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Ask the Attorney Part 3
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Minnesota Community Living May/June 2012

Ask the Attorney

By Nigel H. Mendez, Esq., Carlson & Associates, Ltd.

This column is comprised of questions that have been posed to me by homeowners, property managers and related professionals regarding legal issues they have encountered with respect to their associations.

"My friend in a different association serves on a committee. My association does not have any committees. What does a committee do?”

While all associations have a board or directors that runs the association, many also utilize various committees. Committees are established by the board to assist them in various areas of the association. Committees can be created for short term projects, such as revising the governing documents, or they can be ongoing, such as a landscaping committee, nominating committee or architectural control committee. Committees provide an opportunity for homeowners that have an interest in a specific area to contribute to the association without having to commit to being a board member. Committees can provide invaluable insight and benefit to the board. The ability for the board to utilize committees should not be overlooked.

The power to appoint, regulate and dissolve committees is found in the Minnesota Nonprofit Corporation Act and most association’s bylaws. Minn. Stat. §317A.241 provides that through a majority vote, the board can pass a resolution establishing a committee. Unlike board members who are elected by the members of the association, members of a committee are generally appointed by the board. Committee members serve at the pleasure of the board and can be removed, with or without cause, by a simple majority vote of the board. While many committees have at least one member who is a board member, unless the association governing documents require it, it is not mandatory.

Committees are an extension of the board, but do not generally have the full powers of the board. For example, a committee that is established to research companies to professionally manage the association may not have the ability to enter into a binding contract. The committee would research and interview various management companies and report back to the board with a recommendation. The board would then vote on which management company to contract with, and execute the contract.

However, should the board wish, it could grant greater power to a committee. Some associations have a landscaping committee that is charged with the upkeep of the common area. The board can give the landscape committee a budget, along with the power to contract with a lawn maintenance or snow removal vendor. The resolution that establishes the committee should detail the specific purpose and power that is being granted to the committee.

Minn. Stats. §§317A.231 - .239 detail requirements for board meetings (notice, quorum, actions outside of a meeting). These same guidelines apply to the actions of committees. It must be remembered that the board retains all power over a committee, and at any time can add members, remove members or dissolve the committee.

"My association foreclosed on a home and we learned there is a tenant living there – are we stuck with him?”

The short answer is yes, but for how long is the real question. Before I explain the details, it must be noted that the following answer does not apply to the previous owner - any holdover owner may be evicted immediately. State and Federal laws were changed in recent years to provide protection for tenants who lived in properties that were subsequently foreclosed upon by a mortgage company or association.

The laws state that the "immediate successor in interest” (here the association that foreclosed), must provide tenants with a minimum of 90 days notice to vacate the property. The 90 day notice can not be given until after the end of redemption period.

If the tenant has a bona fide lease that extends more than 90 days beyond the end of the redemption period, the immediate successor in interest must then honor the term of the lease. In this instance, the 90 day notice to vacate is still required and should be given 90 days prior to the expiration of the lease. A bona fide lease is one that is not with the previous owner’s child, spouse or parent; it was the result of an arm’s length transaction; and the rent is not substantially less than fair market rent. However, if the association sells the property to a buyer who intends to occupy the property as a primary residence, the term of the lease does not have to be honored and the 90 day notice can be given immediately upon sale to the new owner.

During the period that the tenant occupies the property, the tenant must follow the terms of the lease and must pay all rent to the association. Tenants are not required to pay association assessments as they are not an owner of the property. Should the tenant fail to follow the terms of the lease or pay the required rent, the association may bring an unlawful detainer (eviction) action immediately without regard to the 90 day notice period.

Both the Federal and Minnesota laws are set to expire on December 31, 2012. Unless extended, no tenant protections will exist in 2013 and an eviction action can be commenced immediately following the end of the redemption period.

To have a question answered in a future article, please email it to me at nmendez@carlsonassoc.com with the subject line of "Ask the Attorney.” While I can’t promise that all questions will be answered, I will do my best to include questions that have a broad appeal. Questions will also be answered by other attorneys practicing in this area of law. The answers are intended to give the reader a good understanding of the issue raised by the question but are not a substitute for acquiring an opinion from your legal counsel.

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