Notes from the Hellmuth & Johnson Spring Legal Seminar

By Lance Stendal Best Practices, Staying Out Of The Courtroom Comments Off on Notes from the Hellmuth & Johnson Spring Legal Seminar

Attended the Hellmuth and Johnson spring CIC legal seminar today. As usual, lots of great information, below are my notes from the seminar. If interested, they are repeating the seminar next Saturday as well:


Enacting Restriction
Here are some things to keep in mind:

  • Do it through your Declaration, not your rules & regulations.
  • Think about how your restriction will impact ability to get approval of the Declaration amendment.
  • If condo certified, be aware of your potential restriction’s impacts.
  • Talk with an attorney!

Criminal Background Checks
HUD released new rules April 2016 regarding disparate impacts and criminal background checks. Since it is well documented that persons of some races are more likely to have been arrested and/or convicted than persons of other races, using someone’s criminal history may inadvertently cause a landlord to discriminate. Having a blanket policy is more likely to cause you a problem. Some bullet points to consider:

  • Arrest records should not be utilized, you should rely on convictions.
  • When using prior convictions, you must demonstrate that such a policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest.
  • Your policy must accurately distinguish between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not.
  • Your policy should take into account the nature and severity of an individual’s conviction and consider the amount of time that has passed since the criminal conduct.
  • When proving discrimination, HUD must prove that such interest could be served by another practice that has a less discriminatory effect.
  • Delaying consideration of criminal history until after an individual’s financial and rental history is a good idea, may winnow candidates before getting to this point.
  • Bald assertions based on generalization or stereotypes due to a criminal record are not sufficient.

Check out the HUD rule adopted April 4, 2016.

Other Rental Issues
Generally speaking, an HOA should NOT be completing criminal background checks, the landlords should be doing that. Okay for HOA to require the criminal background check.

A good question from the audience about corporate housing. A company was leasing a unit for corporate relocations. HOA didn’t like this but they were meeting the transient/hotel and short term occupancy restrictions. Point was raised that the association could have potential claim that the person occupying the home could be considered as subletting, which is often not permitted. Interesting way to look at it.

Super Bowl coming this year will be a big concern for short-term rentals in desirable locations. Association may want to take steps to address this now. Remember that someone may decide just to pay fines because they could potentially make thousands from that Super Bowl rental.


Employee vs Independent Contractor
Employee – you control what will be done and how it will be done
Contractor – You control what will be done, but they control the specific means or manner in which jobs are performed.

Some tests:

  • Where do they work?
  • Do they have a separate tax ID (and meeting other legal requirements of being a business)?
  • Signed contracts?
  • Do they incur any expenses related to their work?
  • Continuing or recurring business liability?
  • Here’s some info from MN Dept of Labor & Industry:

Attendee question – paying a cleaning contractor under their social security number and not a separate corporate federal tax ID. Is that a problem? While this is permissible, it is better practice to have them incorporate and have a separate tax ID and pay that entity.

Joint Employer Liability
NLRB case. If potential actual control that could be enough. NLRB expanded that, is there any potential at all.

Here’s a scenario that could get a homeowner’s association into trouble: Condo Association has a Caretaker that is hired and controlled by the management company (this is how it is commonly done). Caretaker violates a policy and the management company fires the Caretaker. The condo board says “wait a minute, we really like them, we want to keep them.” (Quick Aside: we actually had this happen with a Caretaker stealing laundry coin.) By doing this condo is now directly involved in, and in effect controlling, the firing or discipline of the Caretaker. The Condo is now opening itself to Joint Employer Liability and could be held liable for employment practices. This blurs the line, must keep it clear.

Ways to avoid Joint Employer Liability:

  • Do not exercise control over hiring, firing, discipline, or supervision.
  • Note concerns to the management company, not to the caretaker
  • Do not train
  • Control parties to agreement


Support Animals
Current rules make it very clear that standards under ADA do not apply in a housing context (e.g. limitations on what is a service animal does NOT apply). Make no distinction over type of disability (e.g. mental or physical). Any pending changes in MN? Not that we are aware of and would be surprised if HUD walked back those regulations.

Q: What about someone who is granted exception but now is impacting someone else is allergic to the animal? A: You need to find a way to balance both needs.

Q: Can Association use Reserve Funds to remove a common element, so is not replacement of a property but is removal of a property (e.g. removing a building no longer being used). A: It’s borderline. Is not a replacement, but maybe could argue that is converting the use. Will any of the members complain about this? Need to weigh those chances.

Q: What advice giving on Directors who are delinquent? A: It depends. What do documents say? Nonprofit statue has minimal standards and MCIOA does not impose much more but many Bylaws address minimum requirement for serving on the Board OR they have a standard that if not met can permit your removal. If not there, may not have a basis to say cannot serve just because they are delinquent.

Please remember, I am not an attorney and my notes should not be construed as legal advice!

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