Exam 11: Real Estate Communities: Multiunit Interests and Owners Associations

Puamana was established in 1968 as a Hawaii non-profit corporation. Several owners constructed "pop outs" that encroached onto the common areas owned by Puamana. The term "pop out" refers to an expansion of the dwelling by which the exterior walls are pushed out toward the area beneath the eaves of the building structure. The Board of Directors of Puamana initially assumed that the "pop outs" remained within the boundaries of the respective units because they did not protrude beyond the drip lines of the eaves. However, the Board subsequently discovered that the unit boundaries coincided with the original position of the exterior walls of the dwellings and that the "pop outs" encroached onto the common areas even though they remained under the eaves. Dale W. Hillman was one of the unit owners desiring to construct a "pop out," and he proposed to extend nearly all of his 66-foot exterior wall 2.5 feet outward toward the eaves, creating an additional 165 square feet of floor space. The Board rejected Hillman's proposal unless and until the CCRs could be amended to expressly permit encroachments onto the common areas. On October 19, 1999, the Board recorded a document entitled "Amendment of Puamana Declaration, Covenants, Conditions and Restrictions." The amended CCRs authorized the Board to approve "minor encroachments" of up to 200 square feet per unit. Allan and Barbara Lee and other owners brought suit challenging the authority of the board to amend the CCRs to allow the "pop outs." The Lees also claimed that they enjoyed a scenic view of Kaho'olawe from their third-floor loft, which was blocked when their neighbor, Mark Ciaburri, impermissibly constructed his own third-floor loft. Did the board have the authority to allow the "pop outs" through the amendment?

Which of the following is not a valid reason for denying an applicant a co-op interest?

Which of the following is not included in the Declaration of Condominium?

Unit owners are responsible for torts committed in their condominium units.

Which of the following would be a valid basis for a homeowner's challenge to enforcement action by the homeowners' association?

A vacation license is the same as a time-share interest.

John is a member of the board for his condominium development. John has missed 8 of the last 12 board meetings. The other board members have missed at least 50% of the meetings. The board did not hire an accountant to review the financial reports of the condo manager. Eighteen months after John took his position on the board, an accountant was retained to examine the books of the condo development. The accountant discovered that the manager had embezzled $250,000. Which of the following statements is correct?

Any proposed or modification use of common areas must be approved by the condominium association.

Cooperative boards can review and reject applicants who wish to purchase a unit in the co-op.

Janice Greyson was visiting the condo development, Rushing Springs, to see her nephew. As she walked across the grassy area in between major building of the development, she tripped and fell in a sink hole in the grass. She suffered a broken ankle. Who is liable for her injury?

Bylaws specify meeting requirements.

Which of the following is not a form of timeshare interest?

Architectural Control Committees cannot enforce rules on aesthetics only.

A conflict of interest for an HOA board member would be:

To collect fees and assessments, homeowners' associations need only a rule change.

Which of the following forms of multi?unit housing requires a corporation?

Landlord tenant laws apply to cooperatives.

HOAs must take reasonable precautions for security purposes, but they are not insurers against criminal conduct.

Which of the following is not a remedy available to homeowners' associations for violations of CCRs and rules?

HOAs can prohibit short-term rentals.