The Condo Republic 

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Viva Reforma!
Brought into the uprising like a U.N. peacekeeping official, Rep. David Litvack, D-Salt Lake City (pictured at left), says he became interested in condo property rights after several constituents approached him, saying they were powerless to affect the actions of their HOA board. “They felt like they had nowhere to turn,” Litvack says of the distraught condo owners who reached out to him nearly a year ago with their complaints.

“We’re not talking about frivolous disputes,” Litvack says, referencing concerns he recently heard. “There were things that involved vote fraud, financial mismanagement, board meetings that are not made accessible to the condo owners, the use of fines as kind of a punishment or a way of keeping people quiet—these are some of the accusations.

“They really didn’t have much of a way to address grievances with unresponsive boards—boards that were even violating their own bylaws,” he said. With some boards even gaming the nominating process, Litvack was told some condo owners felt litigation was their only option to force out dictatorial boards.

“Then you’re in a situation where you end up paying attorney fees twice over, even if you prevail,” Litvack says. In a battle between condo owners and an intractable board, Litvack says one solution may be an independent third party, possibly operated by the government, that could arbitrate such disputes.

“This [ombudsman] would act as a moderator to try to bring resolution to disputes between owners and HOA boards,” Litvack says, adding that these types of “ombudsmen” are in place in other states.

It’s a position he says is not unprecedented, even in Utah, since there is already a private-property ombudsman in state government who intercedes in disputes between property owners and government officials seeking to take property through eminent domain.

Florida has had a condo-owners ombudsman office established since 2004 to mediate disputes, and the Connecticut state assembly is currently looking at following Florida’s model by establishing a self-funded commission that would draw revenue from a small annual assessment from condo owners: $4 per year, per condo unit, with a $35 filing fee for a condo owner looking to invoke the mediation of the ombudsman’s office.

The issue is front and center for the Condo Owners Coalition of Utah. Executive director Lisa Hamilton (pictured at left) says the Legislature needs to help safeguard the rights of condo owners, arguing that government already has a stake in helping resolve private-property disputes.

“Say you own a single-family home and you have a dispute over the property line, who do you go to?” Hamilton asks, answering that residents turn to municipal government. With condos, Hamilton says there is a similar need for government to mediate private-property matters.

“I think being a condo owner has only recently become so popular, so legislation hasn’t been made and hasn’t been needed,” Hamilton says. “But there’re more condos now than there ever have been; people are moving in for the condo lifestyle, and they’re finding all of these problems.”

Sam Bell, a Salt Lake City attorney who represents more than 500 homeowners’ associations, has seen his fair share of corrupt boards, irate condo owners and everything in between. Having been party to bad blood between owners and their boards, Bell isn’t convinced the Legislature can do much to prevent it.

“My honest opinion is that if boards are rational, you don’t need somebody to get in between owners and the board to solve a problem,” Bell says. “You do get boards on occasion that are a little power hungry and all of a sudden they become Nazi generals and just want to run everything and forget that the real purpose is just to get a community that is appealing to live in and enhances property values. But the biggest issue there is education.”

Bell points out that with condo boards staffed with laypeople, they generally don’t understand all the legal requirements of them for transparency and accountability. He says that if board members paid close attention, they would see there are already legal requirements that open up certain financials and voting records to their owners.

“I think education would go a long ways,” Bell says “Probably a lot farther than an ombudsman would.”

Bell also says that even in many condo CC&R agreements, there are provisions in place to allow condo owners to recover attorney fees if they have to sue their boards. By his estimation, Bell says that while many disputes arise, very few ever go down the path of serious litigation, saying that less than a handful of cases in the past three years, citing only his recollection, required significant legal attention.

“I think helping a board understand their responsibility is a bigger issue than having a law that requires them to do something,” Bell says.

That being said, Bell says even more than boards, management professionals need more training. “I think the most important group of people in need of education are the managers. Boards typically rely on the managers for information and guidance. This could be manifested through licensure (or enforcement of licensure laws) and continuing education.”