed and the books will be asked for when/if a civil suit it filed.

Lastly, this valid “membership” is getting smaller and smaller due to fines and fees and cannot vote. The office was total remodeled, lots of new pretty things and the Board said they paid for most of this with “fine“ money. Now, they want Happy Hour at the office. BYOB of course. Any opinions on liability? I understand the difference between Host, Hospitality and Dram Shop, but does anyone think this is a good idea or is cheaply insured? Especially since they just voted in to name them as lost insured on all boats, Voting that in passed. Why not include the board as lost insured on our cars, ATV’s, Golf Carts, …..? What are they even on them at all? We think we know, but the lot owners/membership has already voted it in without many questions if any. It may not even matter if they were voted in, depending on the membership issue, just wondering if other HOA’s do this and any problems they had.

Thanks

Thank you for your response, but I believe you are missing the point. They fail to acknowledge the Judges order so eveyone is still considered a member in their minds. Also, we realize the HOA/HOA attorney and who he/she works for, it was just easier to put it that was because this is getting passed out. We also realize, even though the board may not acknowledge it, who actually provides the documents and who is responsible for submitting evidence. The attorney of course, submits it and is responsible to make sure what he submits is accurate. Another part of the problem we are not getting into.

Your answer if for the one person, we are asking for many people who did vote or tried to vote.

Member or not, CC&R's run with the land and have their own laws. That is our issue.

FYI our board at a meeting after Court where CC&R's were brought to their attention referred to them as the band Credence Clearwater Revival and laughed because they never botherd to check out what it meant.

Patsy Cline's "Who's Sorry Now" comes to mind.

The Answer, Probably the whole community here that we had a board that did not know but was responsible.

Everyone except the attorney

We, well some of us, realize that. More people should have paid attention I guess.

The others apparently have so much money they do not care what is going on. If the CC&R’s expire, from what we understand, they cannot collect for anything regarding the land. If the membership is also invalid, the HOA cannot collect on that either. So what everyone paid or continues to pay, will probably only go for legal fees. The board has insurance, but possibly ignoring or not informing us may be actionable. We will wait and see. The person who had the case dismissed against her, claims to have another order where the Judge discusses the attorney, continually filing in the wrong county, may be actionable too.

We may need to save our dues for our own legal fees for issues this board may have gotten us all into.

Your situation reminds me of the situation my neighborhood has dealt with. Membership rolls were not kept. Covenants expired. Judge ruled against them. Board misrepresented information to neighborhood and continues to insist they are correct, although they have put on hold their enforcement matters until they can get the judge to clarify their order. Because of the HOA's actions, numerous homeowners are facing legal action because the HOA's attorney told them they'd handle it all.

I am in the mindset that if things were not kept in accordance with the law and the governing documents, they are invalid. I have experienced that some hold the opinion that as long as no one questions it then it is valid. I also think that if the HOA is invalid, then them purposefully hiding information from the neighborhood
could make them personally liable for their actions.

For more information regarding this similar situation, see Judge Lisa Munyon’s March 4, 2011, “Order on Plaintiff’s First Partial Summary Judgment Motion – Marketable Record Title Act,” in Busch v. Sand Lake Hills Homeowners Association, Inc., Case No. 10-CA-11,262.

I'm not an attorney and I do not work within the legal profession. I am offering my opinion based on the information contained within your posting, personal experiences, research and, hopefully, common sense.


This will depend on the language used in the ruling.

It's possible that every member will have to go through this process, each one citing this case as precedent.


It would take additional court cases and/or a change in to the Board.

It's possible that the Association could be deemed voluntary. If this happens, those who are voluntarily members would have to comply with the Associations rules.


Yes. However, if there are common elements (roads, street lights, playgrounds, parks, clubhouse, pools, etc.) then everyone would still be partial owner and as a partial owner, responsible for the upkeep of those elements.


The Association must still comply with any State laws about liens.


That is a question you will have to ask your attorney.


No.

Typically, there is no State or Federal government agency that can be contacted to gain assistance. Therefore, it's up to the membership to take care of the issues themselves.

This is because the CC&Rs (deed restrictions) are considered a civil contract between all owners of the properties that have the same deed restrictions attached. Associations are formed to maintain and/or operate the common area and fulfill any services (trash/recycling, snow removal, street lighting, etc.) required by the CC&Rs. Per the CC&Rs, the Association is also given the authority (in addition to the owners) to enforce the covenants, restrictions and conditions of the deed restrictions (contract). Typically, Associations are incorporated (usually as a nonprofit) as this provides them certain advantages. As a corporation they must comply with corporate laws in addition to any HOA/COA laws.

As you know there are civil laws and criminal laws. Criminal laws are usually enforced by the State. Civil laws are usually enforced by the individuals involved and they do this through the court system. Since contracts, hoa/coa laws and corporate laws are considered civil laws, there is typically limited governmental authorities to "oversee" or enforce those laws.

Sure the State corporation commission may fine for not filing the annual report on time. The IRS will certainly go after the Association for failing to file taxes. The District Attorney will prosecute if criminal laws are broken (example embezzlement). However if the Association doesn't comply with the Bylaws or a civil law, it's up to the membership to hold the Board accountable. The easiest way would be to recall the board or not reelect them to the Board. The more expensive option is to go through the court system.

This is why it's imperative that the members remain active in the development and actually take an interest in how the Association is governed. If apathy sets in (and, unfortunately it does), it becomes that much more difficult to change things when issues are discovered. As you are discovering.


Typically, if the individual or entity who initiated the lien doesn't want to remove it, the only other option is to go to court.


Associations must comply with all laws.

The only way this works is if the people involved are agreeing to comply with the laws. If one does not wish to comply then the others must take that one to court to force them to comply (which may or may not be successful).

In the case of corporations, the bylaw will be effective until someone realizes that section is in violation of the law and challenges it. As stated above, if the challenge is challenged, the issue must be settled within the courts.


This is a question for your Attorney.

Now that I've had a chance to study the appeal document, I have the following comments.

It appears that the 1986 Board and/or Association attorney failed to dot the i's and cross the t's. It appears that the court concurs that the 1986 amendments were valid but only through 1990 (because the document did not extend the original dates the CC&Rs were to be in effect).

In 2003 the CC&Rs were again modified. However, the court is saying that since the 1969 document, as amended in 1986, terminated in 1990, the 2003 document had no basis to be applied to all lots/units in the development. Because there was no basis, the defendants lot had no CC&Rs attached.

However, as I see it - here are the issues:

1) There are private roads that need to be maintained.

2) I would suspect that in the absence of CC&Rs an argument could be made that a private road agreement would be automatically enacted as everyone who lives on the road would be responsible (and liable) for the condition of the private road.

3) It's also possible that an argument could be made that the lots that voted in favor of the 2003 CC&Rs could have those CC&Rs attached to their deed (mainly because they agreed to it and thus entered into a contract with others who agreed).

I suspect that if the roads were public the Board wouldn't be fighting the issue as hard. Additionally, since De's posts indicate other common areas (offices, lake or retaining pond) there are areas that need to be legally addressed.

Personal opinion, based on the information available, I think the current board has been arguing the wrong argument and sticking with "the CC&Rs are valid" rather than the roads are private and need to be maintained by all who have property accessed by the road (or easement on it).

That's my layman's 2 cents

Tim

DeS - You may want to read an Aug. 18, 2012 Reader's Watchdog column in the DesMoines Register that discusses HOA law in Iowa, supposedly one of the weakest in the country. You may be able to get Bill Brauch and his staff in the consumer protection division of the state Attorney General’s office to take action or at least help you figure out where you stand. According to Brauch, the Attorney General "can act if the concerns rise to the level of unfair practices."