Time flies. Since about 2010, I have been counseling community associations on risks involving potential breaches of personal information and the fact that Pennsylvania has a specific statute related to such breaches, literally called the “Breach of Personal Information Notification Act” (“BPINA”). BPINA was recently amended and signed into law by Governor Wolf on November 3, 2022 (and effective in 180 days).
As a general BPINA primer, community associations qualify as “businesses” under BPINA and are covered “entities” which do business in the Commonwealth of Pennsylvania. BPINA defines “Personal information” as follows:
(1) An individual’s first name or first initial and last name in combination with and linked to any one or more of the following data elements when the data elements are not encrypted or redacted:
(i) Social Security number.
(ii) Driver’s license number or a State identification card number issued in lieu of a driver’s license.
(iii) Financial account number, credit or debit card number, in combination with any required security code, access code or password that would permit access to an individual’s financial account.
(iv) Medical information. (Added as amended on 11/3/22)
(v) Health insurance information. (Added as amended on 11/3/22)
(vi) A user name or e-mail address, in combination with a password or security question and answer that would permit access to an online account. (Added as amended on 11/3/22)
Most community associations do not keep social security numbers, medical information and/or health insurance information (and likely should not be if they are), but many have access to and keep records of driver’s licenses, financial accounts and credit/debit cards. Many also have portals which contain a user name or e-mail address, in combination with a password or security question and answer that would permit access to an online account (usually an association account of some kind). (Note: the last section re: email addresses and login information was added as amended on 11/3/22 so community associations should use due diligence to protect the information and comply with BPINA as amended, even if they were properly handling records of driver’s licenses, financial accounts and credit/debit cards prior to the recent BPINA amendments).
Hopefully any and all of this personal information is being properly handled and kept (maintained) offsite on properly encrypted systems run by third-party providers and/or contactors to attempt to offset and/or limit liability (I note that managing agents also keep this information as well, and there should be similar considerations/protections for maintaining such data).
BPINA has always required notification of the breach of the security of the system, but the November 3, 2022 BPINA amendments added additional notification requirements, including the following new Section 3(a.3):
(a.3) Electronic notification.–In the case of a breach of the security of the system involving personal information for a user name or e-mail address in combination with a password or security question and answer that would permit access to an online account, the entity, to the extent that it has sufficient contact information for the person, may comply with this section by providing the breach of the security of the system notification in electronic or other form that directs the person whose personal information has been materially compromised by the breach of the security of the system to promptly change the person’s password and security question or answer, as applicable or to take other steps appropriate to protect the online account with the entity and other online accounts for which the person whose personal information has been materially compromised by the breach of the security of the system uses the same user name or e-mail address and password or security question or answer.
Accordingly, community associations should be aware of not just the general (preexisting) notification requirements pertinent to a breach of personal information, but associations should also understand how to handle notification involving the breach of the security of the system involving personal information for a user name or e-mail address in combination with a password or security question and answer that would permit access to an online account in accord with BPINA as amended.
Finally, this post was not intended to serve as a discussion of how to properly handle a breach of personal information nor was it intended to be an exhaustive review of BPINA in general and/or as amended; rather, the intent was to notify our community association clients and industry colleagues of changes in the law, so proper due diligence can be undertaken. For some reason lawyers [still] love to use a dead language – Latin – to make their points. Our question is therefore: parati estis? … or, are you ready?
To get ready, we recommend that community associations review BPINA as amended, which can be found here, discuss with their counsel, managing agents, any service providers that handle personal information (especially association software providers), and confirm proper insurance coverage with association insurance professionals. As it relates to insurance, community associations should obtain adequate cyber-liability insurance to offset risk and cover a breach incident (it is noted that the cost of proper notification is tremendous, especially if the breach involves notification to over 1,000 persons at one time (because all consumer credit reporting agencies must also be notified)).
I know, I know… nobody – and I mean – nobody, wants to hear, read, speak or even think about the COVID-19 pandemic now. I get it, we’ve had enough. As a community association attorney and litigator, I’ve certainly dealt with my share of issues related to COVID-19 – virtually anything and everything that could have happened in the communities that my firm represents did happen from March of 2020 until about now. This sadly includes the loss of multiple people in associations that our firm represents.
But what if I were to tell you that community associations actually learned some good things as a direct result of the pandemic? It’s not as crazy as it sounds – let me explain by way of a good old-fashioned Letterman-esque “top-ten” list (of course sans Paul Schaffer and the World’s Most Dangerous Band’s/the CBS Orchestra’s musical interludes). Queue the drum roll please:
Number 10: Community associations can survive a pandemic.
In fact, community associations did survive the pandemic. This is due to the resilience and determination of community association Board Members, Community Managers, vendors, contractors, advisers and community residents. We are in a much different place now than where we were last year at this time, and while much of this is due to the reduction of COVID-19 infection rates, the unwavering efforts of community association leaders must also be acknowledged. Difficult decisions had to be made in every community at the outset of the pandemic and throughout its pendency – whether it was how to handle the economic impact of resident unemployment and the potential non-payment of association assessments/dues, the closure of community facilities such as pools, gyms and recreation areas, the issue of if, when and how to have the required Board and/or Committee meetings and/or association owners’ meetings, whether or not to allow guests onto the property, or looking out for the physical, mental and emotional well-being of residents who were home and literally “in” the community probably more than they ever have been since purchasing their units. Community associations around the country deserve a round of applause.
Number 9: For the most part, community association residents do the right thing when asked.
After the pandemic started, community association leaders were put in a position to act quickly and ask residents to do things they never had to do before, including wearing masks around the community, maintain a “social distance” from one another, not use facilities and amenities that had to be shut down and participate in meetings virtually rather than in-person. Using the communities that my firm represents as a statistical sample, I believe that the vast majority of community association residents were not only cooperative (with rare exception(s), of course), but many of the residents went above and beyond in many different ways. Community association residents will do the right thing when asked, which is a wonderful thing.
Number 8: Even when faced with an emergency situation like a pandemic, most community association residents still pay their assessments/dues on time, or make arrangements to pay.
We learned that despite the impact of the pandemic, the overall delinquency rate in most community associations did not increase substantially. Of course, community association leaders had no way to predict if this, or the opposite, would end up being the outcome.
What we did know is that, not too long after the pandemic started, some community association residents were laid off or even let go from their jobs, and unemployment compensation payments were not immediately sent to these residents. The worst-case scenario would have been that a majority of residents could not pay their community association assessments/dues, which would lead to the community association not being able to pay its staff and/or its vendors for all of the required services that are provided to the residents. Fortunately, this did not happen. In the communities that my firm represents, we actually saw residents reaching out to the Board to make arrangements to pay their assessments, and Boards worked with residents as needed – often times allowing residents to enter into payment plans and not charging late fees and/or interest on any delinquency that started after March or April of 2020.
It therefore appears that while the pandemic had a massive financial impact on the global economy, the overall financial impact of COVID-19 on community associations was not as drastic, at least to date. Let’s hope it stays that way, especially as we move from the dark into the light.
Number 7: Community association leaders were diligent in their efforts to protect residents.
During the pandemic, community association leaders increased their due diligence efforts to a level commensurate with the problem at hand. Rather than ignoring issues or letting the chips fall where they may, Board members and Community Managers engaged in unparalleled levels of communication with all of their trusted vendors and advisers, myself included. The daily Zoom meetings, conference calls and chains of emails resulted in proper due diligence by community leaders on issues related to the pandemic and served to protect the health and safety of residents. We learned that community association leaders decided to tackle, rather than retreat from, the pandemic in order to protect their residents.
Number 6: Common Interest Community statutes need to be updated to allow for electronic voting, the use of electronic proxies and to allow for electronic Board and owners meetings in community associations.
While some state legislatures have already updated their statutes to allow for the use of modern technology for community association voting, proxies and meetings, and these issues were in the process of being legislatively discussed in some jurisdictions, there was no plan to update the statutes in many others. However, as a direct result of the pandemic, we learned that community association leaders and residents want to utilize modern technology for these essential issues and functions in community associations. When there was suddenly no other choice available due to the inability to have in-person meetings, community associations turned to technology to continue to operate, albeit on an emergency basis.
Absent the enactment of statutory amendments to allow for the permanent use of modern technology which would generally apply to all community associations, the only choice most community associations whose documents are silent on the issue(s) would have would be to seek to amend the governing documents, by way of unit owner vote, to specifically allow the community association to use modern technology for voting, proxies and meetings. The pandemic taught us that the use of modern technology is good for community associations and statutory updates around the country are the preferred path.
The Community Associations Institute has a federal Legislative Action Committee and various state Legislative Action Committees (including the PA-LAC in my home state of Pennsylvania) that are diligently working on these issues for the benefit of community associations nationwide. Information can be found at: https://www.caionline.org/Advocacy/LAC/Pages/default.aspx.
Number 5: Community association residents learned what really matters.
The pandemic served to “reset” our expectations in virtually every aspect of our lives. Lest we forget, not too long ago, there were toilet paper and paper towel shortages, hand sanitizer was selling for $15 a bottle if it was available, Lysol wipes were harder to find than a unicorn covered in diamonds and grocery stores were rationing items like chicken breast to one pack per customer. All of this led to a decrease in demands, complaints and communications from unit owners about things like the grass being ¼ inch too high in the back of their unit or that the guy across the street owns a car that has a registration that expired a month ago. In other words, when residents focused on what was actually important, they stopped focusing on things that, while they might have merit, didn’t matter in the grand scheme of things.
Number 4: Community association education is important.
During the pandemic, those of us in the industry who focus on community association education, including the Community Associations Institute, worked tirelessly to ensure that community association Boards and Community Managers would continue to have access to quality educational content. The end result was shifting the educational seminars from in-person to virtual events. Community association leaders apparently agreed that quality educational content was needed during the pandemic, as the overall attendance for the virtual seminars vastly exceeded the turnout of prior, similar in-person events.
While the content of the majority of the virtual educational seminars during the pandemic pertained to pandemic-related issues and solutions, it served a valuable purpose. Community association leaders were hungry for information and cogent guidance on important issues and the pandemic was not a reason to stop educating those in our industry. Rather, it was time for us to amp up our efforts because community association education is important.
Number 3: Community association residents like attending electronic meetings more than they like attending in-person meetings.
Let’s not sugarcoat it. The pandemic literally forced us to meet with one another virtually instead of in-person. What community association leaders quickly learned was that these virtual meetings led to a better turnout, whether it was for Board meetings or unit owners meetings, and the virtual meetings were generally more efficient to run and took less time to complete.
Community associations want to continue to utilize electronic meetings, and this makes complete sense. As discussed in Number 6, above, the solution for community associations in many jurisdictions lies in updating statutory language to allow for the use of modern technology. If you live in a community association in a state that currently does not allow for electronic meetings, you should contact your state legislators’ offices and make them aware of the issue.
Number 2: “Community” matters.
The pandemic, by its nature, forcibly changed our notion of what “community” really is, and in thinking about all of this in retrospect, it appears that we took “community” for granted prior to the pandemic. Community association leaders learned that “community” matters, so we must focus on building (or rebuilding) “community” moving forward.
The good news is, it looks like we have a jump start on this because during the pandemic, residents turned their attention to assisting other residents in the community with things they could not handle or do on their own due to the pandemic, which actually served to foster an actual sense of “community”. If we continue to serve our neighbors this way, the “community” will be amazing.
And, the Number 1 GOOD thing that community associations learned from the COVID-19 pandemic:Have empathy towards your fellow human.
During the pandemic, we experienced and witnessed an abundance of personal pain, loss and struggle in our homes, families and communities. Community associations were certainly not immune from this – on a personal level, some of my clients unexpectedly and suddenly lost dedicated Board members to COVID-19, which had substantial impact(s) in these communities. Add the emotional, physical and mental stress of the pandemic to all of this and the end result is that community association residents (our fellow humans) deserve some empathy when we are dealing with them.
When speaking to my community association clients about these issues, I advise that they should govern with empathy and utilize emotional intelligence, in addition to good faith and due diligence, when making decisions. “Don’t leave empathy at the door when making important decisions” is something I said a lot to them over the last couple years. Many community association leaders also began to think this way, and I hope it continues well after the COVID-19 pandemic is nothing but a distant memory.
– Edward Hoffman, Jr., Esq., CCAL
* Content in this Blog post is also contained in an abbreviated/edited article by Edward Hoffman, Jr., Esq., CCAL, published in the March/April 2022 issue of CAI’s Common Ground magazine, entitled “The Bright Side”.
Look around, leaves are brown… There’s a patch of snow on the ground …
(A Hazy Shade of Winter, Simon and Garfunkel, lyrics by Paul Simon)
Every year, community associations face innumerable claims and lawsuits for accidents, injuries and damages for incidents involving snow and ice on association property. These claims and lawsuits are expensive and time-consuming and can potentially impact community associations’ insurance rates. A while back, I was interviewed* for CAI’s HOA Resources Blog regarding snow removal policies in HOAs. Below is the Q&A from that interview.
Q: Why should an association have a snow removal policy?
A: Every association with such a need should adopt a snow removal policy. Outdated snow removal policies can create just as large of a liability issue for the association as not having one. It’s important for the board to implement the policy and apply it uniformly and consistently.
Q: What are the top factors associations must consider when creating a snow removal policy?
A: First, associations should determine who is responsible for the snow removal, such as a service provider that will be performing contracted work. Boards and managers should check their insurance certificates and be certain that the association is named as an additional insured under each policy. The service provider’s proposal/specification sheet is not an actual contract.
Next, the threshold for snow removal must be determined. The industry standard in the Northeastern U.S. is generally 2 inches of accumulation. Special care should be attributed to ice and sleet events, meaning the association must address other hazardous conditions in the community.
Finally, consider what level of control the association is exerting over the service provider. The more control the board asserts while they work, the more potential liability should an incident occur. The association should contract for snow removal work according to the parameters set forth in a properly drafted and approved service contract.
Q: Should associations in areas that do not routinely get measurable snow have a policy?
A: Every association should have a policy for handling a snow event. There may not be a need for a snow removal contract in areas without measurable snowfall, but all associations should have a snow event action plan in place.
Boards and managers in an association without a snow removal policy should consider their options. While some areas without regular snowfall may not require one, having a snow event policy can prevent liability concerns later. Associations should review their snow removal policies periodically to determine their relevancy. One policy can be the difference between a winter wonderland and a slew of lawsuits.
– Edward Hoffman, Jr., Esq., CCAL
*The CAI HOA Resources Blog link to the interview can be found here: https://hoaresources.caionline.org/does-your-hoa-need-a-snow-removal-policy/
Sign, sign, everywhere a sign Blockin’ out the scenery, breakin’ my mind Do this, don’t do that, can’t you read the sign?
(“Signs” – Five Man Electrical Band)
Every year, usually around election season, the signs come out. Let’s discuss some reoccurring sign issues that pop up (pun intended) in community associations year after year.
Signs that People Believe Implicate “Freedom of Speech”
What about those “Hate Has No Home Here” signs? During the 2016 and 2020 election seasons, these signs popped up with increasing frequency between owners/members/residents in associations who attempted to assert their “First Amendment freedom of speech rights” in support of the notion that they could fly or display the Hate Has No Home Here sign based upon their “First Amendment constitutional right to freedom of speech” (a battle over this issue actually ensued local to the author in a Philadelphia suburb between an owner and an association, but it appears to have resolved prior to litigation). Are the owners/members/residents correct? To give a definitive legal opinion: probably not.
In very general terms, and as related solely to the discussion of the issues in this Blog post, the First Amendment to the United States Constitution provides that the government (which now includes local and state governments) cannot make laws that abridge freedom of speech:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
The emphasis on the government in the First Amendment is an important one – there must be “state action” by a “state actor” in order to trigger application of First Amendment rights; in other words, the government must be seeking to curtail or otherwise limit someone’s First Amendment rights in order for the First Amendment protections to apply.
Since a community association is private, and is not an official form of “government”, federal First Amendment freedom of speech protections would not apply to private association restrictions or covenants that may limit such rights. But what about the individual states – how do they apply freedom of speech protections to community associations? While most states do not consider a community association a “state actor” and will therefore not interfere or overturn private association restrictions or covenants that may limit speech, there are states that have actually found in favor of homeowners in matters concerning freedom of speech in a community association. However, Pennsylvania does not appear to be one of these states, at least as it relates to owners/members/residents that have argued that “for sale” signs must be allowed because it is a “freedom of speech” issue.
In Midlake on Big Boulder Lake Condominium Association v. Cappuccio, 673 A.2d 340 (Pa. Superior 1996),the Pennsylvania Superior Court upheld an association restriction which prohibited owners from posting any type of sign on or in a unit or a common element which would be visible from the outdoors. The court held that the association was a private, not governmental, organization and as a result the association was entitled to enforce its restrictions without violating the First Amendment of the United States Constitution. In reaching its decision, the court also found that the owners contractually agreed to abide by the restrictions in the covenants at the time they purchased the home, thereby relinquishing their freedom of speech concerns.
In Anelli v. Arrowhead Lakes Community Association, Inc. (Pa. Cmwlth. 1997), a restriction on “For Sale” signs was contained in the association covenants and homeowners that could not sell their home posted a “For Sale” sign in front of their home. The Pennsylvania Commonwealth Court held the association restriction on “For Sale” signs to be enforceable as the Association is not a governmental entity and was therefore permitted to restrict “free speech” in the nature of posting “For Sale” signs.
Thus, at least in Pennsylvania, it appears that the current trend is that Hate Has No Home Here and similar signs would not be afforded protection under First Amendment to the United States Constitution as Associations are not state actors, and the private covenants, if applicable and restrictive, would be determinative. The lesson to be learned here is, contact association counsel if this issue manifests before acting in any manner as your state may have differing state protections that would alter the outcome.
Political Candidate Signs
Community association residents have divergent political leanings and opinions on various issues. They are politically active outside of their association. They vote. They want to support their preferred political party and/or its candidates. One way to do so is to support their candidate by putting a sign in the lawn or window of their unit. But since they live in a community association, can they display these political signs if the association’s covenants and restrictions say they can’t, or limit where the signs can be placed? In Pennsylvania, the appellate courts have not yet taken up the political sign issue, but based upon the Midlake and Anelli cases, the result would likely be that the private covenants would control. In the state of New Jersey, however, the answer appears to be “it depends”.
In Committee for a Better Twin Rivers v. Twin Rivers Homeowners’ Ass’n, 192 N.J. 344 (2007), the New Jersey Supreme Court upheld an association’s ability to enforce sign restrictions, including “political” signs, as the contractual (association) restrictions still reasonably allowed for the placement of such signs in a window and in an identified area of the lawn.
Five years later, the New Jersey Supreme Court issued another opinion in Mazdabrook Commons Homeowners’ Ass’n v Khan, 210 N.J. 482 (2012), again on a political sign issue, but in favor of the homeowner this time. In Mazdabrook, a homeowner was running for local political office and posted two of his campaign signs inside of a window and inside of a [glass] door of his home. The distinction between this case and Twin Rivers was that the association’s restrictions in Mazdabrook essentially banned almost all types of signs, except for one “For Sale” sign. The Court held that the association sign restriction violated Article I, Section 6 of the New Jersey Constitution, which provides that “…[e]very person may freely speak, right and publish his sentiments on all subjects, being responsible for the abuse of that right.” In coming to its decision, the Mazdabrook Court compared Twin Rivers and concluded that an owner’s right to post a political sign outweighed the impact on the association’s private property interests.
It appears that the distinction between the Twin Rivers and Mazdabrook cases was that the Twin Rivers restrictions permitted political signs but restricted their location, while the Mazdabrook restrictions did not permit political signs in any manner whatsoever, stifling the homeowner’s right to assert political speech in accord with the New Jersey Constitution.
I would envision that the same analysis would occur if instead of a lawn or window sign, owners/members/residents flew or displayed a “flag” with their preferred candidate’s name emblazoned across the flag – and the following question begs to be asked: is this even really a “flag” or is it merely a political campaign sign or endorsement? In my eyes, it is the latter. I foresee a situation in the not so distant future where owners/members/residents will fly or display a candidate’s political campaign flag as “flags” may be permitted by vague covenants when other types of exterior signs or displays may otherwise be prohibited in the community. In Pennsylvania, based upon current precedential appellate case law, such a flag would not be protected, but in New Jersey, it *may* be protected based upon how restrictive the covenants in a community may be as it relates to protections afforded by the New Jersey Constitution.
Your state might be different, so please seek the cogent advice of association counsel BEFORE making any decisions that might be contrary to state law and/or your state constitution.
In Closing
Sign issues will always be present in community associations, so Association Boards and community managers must be educated on sign issues and handle them correctly before they go the wrong way. Remember, a little common sense goes a long way – often times, sign issues should, and can, be resolved instead of ending up in court and/or being plastered across social media and cable news networks.
– Edward Hoffman, Jr., Esq., CCAL
The content for this Blog post is derived from an article on flags in community associations written by the author and published in the September/October issue of Common Ground Magazine entitled “Stars and Stripes and Sleepless Nights”.
As a Community Association attorney, I’ve been on both sides of the fence as it relates to association litigation. Whether I am initiating litigation against others on behalf of the association or defending the association for claims brought by others, the following holds true: litigation is expensive, time-consuming and emotionally draining for those involved. The purpose of this Blog post is to educate community leaders on how to implement best practices in order to avoid litigation.
Association as a Plaintiff
Collections
Let’s face it: unit owner delinquencies are a problem for most associations. Sometimes avoiding litigation in collections is not possible due to chronically non-paying unit owners. But much of the time, litigation can be avoided if the association stays proactive in its efforts to collect overdue assessments.
To begin, every association should implement, and utilize, a practical collections policy that protects the interests of the association while, at the same time, seeks to resolve the arrears without the necessity of litigation. A multi-tiered policy is often the best way to try and collect the arrears while resorting to litigation as a last step. For example, after the account is deemed delinquent (as “delinquent” is defined in the collections policy), a warning/demand for payment letter is sent to the delinquent unit owner by the association, requesting payment within ten days. Should the owner not pay within the allotted time period, a final warning/demand letter is sent to the delinquent unit owner by the association, requesting payment within five days. Should the unit owner again fail to pay, the matter is to be turned over to the association attorney for collection. Depending on what the collections policy provides, the attorney can either send an attorney demand letter (in compliance with the Fair Debt Collection Practices Act) or immediately initiate suit against the delinquent unit owner in order to collect the delinquent account.
Utilizing this type of collections policy thus allows the association to have a “two (or perhaps three) strikes and you’re out” approach when it comes to collections in an attempt to avoid litigation until it becomes absolutely necessary.
Transition and Declarant Issues
The majority of lawsuits filed by an association against a declarant are filed after many months, or even years, of communication and negotiation between the parties. However, the earlier the parties can begin to communicate and attempt to resolve the disputed issues, the better.
For instance, associations often wait until the formal transition process begins to bring up any outstanding issues related to the common elements. While the declarant certainly needs to address valid issues at transition, there is no reason why the association has to wait until the actual transition to request that the declarant correct a deficiency with the common elements. Rather, the association should open the line of communication early in the process to put the declarant on notice of the issue. Sometimes, if it is logistically/economically feasible, a declarant may handle the issues as they occur in order to keep the relationship between the parties “positive” and to avoid having to handle everything all at once at transition (however, depending on the particular declarant, this may not be possible).
Also, with respect to the formal transition, rather than digging in, puffing out their chests and litigating every issue, the parties are encouraged to respectively discuss and negotiate their positions and enter into a “Transition Settlement Agreement” in order to finalize the remaining issues and send each party on its way.
The moral of the story is that while litigation between an association and a declarant is sometimes unavoidable, if the parties effectively communicate early on in the process, agreements may be reached and litigation may actually be avoided.
Contract Disputes
In the association world, most contractual disputes involve a contractor/vendor that the association believes didn’t live up to its end of the bargain. While breach by the other party is sometimes inevitable despite the terms of the contract, an association can seek to avoid litigation if it can craft/revise/amend the contract in such a manner that fosters the ability of the association and the contractor/vendor to resolve the issue and/or terminate the contract with an agreed-upon recourse (i.e., liquidated damages).
It is recommended that the association have its professional property manager review and assist in negotiating contracts on behalf of the association. Managers generally have many years of experience under their belts when it comes to contracts, and they are a tremendous resource for associations.
When it comes to larger (as far as cost), and more technically complicated, contracts, it is advisable to have the association attorney review the contract to ensure that the association is best protected. Many times, onerous and one-sided (and sometimes unenforceable) clauses are present in the contract and these provisions should be removed from the outset. Other times, there are issues pertaining to breach, notice and damages that the attorney must strengthen and/or bolster for the benefit of the association.
At the end of the day, an association can best seek to avoid litigation by being proactively involved in the drafting process prior to execution of the contract. Otherwise, it might be “too late” and litigation may become the only option available to the association.
Enforcement (injunctive relief)
Similar to collections matters, sometimes avoiding litigation in an enforcement matter is not possible due to perpetually non-compliant unit owners and/or due to the nature of the violation at issue. However, litigation can be avoided if the association stays proactive in its efforts to enforce its covenants.
To start, associations should enact reasonable rules and regulations in compliance with their governing documents and enforce same equally and uniformly against all unit owners. Care should be taken to ensure that the proper notice, hearing and appeal requirements are incorporated into the rules and regulations. Doing so not only ensures compliance with the law (i.e., procedural due process), it also provides a mechanism for the association to try and work with the unit owner(s) to voluntarily remedy the violation prior to engaging in litigation in order to force unit owner compliance.
Finally, associations should make every effort to communicate with the non-compliant unit owner(s) throughout the process in an attempt to resolve the violation. Only after every reasonable opportunity has been exhausted, should an association engage in litigation to seek injunctive relief to cure the violation (the author notes that when the alleged violation involves actual or potential damage to property and/or results/may result in physical harm or bodily injury to a person, the association should expedite seeking a remedy and obtain emergency injunctive relief if required).
Association as a Defendant
Personal Injury – Premises Liability
Associations must manage risk appropriately in order to avoid litigation in premises liability matters. Proactive risk management measures include, but are not limited to:
Asking the association general liability insurer to perform a risk management assessment in order to provide recommendations to the association on suggested risk minimization techniques;
Ensuring that various contractors fulfill their duties in a manner that minimizes risk (i.e., snow plow contractors, security guards, lifeguards, landscapers).
Making sure that the association is properly maintaining common elements to eliminate common risks (i.e., broken/uneven sidewalks, potholes, trees and tree limbs);
Having the property manager perform routine inspections of the property;
Enforcing rules and regulations as required in order to avoid risk caused by unit owner violations.
By being proactive about risk minimization, associations will reduce the number of claims that are brought, and in turn, the likelihood of litigation.
Director and Officer (D&O) Liability Actions – Breach of Fiduciary Duty
Litigation brought by unit owners for an alleged breach of fiduciary duty by the association board of directors is a growing phenomenon. In order to avoid these claims, the board should act in good faith, treat all unit owners equally and perform its duties reasonably and with sound business judgment.
While such allegations will invariably be brought by at least one unit owner in every association, the more documentation an association has to substantiate its actions, the better suited it will be when a claim is made. Accordingly, it is imperative that the association keeps minutes of all board decisions, correspondence to/from unit owners, copies of all contracts and accounting statements and audits, among other things.
Finally, the author notes that associations should obtain adequate director and officer liability insurance coverage in order to best protect the board and the association.
Enforcement Issues
Unit owners frequently bring claims against the association for “selective” or “unequal” enforcement, meaning that the association board is allegedly picking and choosing how it wishes to pursue enforcement of the association covenants and/or is selectively deciding which unit owners they will seek to enforce the covenants against (in other words, the association is allegedly using its enumerated powers to “punish” some owners, and let others “slide”).
Associations can avoid litigation for selective enforcement by always acting: (1) in good faith; (2) reasonably; and (3) with sound business judgment. By following the enforcement procedures set forth in the governing documents (including proper notice, hearing and appeal requirements) and enforcing the covenants equally and uniformly against all unit owners, the risk of such claims is reduced.
Finally, it is noted that claims brought for selective enforcement often concurrently involve fiduciary duty claims (discussed above) and/or fair housing/discrimination claims (discussed below).
Defamation
A suit for defamation can arise in an association when a unit owner (or even a board member) alleges that the association defamed (whether through slander or libel, or both) the owner by communicating about the owner in a manner that has harmed the owner. In the author’s home state of Pennsylvania, and in many other states, when bringing an action for defamation, an owner must prove:
The defamatory character of the communication;
Its “publication” by the association;
Its application to the owner;
The understanding of the recipient of its defamatory meaning;
The understanding of the recipient of it as intended to be applied to the owner;
The special harm resulting to the owner from its publication; and
At times, that abuse of a conditionally privileged occasion had occurred.
While many suits for defamation brought by unit owners are baseless in the law, the association still must defend the suit, which is time-consuming and potentially expensive. Associations should therefore seek to act reasonably and avoid making potentially defamatory communications about the owner. Some frequent issues that have brought about defamation complaints are as follows:
Publishing the name of a unit owner whose account is in arrears to all owners either in a newsletter or by posting on a community bulletin board (whether electronic or physical);
Publishing the name of a unit owner whose account is in arrears on an association website, allowing the “world” to view it; and
Publicly discussing a unit owner’s alleged covenant violation at an open board meeting prior to issuing a final determination on the issue.
Finally, if the association has any doubts on how to handle an issue that may lead to a potential defamation claim, it is encouraged that the association contact its counsel for an opinion on the issue.
Contract Disputes
Contractors and vendors with whom an association contracts often bring claims against the association for breach of contract. More often than not, the association believes that the vendor or contractor has not “performed” pursuant to the contract terms (and/or has overcharged) and has therefore breached the contract. The association then withholds payment, which causes the vendor or contractor to sue the association for breach.
The key to avoiding these suits is for the association to act reasonably in how it approaches a contract dispute, including how it handles the above-referenced situation. Rather than simply withholding payment for an alleged breach by the vendor or contractor, which will likely cause the situation to escalate into litigation, the association should seek to communicate with the vendor or contractor in an effort to amicably resolve the dispute. Frequently, these disputes can be negotiated and resolved in a manner that’s beneficial to both parties when compared with the cost, energy and time involved to litigate a breach of contract dispute.
Fair Housing Claims
Title VIII of the Civil Rights Act of 1968 (“Fair Housing Act” or “FHA”), 42 U.S.C. §§3601 – 3631, and its 1974 amendment, made it illegal to threaten, coerce, intimidate or interfere with anyone exercising a fair housing right or assisting others who exercise that right, or to advertise or make any statement that indicates a limitation or preference based on a protected class, which includes race, color, national origin, religion or sex (gender).The Fair Housing Amendments Act of 1988 (FHAA) added two more protected classes to the FHA: (1) familial status; and (2) individuals with disabilities. The FHA applies to community associations because the FHA prohibits discrimination, by the association, related to any services and/or facilities the association provides related to the residential housing in the association. 42 U.S.C. §3604(b).
The US Department of Housing and Urban Development (“HUD”) has interpreted the FHA to include two types of discrimination: Disparate Treatment and Disparate Impact (also known as “Discriminatory Effect”). Disparate Treatment involves discrimination due to different treatment, i.e., treating someone differently because of race, color, sex, religion, national origin, familial status or disability. Disparate Impact involves discrimination by different impact, i.e., when a neutral policy or procedure has a disproportionately negative impact on a protected class.
Fair housing claims have been increasing steadily against community associations across the country. The most common fair housing complaints in associations are as follows:
Failure to provide a “reasonable accommodation” for a disability – examples include requests for animals (service and emotional support/companion animals) and parking issues;
Failure to provide a “reasonable modification” for a disability;
Familial status violations.
In order to avoid fair housing claims and litigation, associations should be educated on the law, act reasonably when making determinations and, when handling an accommodation/modification request, review same and issue a fair and reasonable determination in a timely manner.
Finally, the author notes that fair housing issues are discussed in greater detail in the author’s Common Ground magazine article entitled “All’s Fair”, in the July/August 2014 issue.
Alternatives to Litigation (ADR)
Finally, sometimes the only way an association can actually avoid litigation is to agree to submit the dispute to alternative dispute resolution (ADR). This can be binding or non-binding in nature, based on the agreement of the parties. Popular forms of ADR include Mediation (generally heard by a sole Mediator and is more of a “summary” proceeding where the parties and the attorneys submit information to the Mediator (ahead of time and/or at the Mediation) without the need for evidence/actual testimony to be introduced/taken at the Mediation) or Arbitration (frequently heard by a panel of Arbitrators and can include testimony and evidence at the proceeding).
By Edward Hoffman, Jr., Esq., CCAL
An abbreviated version of this Blog post was published in Ed Hoffman’s article in the July/August 2015 issue of Common Ground magazine.
I can’t recall exactly how many times I’ve received a call or an email from a Board Member or Community Manager and the question being posed from the other end of the phone related to flags in some manner. As it relates to the American flag, it must have come up dozens, if not a hundred times, and usually as follows:
Q: Must the association allow an owner/member/resident to fly an American flag?
A: Yes, the association generally must (or at least should, what’s the real problem here?), but federal law (the Freedom to Display the American Flag Act of 2005) allows the association to place reasonable restrictions pertaining to the time, place, or manner of displaying the American flag necessary to protect a substantial interest of the association. (It is noted that many states also have enacted their own statutes that deal with the issue as well).
It’s hard to fathom how much litigation has actually ensued over this seemingly simple issue, but generally it’s all due to some type of overreach – either by the owner/member/resident or by the association, and sometimes by both. In my personal experience, I have dealt with issues involving the size of the flag, the size of the pole, the location of the flag, the location of the pole, a flag being flown with no pole, multiple flags being flown instead of one, and innumerable other issues. Usually, after some back and forth, the association and the owner/member/resident find an acceptable middle ground, an American flag stays up, and everyone goes their separate ways.
But sometimes it’s not that easy. In October of 2019, after a rejection by the association and many months of legal wrangling, a Vietnam veteran resident of the Equestra at Colts Neck Crossing active adult community in Howell, New Jersey was finally granted permission to install a non-permanent, staked flagpole to keep his flag hanging in his garden bed. Though the association only allowed flags attached to the home, in support of his request for an upright flag on a pole, the resident contended that it was difficult for him to climb ladders to reach the flags that attach to the siding on the home and that the brackets frequently break, and also that as a veteran he wished to fly the flag at half staff/mast at times. While an amicable resolution was eventually achieved, it came at the expense of time, money and energy of both parties, and it also resulted in local news media covering a dispute between a Vietnam veteran and an association about an American flag.
As recently as January of 2020, some military veteran residents in the Craft Farms North HOA in Gulf Shores, Alabama erected flag poles in their front yards, which the HOA believed was prohibited as the covenants provide that the flag must be attached to the home. So why is an association fighting with veterans out of all people? Because it’s a balancing test: while the veterans clearly are legally permitted to fly the American flag, the private covenants restricted the physical location to being attached to the home, which is also permitted by federal law.
Another fairly well-known legal battle that garnered national attention involves Air Force veteran Larry Murphree and the Tides Condominium at Sweetwater by Del Webb Master Homeowners’ Association in Jacksonville, Florida. The battle over flying the flag started in 2011, when Mr. Murphree put a small flag in a flower pot by his front door. The association asked him to remove the flag, so Mr. Murphree sued. The association eventually settled allowing him to keep the flag so long as it was in compliance with association rules and the law. However, by 2013 the association revised its rules to prohibit anything but the actual plant from being allowed inside a flower pot. The association subsequently began fining Mr. Murphree for the violation, so Murphree sued once again. The case ultimately ended up in state court with each side making claims against the other, and the matter went to trial the last week of February of 2020. The two sides were given another month to present their final arguments in writing. As of the writing of this article, to the author’s knowledge, no verdict has been handed down, likely due to the outbreak of COVID-19 delaying the judicial system on a national basis.
These examples raise the following questions: what is reasonable, what battles should actually be fought, and why are people even fighting over these issues to begin with? From what I have concluded the American flag means a lot of things to a lot of Americans, and it is not just an issue of American pride or some sort or patriotism, but it is also an emotional issue that simply cannot be explained. People are therefore willing to dig in their heels to prove their point as to flying the flag and associations will similarly do so in order to enforce their covenants. The end result is that these disputes will never go away in associations. Perhaps the lesson to be learned is that sometimes seeking an early resolution by way of alternative dispute resolution (ADR), such as through non-binding mediation, may allow for a reasonable discussion to occur and for a third party with “no skin in the game” to make reasonable recommendations for each party to consider. And lest we forget, that foreign to some concept called “common sense” can, and should, be used when issues like these come up in associations.
Old Glory – But Modified
I have also received questions about American flags with other “embellishments” added to the flag (i.e., USMC Semper Fi logo, Army star, a “thin blue line” to support law enforcement, firefighter axes, etc.) and owners/members/residents have argued that these flags are still American flags that the Association can not completely prohibit. However, modified American flags do not qualify as American flags under federal law. To wit, 4 U.S. Code, Chapter 1- The Flag – at Section 1, “Flag; stripes and stars on”, succinctly and unambiguously provides that “[t]he flag of the United States shall be thirteen horizontal stripes, alternate red and white; and the union of the flag shall be forty-eight stars, white in a blue field.” 4 U.S. Code, Chapter 1- The Flag – at Section 2 further provides that “[o]n the admission of a new State into the Union one star shall be added to the union of the flag; and such addition shall take effect on the fourth day of July then next succeeding such admission.” (In 1959, Alaska and Hawaii were the last two States admitted into the Union and represent the 49th and 50th stars added to the flag). Accordingly, any modified version of the American flag is not really the American flag, and as a result the Freedom to Display the American Flag Act of 2005 does not apply. Period.
State Flags
Many states have also passed their own statutes that prohibit associations from completely prohibiting the display of the American flag as well as state flags. This being said, I can honestly say that in all of my years of law practice and in my many years of representing associations, I have never received a question about someone being allowed to fly a state flag. In fact, I can’t recall if I have ever actually seen the flag of the Commonwealth of Pennsylvania or the State of New Jersey (the two states where I am licensed to practice law) being flown in front of a private residence or anywhere other than in front of a courthouse or a state office building of some sort. I will let you all know if this ever changes, but I wouldn’t hold my breath if I were you. (However, my guess is that in Texas the lone star state flag means much more to Texas residents than the Pennsylvania flag does to Pennsylvania residents, so this has probably been an issue in Texas).
“Other” Flags
While I have never encountered a question about flying a state flag, there have been plenty of inquiries relating to owners/members/residents flying or displaying “other” flags in the community, including but not limited to college/alumni flags, professional sports team flags (around these here parts, it’s Flyers, Sixers, Eagles and Phillies flags), decorative/seasonal/holiday flags, Bible verse flags and charitable foundation/issue flags. I am not aware of any federal, state or local laws that would prohibit an association from prohibiting or restricting association owners/members/residents from flying or displaying these types of flags so long as the recorded, private covenants that run with the land specifically allow for such a prohibition or restriction.
Where there is no specific language in a covenants relating to flags, the association must ensure that some other language exists which would support a prohibition or restriction on flying or displaying “other” flags – this is typically in the form of an outright ban on displays or decorative items being placed outside the unit or in some other form of restriction (such as size and location) which would encompass and include “other” flags by its nature. If no language is present in the covenants and the association decides to handle the issue through rulemaking process rather than seeking a covenant amendment, there is risk that such a rule may be deemed to be unenforceable if challenged. Finally, if there is no prohibition or restriction present, and residents are happily flying or displaying “other” flags in the community, an amendment project to prohibit or restrict these flags would likely fail before it even started.
Military Branch and/or POW/MIA Flags
Another recurrent flag issue involves flying military branch (i.e., Army, Navy, Air Force, USMC, Coast Guard (and soon to be Space Force!)) and/or POW/MIA flags. There appears to be no federal protection (though these flags may be flown at federal sites and facilities), but various states including Pennsylvania, Illinois, Texas and Florida have included military branch and/or POW/MIA flags in their state statutes. The advice here is therefore: check with association counsel before making any decision(s) on these flags as your state may actually have a law in place which deals with them.
Flags that People Believe Implicate “Freedom of Speech”
What about those “Hate Has No Home Here” flags? During the 2016 election season, these flags popped up with increasing frequency between owners/members/residents in associations who attempted to assert their “First Amendment freedom of speech rights” in support of the notion that they could fly or display the Hate Has No Home Here flag based upon their “First Amendment constitutional right to freedom of speech” (a battle over this issue actually ensued local to the author in a Philadelphia suburb between an owner and an association, but it appears to have resolved prior to litigation). Are the owners/members/residents correct? To give a definitive legal opinion: probably not.
In very general terms, and as related solely to the discussion of the issues in this article, the First Amendment to the United States Constitution provides that the government (which now includes local and state governments) cannot make laws that abridge freedom of speech:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
The emphasis on the government in the First Amendment is an important one – there must be “state action” by a “state actor” in order to trigger application of First Amendment rights; in other words, the government must be seeking to curtail or otherwise limit someone’s First Amendment rights in order for the First Amendment protections to apply.
Since a community association is private, and is not an official form of “government”, federal First Amendment freedom of speech protections would not apply to private association restrictions or covenants that may limit such rights. But what about the individual states – how do they apply freedom of speech protections to community associations? While most states do not consider a community association a “state actor” and will therefore not interfere or overturn private association restrictions or covenants that may limit speech, there are states that have actually found in favor of homeowners in matters concerning freedom of speech in a community association. However, Pennsylvania does not appear to be one of these states, at least as it relates to owners/members/residents that have argued that “for sale” signs must be allowed because it is a “freedom of speech” issue.
In Midlake on Big Boulder Lake Condominium Association v. Cappuccio, 673 A.2d 340 (Pa. Superior 1996),the Pennsylvania Superior Court upheld an association restriction which prohibited owners from posting any type of sign on or in a unit or a common element which would be visible from the outdoors. The court held that the association was a private, not governmental, organization and as a result the association was entitled to enforce its restrictions without violating the First Amendment of the United States Constitution. In reaching its decision, the court also found that the owners contractually agreed to abide by the restrictions in the covenants at the time they purchased the home, thereby relinquishing their freedom of speech concerns.
In Anelli v. Arrowhead Lakes Community Association, Inc. (Pa. Cmwlth. 1997), a restriction on “For Sale” signs was contained in the association covenants and homeowners that could not sell their home posted a “For Sale” sign in front of their home. The Pennsylvania Commonwealth Court held the association restriction on “For Sale” signs to be enforceable as the Association is not a governmental entity and was therefore permitted to restrict “free speech” in the nature of posting “For Sale” signs.
Thus, at least in Pennsylvania, it appears that the current trend is that Hate Has No Home Here and similar “flags” would not be afforded protection under First Amendment to the United States Constitution as Associations are not state actors, and the private covenants, if applicable and restrictive, would be determinative. The lesson to be learned here is, contact association counsel if this issue manifests before acting in any manner as your state may have differing state protections that would alter the outcome.
Political Candidate “Flags”
Community association residents have divergent political leanings and opinions on various issues. They are politically active outside of their association. They vote. They want to support their preferred political party and/or its candidates. One way to do so is to support their candidate by putting a sign in the lawn or window of their unit. But since they live in a community association, can they display these political signs if the association’s covenants and restrictions say they can’t, or limit where the signs can be placed? In the state of New Jersey, the answer appears to be “it depends”.
In Committee for a Better Twin Rivers v. Twin Rivers Homeowners’ Ass’n, 192 N.J. 344 (2007), the New Jersey Supreme Court upheld an association’s ability to enforce sign restrictions, including “political” signs, as the contractual (association) restrictions still reasonably allowed for the placement of such signs in a window and in an identified area of the lawn.
Five years later, the New Jersey Supreme Court issued another opinion in Mazdabrook Commons Homeowners’ Ass’n v Khan, 210 N.J. 482 (2012), again on a political sign issue, but in favor of the homeowner this time. In Mazdabrook, a homeowner was running for local political office and posted two of his campaign signs inside of a window and inside of a [glass] door of his home. The distinction between this case and Twin Rivers was that the association’s restrictions in Mazdabrook essentially banned almost all types of signs, except for one “For Sale” sign. The Court held that the association sign restriction violated Article I, Section 6 of the New Jersey Constitution, which provides that “…[e]very person may freely speak, right and publish his sentiments on all subjects, being responsible for the abuse of that right.” In coming to its decision, the Mazdabrook Court compared Twin Rivers and concluded that an owner’s right to post a political sign outweighed the impact on the association’s private property interests.
It appears that the distinction between the Twin Rivers and Mazdabrook cases was that the Twin Rivers restrictions permitted political signs but restricted their location, while the Mazdabrook restrictions did not permit political signs in any manner whatsoever, stifling the homeowner’s right to assert political speech in accord with the New Jersey Constitution.
I would envision that the same analysis would occur if instead of a lawn or window sign, owners/members/residents flew or displayed a “flag” with their preferred candidate’s name emblazoned across the flag – and the following question begs to be asked: is this even really a “flag” or is it merely a political campaign sign or endorsement? In my eyes, it is the latter. I foresee a situation in the not so distant future where owners/members/residents will fly or display a candidate’s political campaign “flag” as “flags” may be permitted by vague covenants when other types of exterior signs or displays may otherwise be prohibited in the community. In Pennsylvania, based upon current precedential appellate case law, such a flag would not be protected, but in New Jersey, it *may* be protected based upon how restrictive the covenants in a community may be as it relates to protections afforded by the New Jersey constitution.
Your state might be different, so please seek the cogent advice of association counsel BEFORE making any decisions that might be contrary to state law and/or your state constitution.
In Closing
Flag issues will always be present in community associations, so Association Boards and community managers must be educated on flag issues and handle them correctly before they go the wrong way. Remember, a little common sense goes a long way – often times, flag issues should, and can, be resolved instead of ending up in court and/or being plastered across social media and cable news networks.
– Edward Hoffman, Jr., Esq., CCAL
A condensed version of the content in this Blog Post was originally published in the September/October 2020 issue of Common Ground magazine in an article entitled “Stars and Stripes and Sleepless Nights”.
