People sometimes learn the hard way that local government has little interest or oversight in homeowner and condo associations. Town and county councils can address problems according to zoning, streets or recorded plans, but they don’t have oversight in a private contract between a homeowner and developer.
After hearing about those frustrations, Delaware State Legislature assigned a point-person to help handle such conflicts.
The Common Interest Community (CIC) Ombudsman helps property owners in common-interest communities understand their rights and responsibilities; receives and reviews complaints; and can mediate a resolution if both sides approve.
According to Ombudsman Christopher Curtain, nearly 240,000 Delawareans live in as many as 3,000 common-interest communities. He addressed a roomful of such individuals at a March 1 community meeting at the Roxana fire hall.
In Delaware, land developers create common-interest communities for the residents to maintain “common elements in the community,” including pools, community centers, stormwater or sewer systems and other infrastructure.
“I can think of very few jobs that are as thankless as working and volunteering on your HOAs. I truly believe that,” said Sussex County Administrator Todd Lawson, who attended the meeting.
People can to use resources such as the Community Associations Institute (CAI) (www.caionline.org), which publishes data and how-to guides on community management.
Most of the Roxana meeting’s attendees had dealt with condominiums, planned communities and some master associations (such as Millville By the Sea), in which the higher association oversees the smaller neighborhood HOAs. Between condos, co-ops and residential subdivisions, the common themes are: automatic and mandatory membership, and mandatory assessments.
Some people brought questions and concerns. Many left the meeting with to-do lists, to read up on Delaware state code, contact the ombudsman or tackle neighborhood problems in a new way.
For Delaware CICs, Curtain has written a guide on election and voting procedures, and he’s writing a guide to collecting assessments, which will be posted online soon. Individuals and boards can use the CIC dispute-resolution forms, which have solved about 90 percent of all disputes internally, he estimated. Anything not resolved can be sent to his office.
Since 2014, Curtin has been Delaware’s first and only CIC Ombudsman, possibly the only one nationally who is situated in an Attorney General’s Office. He has subpoena power and can make binding decisions as an arbitrator, so that’s a plus for Delaware’s program, despite a lack of staff.
Curtain said he has four subpoenas out right now for misappropriation of funds. Two years ago, Curtain helped secure guilty pleas from two HOA board members who stole more than $20,000 from their Bridgeville homeowners’ association that was supposed to be for desperately-needed septic-system maintenance.
For many people who move to a development where construction is still in progress, the ultimate goal is a clean transition of governance, from the developer/declarant-controlled board to one managed by the property owners, said Chad Toms, attorney and partner at Whiteford, Taylor & Preston LLC.
If the property owners have a dispute that may require litigation, Toms recommended they start with a transition study to determine: (1) was everything engineered correctly, (2) was it built correctly and to code, and (3) were the materials appropriate to the circumstance and climate?
“I’ve had a couple of cases where the product that was built here was originally designed in a much warmer climate, … so while it may have worked in Georgia, it may not work here,” Toms said.
Before sending the transition study to the developer, he said, groups should ask the developer about a tolling agreement and find out if any state agency might help support their claims.
He also cautioned groups against using association money to address problems at individual homes, unless the problem is truly common to every unit.
Where the government gets involved
But many of the issues stem from the private contract between the developer and the individual property owner, so homeowners can be unpleasantly surprised that town and county governments won’t automatically hold developers’ feet to the flame in contract disputes, except perhaps over roads and infrastructure.
“We really have no role in that handover,” Lawson said of the government bodies. “That turnover is governed by the bylaws.”
“Once the entire community is closed out, we have very little power,” said Sussex County engineer Hans Medlarz.
Instead, county and municipal councils are more involved in design, permitting and construction.
People can complain to planning-and-zoning boards if a developer wants to change what’s been approved on paper, such as unit sizes or neighborhood design, since those require P&Z permits. Governments can also hold future building permits as ransom in order to bring a developer to the table.
Zoning is decided either by a municipality, or by the county for properties outside incorporated town limits.
The government typically inspects the roads, curbs, sidewalks and stormwater drainage. Governments also hold bonds from the developer to ensure work is done properly, or can cash them in if work isn’t completed.
Delaware’s overarching Delaware Uniform Common Interest Ownership Act (DUCIOA) is found in Delaware State Code, Title 25, Chapter 81 (http://delcode.delaware.gov/title25/c081).
The legislation was finally approved around 2008, after about 20 years of talk.
Some rules do apply to pre-existing communities, while others only apply to new growth.
“The new statute provides that, at 25 percent [conveyance] of the units, one member or 25 percent of the board has to be a unit owner-elected member,” Toms said. “And then when you get to the 50 percent mark, one-third of the board is supposed to be unit owner-elected. And this does apply to preexisting, so I get the feeling that Mr. Curtain’s unit deals with this all the time.”
That law (25 Del. § 81-303(d)) appeared to surprise some people, so Toms joked, “You can consult with Mr. Curtain’s office, or if you want to spend money, you can call my office.”
Problems du jour
State Sen. Gerald Hocker Sr. (R-20) and state Rep. Ron Gray (R-38) hosted the March 1 meeting to educate residents after hearing a recent deluge of questions and concerns about CICs.
Hocker said the DUCIOA is still imperfect, partly because it was passed in a hurry. Although promises were made to make improvements, later fixes got nowhere, and more recently, legislators, he said, are too burned out to approach it again. But meetings like the one in Roxana are a start, Hocker said.
He also addressed Fairway Village in Ocean View, where residents have filed a lawsuit against developer Fairway Cap and Fairway Construction for building and, the residents allege, improperly renting out townhouses as a commercial apartment complex, rather than selling the units, and thereby, they say, unfairly maintaining control in the association.
Hocker said that after hearing complaints from some residents, he asked the Attorney General’s Office to investigate. But a week later, he emphasized, the AG’s Office wouldn’t touch the situation, after hearing that residents had filed the lawsuit in Chancery Court.
In Roxana, some of those residents protested that no one had told them the AG’s Office was investigating, but Hocker said he had told whoever visited him, as well as the Town of Ocean View.
In 2014, Gray had opposed the expense of an ombudsman, but now he said he appreciates the help and legal expertise of the office.
“I have become a believer in this, and he is overwhelmed. I agree with Sen. Hocker that we need to get more help for him,” Gray said of Curtain.
The CIC Ombudsman Office is available by phone at 1-800-220-5424 and by email at firstname.lastname@example.org.
Information sheets and email lists are online at https://attorneygeneral.delaware.gov/fraud/cpu/ombudsperson.