Presenting a live 90-minute webinar with interactive Q&A Covenants, Conditions and Restrictions for Condos and Planned Communities Drafting, Amending and Enforcing CC&Rs: Best Practices for Developers and Homeowner Associations TUESDAY, MAY 3, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: David A. Herrigel, Principal, Hyatt & Stubblefield , Atlanta Wil Washington, Principal, Chadwick Washington Moriarty Elmore & Bunn , Fairfax, Va. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Covenants, Conditions and Restrictions for Condominiums and Planned Communities May 3, 2016 Prepared and Presented by: David A. Herrigel Hyatt & Stubblefield, P Hyatt & Stubblefield, P .C. .C. Peachtree Center Harris Tower 233 Peachtree Street, N.E., Suite 1200 Atlanta, Georgia 30303 (404) 659-6600 dherrigel@hspclegal.com
The Developer Perspective • Structuring new projects • Governance documents 6
A. Goals of Governance Structure 1. Long-term ownership, operation and maintenance of common areas and amenities 2. Creation and enforcement of community-wide standards of architecture, maintenance, and use 3. Smooth and efficient operation and administration before and after development period 7
A. Goals of Governance Structure (cont.) 4. Foster an environment for all uses to succeed 5. Maximize marketability, developmental control, flexibility 6. 6. Create a community Create a community 8
B. Things to Avoid and Why 1. Significant direct interaction between residential and nonresidential owners a. Competing interests and expectations for the community and for residential and nonresidential owners b. Different levels of communication and participation 9
B. Things to Avoid and Why (cont.) 2. Creating a nonresidential association unless a reason exists to do so (e.g., ownership of common property) a. Nonresidential or commercial owners may a. Nonresidential or commercial owners may not have time, resources, or interest to be involved in the day-to-day planning and affairs of the community b. Creates unnecessary administrative and other costs 10
B. Things to Avoid and Why (cont.) 3. Too much governance – Service Areas v. Sub- Associations a. Administrative and other costs of Sub- Associations Associations b. Finding something for Sub-Association to do 11
C. Drafting Tips/ Techniques 1. Know your audience • Be user friendly • Use plain language; Avoid legalese 2. Organization • TOC • Consistent use of defined terms 12
C. Drafting Tips/ Techniques (cont.) 3. Be wary of forms 4. Consider tables/ graphics to illustrate points 5. Flexibility v. certainty 13
D. Significant Document Provisions 1. I dentify Players 2. I dentify Property Types 3. Assessments and Other Revenue Sources 4. Membership and Voting 5. Architectural Control – Standards; Responsibility; Control 14
D. Significant Document Provisions (cont.) 6. Maintenance Obligations; Standards 7. Use Restrictions and Rules 8. 8. Enforcement Enforcement 9. I nsurance 15
D. Significant Document Provisions (cont.) 10. Easements 11. Development Rights 12. Mortgagee Rights 12. Mortgagee Rights 13. Amendment 16
Amendments to CC&Rs Wil Washington standing in for J. David Ramsey Becker & Poliakoff 973.898.6502 dramsey@becker-poliakoff.com
Amendments to CC&Rs Leasing Restrictions – Common Provisions – Six or twelve month minimum lease terms – Landlord required to make lease subject to terms of governing documents – If tenant breaches the rules, owner is responsible, – If tenant breaches the rules, owner is responsible, sanctions may apply and may be required to evict tenant – If Owner does not enforce the lease terms, power of attorney to association to enforce and evict if necessary 18
Amendments to CC&Rs Amendments to Lease Restrictions – Modifications to Consider – Keeping lease term to minimum of six months • Satisfy new FHA project approval criteria – Assignment of rents if owner defaults on payment of – Assignment of rents if owner defaults on payment of assessments – Assignment of Owner’s right to use amenities when Unit is leased – Prohibition on subleasing – Upon breach of rules, Association may suspend right to use amenities and other rights 19
Amendments to CC&Rs Amendments to Leasing Restrictions – Legal issues • In most states changing the restrictions on leasing is enforceable – See Woodside Village Condominium Association, Inc. v Jahren, 806 So.2 nd 402 (Fl. Sup Ct. 2002) Association, Inc. v Jahren, 806 So.2 402 (Fl. Sup Ct. 2002) • Violation of FHAA does not require intent; disparate impact is sufficient – See Villas West II of Willowridge HOA v. McGlothin, 841 N.E.2d 584 (Ind. Sup. Ct. 2006) • New HUD Rule on discriminatory impact - http://portal.hud.gov/hudportal/documents/huddoc?id=discrim inatoryeffectrule.pdf. 20
Amendments to CC&Rs Qualifications for Candidacy – Common provision • Must be Unit owner of record • Many documents do not require candidate to be in “good standing” standing” 21
Amendments to CC&Rs Qualifications for Candidacy – Considerations for drafting • Allow spouse or domestic partner of record owner to be a candidate • Require that assessments be paid in full; avoid requirement • Require that assessments be paid in full; avoid requirement that there be no violation of rules • Restrict each Unit to one member on board • Consider whether residency requirement is important 22
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