Homeowner's association bylaws have teeth

William Serangeli, Bill Serangeli, Iowa Real Estate & Land Use Law, Dickinson Law Firm, Iowa Construction Law, Des Moines Iowa

Posted on 08/31/2016 at 12:07 PM by William Serangeli

For the purchasers of many condominiums and townhomes, the existence of a Homeowner’s Association and the bylaws and rules adopted by the Board of Directors of those Associations are often glossed over or deemed a nuisance. Today, the Iowa Court of Appeals affirmed the Trial Court’s Order granting a Condominium Owner’s Association’s request to terminate a Condominium Unit Owner’s right to occupy, use or control his unit and ordered an involuntary sale of the unit. Pleasant Hill Eldridge Condominium Owners and Facilities Association v Charles W. Ray (No. 15-0587).

While it is often said that bad facts sometimes make bad law, it is clear in the Pleasant Hill decision that the unit owner was not a model neighbor. Although the unit owner had lived in his unit for decades, the Court of Appeals found that he repeatedly allowed liquids to permeate the ceiling of the unit below him; placed personal belongings in common areas; sprayed water on a common deck, which splashed into another unit; offended a resident by retrieving mail in his underwear; stole mail – a crime for which he was convicted; and possessed a cache of firearms as a felon, a crime for which his probation was revoked. He also failed to pay his dues on time, generated mold within his unit, created fire hazards inside and outside his unit, and failed to maintain his garage.

Thirteen years prior to taking the action for an involuntary sale, the Homeowners Association amended its bylaws to authorize involuntary sales of units if owners violated any of the covenants or restrictions or provisions of the Declaration, the bylaws or the Regulations adopted by the Association. A key element in the Court of Appeals review of the Trial Court was what standard of review to be applied. Although a “mandatory injunction” was entered by the Trial Court, the District Court analyzed the action as a breach of contract case, which is a law action and is not subject to de novo review.  Since the challenge by the unit owner involved a construction of the bylaws of the condominium association, the Court of Appeals held that the general rule of contract law applied and the action would be reviewed as an action at law. 

The unit owner challenged the amendment made to the bylaws thirteen years ago. The Court of Appeals made short work of his argument concerning notice by holding that substantial evidence supported the finding that appropriate notice had been given. 

As to the challenge that a forced sale was unreasonable, the bylaws contained detailed and specific restrictions on owner conduct. The only ambiguity found in those restrictions on owner conduct dealt with a prohibition involving “immoral, improper or offensive” conduct. The Court of Appeals felt that the unit owner’s conduct fell within the clear and ambiguous prohibition dealing with unlawful conduct. 

The Court went even further and decided that the business judgment rule required the Court to defer to the Association’s interpretation of the bylaws and declined the unit owner’s invitation to interpret the bylaws anew. 

 The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

- William Serangeli 

 

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