Issue 16 - A Condominium Management Co., Inc.

Transcription

Issue 16 - A Condominium Management Co., Inc.
Third Quarter 2014
A Condominium Management Company
The Door of Shame
Inside this issue:
The Door of Shame
-excerpt from Common Ground by Marvin Nodiff and Alissa Edwards
1 , 3,
Above & Beyond: Larry Lang 2
Saving Energy to Stay Cool
2
New Face: New Name
4
Local Community Events
6
Your Management Team
Information
6
T
ired of some owners ignoring polite reminders and late notices urging them to pay
their assessments, a self-managed association board in Texas posted a list of the delinquent
owners on the clubhouse door. The listing became known around the community as “The
Door of Shame.”
Similarly, an Ohio association posted delinquent owners’ names in a glass enclosed case
near the elevators, only to learn that several years earlier, one of the residents had transferred her unit into a trust without notifying the board and was no longer the owner of record. The board received heated threats of defamation lawsuits.
Is it legal for an association to publish a list of deadbeats? Is it effective? Do owners-even
those who are delinquent-have a right to privacy? What are the risks in disclosing the
names of deadbeats?
Most community managers and association attorneys express strong reservations about the
practice of publishing a list of delinquent owners and conclude it’s not worth the risk. Yet,
some associations embrace the strategy.
A Condominium Management
is proud to announce that we
will be hosting our first “A Day
at the Park” this year! A Condominium Management has reserved seats for the September 7th, 2014 Detroit Tigers
game, Tigers vs. San Francisco
Giants at 8:00 PM, and is inviting all of our community
members and vendors to come
out and enjoy “A Day at the
Park” with the A Condominium
Team! Tickets are in the upper
level behind home plate and
are available to all community
members and vendors for
$32.00/person. For all of
those attending, please
note the game time has
been changed to 8:00 PM
the same day. Come out and
enjoy “A Day at the Park” with
your community, Eric, Jason,
Makayla and their families.
Anecdotal evidence suggests the door-of-shame practice yields mixed results, motivating
some owners to pay their assessments and others to become hostile. One owner retained
legal counsel and asserted a defamation claim because the facts were inaccurate, and he was
embarrassed in front of others in the community, according to Houston attorney Mare D.
Markel, a member of CAI’s College of Community Association Lawyers (CCAL). Even
though the mistake was eventually corrected, the damage was done.
Is Publication Legal?
When publishing the names of delinquent owners, Markel believes that since an association
is attempting to collect its own debt and has been collecting it since before it became delinquent, a board is in compliance with federal debt collection laws. However, like many issues, state-specific laws may ban the practice. In California, for example, Steven S. Weil, a
CCAL member, says some confidentiality is required.
“The property must be identified by parcel rather than the owner’s name,” says Weil, a partner with Berding & Weil in Walnut Creek, Calif.
If the state statue is silent of doesn’t expressly prohibit publication, some attorneys maintain that the practice could be employed if done properly.
Benny Kass, a CCAL member in the Washington, D.C., area, doesn’t favor publication
unless the board tells owners in advance that their names would be made available to other
owners if they are delinquent for a specified period of time, the publication is circulated
only to owners and the information is accurate. Kass adds that a board should establish a
minimum amount that would trigger publications; an owner, for example, should not be
named if the debt only involves a late fee.
Continued on page 3
Association News
Above & Beyond: Larry Lang
~ by Makayla Eckardt, A Condominium Management
T
his issue, we have decided to recognize board member and president Larry Lang from the Pine Knob
Enclaves. Larry moved into the community in 2009 and promptly began volunteering on the Board of Directors in 2011. He has since then, continued his involvement with the Board, and recently, taken the position
of President in 2014. Larry has always been an exceptional Board member, but has made an even better
President. We would like to recognize Larry for his exceptional service on the Board. Larry has a strong
management background, and a no nonsense attitude towards the operation of the community. Already, he
has already made strides to increase Co-owner enjoyment, and reduce tension in the community. Larry has
already made a great impression on the Board, and on our company as the new president. We look forward
to working with him in the rest of his two year term, and hopefully, for many years to come.
Please join us in recognizing Larry Lang for his exceptional service to the community!
Want to recognize someone in your community? Please send your nominations to
MEckardt@ACondoMgt.com.
Saving Energy to Stay Cool
E
~ by Makayla Eckardt, A Condominium Management
nergy bills—like the temperature—always rise in the summer. But don’t fret: While there are big fixes
you can incorporate to make your home more energy-efficient, there are also many inexpensive energy solutions, as well as some simple and free steps that you can take to cut down on costs and save money.
Turn it up. Set your thermostat as high as possible. Start with 78 degrees when at home and 85 degrees
when away. For each degree above 72 you set the thermostat, you save between 1-3 percent. Be sure to take
into consideration your health and comfort, and drink plenty of fluids to stay hydrated.
Circulate air. Use fans to create cool breezes and keep the air moving in your home. Ceiling fans, in particular, can create enough air movement to make it cooler by at least four degrees. This could translate into a
significantly lower monthly electric bill, as ceiling fans only use about as much energy as a 100-watt light
bulb.
Shut the shades. Windows allow a lot of heat into your home. Keep drapes and shades closed during the day
to keep the temperature down.
Open nights. At night, if it’s cooler outside than in, open your windows! Not only will this bring some fresh
air into your home, it will give you a chance to turn off that AC. Also, be sure to close your windows in the
morning to keep the cooler air in longer.
Unplug. Electronics—such as TVs, DVDs, chargers, computers, printers and other devices—use electricity
even when they are turned off. By unplugging these devices when you’re not using them, you only save a
few watts, but they quickly add up to bigger savings over time. Use a power strip for multiple devices, and
switch it off before you go to bed. Also, turn off lights in unoccupied rooms.
As always, be sure to consult with the association, and contact your management office, to get approval for
any major renovations to your home.
Page 2
Third Quarter 2014
The Door of Shame
Continued from page 1...
Case law suggests that association homeowners may enjoy a qualified privilege to information such as delinquency records because they share a common interest in it.
Jeffery E. Kaman, an association attorney with Kaman & Cusimano in Columbus, Ohio, emphasizes that
owners have a right to know the association’s financial condition buy says boards need to be careful how
much they share. “Boards can disclose the addresses of delinquent accounts but should not disclose the
names of the owners to avoid the possibility of defamation.” Community association governing documents
typically are silent on the question of publication. Without express written authority, some professionals believe it’s prudent to avoid the practice.
“We always recommend that boards refrain from publishing what we consider to be private information,”
says Dave Ciccarelli, CMCA, AMS, PCAM, president of Horizon Community Services in Purcellville, VA.
Is it Effective?
Communities that have published the names of delinquent owners have realized some success. Like Markel,
Kass indicates his clients generally opt not to publish delinquent names, but when they do, owners pay.
Kaman also believes it’s a good strategy to inform owners about the financial condition of the community;
part of that is talking to owners about delinquency rates. He says associations can encourage individualsand avoid the “embarrassment factor”-by publishing a list of delinquent addresses instead of names.
Ciccarelli remains skeptical. In 17 years in community management, he recalls only two association clients
that published the names of delinquent owners. In neither case were the funds collected.
Is it Worth the Risk?
A Board should carefully consider whether publishing the names of delinquent owners would offer more
benefits than risks.
An association could be exposed to liability for defamation if the information is incorrect. Whether the association uses a door of shame, posts the list to its website or announces the names during a meeting, it could
be sued for libel (if the information is published in written form) or slander (if it is spoken).
The essential elements of defamation include: the association published the statement, the association was at
fault in publishing; the statement tended to expose the owner to hatred, contempt, ridicule or deprived the
owner of the benefits of public confidence and social associations; the statement was read or heard by the
public; and the owner’s reputation was damaged.
“Each board should adopt a collection strategy in consultation with professional management and legal
counsel,” advises Karman. “The association’s goal is to collect money, not to spend it defending itself in litigation. The risk in disclosing the name of a delinquent doesn’t usually outweigh the benefits.”
When publishing delinquent names, numerous opportunities for a misstep exist and could lead to a claim of
defamation. Perhaps a payment was received but not posted, or late fees and interest were improperly calculated. If a board wants to publish, Kass says it needs to be sure the “information is 100 percent accurate.”
Continued on page 6...
Page 3
Association News
New Name: New Face
~ by Makayla Eckardt, A Condominium Management
We would like to introduce
to you Miranda Carey. Miranda
was born on April 7, 2014 at 4:56 AM.
At birth, Miranda weighed 6 pounds
6.8 ounces and was 18.75 inches long.
Miranda specializes in many tasks
such as sleeping, eating, smiling,
and leaving special presents
for mom and dad.
Please join us in wishing the happy couple congratulations,
and good luck, to their new baby girl.
Page 4
Association News
The Door of Shame
Continued from page 3...
In the case of the Ohio association that published a former owner’s name, Karman says cooler heads prevailed,
and the dispute resolved itself. “If the board posted addresses only, instead of names, the entire tense situation
could have been avoided,” he notes.
Publication also could have a negative impact on morale. Owners who religiously pay their assessments in full
and on time may applaud a board that posts the names of delinquent owners, while others may see the tactic
as unnecessary-intended solely to humiliate-and wonder why the board isn’t pursuing legal action to collect
debt.
Ciccarelli warns that the potential for ill will against associations-even by members in good standing- “is to
great to ignore and...more than offsets any additional collections that such action might facilitate.”
Weil prefers to rely on collection tools in state law and the governing documents. California statues require
boards to have an assessment collection policy. “It’s worthwhile for the board to publish evidence that it is aggressively, respectfully and sensibly pursuing collection,” he says. “There’s no extra bang for the buck in publishing the names of those targeted for collection.”
Weil also suggests to boards that they publish addresses instead of names. “All the positives resulting from disclosure are achieved without the negatives.”
He says boards should include a statement such as “delinquent as of a certain date” so they don’t offend those
who might have paid after the document was written or posted.
Does an Owner Have a Right to Privacy?
In 1981, an Ohio court of appeals found an association’s decision to publish minutes of a meeting where the
board decided to foreclose on a delinquent owner was not an invasion of the owner’s privacy.
The court reasoned that the minutes were an accurate reporting of the actions taken at the meeting and were
not offensive or objectionable to a reasonable person of ordinary sensibilities.
If a board doesn’t publish the names or addresses of delinquent owners, would the same information be available if an owner wanted to inspect the financial records? Would there be a different results under the discovery rules in a lawsuit?
Generally, under state statues for community associations and nonprofit corporations, any member has the
right to inspect the association’s records. This includes the financial records which in turn may included delinquent accounts. Not all documents are available for inspection. Attorney-client communication, for example, is privileged and exempt from inspection.
Many courts have taken a balanced approach, weighing the reason to inspect the document against the
debtor’s reason to keep the documents private. Disputes may hinge on state statues and rules of evidence.
In 1995, A California court of appeals determined that owners’ voting ballots were excluded from a director’s
right to inspect under state statues. The court determined that voting is a type of information in which members have a reasonable expectation of privacy and is excluded from the general rights of inspection.
Page 5
Third Quarter 2014
In a different case, a California association was sued for failing to disclose the names of delinquent owners.
The association argued that the names but not the amount were privileged. The issue of discovery in the
context of lawsuit rested on the rules of evidence. According to Weil, California statues wouldn’t treat as
privileged a board’s decision regarding a delinquent owner made in executive session.
Karman says Ohio laws give an owner the right to inspect the association’s books and records, including a
list of delinquent addresses with an “as of” date.
Markel notes that there are few, if any, court cases regarding disclosing information about delinquent owners to third parties, but a board would have a seller’s consent to disclose the information on a resale certificate.
In addition, when an association records a notice of lien or files a lawsuit to collect debt, the action becomes
a public record that any owner could discover at the local deed recorder or courthouse.
Does Insurance Cover Defamation Claims?
Karen O’Connor Corrigan, CIRMS, president of O’Connor Insurance in St. Louis, says her agency has yet to
encounter a claim where an association published a delinquent owner’s name.
Insurance coverage can be tricky in these situations. Libel and slander are covered in the commercial general liability policy. A directors and officers liability policy only comes into play if the general liability policy
fails.
However, Corrigan notes that the general liability policy excludes coverage if the slander and libel results
from knowingly violating another’s rights; knowingly publishing false information; publishing before the
policy is in place; criminal acts; electronic chat rooms or bulletin boards the association hosts, owns or controls; or distributing material that violates statues, such as the Telephone Consumer Protection Act, CANSPAM Act, or any other statue, ordinance or regulation that prohibits or limits sending, transmitting, communicating or distributing material or information.
“If the general liability policy has any of the exclusions, the board should hope the association has one of the
rare D&O policies that doesn't exclude libel and slander,” Corrigan says.
She suggests association submit a libel or slander claim to both the general liability and D&O arrivers since
there is potential coverage under both policies. If the general liability insurer denies the claim, the D&O
policies doesn't exclude libel and slander and could fill the coverage gap. However, most D&O policies won’t
cover libel or slander if the claim resulted from a deliberately fraudulent or dishonest act or if it violated a
statue or regulation.
To Shame or Not?
So while some associations believe it’s appropriate to publish delinquent owner names, it’s not always effective, and the risks-a hit on moral and the potential for lawsuits-outweigh the possible benefits.
Instead, boards should recognize that state laws differ and should consult the association attorney to prepare
written collection procedures. This helps avoid spending scarce resources to defend the association against
defamation claims.
If a board simply cannot resist the urge to create a door of shame, it should make sure the association’s D&O
policy plugs holes in the general liability policy. The board also should insist on having its facts straight and
use addresses only-not names.
Page 6
A Condominium Management Company
P. O. Box 81561
Rochester, MI 48308-1561
Office: (248) 650 - 8983
Fax: (248) 453 - 5771
Email: Info@ACondoMgt.com
www.ACondoMgt.com
Your Management Team Members:
Jason Carey
Owner
JCarey@ACondoMgt.com
(248) 453-5798 Direct Dial
Eric Mazure
Property Manager
EMazure@ACondoMgt.com
(248) 650-8983 Main Office
Makayla Eckardt
Management Coordinator
MEckardt@ACondoMgt.com
(248) 402-5002 Direct Dial
Upcoming Community Events
Date
September 7
Event
Day at the Park! Detroit Tigers Game @ 8:00 PM Tigers vs. San
Francisco Giants
Venue Information
Comerica Park
Order your tickets today at
ACondoMgt.com
August 16September 28
2014 Michigan Renaissance Festival
Open weekends & Labor Day 10:00 AM-7:00 PM
12600 Dixie Highway
Holly, MI 48442
August 16
20th Anniversary Woodward Dream Cruise
August 22
Lady Antebellum Concert
DTE Energy Music Theater
August 22-23
Mackinac Island Fudge Festival
Mackinac Island
August 28September 1
Michigan Peach Festival - 2014
228 N. Main Suite D
Romeo, MI 48065
August 29September 1
Arts, Beats & Eats
Royal Oak Downtown Development Authority
September 18-21
Frankenmuth October Fest
Frankenmuth
September 21
Rascal Flatts Concert
DTE Energy Music Theater