Month: August 2013

A Sweet Partnership?

With the burgeoning interest in locally grown produce and all things “green,” could the return of home beekeeping have been far behind?  In addition to making honey, pollinators are essential to a good garden, production of food crops and the health of flowering trees and bushes.   Locally grown honey surely is better than what comes in those plastic bears at the supermarket.  In fact, there is a huge resurgence in hobby beekeeping nationally and in Atlanta as well.  Emory University has bee hives, and this spring Georgia Tech is putting hives on a meadow growing on the roof of Clough Commons, the new LEED certified undergraduate science center.  Even the White House is on Board.  See, www.whitehouse.gov/blog/2010/06/23/secret-life-white-house-bees.  I recently attended a seminar sponsored by the Metro Atlanta Beekeepers Association, Inc.  There were over 200 attendees and registration had been closed for over two months prior the event!  As I listened to the speakers talk about the benefits and mechanics of beekeeping my mind naturally drifted to how my condominium and homeowner association clients would react to finding out that an Owner intended to put a beehive in his backyard . . .

Georgia law is generally friendly toward bees. Official Code of Georgia Annotated Section 2-14-41.1 provides:

No county, municipal corporation, consolidated government, or other political subdivision of this state shall adopt or continue in effect any ordinance, rule, regulation, or resolution prohibiting, impeding, or restricting the establishment or maintenance of honeybees in hives.

Recently, Cobb County Code Enforcement cited a beekeeper under Cobb County’s livestock ordinance.  When the officer went to serve the violation notice, however, the beekeeper explained that there is no way that bees could be considered livestock and the citation was dismissed.   While it is clear that no governmental agency can prohibit the keeping of bees, that proscription would not mean that a community’s own documents could not have an enforceable covenant prohibiting bees.  But does the language in most covenants address bees?   Keeping the usual caveat in mind, that you need to check the covenants for your specific community, most “Animals and Pets” provisions start out something like this:

No animals, livestock or poultry of any kind shall be raised, bred or kept on any Lot; provided, however, dogs or cats may be kept on a Lot, not to exceed a total of three (3) such animals, provided they are not kept, bred or maintained for any commercial purposes.

Is a bee an animal?  Under some broad definitions, anything that is not a plant or a mineral is an animal, but other definitions limit animals to mammals as opposed to reptiles, fish and insects.   Arguably, that provision would not bar an Owner from keeping bees because a bee is not an animal, livestock or poultry and, as we all know, covenants are strictly construed in favor of free use of property.  Some covenants contain a slightly more tailored provision which addresses “Insects” as follows:  “No Person shall permit any thing or condition to exist upon any Lot which shall induce, breed or harbor noxious insects.”  But is a honeybee “noxious?”  I met several hundred people in one day who would say “No!”

Could the presence of bees be a “nuisance” as that term is used in covenants?  Nuisance provisions are always the provision of last resort when trying to find some provision to fit a condition that the Association wants to address.   Nuisance provisions usually contain language such as:  “No plants, animals, device or thing of any sort shall be maintained in the Community whose activities or existence is in any way noxious, dangerous, unsightly, unpleasant or of a nature as may diminish or destroy the enjoyment of the Community by other Owners and Occupants.”  The primary reason an Association or other Owner may want to prohibit the keeping of bees in the community has to be the fear of being stung.  But how dangerous is a bee sting?  And would it rise to the level of being “noxious” to satisfy a nuisance provision?

I thought the speakers at the beekeeping seminar might be minimizing things when they said that it is perfectly normal for a bee sting to cause swelling, and that you only need to worry if you stop breathing.  No one wants to get stung, but unless you are actually opening a hive to work with the bees, or step on one, bee stings are rare.  And, to put it in perspective:  According to the Centers for Disease Control, in 2010, 33,687 people died in traffic deaths; 42,917 people died of poisoning, 31,672 people died from firearms and 50 died from bee stings.  Of course no one want to know, or be, one of the 50, but the risk of serious complications arising from a bee sting is certainly rare.

Taking another approach:  A beehive is, under most definitions, a “structure” which would require advance written approval of the Architectural Control Committee or the Board.  However, I was surprised to learn that beehives now come in all colors and can be painted green or brown to be camouflaged into its surroundings.  Some even have copper or other ornamental tops.  So, before denying such a request out of hand, the ACC or the Board may want to review any submitted plans on a case by case basis.

Even if a community decides that keeping bees on individual lots is not in keeping with its ‘community-wide standard,’ a hive or two may be a great addition to the community garden or the common elements.  Bee thinking!!

Financing these Expenses Through a Loan

Chuck N. Little felt a tiny bump on the head. He stared up in distress at his multi-story condominium building, scratched his head and shouted, “The Condo is Crumbling! The Condo is Crumbling! I must tell the Board.”

It is easy to feel overwhelmed when capital improvements and major renovations are needed in your Community. Whether you live in a multi-story condominium project, a single family detached subdivision or side-by-side with your townhome dwelling neighbors, eventually capital improvements of some sort will be needed to the common areas in your Community. Often times an Association does not have sufficient funds in their reserve account to cover the expenses of renovating, repairing or replacing capital improvements in a particular Community or in some cases may not have a reserve account at all. Timing may be critical as the situation will presumably continue to degenerate and may become more costly to repair as time goes on. An Association then faces the unpleasant choice of not making the repairs or, at the very least, deferring the maintenance until the members pass a large special assessment to cover the costs and waiting for the funds to be collected. Instead of reacting like Chuck N. Little, the Association should consider applying for and obtaining a term loan to cover these costs. Many banks and lenders across the country now offer attractive loans to homeowners and condominium associations to pay for major construction projects. A loan of this sort is typically secured against the “stream of assessments” in the Community and the costs can be spread out over time as the funds become available.

Obviously, there are pros and cons to consider before deciding to obtain a loan. On the upside, a loan is typically less of a financial burden on the homeowners. Rather than having all the costs of the maintenance and repairs due at one time, necessitating a special assessment that is immediately due and payable, the Association can spread the costs out over the term of the loan, often as long as fifteen years, and include the expense in the annual budget as part of the general assessment. In the alternative, the Association could also levy a special assessment to fund the loan re-payment but allow the homeowners to pay back the special assessment over time. In either of the above scenarios, the Association would not need to wait until all the money is collected from homeowners before beginning renovation. On the downside, there are fees associated with closing a loan such as the loan origination fee, attorneys’ fees for the attorney who represents the Association as well as the attorney who represents the bank and miscellaneous fees for the title examination and recordation of the loan documents. Also, the Association must pay interest on the outstanding balance. However, the interest rates today are at record lows and the expense of obtaining a loan can sometimes seem relatively small when compared to the increase in property values in the Community as a result of the capital improvements and repairs.

As with all loans, a variety of issues must be considered when determining which lender to go with: Who has the best terms and lower up front costs? Which closing process is less onerous? Typically a lender will provide the Association with a loan commitment letter which lays out the terms of the loan including the proposed interest rate, term of the loan and a date by which the offer will expire. An Association can and should shop the loan market and obtain commitment letters or at least discuss terms with several lenders. The Association can then decide which proposal is the most favorable and advantageous for their Community and can execute the commitment letter from that particular lender. At that point the loan is locked in and must close by the date shown on the commitment letter or the Association must renegotiate a loan at possibly less favorable terms.

Before an Association commits to obtaining a loan, they should first review their documents to determine if they have the authority to obtain a loan of this sort, and if so, what procedures must be followed to approve the loan. Typically the documents provide that the Board has the authority to enter into a loan upon the approval by a certain percentage of the homeowners. However, some documents provide that the Board of Directors can approve the loan without a vote of the homeowners. In some rare cases, the documents may have to be revised in accordance with their existing amendment procedure to allow the Association to borrow money for the purpose of renovating, repairing or replacing capital improvements. Additionally, Lenders usually require a low percentage of delinquencies in the Community, a title exam, certified articles of incorporate from the Secretary of State, financial statements of the Association, general operating budget, minutes of meetings and the authority of officers to sign closing documents as well as an opinion letter from the attorney representing the Association which provides that the proper procedure was followed to acquire the loan. So, what does all this mean in terms of costs and fees to the Association? Dollar amounts vary, but generally an Association can expect to pay the following: loan origination fee (percentage of the amount to be borrowed), interest rate over the term of the loan (whatever that may be), attorney fees in connection with the review of documents, opinion letter, etc. ($2,000 – $3,500), attorney fees to close loan and represent the bank ($1,500 – $2,000).

Closing the loan is usually swift and painless if all the leg work is done correctly. Banks usually require the establishment of a bank account with that particular bank and will sometimes request a minimum balance in that account or a money market fund. Sometimes they will simply transfer the funds into the general operating account of the association. Once the documents have been signed and the money is in the bank, the Association can begin to draw on these funds and start the repairs.

When confronted with major renovations and repairs to capital improvements in your Community, a long term loan is an excellent way for the Association to finance these costs and protect homeowners from the burden of an immediately payable special assessment. The Association should review their community documents to make sure they have the ability to obtain a loan of this type, research the terms offered by several lenders, and consider the benefits and burdens of this type of loan on its members. Remember, your condo may be crumbling, but your Association has tools at its disposal to make sure the financial fall-out may not be so bad after all.

Strategies for Addressing Issues Associated with Residents with Mental Illnesses

At first it looked like one of the residents was just a poor housekeeper. Plastic bags of garbage were visible through the windows of her condominium unit and dozens of cats were clawing at the windows. The Board was concerned about the presence of rats in the community and the smell emanating from the unit. They wanted to exercise the Association’s right of abatement to remove the trash and clean out the unit. After giving proper notice, the management company arrived with a cleaning crew. The resident called the police. Despite having been shown the provision in the Declaration of Condominium, the officer, not well versed in community association law, refused to let the cleaners in without an order from a Superior Court Judge. The Association’s attorney filed an action seeking to enjoin the resident’s interference with the Association’s right of abatement. At the hearing, the resident appeared and it was clear to the Judge that the resident suffered with mental illness. The Judge, the resident and the Association’s attorney worked out mutually agreeable dates for the Association to come in to the unit and clean.

According tostatistics compiled by the National Institute of Mental Health, an estimated 22.1 percent of Americans aged 18 and older, approximately 1 in 5 adults, suffer from a diagnosable mental disorder in any given year. This figure translates into 44.3 million affected people. While these statistics include some conditions which are not disabling, 40 percent of people who qualify for disability benefits receive them for mental disorders including major depression, bipolar disorder, schizophrenia, and obsessive-compulsive disorder.¹ In the last year, this firm alone has had four serious cases dealing with behaviors which were technically covenant violations but clearly were the result of mental illness. Multiply that by the number of law firms and attorneys practicing in this area and it is easy to see that it may be time to have a discussion about strategies for dealing with mental health issues.

Pursuing remedies available through an Association’s governing documents may provide permanent relief through the termination of a lease of a tenant, or temporary relief as in the case above. Fines, while meaningful in some instances, may be well beyond the concern of someone who is suffering with severe mental illness. Sometimes the remedies contemplated by an Association’s governing documents will address the behavior but not the problem. Minor but persistent violations of the covenants can be frustrating to other residents and members of Associations’ Boards of Directors, but may not reach the level of warranting the expense associated with obtaining equitable relief. Doing nothing violates the Board’s duty to the other members, but if using the remedies available in the documents won’t work, what is the Board to do?

As a threshold matter, the Board of Directors needs to be mindful of the Federal Fair Housing Act, 42 U.S.C. § 3601 et seq. (1968, 1988) (“FHA”) which contains several provisions which hold that mental illness is a handicap which is encompassed by the FHA.² This may impact an Association’s policies on dealing with residents suffering with mental illnesses. In Schroeder v. De Bertolo, 879 F. Supp. 173 (D.P.R. 1995) the family of a deceased condominium unit owner sued the individual board members and a staff member claiming that they had brought groundless civil claims against the owner, entered the unit without permission in an effort to intimidate the owner, and prohibited her from using the common areas because of her mental illness handicap. While we do not know how the case ultimately was resolved, the Court refused to dismiss the claims finding that a condominium board and staff who interfere with an owners right to quiet enjoyment and use of the unit and common areas may be liable under the FHA. The FHA requires Associations to make reasonable accommodations to persons with handicaps, including mental illness. Therefore, even if it violates an Association’s controlling documents, courts may find that a mentally disabled person may be entitled to have a pet. This was the holding in a case involving an apartment lease, in which a court found that under the FHA if the pet is necessary to ameliorate the mental disability of the resident, then the FHA would over-ride the provisions of the lease. Crossroads Apartments Associates v. LeBoo, 578 N.Y.S. 2d 1004 (City Ct. 1991). Even disruptive behavior may be entitled to some protection under the FHA. Finally, while the FHA states that a housing provider is not obligated to permit an individual to live in a dwelling if the tenancy would constitute a direct threat to the health or safety of other individuals, nonetheless the resident is entitled to a reasonable accommodation if the disruptive behavior is caused by a mental illness. Housing Authority of the City of Boulder, 909 F.Supp. 814 (D. Col. 1995). It may be advisable for associations to include handicaps generally and mental illness in particular, in the non-discrimination provisions in their Declarations in order to avoid or ameliorate challenges brought under the FHA.

Clearly Boards would prefer to never deal with situations arising from the manifestations of mental illness. Nevertheless, enlightened Boards may choose to see these situations as an opportunity to educate themselves and the membership of the Association about mental illnesses and to try to move beyond their own prejudices. This is an opportunity to be a positive influence in someone’s life and to intervene at a crisis point in a constructive manner. The first step would be to ascertain whether the resident has any local family members or friends who can be contacted in the event that a crisis appears to be building. This should ideally be done when the resident is not symptomatic. The Board may generate an “emergency contacts” directory for all of the members. Secondly, Boards should consider whether they need to cite symptomatic individuals for every covenant violation. If someone is not cutting their yard, for example, it may be possible to provide that service for them for a limited time and bill it back to their account as a specific assessment. Oftentimes numerous communications from the Association and/or its management company or attorney will only add to the stress and exacerbate a person with mental illness’ condition. Third, every county in Georgia has a Department of Family and Children Services who will investigate calls of neglect. Fourth, many counties, at least in the metropolitan Atlanta area, have specially trained mental health units of the police departments who will come and interview people and suggest available treatment options. If it appears that an individual is a danger to themselves or others, the investigating officer may obtain an emergency court order for involuntary in or out patient evaluation. Fifth, any person may file an application with the community health center for a court ordered evaluation. The community mental health center will then make a preliminary investigation and, if the investigation shows that there is probable cause to believe that the person requires involuntary treatment, then it will seek a petition in Probate Court for an order compelling treatment. (O.C.G.A. § 37-3-61 (1).) Individuals may petition the court directly, but those petitions need to be accompanied by a certificate from a physician or psychologist, a requirement which may be difficult to meet. Most people who suffer with mental illnesses, of course, are not violent and the criminal justice system is ill-equipped to constructively respond to these issues. However, as a last resort, if a resident actually injures someone else, or is threatening other residents in such a manner that others have a reasonable apprehension of immediately receiving a violent injury, it may be necessary to call law enforcement for assistance.

As pointed out by Gary Poliakoff: “These situations create serious moral and ethical questions as to the obligations we have to each other when we live in a communal setting. In many instances there is no legal duty on the association’s part to cope with an individual unit owner’s problems. However, the absence of a legal obligation does not eliminate the community’s moral and ethical obligations.” ³

1 These statistics are compiled at www.nimh.nih.gov. Similar statistics can be reviewed at the National Mental Health Association’s website: www.nmha.org.

2 For a general discussion, see Richard S. Ekimoto’s “An Overview of Reasonable Accommodations Under the Federal Fair Housing Act,” J. Comm. Assoc. Law Vol. 4, No. 2 (2001).

3 Gary A. Poliakoff, “Coping with Problems of Aging and Infirm Owners,” Common Ground, September/October 1986.