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Condo | HOA Lawyers

Can Your Association End a Unit Owner’s Suit by Post-Suit Filing Actions?

In Welsh v. McNeil, 162 A.3d 135 (2017) a board member and unit owner (“Board Member”) sued another unit owner (“Landlord Unit Owner”) for violation of the Association documents claiming that the Landlord Unit Owner violated the leasing provisions by allowing someone (the “Tenant”) to occupy the premises who was not on the lease.  The lease was only to an unincorporated entity, and did not name who would be occupying the premises.  Before suit was filed the Landlord Unit Owner and Tenant asked the Board to waive the bylaw provision as a reasonable accommodation under the Fair Housing Administration (“FHA”) to afford recovering alcoholics an equal opportunity to use and enjoy a single family dwelling of their choice.  The Board did not take any immediate action.  Ultimately, the Board turned the request over to its attorney who, after corresponding with Tenant’s attorney, advised the Board that the accommodation request was “appropriate” and “required” under the FHA, and recommended that the full Board meet to discuss the issue.  Two weeks later, the Board Member filed suit against the Landlord Unit Owner.  The Board did not authorize the suit and the Association did not participate in it.  The Tenant filed a counterclaim alleging discrimination by the Board Member for violating their rights under the FHA.  The president of the Association then sent a letter to the Landlord Unit Owner advising that the Board voted to approve their lease.  In other words, the Board took a post-suit action to approve the very action for which the Board Member, without authorization of the full Board, had sued the Landlord Unit Owner.

Trial Court Decision. The trial court held that once the Association approved the lease, even though it was after suit was filed, “a dispute no longer existed for the court to resolve.”  The court found that Board Member could not challenge the Association’s decision allowing a reasonable accommodation without also suing the Association, despite language in the Association documents that stated that individual members had the “same rights as the Association to enforce the Bylaws.”  The trial court also found that the counterclaim filed by the Landlord Unit Owner for discrimination under the FHA could continue.

Appellate Decision. The appellate court agreed that the Landlord Unit Owner’s claim for discrimination could continue, but reversed the trial court relative to Board Member’s claims finding that the subsequent approval of the lease did not render the claims of the Board Member moot.

Lesson.  Enforcing your condominium documents, when you can’t get the Board to join in your position, can be very costly even when you’re right.  This case also stands for the continuing proposition that the FHA is construed very broadly.

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