Alyssa Gautieri

By Alyssa Gautieri

Community associations are required to maintain books and records of expenditures, budgets, audits, receipts of operation, annual reports, and meeting minutes. Do owners have the right to review these records at any time and what is the best process for allowing them to do so?

According to Stacey R. Patterson, Esq. an attorney who serves as counsel with Ansell Grimm & Aaron, P.C., “owners are entitled to review the business records kept by their particular association that are not otherwise protected by attorney-client privilege or specific state laws and policies.”

For more specific guidelines for condominiums, Patterson recommends consulting the statutes or legislation in your particular state. For example, in New York, consult the New York Condominium Act – codified at RPP §339-d et. als. and in New Jersey consult the New Jersey Condominium Act codified at N.J.S.A. 46:8B-1 et. als.. With regard to corporations or homeowner associations, owners should consult the non-profit corporation statutes in their particular states. Owners should also consult their particular association’s governing documents for procedures relating to request for documents.

Some business records may be protected by disclosure as an attorney-client communication. Attorney-client privilege protects communications between association boards and/or agents with their attorneys from disclosure to third parties. Information that is privileged involves confidential communications between an attorney and a client made for the purpose of seeking or providing legal advice. “If there’s a question about whether a communication is protected from disclosure as privileged, it is best to discuss the issue with your attorney,” Patterson said.

Further, if a board is unsure about whether something must be disclosed to owners, Patterson suggests to err on the side of transparency. “If it’s not an attorney-client communication, my recommendation would be to turn it over unless there is a compelling reason not to,” she said.

Patterson suggests that associations adopt a uniform policy for handling record requests from owners. The policy should outline the procedures that owners must follow when making these requests and how the board will respond.

Owner requests for records should be in writing and be specific. Certain states, such as New York may require that requests for association records be made in good faith and for legitimate purposes. This serves to minimize fishing expeditions. If the owner seeks copies of hard files, the board can require a fee to be paid up front before providing such copies. Further, if owners seek to inspect hard copies, it is recommended that they be required to schedule an appointment during the association’s agent’s business hours.

If a request is made during the on-going COVID-19, an in-person inspection may not be practical or safe. In the alternative, and in light of the accessibility and availability of electronic communications, it may be more practical in many cases to send documents electronically which serves to reduce costs and manpower needed as well as to avoid in-person contact”. “A switch to electronic storage of records is also a more streamlined way to maintain and access records,” according to Patterson.

The right to inspect records is reserved for unit owners only. Non-owners or renters are not entitled to inspect records unless a court orders their turnover.

Issues may arise when dealing with certain records such as delinquency reports, which are considered financial records. An association may choose to redact personal information such as names or addresses within records to protect the privacy of unit owners. Further, “the problem with providing delinquency reports is that the information is ever-changing and it is difficult to ensure that the information is up-to-the-minute accurate from the time the report is created to the time it is produced in an inspection,” Patterson said.

Patterson explained that a unit owner can pursue legal action if they believe that they have been improperly denied access to certain business records. In New York, the unit owner challenging denial of access must be able to demonstrate that the request for access is made in good faith and for a legitimate purpose.

In New Jersey, a dispute about access to records is housing-related. Housing-related disputes are typically handled through an alternative dispute resolution (ADR) hearing. ADR is an informal process handled by a mediator. ADR serves as a vehicle to attempt to resolve disputes without the cost of pursuing litigation. “In ADR, a mediator will consider the positions of the parties and attempt to resolve the dispute in the best interest of everyone involved,” explained Patterson. “If unsuccessful, the parties always have a right to their day in court”.

By Alyssa Gautieri

Odor-related complaints are more common than you’d think—whether it’s cigarette smoke in outdoor common areas, the lingering scent of food in hallways, or the smell of perfume penetrating the walls. 

According to attorney John LaGumina, of LaGumina Law Firm in Purchase New York, an association has the obligation to get involved in most odor-related complaints. 

A board’s nuisance rules will play a big part when dealing with official complaints about odors caused by residents, LaGumina said. Nuisance rules discourage and prohibit residents from doing anything that unreasonably annoys or interferes with another resident’s right to peacefully possess, use or enjoy their home and property. While nuisance rules tend to be general and broad, the board can use these rules to address specific complaints regarding smoke, food smells, or unsanitary conditions causing odors that impact one or more residents.

From cigarette and marijuana smoke to strong perfumes and unsanitary conditions, LaGumina pointed out issues in addressing different odor-related complaints.

Cigarette Smoke

Not only is the smell of cigarette smoke unenjoyable to most bystanders, second-hand smoke can have detrimental health effects. According to LaGumina, “if a board receives a second-hand smoking complaint, it has to be addressed.”

“For decades, the law said that the board had no responsibility for what happened inside a unit, including smoking. There is a persistent trend in recent case law, however,  that holds that boards now have the duty to do something. Courts are increasingly likely to penalize boards for doing nothing about a smoking complaint,” he said.

“If the association receives a complaint about smoking, that presumably violates the nuisance rules that are already in place,” LaGumina said.  Thus, “the board can send a warning letter and if the conduct continues, the board can eventually fine the resident.”

“Residents do not have the constitutional right to smoke and outright smoking bans, if properly adopted and approved by the unit owners, can be upheld,” LaGumina said. Most governing documents also give the board alone the ability to adopt regulations concerning smoking in the common areas—which include decks, terraces, and patios.

To ban smoking inside a unit, at least two-thirds of the unit owners would have to agree to amend the governing documents. Even without an interior smoking ban, a board can still, on their own, enact a new rule and policy that second-hand smoke complaints will be considered nuisances and result in warnings and fines. 

If a resident with asthma or allergies is filing second-hand smoke complaints, it could become a more serious issue. “If an adjoining resident has a medical condition that makes them more sensitive to second hand smoke, the board’s duty to take action escalates,” said LaGumina.

According to LaGumina, the board could also hire an engineer to look at the building and decide if anything could be done to better seal off units and stop smoke from penetrating adjoining units.

Marijuana 

If there is a complaint from a resident about the use of marijuana, the association would follow the same steps as recommended for a second-hand smoke complaint—most often issuing a warning followed by a fine for breaking the nuisance rules.

“The board is not under any duty themselves to contact the police, and police departments often may not respond to calls regarding marijuana use.  However, the board can remind the complainant that they have the right to contact the police,” LaGumina said. “Unless the board members witnessed the smoking, the board usually does not have the ability to make a first-hand complaint to the police.”

If a resident is prescribed medical marijuana, condominiums and HOAs are required to offer a reasonable accommodation to their no smoking rules. If a resident complains about the use of marijuana by another resident who is legally allowed to use marijuana, LaGumina suggested speaking to the resident with the legal marijuana prescription and trying to arrive at a compromise. 

Food Smells

Whether it’s the scent of a homemade meal in the oven or the stench of burnt burgers after a barbecue gone wrong, it’s not uncommon for residents to complain about lingering food smells that come from their neighbors. Even if the smell is a good one—such as cookies baking in the oven—proper ventilation should not allow residents to smell food that’s cooking next door.

In the case of a complaint, the association should follow the same steps as they would for any other nuisance, according to LaGumina.

If an association warns or fines a resident who is responsible for distracting food smells, it must be careful to avoid any discrimination. “Any food smell policies put in place definitely need to be uniform to prevent a discrimination lawsuit,” said LaGumina. 

If there are many complaints about surrounding food smells, the associations could contact an engineer to see if there are any defects or ways to improve ventilation. “Many of the older condominiums don’t have the basic ventilation that helps circulate the air for food smells,” LaGumina said. “The association can certainly set up an inspection policy and try to require owners to install kitchen fans and encourage unit owners to use kitchen fans.”

Body Odor & Perfumes

It’s possible that a resident is allergic to the perfume used by another resident, or that a resident has an especially noxious problem. “Anything that causes annoyance to other residents can be considered a nuisance,” said LaGumina, who noted that these body odor or perfume issues are not very common. 

These issues should be handled as a smoke complaint would be. The association can resort to the typical clause in most governing documents that bans noxious fumes or odors.

Unsanitary Conditions

If a resident is hoarding, it will likely become evident to their neighbors over time—and there may also be a smell that emanates from their unit. In these cases, an association must tread lightly; a resident may be hoarding due to a mental health condition or another ailment or infirmity. The situation can be treated as a nuisance, although more extreme measures may be required. 

“Hoarding situations are unfortunate, and once they arise, it takes a long time for them to go away,” said LaGumina, who added “there are different ways for a board to approach a hoarding situation.”

According to LaGumina, the association can write a letter to Adult Protective Services (APS)—an agency that helps elderly adults (65 years and older) and dependent adults (18-64 who are disabled), when these adults are unable to meet their own needs. APS may come out to inspect the situation to determine if the person is endangering themselves. 

The association can also contact the fire inspector as hoarding conditions can constitute a fire hazard. “The association may have to be persistent in these tough situations,” said LaGumina.

Keep in mind, regarding access to a unit that may be hoarding, board members or managing agents do not have the right to enter a unit unless the owner agrees.  Without such permission, a court order would be needed which could involve costly and time-consuming litigation.

By Alyssa Gautieri

There are quite a few ways that an association manager can breach their fiduciary duty to the association, whether it’s acting outside of their scope of responsibility or performing a task that was unauthorized by the board. As hired workers, do managers have the same fiduciary duty to the association as the board?

According to attorney Sara A. Austin — a partner at Austin Law Firm, LLC in York, Pennsylvania — fiduciary duty is a legal concept that refers to the duty owed by one person to another person or entity. The fiduciary, whether a real estate agent, lawyer, or association manager, acts on behalf of the principal.

“The fiduciary must act in the best interest of the principal — in this case, the association — even if it would hurt the fiduciary  by doing so,” Austin said. An association manager must perform their established duties while putting their client’s interest ahead of their own and preserving good faith and trust.

A manager is hired by the board to act on behalf of the association and is essentially “stepping into the shoes of the board to complete delegated tasks,” Austin said. “In essence, managers have the same fiduciary duty to the association as the board.”

If the association is professionally managed, the manager handles most of the day-to-day operations, whereas the board deals with governance matters. “The manager has no more power than the board does, so if the board is not authorized by statute or otherwise to do something, a manager cannot do it,” Austin said.

A breach of fiduciary duty occurs when the fiduciary acts in their interest, rather than the best interest of the principal. A manager or management company signs a contract at the time of employment or engagement that should outline those responsibilities. A breach of duty may occur if a manager performs duties that are contrary to the contract or go beyond the authority that was granted to them by the board. 

For example, if a board authorizes the manager to sign a contract for a job that costs $2,000 but the contract states the job will cost $3,000. In this case, the manager has exceeded his or her authority. If there is a breach of fiduciary duty, a manager could be liable for the damages to the association.

The association must protect itself from a manager that acts outside of their authority. The board should have a clear understanding of its contract with the management company, according to Austin. The contract should outline the manager’s responsibilities, who is monitoring the manager’s performance, and how the manager reports his or her actions and performance  to the board.

The contract should also outline how checks and balances are going to occur, “especially when it comes to financial issues,” said Austin, who noted that communication between the manager and the treasurer is very important. “There has to be awareness of what is going on so if something seems amiss, it can be stopped early.”

There may also be a breach of fiduciary duty if the board directs a manager to perform a duty outside of the scope of their responsibility and the manager complies. For example, the manager alone cannot approve the budget even if the board were to ask them to do so. “The manager needs to know what the board can delegate to them,” said Austin.

If the board is pushing for a manager to perform a duty that cannot legally be asked of them, the manager should not take that action because they could be held liable if the duty is performed. Any changes in authority should be written down, whether in the bylaws or manager contract. “Having it in writing protects everyone,” said Austin. The manager can contact the president of the board or the association’s counsel, or the management company may seek their own counsel if issues persist.

When it comes to avoiding any breaches in fiduciary duty, Austin said, “it’s really important for the board and the management agent to have a good working relationship.”