How Delaware’s HOA laws can make it hard for residents to settle disputes
If you live in a community requiring dues like a homeowner's association, laws in Delaware make it hard to fight any dispute, ranging from an arbitrary fine to a ban from community amenities.
Whether renting or owning, residents of these common interest communities are subject, whether they know it or not, to the preferences, actions or ire of the group of people who run them — with little recourse to oppose decisions made by people in control of these communities. That's because it's difficult for even homeowners or renters to figure out who to complain to should a problem arise and the steep cost of taking a case to court, if necessary.
Common interest communities − of which there are 2,000 to 3,000 in Delaware − include homeowners’ associations (HOAs), condominiums or cooperative councils, and maintenance corporations. Civic associations are not considered common interest communities because they cannot enforce the collection of fees.
Required by Delaware Code: Common interest communities, or CICs, are contracts created by land developers to set the restrictions or conditions for living in a community. This governing document authorizes the collection of mandatory, enforceable annual fees for the maintenance of common areas. In turn, the developer gives this contract to a group of people within the community to administer and enforce.
Incorporated or not: CICs legally own the common areas of a development such as parks, roadways, community amenities, and stormwater management systems. The group of people in control of the CIC has the power to assess fines and levy penalties for not abiding by regulations.
The law is clear: The governance of these shared conveniences is to be documented in bylaws and recorded in the respective county's Recorder of Deeds office. Too often, however, CICs are not being managed according to their bylaws or unfairly enforcing the bylaws — if they have bylaws at all.
This information comes from the Office of the Ombudsperson for the Common Interest Community's 2019-2020 Annual Report, the latest report available. The CIC ombudsperson position, housed within the Department of Justice's Division of Fraud and Consumer Protection, was created to educate interested parties about the rights and requirements under Delaware Code for common interest communities, provide guidance for the application of the law, and offer avenues for the resolution of disputes outside of the court system.
Disputes involving these common interest communities are loading the courts anyway. With the easy ability to escape accountability, it appears that the only recourse for aggrieved homeowners and tenants is to sue, live with the decision, or move.
Read the ombudsperson's 2019-2020 report here.
HOA bans family from using pool
The Gould family of New Castle County was baffled after receiving a notice this summer from the Stonebridge Townhomes Owners Association, an HOA, stating the entire family was banned from using the community’s swimming pool.
In early July, Matthew Gould went for a swim at their community pool in Stonebridge Townhomes. After his swim, Matthew said he was approached by the lifeguard who asked him to provide his pool pass. Matthew said that he showed the lifeguard the pool pass but it led to a dispute and the police were called to referee.
No charges were filed, but later the family received a notice from the HOA, addressed to their landlord, advising that "pool privilege's (sic) have been revoked" for the rest of the 2022 pool season.
The Stonebridge Townhomes Owners Association handbook, which documents the community's bylaws, states hearings are to be scheduled within 10 days of receipt of a written request for a hearing.
No further communication came directly from the HOA even after the Gould's requested a hearing regarding the decision.
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“They haven’t gotten back to me and never answered me," said Shamiya Gould, Matthew Gould's wife. "They just said me and my family weren't allowed at the pool.”
No reply was received from the board of directors for the Stonebridge Townhomes HOA when asked for comment for this story.
Deed restricted covenants, HOAs and DUCOIA
A remiss response from an HOA is typical, according to the Ombudsman's report and Kent County attorney Dean A. Campbell.
“This [family’s story] is something I hear about on a daily or weekly basis,” said Campbell who has practiced HOA law for 25 years.
In an attempt to govern the disputes that eventually arise out of common interest communities, the state created the Delaware Uniform Common Interest Ownership Act or DUCOIA. Its provisions are supposed to guide developers and people living in these communities on how to live peaceably, but Campbell said, "it's a very long ... confusing body of law," that he said took years for many lawyers to figure out what the statute says and does.
The act is based on common law for deed restrictive covenants, Campbell said, noting "there's really no regulation or oversight as to what goes into those rules."
In the past, restrictions found in these deed restrictive covenants could be for something trivial, like forbidding someone from shaking a dust rag out of a window. In some cases, they excluded people of a certain race, ethnicity or religious affiliation. State legislators created DUCOIA in hopes of providing a roadmap for civility in old communities with old restrictions and new communities with different perspectives. In any case, many people are unaware of this law and ignore it even when they are.
If discrimination against someone with protected class status is suspected, a complaint can be filed with Delaware's Division of Human Relations. Otherwise, a homeowner or tenant can file a complaint with the CIC ombudsman, but that office does not have the enforcement power of a court.
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HOAs are protected by corporate law and associated fees
If a homeowner feels they are wronged by their common interest community, Campbell said there are few options available if the governing board will not follow valid bylaws. A homeowner or tenant can file a complaint with the ombudsman, but that office reports a large backlog of complaints waiting to be addressed.
Even then, many disputes can only be resolved in the Court of Chancery.
"Probably Delaware's most expensive court to litigate in," Campbell said, "[and] a docket that's just incredibly full."
And, as esteemed as Chancery Court is, Campbell said when it comes to issues involving the Delaware Uniform Common Interest Ownership Act, there's not a lot of legal precedent to interpret different sections of the act.
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With an increasing number of residential developments in Sussex County, the power of HOAs hangs over everyone who moves into one. That's because Sussex County requires developers to create a homeowner's association for their subdivision.
Campbell attributes many of his HOA cases to properties in Sussex County. From his vantage point, as more and more subdivisions were created, more and more HOA disputes have followed, he said. A lot of his clients contact him feeling browbeaten by their HOA, Campbell said.
Most HOAs are also corporations and are subject to corporate law. When Campbell sues an incorporated HOA in Chancery Court, he said he sues them using corporate law tactics, claiming the HOA's directors harmed the corporation with their actions.
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Campbell said "HOAs have all the same authority but not the same oversight," as chartered cities and towns.
Since homeowners’ associations, condominium or cooperative councils, and maintenance corporations legally own their community's infrastructure, they make the rules about how the property is used and who has access to it.
"They use that leverage and they do have the right to do that," Campbell said. "The problem is how they go about doing it."
If someone acting on behalf of a legally chartered town commits misconduct, it is subject to the Freedom of Information Act and the Department of Justice could step in to correct it or even file suit on behalf of the wronged party. HOAs and other forms of CICs are largely immune from these actions.
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"Until the Legislature steps in, there's really nothing to stop [them]," Campbell said.
HOAs in Sussex County, Campbell said, have become very cognizant of the inadequacies of the law and are not intimidated by the threat of a lawsuit.
"They are confident that most homeowners won't have $10,000 or $20,000 to throw at attorneys to sue over the use of a pool," he said.
As for the Goulds, the couple said because of how they were treated by this particular lifeguard and the response from the HOA, they felt unwanted and too uncomfortable to live at Stonebridge Townhomes anymore. They have since moved out of the community.
Still bothered by the actions of the Stonebridge Townhomes HOA, Shamiya Gould added that she is still considering taking legal action.
Read the full report:
Contact reporter Anitra Johnson at ajohnson@delawareonline.com or 302-379-5786 with tips and story ideas. Follow her on Facebook.
This article originally appeared on Delaware News Journal: How Delaware HOA laws create complications for residents, court system
