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Ask the Attorney – October/November 2012
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Minnesota Community Living November/December 2012

Ask the Attorney

By Nigel H. Mendez, Esq.

T
his 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.

Can My Association Ban Political Signs and Holiday Decorations?

I am frequently asked questions regarding whether something can be banned in an association. The questions usually come from boards that want to stop a practice they see getting out of hand, or from homeowners who have received a letter from their association reminding them that a certain activity is prohibited.

The short answer to these questions is almost always: Yes, the association can prohibit that action. And the reasoning is often the same – the homeowner either agreed to that prohibition when they purchased the unit, or agreed to allow the association to enact rules that prohibit such activity in the future.

Restrictions on the use of a property are most commonly found in the Declaration or Rules and Regulations. Both of these documents can be amended to add or remove restrictions.

In the fall, I am most often asked "can my association ban political signs?” Again, the simple answer is "Yes, they can ban any sign.” Homeowners attempt to argue that "free speech” overrules any association rule. They will also point to various local, state or federal laws that specifically allow posting of political signs at various times of the year. What these homeowners misunderstand is that the First Amendment simply states:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the free- dom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

The First Amendment restricts the government from impeding on one's ability to freely express themself. It does not apply to an association that the individual chose to join and abide by the rules. Likewise, any state law or local ordinance that expressly provides for the ability to post a sign does not apply to an association. There was an attempt in the 2011-2012 legislative session to enact a law that would make restrictions on displaying political signs void and unen- forceable. The bill was unsuccessful.

Restrictions on signs are not limited to political signs. Many associations prohibit "for sale,” "for lease,” "for rent,” or "open house” signs. The restrictions can be either a complete ban or a limit on the size, location or duration of the sign. Restrictions that can be put into place include: no posting of signs in yards; no posting of signs on decks or balconies; no posting of signs in windows; or no posting of signs in a manner that makes them visible from the outside.

Once the political season has ended, the focus turns to the holiday lights and decora- tions debate. In associations, the issues extend beyond the colored lights versus white lights and flashing versus non-flashing debates that many households have. Many homeowners feel they should be allowed to decorate their porches, entryways or trees with holiday lights or ornaments. Again, like signs, associations have the ability to control such displays. While some individu- als might feel that a motorized Rudolph, complete with light-up nose, is a require- ment for a happy holiday, others might believe that simple white lights are all that is needed. Associations have the ability to decide what is acceptable for a public display, and what is better left behind closed curtains.

In summary, when a homeowner purchases a unit that is part of an association, he/she agrees to abide by the governing docu- ments. In essence, they are giving up their right to say "this is my house and I will do as I please” and instead are saying "this is my house and I will do as I please, provided that it is not in conflict with the governing documents.”


Do We Have to Have a CPA Review Our Association Records Every Year?

Associations that are governed by the Min- nesota Common Interest Ownership Act (MCIOA) are required to conduct a review of the financial statements at the end of every fiscal year. Minn. Stat. §515B.3- 121 requires that all associations hire an independent licensed CPA to review the association’s financial statements. This is the minimum requirement, and additional requirements may be included in the as- sociation’s Declaration.

The Statute requires a review of the as- sociation records, not an audit. An audit is much deeper and costly than a review. While both processes will give the associa- tion assurances that the financial statements are correct, an audit will delve deeper into every transaction to assure no irregulari- ties exist. For most associations, a review is sufficient.

This requirement may be waived by an af- firmative vote of at least 30 percent of the votes in the association. The votes can be obtained via a mail vote or at a meeting. It is important to note that the 30 percent threshold is not 30 percent of those who came to the meeting or responded to the mailed ballot. The affirmative vote must equal or exceed 30 percent of all the votes in the association. This vote must be taken within 60 days of the end of the fiscal year. However, even if the members of the as- sociation vote to waive the requirement to perform the review, the board still retains the power to cause a review or audit to be made.

While many associations have their records reviewed annually, some opt for a review every other year, or even once every three years. It should be noted that if your as- sociation wants to review the records only once every three years, a vote must be taken every year to postpone the review – you can not vote in 2012 to wait until 2014.

Associations that are not governed by MCIOA should review their governing documents to determine any financial statement review or audit requirements.

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 At- torney.” While I can’t promise that all questions will be answered, I will do my best to include questions that have a broad appeal. Ques- tions will also be answered by other attorneys practicing in this area of law. The answers are intended to give the reader a good under- standing of the issue raised by the question but are not a substitute for acquiring an opinion from your legal counsel.

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