Saving Management Company Emails

Oct 15, 2017 0 Views 0 Comments

QUESTION: When a management contract is terminated, what about emails sent and received by the manager? Should they be given to the new management or the board? And how do we even retrieve them? We don't always have a code telling us this is "Association XX."

ANSWER: When HOAs change management companies, they generally ask for financial records only so the issue rarely comes up. It changes if there is litigation—actual or threatened. Then there may be a demand for all emails involving that association. The ease of segregating and transferring emails will depend on how the management company is saving its emails.


What Emails? I know some of you are thinking, "What emails?" Boards are not supposed to hold meetings via email. True. However, there could be a significant amount of of email communication with management about scheduling meetings, requests for bids, instructions on violation hearings, maintenance issues, distribution of financial reports, etc. These communications do not violate the Davis-Stirling Act. As a reminder, boards should be using dedicated email accounts to avoid mixing private emails with board emails.

Litigation. Preserving electronic documents is important for litigation because such communications show when a board learned of a particular problem and what they instructed their managing agent to do about it. They often exonerate the association.


Proper Protocol. I suspect most management companies have no systems in place for segregating and saving email communications due to the relative newness of the technology and the cost to purchase document management software and to train their managers. Implementing a proper system would drive up management fees for HOAs—something companies are loathe to do because the industry is so cost sensitive.

For example, our firm captures, tags with client information, and stores all email communications and saves them to an offsite server that then backs up to another server in another location (and then a third redundant server in yet another location). All servers are in hardened sites to protect against theft. They also utilize fire retardant systems that use inert gases to smother flames without harming the computers.

We also scan and save all documents using the same system. As a result, client records are secure and searchable. That means we can find and  download all client files in a matter of minutes. It is possible that larger, more sophisticated management companies have begun moving to such systems. I know from experience, however, that other companies have not done so. Sophisticated computer networks, software, and IT support is expensive.

Transferring Data. You raise the problem of transferring electronic records once your relationship with an association is ended. Putting it on a board member's computer is a bad idea. Because directors come and go and their home computers have little or no protection, the data will eventually be lost. Putting it on the new management company's computer is better, provided they have a way to segregate and protect the data.
The best solution may be to burn the records to a CD, label it and give it to the new management company to store with the association's paper records.

RESERVES AFFECT
MARKET VALUES


I recently spoke at an event with the founder of Association Reserves, Robert Nordlund.

He mentioned a study he recently completed to see if property values were affected by the strength of an association's financial reserves.

He compared the sales price
(measured in price per square foot) of units in 100 comparable condominium associations to the their reserve fund strength (measured in % funded).

He found that market values were 12.6% higher in associations with strong reserves (over 70% funded) than in associations with weak reserves (under 30% funded).

I took out my calculator and did the math. If you own a $300,000 condo in an association with weak reserves and persuaded your board to build strong reserves, your property value increases by $37,800. Building reserves is like putting money in your own piggy bank.

I always had a sense that healthy reserves had a positive effect on property values. Kudos to Robert Nordlund for quantifying it. 

AB 1412
SIGNED BY THE GOVERNOR


A little bit of good news out of Sacramento, Governor Brown signed Assembly Bill 1412, which corrects a problem created by one of last year's bills.

When an absentee owner fails to annually update their contact information,
AB 1412 allows associations to use the last address provided by the owner.

The bill also extends limitations on personal liability to volunteer officers and directors of mixed-use developments. For more information, see AB 1412.

Congratulations to CAI's California Legislative Action Committee for sponsoring this bill.


I had a grammatical error in the ad for lawyers I placed in my last newsletter. A number of you caught the error. Here is one of the comments:

Proof Reader
. You am, am you? Yes, someone with business writing skills would be helpful. LOL. -Shelly D.

RESPONSE: Smile. I wish I could blame my auto-correct feature but I can't. The error was all mine. Fortunately, the ad was effective in bringing excellent lawyers to the firm. I hired two more for my Los Angeles and Riverside offices. I'm looking for another for my Northern California office. If you know any HOA lawyers you can send my way, have them call me at 800-464-2817 or send an email.

*****
 

Restricting Pot #1. You make reference to amending CC&Rs for smoking marijuana in a development, can HOAs make this part of their rules and regulations, pending their amending their CC&Rs? -Sharon B.

RESPONSE: Yes, boards can adopt rules regulating all smoking, including pot.


Restricting Pot #2. How can HOAs steer clear of the Compassionate Use Act of 1996 regarding medical use? Just curious. -Carey C.

RESPONSE: People can take cannabis in other forms without smoking it. I cover this issue in more detail on my website. See Medical Marijuana.


Restricting Pot #3. A few years ago our HOA amended our CC&Rs to exclude all types of smoking, posted "This is a non-smoking zone " sign at our entry. Now we have no issue with odor from any type of smoke leaking to/from decks, open windows. -Astrid L.

*****


I had a lot of feedback on my article about politicians. Here are a couple of comments:

Politicians #1
. So, are you saying we can’t charge our normal fees for use of our common house if someone wants to host a candidate or a political rally? -Claire S.

RESPONSE: Yes. In Senate Bill 407, politicians gave themselves a free ride. They get to hold a rally and the association picks up the tab for insurance, clean-up, etc. Is this a great country or what?

Politicians #2. On the new law making the common area available to politicians, if the community is gated can an owner invite the public at large to enter the common area for a political purpose? This would seem to open up a huge amount of potential liability for an HOA. -Debra G.

RESPONSE: Right now, the legislation is a little hazy.

Inviting the Public. In the worst case scenario, the public can be invited in. The statute states that associations cannot prohibit "guests" or "invitees" from attending the event. I have no doubt that a resident holding a political rally will deem the general public to be his guests and invitees. I disagree with this interpretation and oppose inviting the public into private developments because of the cascade of problems and liability exposure that could follow.

Disability Accommodation. Inviting the public to political events in the common areas subjects the association to the Americans with Disabilities Act. Not that it carries any weight in California but the ACLU of Virginia agrees with my position. They believe a campaign rally in a private location open to the public must follow anti-discrimination public accommodation laws and ADA. That means older HOA developments would be forced to retrofit their facilities to make them handicap accessible or face lawsuits from disability activist groups.

Radical Speakers. Another problem involving public access is who might show up. If guests and invitees are interpreted to mean the general public, a resident could schedule the Grand Wizard of the KKK to speak at a rally in your common area park and invite the general public, white sheets and all.

Security. While 99% of all political meetings are peaceful, at some point someone will hold a rally involving a radical group. It could get violent--just look at Berkeley's anti-free speech radicals. If a board suspects a planned event could turn violent, does it have an obligation to hire a security company to keep the peace? It might.

Can the association charge the cost of the extra security to the rally organizer? Not according to the statute--the cost is borne by the association. If the board fails to hire security and people are injured, lawsuits will fly because the board "negligently" failed to ensure safety in the common areas.

Insurance. Insurance could also be an issue. Typical HOA insurance policies might not cover common areas being used for public purposes. That means the association could be paying out of pocket to defend itself against lawsuits.

RECOMMENDATION:
The legislature created a mess. To prevent the general public from accessing an association's common areas for political events, associations should require anyone holding such events to provide a typewritten list of his/her guests and invitees. Persons not on that list would not be allowed to attend. That should keep an association's insurance intact and avoid ADA issues. It does not, however, address the problem of radical speakers creating security problems. I could see residents protesting a radical speaker and things getting ugly.

*****


Restating Documents. You speak of amending CC&Rs like it's a walk in the park. Amending our CC&Rs requires a 2/3 majority membership approval. That's impossible, which means we have to go to court. Short of that, how do you propose we amend our docs? -Karani J.

RESPONSE: It's never a walk in the park--it's more like a hike through steep terrain covered with poison ivy. Even so, most associations successfully restate their governing documents. We handle ~30 per year. Contact us if you would like a quote.

*****


Ham Radio Law. Any comment on the bill making its way through Congress that, if signed into law, will permit the instillation of amateur (ham) radio antennas in HOA common areas? Thx and Semper Fi. -Wayne W. W7TFY. (Yep, I’m a “ham.”)

RESPONSE: A ham communications bill (H.R. 1301) failed last session. Another bill (H.R. 555) was introduced this session and passed the House. It is currently in the Senate though no action has been taken on it. See H.R. 555.

*****


Voting. At our last meeting the board had 4 out of 5 members present. They took a vote, 1 abstained, 1 no, 2 yes. Did the motion pass? -Melinda G.

RESPONSE: If the abstention was a vocal abstention rather than quiet acquiescence, the vote failed. A majority of 4 is 3. A vocal abstention is not a "yes" vote. I give a full explanation in "Abstentions & Recusals."

Adrian J. Adams, Esq.

Boards should contact us for friendly and professional legal advice.

Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS | STIRLING PLC

Liability for Water Damage & Mold

Dec 3, 2017 0 Views 0 Comments

QUESTION: A leak in the roof caused rain water to drain into a lower unit causing mold to grow on drywall. Who is responsible for removal of the mold and repairs?

ANSWER: The first place to look is in your CC&Rs to see if they address the issue. Assuming it is a common area roof the association is obligated to maintain, the association is not automatically liable just because the roof leaked. Only if the association were negligent (or intentionally caused the leak) would it be liable for the damage.

No Negligence. If the association is not negligent, each side pays for its own damage--the association repairs the common areas and the owner his unit. If the association's negligence caused the leak, then the association is responsible for repairing all damage and removing the mold.

No Presumption. Because there is no presumption of negligence whenever a homeowner suffers damage, the onus is on the damaged party to prove the association breached its duty of care. The owner must point to some act (or failure to act) by the association that resulted in foreseeable harm to the owner.

Burden of Proof. For example, the owner must show the association knew or should have known of the potential roof leak. Were there reports of other leaks, thereby putting the association on notice? Were the roofs past their useful life as noted in the association's reserve study? If the roofs were well-maintained with no reports of leaks, it's unlikely the damaged owner could prevail in an action against the association.

Mold. Mold is always a consideration whenever there are water leaks. Mold is natural to the environment and already exists in the air everyone breathes, both indoors and outdoors. (See Chart of Indoor Molds.) If the number of mold spores inside a unit are similar to outdoor levels, then everything is fine. If the count inside a unit is significantly elevated, it means there is active mold in the unit that needs to be removed. If, as you noted, mold is visible on the drywall, it must be removed. If it's a small amount of surface mold, it can be removed with bleach and water. If it's more extensive, it will require removal of the drywall.

Responsibility. If the mold is on a common area wall for which the association is responsible, the association is obligated to remove it regardless of who was at fault. If another party caused the water damage and mold, the association can then bill that party for reimbursement (following a properly noticed hearing). If the mold is on a wall the owner is obligated to maintain, then the owner makes appropriate repairs and goes after the party that caused the damage. Normally, everyone turns it over to their insurance.

Insurance.
Insurance will cover water damage from a sudden leak but will not pay for mold removal or personal injuries associated with mold. That is why it is important to thoroughly dry everything immediately following a water leak. Promptly removing all moisture avoids mold growth.

RECOMMENDATION: Associations should have restoration companies on speed dial. If there is a large water leak, they should immediately bring in fans, water vacs, and dehumidifiers to remove all moisture. In addition, the source of the water leak should promptly be repaired. The damage and subsequent repairs should be documented. See Water Damage Checklist.

CC&Rs AND
TITLE INSURANCE


In what appears to be the first case of its kind, I served as an expert in a title insurance action that focused on how use rights are created in CC&Rs.

Luxury House. The owner of a lot in Palm Desert built a large custom home, pool and other amenities for the purpose of selling at a profit. The house overlooked a golf course and had large open-space areas around the house with berms on property lines to act as noise and privacy buffers from adjacent properties. The home was sold to Mr. Pasternack.

Neighbor's Construction. With the association’s approval, the owner of an adjacent lot removed Pasternack’s improvements, berms, landscaping, and underground irrigation lines and began building structures on the property line, including a 2-story house less than 8 feet from the line.

Litigation Erupts. A survey revealed the seller had overbuilt Pasternack's lot. Improvements and structures sold to Pasternack spilled onto adjoining lots and the common area in violation of the CC&Rs and building codes. Litigation erupted with the filing of claims and counter-claims by all parties. Because his property rights were impaired, Pasternack demanded that his title insurance company, Fidelity National, defend him. They denied his claim.

Title Insurance. Pasternack prevailed in his litigation against the seller and then sued Fidelity National for not defending him on the cross-claim. Fidelity National pointed out that their policy covered "use rights" as defined in the CC&Rs. They then argued that CC&Rs do not confer use rights. Instead, they restrict property rights, nothing more.

Use Rights. I argued that "use rights" were created in the negative. In other words, restrictions such as setback requirements, tree height limitations, open areas, and berms created rights to views and privacy that benefited all owners, including Pasternack. Accordingly, his property rights were impaired when the association failed to enforce the CC&Rs, thereby damaging the desirability, attractiveness, and use of Pasternack's property.

Court's Decision. The court agreed and ruled that Pasternack suffered a loss of property rights which Fidelity had a duty to defend. It ordered Fidelity to reimburse the substantial legal bills Pasternack incurred defending his rights in the first action. (Pasternack vs. Fidelity National Title Insurance Company, Nov. 21, 2017, Case No: 30-2014-00742249-CU-IC-CJC.)

COMMENT: Kudos to attorney Greg Hatton for successfully asserting Pasternack's rights.

THOMAS QUILLING
JOINS ADAMS STIRLING

I am pleased to announce that attorney Tom Quilling joined our firm.

Tom brings to the firm extensive experience in business, commercial and real estate litigation, transactional work, and architectural expertise.

Land Use. As Deputy City Attorney for San Dimas, Tom handled matters involving the Subdivision Map Act, zoning laws, land use approvals such as general plans and zoning amendments, specific plans, conditional use permits, and variances. His private practice involved construction, environmental and real estate law related to contractors, owners, developers, public agencies, architects, and engineers.

Litigation. Tom’s litigation experience includes environmental litigation, real estate land use, zoning and regulatory litigation, and class action defense. Tom represented real estate developers, cities, redevelopment agencies, and housing authorities in construction-related cases for public works contracts and construction claims management. His clients included the Walt Disney Concert Hall in the defense of a multi-million dollar construction lawsuit. He also represented the City of Los Angeles in a complex, multi-million dollar marine construction lawsuit.

Architectural. As a former architect, Tom reviewed and utilized residential building codes, regulations and ordinances, and conducted project site analysis with emphasis on land planning and urban design.

Education. Tom earned a Juris Doctorate from Loyola Law School, Los Angeles, CA and a Bachelor of Science in Architecture, with academic honors, from the University of Wisconsin, Milwaukee, WI.

We are very happy to have such a talented and experienced attorney in our firm. If your association needs legal services, contact us for a proposal.


Vacancy. As I read the question; “We had a director resign upon the successful appointment of her successor.” If she had not yet resigned and voted for her replacement the entire vote was improper and void. The seat was not vacated if she was still on the board and able to vote. If she resigned she can’t vote if she vacated, then the vote is a tie 2:2. -Gary S.

RESPONSE: By statute, directors can make their resignation effective at a future date. (Corp. Code §7224(c).) A resigning director can then participate in the selection of his/her replacement, provided the selection takes place prior to the effective date of the resignation. (Mayo v. Interment Properties.) If the resignation is offered so it takes effect upon the appointment of a successor, the appointment of a successor and resignation become simultaneous. As soon as the appointment is made, the resignation becomes effective. That's why the two unhappy directors I discussed in my last newsletter can't have a "do-over." The resigning director is already off the board and the new one on. Even if the board now voted 4 to 1 to undo their vote, they can't. Doing so would have the effect of removing a director, which the board cannot do. That requires a vote of the membership.

*****


Opening Ballots #1. Regarding board members opening ballots, we hired a notary public for our membership votes. There is no conflict of interest and she keeps the records for us. I like your newsletter. -Trish Y.

Opening Ballots #2. Is it legal for board members who are subject to a recall to choose the inspector for counting the ballots? -Victoria S.

RESPONSE: Yes, it is. Until such time as directors are actually recalled (which might never happen), they continue to function as duly elected directors.

Reserves Minimum: Counselor, I enjoy your newsletters! In the Oct 29 edition you discuss reserves and your advice was excellent. What I need to know is what is the recommended minimum level and what factor do you use? The article mentions 17% and 70% but doesn't endorse either. And, 70% of what--annual expenditures, I presume? -Charles Q.

RESPONSE: 100% funding is ideal but may not be necessary. If your association's reserves are in the 70% range, they are deemed "healthy" and the chances of special assessments are quite small. If they are 7% funded, you're staring at special assessments in the near future. See "Fully Funded Reserves" for an explanation of how funding is calculated.

*****


AV Rated. You wrote that your new attorney is "AV Rated." What does that mean? -T.J.

RESPONSE
: Attorney ratings are performed by Martindale-Hubbell, a company founded in 1868 that provides services to the legal profession. One of their services is peer review attorneys. They do so by inviting lawyers and judges to provide their opinions about a lawyer's expertise and ethics.

The first letter in a rating denotes the attorney's legal ability as A, B, or C (preeminent, very high, good). The second letter "V" stands for "very high" and signifies adherence to high professional standards of conduct and ethics. A lawyer cannot receive a legal ability rating (A, B or C) unless he or she has first received a “V.”

Martindale-Hubbell's peer review ratings are considered the gold standard in attorney ratings. An "AV" rating is the highest rating offered and is a testament to the fact that a lawyer's peers rank him or her at the highest level of professional excellence. I've had the good fortune to be rated by my peers as AV Preeminent, something I am grateful for. Other attorneys in our firm have also received such ratings.

Adrian J. Adams, Esq.


Boards can contact us for friendly and professional legal advice.

Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS | STIRLING PLC

No Vacancy

Nov 12, 2017 0 Views 0 Comments

QUESTION: We had a director resign upon the successful appointment of her successor. During the board meeting, a director made a motion to appoint a member to fill the seat. It was seconded and passed with 3 voting in favor.

The other 2 directors said nothing. The president announced the motion had carried. But an argument erupted and 5 minutes later the president told the other 2 directors they could submit a candidate to fill the seat.

ANSWER: I know the president was trying to make everyone happy but the horse was already out of the barn. Unless there were some kind of procedural violation or the Russians tampered with the vote, the first motion appointing an owner to the seat passed and you have a new director.

The other two directors might want to submit a different candidate but their motion would be out of order since you no longer have a vacant seat to fill. The resigning director is now off the board and her replacement is now on the board. There is no longer a vacancy to fill.

DIRECTORS
OPENING BALLOTS


QUESTION: For a special assessment vote, can the board open the ballots?

ANSWER: No. The Davis-Stirling Act requires that boards retain an independent inspector of elections to open ballots and tally the votes. Doing so avoids any suspicion of ballot tampering. Election procedures regarding an inspector should be found in your association's Election Rules.

DIRECTOR ACCESS TO
POLICE REPORT


QUESTION: Recently, when a board member told an owner he could not park in a fire lane, the owner used profanity, shouted at the board member and damaged personal property the director had in her hand. The director filed a police report, a copy of which is in the homeowner's file. Do board members have a right to view the police report?

ANSWER: Some people have no business living in an association. If your hot-tempered owner assaulted a director for trying to keep fire lanes open, you will likely have more trouble with him in the future.

Hearing. Do board members have a right to see the police report? Yes. The board should call your scofflaw to a hearing for parking in a fire lane and assaulting a director.
Assaulting a director is probably not in your rules but could fall under the general nuisance provision of your CC&Rs.

Recusal and Evidence. The director who was attacked must recuse herself from deliberating and voting at the hearing but may testify about what happened. The police report also serves as evidence. The homeowner who violated the rules has a right to a copy of the police report, which should be given to him at the hearing.

Penalties. If the board concludes the owner parked in a fire lane and assaulted a director, it can levy fines in accordance with the association's fine policy. Suspending his privileges for up to 30 days is another possibility.

Restraining Order. The board might also consider seeking a restraining order against the person. Your board should seek legal counsel about how best to proceed with legal action against the owner.

RECOMMENDATION: Directors should avoid confrontations with homeowners over rules violations. A letter from the management company is safer and it creates a paper trail, which may be important if there are repeated violations.

JASON SAVLOV
JOINS ADAMS STIRLING


I am pleased to announce that attorney Jason Savlov joined our firm.

Litigation. Jason is an accomplished AV rated civil litigator with a comprehensive background in real estate and business.

Before joining us, Jason handled state and federal cases through mediation, arbitration, jury trials and appeals.

Real Estate. Jason also managed transactional and litigation matters involving landslide/inverse condemnation, partition, construction defects, breach of contract, fraud, trespass, Home Equity Sales Act, mortgage and lien issues, title fraud, REOs, bankruptcies, collections and evictions.

Employment Law. Jason’s experience includes employment law matters such as wage & hour hearings and appeals, preparing employment contracts and handbooks, and advising clients on state and federal requirements.

Education. Jason earned his Juris Doctorate from Southwestern University School of Law in Los Angeles and earned a Bachelor of Science in Management Information Systems from New York University, Stern School of Business.

5th ANNUAL
ABCs of HOAs

I will be speaking at an event in Los Angeles hosted by HOA Organizers. 

This is a free event for board members with a catered lunch and raffle prizes. I will cover new laws impacting associations. Neda Nehouray will address board management responsibilities and procedures. There will be Q&A following each session.


When: Saturday, December 2 from 11 a.m. to 3:30 p.m.
Where: Olympic Collection, 11301 Olympic Blvd #204,
RSVP:  Sophia Lomeli by email or (818) 778-3331.

This year's event will be streamed live on Facebook. If you are unable to attend, you can log onto HOA Organizer's Facebook page around 12 noon to watch the event.

Adrian J. Adams, Esq.

Boards should contact us for friendly and professional legal advice.

Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS | STIRLING PLC

Who Pays for Ballot Recount?

Oct 29, 2017 0 Views 0 Comments

QUESTION: During the election, if a candidate wants the ballots recounted because two candidates have the exact same votes, who bears the cost of the recount?

ANSWER: Neither the Davis-Stirling Act nor the Corporations Code addresses recounts. Although not binding on homeowner association elections, California's Elections Code sometimes provides useful guidelines on voting issues.

No Automatic Recount. As a rule, the person asking for a recount bears the cost. Until last year, not even the State of California had a policy for state-funded recounts. In October 2016, Gov. Brown signed Assembly Bill 44 which requires the state to pay for certain recounts. The bill allows the Governor to order a recount if the number of votes separating two candidates is razor thin.

HOA Elections. In an HOA election, if there is a tie vote, there is no mechanism for an automatic recount. The inspector can, however, on his/her own order a recount. As provided in Civil Code 5110(c), inspectors have the authority to determine the tabulated results of the election and to perform any acts as may be proper to conduct the election with fairness. In addition, the board could authorize a recount if they thought it beneficial, i.e., it would be less expensive than a run-off election.

The Cost. If neither the inspector nor the board initiates a recount, the person requesting it pays. The cost will depend on the size of the association (the number of ballots cast) and whether the recount is done by machine or by hand. If a recount is too costly and the candidates want to avoid a runoff election, they could agree to a coin toss to break the tie. Barring that, the association will need to conduct a runoff at the association's expense.

RECOMMENDATION: Boards should amend their election rules to address recounts and tie votes.

FAILED RECALL
BALLOTS


QUESTION: We launched a recall of our board and one of the directors resigned. If our recall fails for lack of quorum, our inspectors of election said their policy is to not open ballots. We would like the inspector to tally the votes even if there is no quorum. We want the board to appoint the candidate with the highest number of votes to fill the empty seat.

ANSWER: It is common that inspectors not open ballots when there is no quorum. Even if you could convince them to do so, the board is under no obligation to fill a vacancy with the person receiving the highest votes in a failed election. Directors have the discretion to pick someone they believe will contribute the most to the board.

Those members who initiated the recall will have to wait for the next election cycle to make another run at getting their candidates on the board.

CARRIE HEIECK
JOINS ADAMS STIRLING


I am pleased to announce that attorney Carrie Heieck joined our firm and will anchor a new office in Carlsbad, our tenth office in the state.

Corporate Experience. Carrie joins ADAMS | STIRLING with more than a decade of experience representing businesses, property owners, and homeowners' associations in real property issues, corporate formations, contract negotiations, HOA disputes, compliance matters, and business law.

Litigation Experience. In addition to her corporate experience, Carrie has significant litigation and trial experience involving real estate and foreclosure matters representing large institutional clients.

Education. Carrie earned her Bachelor of Arts in Communications from the University of Arizona, Tucson. She then earned a Juris Doctorate from the Whittier Law School in Costa Mesa, California where she attended on a full academic merit scholarship and graduated magna cum laude.

We are very happy to have such an experienced attorney in the San Diego market. If your association needs legal services, contact us for a proposal.


SMALL HOAs. In your latest newsletter, an answer to a question included this: “the Davis-Stirling Act is not designed for small associations.” Can you expand on this? What constitutes a “small association”? Ours has 17 units and we have a management company. Is this considered too small for the Davis Stirling Act? I have been on the board for 5 years and receive your newsletters. We thought we were covered by the Davis-Stirling Act. -Lois L.

RESPONSE: When it comes to the Davis-Stirling Act, size does not matter. The Act applies to tiny 2-unit associations the same as large 10,000-unit ones. That's the problem. The legislature did not take into account that small HOAs don't have the resources to comply with all the Act's requirements.


Members of CAI's Legislative Action Committee raised the issue when the DS Act was being rewritten. We urged California's Law Revision Commission to reduce the burden on small associations. For a variety of reasons, the rewrite took effect January 1, 2014 without the requested relief.

Defining Small. The primary problem is defining "small." Should it be 5, 10, 15, or 20 units? If 10 is the cutoff, all those with 11 units will be forced to shoulder the burden. That does not seem fair. What about a 100-lot association with very little common area and a tiny annual budget with dues of $9 per month? They can't afford compliance any more than a 10-unit association.

The variable for determining size is not the number of units, it's the budget. However, once you set a dollar value, most associations will do everything in their power to get under that threshold and stay there, even if it means deferring maintenance and underfunding reserves. Legislation has a way of producing perverse results.


What To Exempt? Once "small" is defined, the next task is deciding which of the Act's requirements to exempt. I can think of a number of provisions to strike. Unfortunately, persuading the legislature is another problem.

NOTE: Reducing the burden on small associations does not have much traction with the legislature. They are preoccupied with more important matters such as controlling cow flatulence. Governor Brown signed a bill last month regulating the gas passed by cows. Small associations would likely be viewed as a fly on the cow's hide--a nuisance.

*****


Reserves. Your reserve discussion intrigues me. Our reserves are at 17% and the BOD proposed a $16,000 special assessment to achieve a 70% funded reserve but it was defeated by a margin of 2 to 1 in a community vote. The board then increased dues by 20%. Does the BOD have a legal obligation to fund the reserves to maintain the community? -Wayne R.

RESPONSE: Boards have a duty to impose regular and special assessments sufficient to perform their obligations under the governing documents. (Civ. Code §5600(a).) Setting aside sufficient funds to repair and replace major components is arguably one of those duties. In Raven's Cove v. Knuppe, the court held that the failure of the developer-controlled board to fund the reserves was a breach of their fiduciary duties.

Expert Cases. Over the years, I have been retained as an expert in cases where associations (and their boards) were sued for failing to properly fund reserves. In each case, lawsuits were triggered by large dues increases and special assessments to repair major components. The two most common big ticket items are roofs and plumbing.

Deferred Maintenance. Boards who want to be "nice" and not raise dues should know that no good deed goes unpunished. The only way to keep dues artificially low is to defer maintenance and reduce funding of the reserves. That eventually leads to a costly day of reckoning. In one of my cases, roofs failed throughout the complex flooding many units. The association was sued for the damage caused by the deferred maintenance and for negligently funding reserves that resulted in huge dues increases and special assessments. The court focused on CC&R provisions obligating the board to maintain the common areas. It did not go well for the association.

RECOMMENDATION: Fund your reserves! Small increases in reserve contributions over time are much kinder to members than large special assessments, huge dues increases, and litigation.

*****


Peeping Board #1. I gain knowledge and a bit of humor reading the wacky legal liability of board and committee members and managers over-stepping their legal bounds. -Ted S.

Peeping Board #2. I seem to recall that something in the Talmud prohibits the "unwanted gaze." -Fred G.

Peeping Board #3. Being a retired Fair Housing investigator, I’m concerned that this peeping board member may be using his role as a pretext for what might certainly be construed as sexual harassment. Perhaps it might be helpful to address the board’s responsibility to abide by the federal, state and city Fair Housing laws, including but not limited to disparate treatment and behavior (like peeping) that may interfere with the peaceful enjoyment of an owner or renter’s living environment or create an intimidating and hostile environment with a board or board member who wields much power over many owners--many of whom are women. -Peggy S.

*****
 
Reno, NV. Merely due to the content & brevity of your newsletter, I kinda wish I was living back in CA in an HOA which utilizes the services of one of your offices. Sad to say, there are no other reasons enticing me to return to my birth state. It would be truly wonderful to work with a law firm in my own state just as helpful, knowledgeable and good-natured as you folks in the HOA business. Know of any firm in or near Reno, NV? -Donald M.
 
RESPONSE: I'm not familiar with firms in Nevada. There is, however, a California attorney who goes back and forth to Nevada handling HOA clients. His name is Matt Grode. You might send him an email. Maybe one of our readers can recommend a Nevada firm they like.
Adrian J. Adams, Esq.
 
Boards should contact us for friendly and professional legal advice.

Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS | STIRLING PLC

Peeping Board Member

Oct 22, 2017 0 Views 0 Comments

QUESTION: I live in a PUD where members own their lots, which includes a small fenced in backyard. We have an over-zealous president who looks over fences for violations. He upset a husband who caught him gawking at his wife sunning herself in a bikini.

ANSWER: I suspect most residents would find it unseemly and an invasion of their privacy for a board member to be peering over their fence looking for violations.

Inspection Notice. Most sets of CC&Rs allow for the inspection of lots. However, they also include a prior notice requirement. Unless there were an emergency, no board members, managers or agents should enter onto lots or peer over fences without first giving appropriate notice to the owner. Even then, there should be a good reason to conduct the inspection.

RECOMMENDATION:
A fence creates an expectation of privacy and board members should respect that privacy. If violations cannot be seen from the common areas, directors should not be climbing fences looking for them.

DECEASED MEMBER
IN NEWSLETTER


QUESTION: Is it legal for the association's newsletter to publish that a member has passed away without first consulting the deceased family who still reside in the community?

ANSWER: Is it legal? Yes. Your newsletter is reporting an event that occurred in the community that would be of interest to the membership. Hopefully, dying is a rare event in your community. If it were to happen again, contacting resident family members first to express sympathy would be appropriate.

JEFFREY A. BARNETT
JOINS AS PARTNER
 

I am pleased to announce that the highly qualified attorney Jeffrey Barnett joined ADAMS | STIRLING as a Partner in our firm.

Bay Area. Mr. Barnett is a well-respected attorney with extensive experience as general and litigation counsel to associations throughout San Francisco's Bay Area and the Central Coast.

Los Gatos Office. He brings with him a staffed office in Los Gatos where he provides legal services to approximately 300 residential, commercial and mixed-use associations.

Education. Jeffrey has a rich academic background. As an undergraduate, he attended UCLA and then Wadham College in Oxford England before graduating from UC Berkeley with great distinction and Phi Beta Kappa. He then earned his Juris Doctorate from the University of Santa Clara School of Law where he graduated magna cum laude and served on Law Review.

ECHO Author. Mr. Barnett has written extensively for ECHO Journal and we are excited about the knowledge and experience he brings to the firm. If your association needs legal services, contact us for a proposal. For more information about Jeffrey see his website bio.


Airport HOA. Our board manages our small HOA’s airport. Items come up regularly that require immediate action that can vary from trivial to major. Any available board member can take the lead and decide if the consent of the board is called for. Sometimes we take action and formally approve it at the next scheduled meeting. While this system works well for us, we feel we are operating in gray areas. How concerned should we be about our practices? -John W.

RESPONSE: A small HOA with its own airport? That's impressive. Unfortunately, the Davis-Stirling Act is not designed for small associations. The laws affecting common interest developments have become so burdensome that management companies and legal counsel are increasingly necessary for boards to rely on. However, small associations can rarely afford them. Thanks to the legislature, the problem gets worse each year.

Fortunately, management decisions do not fall under Davis-Stirling's Open Meeting Act requirements. It sounds like most of the decisions you referred to are management decisions. Anything requiring full board approval (large expenditures, setting policy, etc.) should be done in a properly-noticed open meeting of the board.

*****


Saving Emails. Thank you for another excellent newsletter. I was very impressed with the data retention and backup policies you mentioned. I would be cautious about burning information to CDs or other media and storing them indefinitely with other records. Technologies change. Software changes. Imagine trying to read data off an old floppy disk in this day and age. I recommend associations recall, restore, and re-save their data at least annually to insure it remains accessible. This should be part of an organization's disaster response and recovery plan. Organizations often forget that the objective is not the maintenance of data backups but the recoverability and accessibility of the information stored. -Al P-Y

RESPONSE: The technology is moving so fast that most kids today will have no idea what a floppy disc is (no it's not a social disease). Fortunately, most data stored by an HOA will have little value after a few years. See: Records Retention Policy.

*****


Reserves. I’ve been thinking about your comments regarding Robert Norlund’s study showing that property values are affected by the strength of an association’s financial reserves.

I’m wondering if you might be confusing cause and effect. In other words, do good financial reserves promote property values, or do higher property values mean the association is more likely to be better financed?

In my experience, higher HOA fees tend to reduce home prices. Personally, I don’t know anyone who bought their home based upon the HOA’s reserve funding. Rather I think people are more likely to recognize value in how the property looks and how well it appears to be run. -Edward T.

RESPONSE:
You would be surprised at how sophisticated some buyers have become. No one wants to spend their last dime squeezing into the condominium of their dreams only to be hit six months later by a huge special assessment. That's also why lenders are interested in reserve funding levels.

I agree that excessive dues tend to drive down property values. However, rebuilding reserves does not have to be done on a crash-course basis. They can be rebuilt over time in a sensible fashion that keeps dues within market levels.


I think Robert's study was spot on. He did not compare expensive HOAs against lower-end ones. By comparing (as best as could be done) similar associations so the primary variable is reserve funding strength, a picture emerges that well-funded reserves have a positive effect on property values. Not surprisingly, well-run associations and well-funded reserves tend to go hand-in-hand.

*****


Politicians. I read and enjoy your newsletter. Your topic about utilizing HOA common area for general public political discussions caught my eye. HOAs should not open the door to general public free speech activities. Yes, the KKK did set the precedent by demonstrating/marching at a shopping center that had been allowing other organizations to demonstrate. The courts ruled in favor of the KKK. As you can imagine, this rocked the industry and it took many years and bags of money to get to the middle ground of “reasonable time place and manner rules.” -Carolle V.

RESPONSE: Too often, the legislature does things with the best of intentions that produce terrible results. Sometime, somewhere, someplace when it least expects it, an association will get burned by Senate Bill 407.

*****


Restating Documents. Our association tried twice to gain the necessary votes (2/3) and failed each time. We considered going to court but our attorney advised us that the process is VERY expensive. This was painful to hear because we had already had our previous attorney revise our documents and now, after these expenses, we are apparently restricted by further legal costs. Do you have any specific knowledge of these extra legal costs? Any input would be appreciated. -Allan S.

RESPONSE: Most restatement petitions are not that expensive. It can change, however, if an owner mounts a vigorous challenge and the judge is uncertain what to do. When that happens, the court may set multiple hearings and briefings. I had that happen once. We eventually prevailed but it was much more expensive than it needed to be. Because there is no attorneys' fees provision in the statute for restatement petitions, the association could not recover its fees as the prevailing party.

If an association spends money and time modernizing its governing documents and the enormous effort required to get at least half the membership to vote in favor of the restatement, it makes sense to spend the money required to get court approval of the documents.

*****


Throwing Away Mail. We have a board member who walks around our mailbox areas and if a piece of mail is on top of the boxes for whatever reason, he picks it up and throws it away. What can be done? -Jim W.

RESPONSE: You might remind him that it's a federal crime to open, tamper with or destroy someone else's mail. (18 U.S. Code 1702.) If that doesn't work, see if the Post Office will install a return mail box for misdelivered mail. If your board member feels compelled to tidy up the mail room, he can drop unclaimed mail in the box instead of the trash.

Adrian J. Adams, Esq.

Boards should contact us for friendly and professional legal advice.

Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS | STIRLING PLC

Prohibiting Pot

Sep 25, 2017 0 Views 0 Comments


QUESTION: With the recent passage of Proposition 64, can homeowner associations prohibit residents and guests from smoking marijuana in the development?

ANSWER: Yes, you can. It can be done by (i) adopting a rule relying on existing nuisance provisions in your CC&Rs or (ii) amending your CC&Rs to specifically prohibit smoking of any kind.

A Nuisance. The right of associations to prohibit smoking tobacco is well established. Second-hand cigarette and marijuana smoke are both on California's Proposition 65 list of carcinogens (cancer causing substances). As such, the smoking of either product is a health hazard and constitutes a nuisance. The definition of nuisance includes “[a]nything which is injurious to health….” (Civ. Code §3479.)

Health & Safety Code. H&S Code §11362.3 specifically states that the statute cannot be construed to permit any person to smoke cannabis in a location where smoking tobacco is prohibited. Therefore, if an association prohibits smoking, marijuana is included.

RECOMMENDATION: When we restate CC&Rs for associations, we offer the option of prohibiting smoking in the common areas that includes vaping, tobacco, marijuana, or any other substance. Many associations are extending the prohibition to the entire development, including inside condominium units. Contact us if your association wants to amend its governing documents.

COMMON AREAS
OPEN TO POLITICIANS

Currently, associations can regulate how their common areas are used and require damage deposits and insurance if reserved for events.

Politicians wanted access to HOA clubhouses so they passed and the governor signed into law a bill which takes effect January 1, 2018. It provides the following:

Common Areas. Members and residents can use the common areas, including the clubhouse, to meet with members, residents, invitees, guests, public officials, and candidates for purposes related to legislation, election to public office, referendums, and the like.

Canvassing & Fliers. Canvassing and petitioning of members and residents for political activities cannot be prohibited. Fliers about elections, legislation, and elections can be distributed without prior permission. This will be problematic for many associations whose members do not want fliers on their doorsteps and currently prohibit them. There is now no way to stop them.

Fees, Deposits, and Insurance. Associations can charge fees and require damage deposits and insurance for private parties but not for any matter described above. If injuries or damage occur, the association's insurance will be picking up the tab. If common areas are damaged, associations will no longer have damage deposits or agreements to pay for the damage. They will need to resort to more difficult means to recover the cost of repairs.

RECOMMENDATION: Boards should consult with legal counsel to ensure policies, forms, and rules are consistent with the new law. Associations needing assistance should contact us.

OPPOSE BILLS ON
THE GOVERNOR’S DESK

There are two bills on the Governor’s desk which would be harmful to associations if signed into law. Our office joins with CAI's California Legislative Action Committee in opposing these two bills:

SB 2 (Atkins): This bill claims to address affordable housing in the state but does so at the expense of homeowners by charging a $75 fee on real estate recordations. This would significantly increase the cost to those who can least afford it--delinquent homeowners in collections.

AB 634 (Eggman): This bill will allow condominium unit owners to install solar panels on common area roofs, garages, and carports without regard for their impact on an association’s architectural guidelines, suitability for a particular building or roof, or any adequate protections from property or water damage. Click here to email the Governor to veto AB 634.

HIRING LAWYERS


We are hiring attorneys for our growing Northern California, Orange County, Riverside, and Los Angeles offices.

Candidates should have at least five years' transactional and/or litigation experience.

I value clear legal analysis, business writing, and people skills.

We offer growth opportunities and excellent benefits. If you are interested, contact me at 800-464-2817 or by email.

 


Elite Warriors #1. Your comment adding board members to your list of the special forces groups was hysterical, but you forgot one group. Managers. I love your newsletter, always informative and regularly entertaining. -Lisa H.

RESPONSE: I agree, managers deserve special recognition. They often walk point for their boards and get hit first in ambushes.


Elite Warriors #2. I'm waiting for you to share how Adams Stirling's senior partner, the Hon. Lawrence W. Stirling's public service actually stretches wa-a-ay back before his legislative efforts as author of the Davis-Stirling Act, to his service as an Army officer. Good job! I thank you for that. -Patsy F.

RESPONSE: Judge Stirling has an impressive career of service. He commanded a large 550-man unit in Korea where he was awarded the Combat Badge for infantry operations along the DMZ. He was then assigned to the 12th Special Forces (Green Berets), went to airborne school, and became an A-Team commander. From there, he was assigned to the Pentagon before retiring from the Army as a Major. His leadership skills were then used in the Assembly where he authored ~200 bills, including the highly successful Adopt-A Highway program and the Davis-Stirling Act. He is a remarkable man and an enormous asset to our firm.


Elite Warriors #3. Your article on the mottoes of different service groups was truly informative. It also explains what happened to UDTs (Underwater Demolition Teams), they became SEALS. I laughed out loud when I came to the last branch of service. The only difference between us board members and the military is they get paid, can retire with a pension, and at some point people stop shooting at them. -Nancy H.

RESPONSE: Excellent point. You should know that as part of the motivation for keeping trainees from dropping out of SEAL training, the Navy pays me to spend two days each year explaining the rigors of being a board member to them. I then give an ultimatum--stay in the program or spend a year serving on an HOA board of directors. It scares the daylights out of them.


Elite Warriors #4. You should compile all of your letters in a book and sell them. -John M.

RESPONSE: Only board members and managers would believe the stories.


Elite Warriors #5. Could you possibly be any smarter or any funnier? Being an "elite warrior" myself, I agree wholeheartedly. Thank you for the LOL. -B.
 

*****


Searching Coolers #1. Greatly enjoy and benefit from your always informative Newsletter. On enforcement of pool rules, our large association has no staff on site after-hours and weekends. While we have rules against both glass and alcohol at the pool, they are often ignored. What, if anything can be done? Even if coolers were searched, there are a variety of ways to smuggle alcohol and we have four pool entrances, all unmanned. Thank you. -A. Nony Mous

RESPONSE: An association's ability to enforce rules depends on the resources available to it. Many associations rely on volunteers, i.e., a neighbor gently reminds a person they can't have alcohol or glass around the pool. If that doesn't work, a complaint is lodged with the board and a letter sent. If that does not work, a hearing is held and fines levied and privileges suspended. That is followed by a lawyer letter and so on. Some associations install security cameras at the pool so neighbors don't have to testify at hearings. Footage from the CCTV provides sufficient evidence of the violation.

Searching Coolers #2. Our local police department informed us that drinking in public or public intoxication is not allowed. Avoid any confrontations and just call the police and report the incident. Let the cops be the bad guys. Violations will cease real quick. It worked for us. -Gary S.

RESPONSE: Before calling in the police, I recommend sending a letter to the membership explaining the safety and insurance situation and letting everyone know you have no choice but to start calling the police if the violations continue. Include a plea that everyone please abide by the rules.

Searching Coolers #3. We are a small Association and do not restrict alcohol. We have not had any issues with public intoxication nor any complaints. I don't want to restrict homeowners' enjoyment of the pool area if we don't have to. -R.S.

RESPONSE: Every association gets to choose the level of risk it is willing to accept. The newsletter question two weeks ago dealt with intoxicated members creating problems with staff and guests and broken glass. If you have well-behaved members who drink an occasional beer from a can or wine from a plastic container and don't cause problems, the status quo may be fine. I recommend, however, that you contact your insurance carrier to make sure they are okay with the situation. You don't want a serious injury or death and then discover your carrier won't cover the loss.

 

*****


Satellite Dishes. Years ago, we were advised not to allow satellite dishes on roofs because they cause leaks. We told all homeowners they had to move their dishes to a fascia board, a side mount on the stucco, or a tripod on one of their decks. There was grumbling but eventually everyone complied. -John A.

RESPONSE: Some associations set up a platform on the roof where satellite dishes can be installed without damaging the roof.

 

*****


Training Programs. In Northern California, the Executive Council of Homeowners is another helpful source for board member education. -Ken M.

RESPONSE: Yes, a fine organization and worth contacting. They recently changed their name to Educational Community for Homeowners (ECHO). You can check out their website at www.echo-ca.org.
Adrian J. Adams, Esq.

Boards should contact us for friendly and professional legal advice.

Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS | STIRLING PLC

Searching Coolers

Sep 10, 2017 0 Views 0 Comments

QUESTION: We have frequent problems with alcohol at the pool where people are drinking all day. They are getting drunk and causing problems for staff and guests.

Additionally, some of the containers are glass which break and cause safety hazards. Can we search coolers to prevent glass and alcohol from being brought into the pool area?

ANSWER: Yes, you can.

Potential Liability. Your board is already on notice of three sources of serious injury: broken glass, altercations and drownings--all related to alcohol at the pool. If injuries occur and litigation erupts, directors could find themselves in front of a jury answering questions about why they did nothing to protect members from injury or death.

Privacy Issues. Inspecting coolers is a reasonable solution.
It's easier to stop alcohol at the gate than to force a combative drunk out of the pool area. Is this an invasion of privacy? Sports stadiums, concert venues, and airports inspect backpacks, coolers and luggage every day without violating the law. If someone refuses to open a cooler, they can leave it outside the pool gate.

RECOMMENDATION: If you don't have rules against alcohol and glass at the pool, you need to properly adopt them. If rules are already in place, you don't need to revise them to include inspection of coolers. Even so, you should give notice to the membership that you will be inspecting coolers. Make sure you explain why--to protect the safety of those using the pool, to avoid costly litigation, and to keep insurance premiums down.

BOARD IS SLOW
TO APPROVE RULES


QUESTION: Our board is taking too long to make a decision on new rules. The president and manager agree that our revised rules are ready to go to the membership but the rest of the board has not made a decision in over three months. Can the president send the proposed rules to the membership without the board's approval?

RESPONSE: Your board sounds like Congress--they have a problem making decisions. If your president acts unilaterally to send proposed rules for membership review, I don's see a basis for anyone filing a lawsuit. It could, however, result in hostile board members when it comes time for the board to approve the rules.

RECOMMENDATION: Your president should put the matter on the agenda for the next board meeting and make a motion to submit the rules to the membership for 30 days for review and comment. As provided for in Civil Code §4360(a), the notice must include the text of the proposed rule changes and a description of their purpose and effect.

JASMINE HALE
IN CCAL


I am pleased to announce that my partner Jasmine Hale has been inducted into the College of Community Association Lawyers (CCAL). 

As a member of the College, Jasmine joins a prestigious group of CAI member attorneys who have distinguished themselves through contributions to community association law.

Jasmine's articles in industry magazines, teaching courses through the Community Associations Institute and the California Association of Community Managers, and her involvement in legislative activities with the California Legislative Action Committee were important factors in the decision to induct her into CCAL.

ELITE WARRIORS


Last week, I responded to a question from Bill L. who signed off with an Army special forces motto. Readers expressed an interest in learning more. Following is a summary of elite units and their mottoes.

SEALs (Navy). Established in 1962, SEALs operate on SEa, Air, and Land conducting unconventional warfare. They carry out clandestine, high-impact missions and special reconnaissance. Their motto, "The only easy day was yesterday."

Force Recon (Marines). Created in 1775, the entire U.S. Marine Corps considers itself an elite force. Within the Corps is a unit similar to the Navy SEALS called Force Recon. They operate as ghost units going deep behind enemy lines to gather intelligence and perform special operations against high-value targets. Their motto, "Swift, Silent, Deadly."

Rangers (Army). Formed in 1942, Army Rangers are rapid light infantry who perform airborne operations, raids, ambushes, and airfield seizures. Their primary mission is to engage in close combat and direct-fire battles. Their motto, "Rangers lead the way!

Green Berets (Army). Formed in 1952, Army Special Forces known as Green Berets conduct guerrilla warfare, sabotage, and subversion. Their training includes languages, culture, diplomacy, psychological warfare, and disinformation. Their motto, "To Free the Oppressed."

Delta Force (Army). Formed in 1977, this elite and secretive force specializes in hostage rescue and counter-terrorism as well as direct action against high-value targets. They recruit from Rangers and Green Berets. Their motto, "Surprise, Speed, Success."

Board Members (HOAs). Emerging in the 1960s, these elite volunteers oversee common interest developments under the harshest conditions imaginable. They have two mottoes: "Survive The Next Meeting" and "Never Again!"


Frivolous Plaintiffs #1.
Is ADR required before small claims court? -Ted O.

RESPONSE: Small claims is specifically excluded from the ADR requirement. (Civ.Code §5930(c).)


Frivolous Plaintiffs #2. I always enjoy reading your newsletters. This issue with a board NOT following the Davis-Stirling Act and participating in closed door meetings appears to be a continuous issue with HOA boards. At some point, members may want to vote them out, or file a complaint with the attorney general or their county's grand jury. Sometimes HOA boards deserve it. -Ted S.

RESPONSE: I agree, some boards are dysfunctional and need to be replaced. In the legal decision cited last week, violations were only alleged, not proven. A closed door meeting does not qualify as a criminal act so getting a grand jury involved is not going to happen. If you truly have a rogue board, you have a number of options. See "Dealing with Bad Boards."


Training Directors. Over many years I see directors are not properly trained to serve. How can this be solved? -Art R.

RESPONSE: Because directors are volunteers, it is difficult for them to balance the demands of work, family and service on the board. That makes attending a class a fairly low priority. For ambitious directors, training is available through the Community Associations Institute's local chapters. Check your local California chapter for more information.


Satellite Dishes. Our condo association is giving us the run-around on where we can place satellite dishes. They are saying a new provision in Davis-Stirling has muddied the waters and most associations are seeking a legal opinion from their attorneys. Fact or fiction? -Anon

RESPONSE: I'm not aware of any new provisions in the Davis-Stirling Act. Moreover, the existing provisions are preempted by the Federal Telecommunications Act. Whether state or federal regulations, owners are limited to where they can install dishes. For more information, see "Satellite Dishes."

Adrian J. Adams, Esq.

Boards can contact us for friendly and professional legal advice.

Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS | STIRLING PLC

Frivolous Plaintiffs

Sep 4, 2017 0 Views 0 Comments

A case was published last week that highlights the importance of complying with Davis-Stirling alternative dispute resolution (ADR) requirements.

Moulton Parkway is an association in Orange County where a few members sued alleging violations of the Davis-Stirling Act (conducting business outside board meeting and failing to maintain and make available certain corporate records).

ADR Required. Prior to filing a lawsuit, section 5950(a) of the Civil Code requires that plaintiffs file a certificate stating (i) ADR has been completed or (ii) the other party did not accept ADR or (iii) injunctive relief was necessary. Plaintiffs failed to file a certificate and the association demurred.

Demurrer Defined. A demurrer is a request that the court dismiss the lawsuit because the facts alleged by the plaintiff, even if true, were not sufficient to justify legal action. If the court agrees, the judge sustains the demurrer (grants the request).

Frivolous Action. To avoid dismissal of their action, plaintiffs voluntarily refiled their lawsuit with a certificate of ADR. The association again demurred
because plaintiffs made no attempt to engage in ADR. Plaintiffs had initially submitted a request for ADR which the board accepted. However, plaintiffs failed to actually engage in ADR.

The court determined that dismissing the first action by plaintiffs and re-filing it without attempting to engage in ADR was frivolous. "The association was willing to engage in ADR; it was plaintiffs who derailed the process." As a result, the court sustained the association's demurrer without leave to amend. In other words, the court dismissed the lawsuit.

RECOMMENDATION: The Davis-Stirling requirement that parties attempt dispute resolution before going into court must be taken seriously. Those who ignore the requirement can lose their right to litigate. To read the case, see Retzloff v. Moulton Parkway HOA.

AMENDING CC&RS
RE SHORT-TERM RENTALS

In a recent unpublished case, owners complained about noise, public drunkenness, and damage to elevators, lobbies, and hallways by short-term vacation renters.

In addition, some owners had difficulty refinancing their units because lenders viewed the development as a “condotel.” To address the problem, the association amended its CC&Rs to restrict short-term rentals.


The association could not meet the 75% approval required by its existing CC&Rs but exceeded the 50% required by the Davis-Stirling Act. The board petitioned the court for an approval under Civil Code §4275. The court granted the petition and a landlord owner appealed and lost.

The court recognized that rental restrictions protect property values, facilitate unit financing, and reduces wear and tear to the common areas from tenant move-ins and move-outs.

COMMENT: Although the case is unpublished, it highlights the problems created by short-term rentals. CC&R amendments are increasingly necessary to address the issue. To read the case, see Ocean Windows Owners Association v. Spataro. I will be speaking on this issue on September 15 (see next item).

AIRBNB HELL


I will be one of the speakers at CAI's Education Conference & Mini-Expo in the San Francisco Bay Area.

I will address the growing problem of short-term vacation rentals in HOAs and what boards and managers can do to address it.

Agenda:    See the Agenda and Speakers
When:      Friday, Sept. 15 from 8 am to 3 pm
Where:     San Ramon Marriott
Register:  Register online

WILD LEGAL
PROBLEMS


I will be a speaker at Equity Management's annual seminar. This free seminar provides information from a variety of speakers on legislative trends, reserves, gang violence, drought survival, and coping with wild legal problems.

When:      Saturday Sept. 16, 8:30-12:00
Where:     Wilson Creek Winery, Temecula
Who:        Board Members
Food:       Breakfast before and wine afterwards
Prize:       55-inch Smart TV
Register:  Register Online for this free event (and for more information)

AVNINDER "ALEX" SOHAL
JOINS ADAMS STIRLING


I am pleased to announce attorney Alex Sohal joined our firm.

Academics. Alex earned his Bachelor of Arts in Political Economy from the University of California, Berkeley and his law degree from the McGeorge School of Law in Sacramento. Alex made the Dean’s List for academic excellence all three years and was an editor for the Globe Law Review.


Legal Work. Prior to joining ADAMS | STIRLING, Alex handled general civil litigation and transactional work. He worked on leases and buy/sell agreements, reviewed estate planning documents, and evaluated bank auditing and compliance standards. On the litigation side, Alex prepared complaints, discovery, motions and briefs, and attended depositions, court hearings and settlement conferences.

Alex works out of our Northern California office providing legal counsel to associations throughout the state. If your HOA needs legal services, contact us for a proposal.


Kudos. Once again, an interesting and amusing newsletter! -Lee H.

Internet Fees. Due to the increased pricing of the internet and the myriad of choices for the service, is it legal to add internet service fees in HOA fees? Obviously the idea is to save a lot of money with the majority of our units using internet. -Melinda L.

RESPONSE: Yes, the fee can be included in dues if the association provides the service to all members. It's like master-metered water or gas--the cost is built into the budget and becomes part of the dues.

Vacant Seats #1. Excellent comments on filling vacant seats. Can a director who has been removed by the members run again? I know it would be stupid since there probably was a reason to remove the person for cause. -Finn M.

RESPONSE: Unless your bylaws provide otherwise, some recalled by the membership can run again. It's like a bank robber released on parole--common sense dictates they not rob any more banks, yet many do.

Vacant Seats #2. You wrote that if a vacancy occurs too close to the next annual meeting, the board might decide to leave the seat empty and let the membership fill it. Does that mean the board cannot, or should not make appointments or that if they make the appointment, that seat is up at the annual meeting? -D.M. 

RESPONSE: You're overthinking last week's response. If the seat is up for election in 60 or 90 days, the board might leave it empty and allow the membership to fill it. If it's not up for another year, the board will likely appoint someone to fill it.

Election Rules #1. I respectfully disagree with your opinion on unsubstantiated rules. There is no harm in doing due diligence and researching old minutes for a vote on the rules. This shows the need for: (1) annotating approved rules/regs with the date of the vote and results, (2) keeping a policy/procedure handbook with all new/revised policies, and (3) keeping a log of all votes at board meetings. -Maggie L.

RESPONSE: You make good recommendations.

Election Rules #2. If inspectors of election may verify signatures on the envelopes, how is it done? Do we need everybody's signatures on file? Thank you! -Anna D.

RESPONSE: Yes, you need signatures on file. In the alternative, the inspector can decide to verify only those signatures that appear suspect or have been challenged. That can be done by contacting the owner of the unit/lot to find out if they cast a ballot. If they did not, the ballot is voided. If they did cast a ballot, the person can verify the signature as theirs--or not.


Election Rules #3. In researching our election rules, I found
that generic rules were provided by our management company which did not consider our bylaws. I don't see how a generic sample meets the legal requirement for associations to have election rules. Common sense seems to be lacking. De Oppresso Liber. -Bill L.

RESPONSE:
For our non-military readers, De Oppresso Liber is the motto of the U.S. Army Special Forces. It is Latin and means “To Free the Oppressed." It reflects the core values of those extraordinary men and women who serve in our special forces. Similarly, the U.S. Marine Corps has its own guiding motto, Semper Fi, which is short for Semper Fidelis and means "Always Faithful," i.e., faithful to God, country, family and the corps.

Bill, your experience highlights why boards should have legal counsel draft or at least review documents. Relying on non-lawyers to prepare legal documents is, at best, problematic.

Adrian J. Adams, Esq.

Boards can contact us for friendly and professional legal advice.


Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS | STIRLING PLC

Election Rules Discovered

Aug 21, 2017 0 Views 0 Comments

QUESTION: While sifting through the files of a prior management company, we discovered a set of election rules for our HOA. The document is unsigned, undated & has no reference to any board meeting so we have no idea when these rules were written or passed. Our legal counsel recommended we accept them. They are pretty generic so there is no argument with the contents. What concerns me is accepting these rules without corroborating evidence of their having been properly passed. What do you make of this?

ANSWER: By statute, your association is required to have election rules. (Civ. Code §5105.) Fortunately, the law affords a presumption of genuineness when it comes to business records. If your management company had your election rules in its files, it is reasonable to assume they were duly adopted by a prior board.

RECOMMENDATION: I side with your legal counsel. Your board can use the newly discovered rules until such time as you decide to revise them.

FILLING
VACANT SEATS


QUESTION: Can a board decide not to fill a vacant seat? If so, should the decision be made in executive or open session?

ANSWER: It is not uncommon for a director to vacate his/her seat prior to the end of their term. A heavy workload at the office, personal health issues, sale of their unit, a recall by the membership, and a dozen other reasons could create a vacancy on the board.

Recalls. If the vacancy occurred because the membership called a special meeting and removed the director, the board cannot fill the vacancy. Despite anything to the contrary in their governing documents, only the membership can fill a seat created by a recall.

Pending Annual Meeting. When a seat becomes vacant, boards must make a decision. If the vacancy occurs too close to the next annual meeting, the board might decide to leave the seat empty and let the membership fill it.

Bylaws & Corp Code. If the vacancy occurs shortly after an annual meeting and the board decides not to appoint a replacement, look to your bylaws--they might require an election. If the bylaws are silent and the board fails/refuses to fill the seat, the membership may call for a special election. (Corp. Code §7224(b).) The process is initiated by filing a petition with the board.

Open Meeting. The discussion and vote by the board to fill or not fill a seat should take place in open session. Voting on this issue does not fall into any of the approved categories for an executive session.

NICK HOBAN
JOINS ADAMS STIRLING


I am pleased to announce that attorney Nick Hoban joined the team.

Nick earned his Juris Doctorate from Santa Clara University School of Law where he focused on high-tech law and earned numerous awards and scholarships.


Nick then interned in Munich, Germany where he reviewed patents and trademarks applications for companies such as Microsoft and Warner Brothers.

Nick works out of our Northern California office with Nathan McGuire providing legal services for our growing portfolio of commercial, residential, and mixed-use associations throughout the state. If your association needs legal counsel, contact us for a proposal.

HOA
RIGHT OF ENTRY


I will be speaking at CAI's San Francisco Educational Luncheon later this week on the topic "Enter at Your Own Risk--Issues Related to an HOA's Right of Entry." I will be joined by Eron Kaylor, VP of Seabreeze Management.

We will cover whether an association has a right to enter a member’s unit. If so, under what conditions? If there is potential liability, how can an association protect itself? What about preventing others from entering because of a restraining order? There will be a Q&A at the end plus a raffle.

    Date:        Friday, August 25th

    Time:        11:30pm – 1:30pm

    Location:  JW Marriott, 515 Mason Street, San Francisco

    Register:  To register, go online.


Elections. If inspectors of election may verify signatures on envelopes, how is it done? Do we have to have everybody's signatures on file? Thank you! -Anna D.

RESPONSE: Yes, you need signatures on file so you can compare them. If something is questionable, the inspector also has the option of contacting the person to find out if they submitted the ballot. If the answer is "No," the envelope is marked "Void." It means someone tampered with the election--likely the Russians.

Cable TV. In response to your section on fiber optics, AT&T is spending a good deal of money and we even get $35 per unit from them to pay for a security guard to accompany the technician. They are not doing it out of the goodness of their hearts. When they took over Direct TV, the FCC made wiring homes with fiber optics a condition of the purchase. -Kingsley M.

Officers. If our bylaws state that officers need not be a director, that does not necessarily mean that they don't need to be a member--would it? Thanks for your newsletter and dedication to the often confusing world of HOA governance. -Carol C.

RESPONSE: If the bylaws are silent on officer qualifications, the board can choose anyone to be president, secretary and treasurer. Those individuals could be members or non-members. They could be residents or non-residents. They could be homeless persons or prison inmates. That's why most associations add language that officers be members of the board (or of the association) when they restate their bylaws.

Escrow Inquiries. Our board was recently warned to be cautious when our management company responded to escrow inquiries. It was explained that if the sale is canceled by the buyer, the seller might sue the HOA citing the disclosure. -Jim L.

RESPONSE: If there are uncorrected violations and unpaid fines, escrow is the best time to address them. The seller is usually anxious to sell and will normally take steps to correct them rather than lose the sale. In my experience, disgruntled owners occasionally threaten to sue but never do. If they were to file suit, it would tie up their property, require disclosures to potential buyers, and cost them legal fees. Sometimes, we run into a psychotic owner the association is anxious to get rid of. When that happens, we tell escrow the association hired a moving van to facilitate the move.

Property Values. Property values in our community have been stagnant. Our community is roughly 50% renters due to the low selling price of our units. Investors pray on the community as it's a great investment. Is there anything we can do to prevent low listings? Can we make it harder for investors to rent out units? -Mark J.

RESPONSE: Your options are quite limited and very difficult to implement. You can (i) amend your CC&Rs to require that buyers live in their units for at least two years before renting (that keeps investors at bay and slowly reduces your rental population as units sell), (ii) amend your CC&Rs to require a minimum one-year lease when units are rented (which eliminates disruptive short-term renters), and (iii) increase property values by spending money on maintenance and common area upgrades (which requires raising your dues).

Open Forum. Our board's policy has been to hold open forum at the end of board meetings and allow each speaker three minutes. This evening, our president announced that open forum will be at the beginning of the meeting and only one topic could be discussed per person addressing the board. Is this within the rules for condominiums? -Mary B.

RESPONSE: Boards can set open forums at the beginning, middle, or end of their meetings. It's entirely at their discretion. They can also set a reasonable time limit on how long someone talks (three minutes is common). They cannot, however, limit the number of topics to one. Directors should politely listen as owners list their grievances, make recommendations on how to improve the community, and chastise the board for their lack of transparency. Owners often make good recommendations, so it's worth the extra time it takes.

Adrian J. Adams, Esq.



Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

Cable TV Contracts

Aug 6, 2017 0 Views 0 Comments

QUESTION: Our association would like AT&T to install fiber optic cable to units. Our CC&Rs limit the board from entering into agreements longer than 5 years without membership approval. We want to comply with the restriction but AT&T has language in their agreement they refuse to amend that AT&T's ownership of facilities and the ability to service existing customers survives the agreement. Does that violate our CC&Rs?

ANSWER: I don't believe it does. Your board is entering into a bulk service agreement for five years. At the end of five years, you can switch to another provider. The agreement allows AT&T to continue servicing individual customers who choose to keep the programming. That does not violate your CC&R restriction. I would be more concerned with automatic renewals and ownership of the cable.

Automatic Renewal. Boards should be cautious about automatic renewals. Almost all service providers (elevator companies, management companies, landscapers, etc.) have "evergreen clauses" in their agreements. They provide for automatic renewal of the agreement unless the board gives written notice otherwise. They often have a 30-, 60-, or 90-day notice period. Failure to give notice within that period means the contract automatically renews for another term.

The longer the notice period, the more likely a future board will miss the requirement and the contract automatically renews. Boards should either remove the automatic renewal clause or reduce the notice requirement to no more than 30 (or 45) days.


Infrastructure Ownership. Ownership of the cable should be explored. AT&T is investing a lot of money installing it and rightly wants to recoup its investment. If they retain ownership, they have leverage to induce a future board to renew the contract. If the association does not renew with AT&T, another provider would need to install their own cable--a costly and disruptive process.

You should explore sharing the cost of the installation with AT&T so ownership of the cable transfers to the association at the conclusion of the agreement.
Another approach is to negotiate language that if the association renews the agreement for a second term, ownership transfers to the association. I've used both approaches in the past.

RECOMMENDATION: As the industry shifts to fiber optic cable (for fast internet speeds and more bandwidth for live streaming), many associations will be negotiating new contracts. We just installed it in our main office. In addition to using legal counsel to review the contract, boards should consider using a cable consultant (yes, they exist) to assist in the negotiations. Attorneys are good at reviewing legal issues but the cable industry is constantly changing and someone with industry expertise can help negotiate better deals. One consultant I'm aware of is Morgan Fussell (www.morganfussell.com). An internet search should identify others.

DIRECTORS AT
COMMITTEE MEETINGS


QUESTION: Our board consists of five directors. Four or more of our directors regularly attend most all committee meetings. They say they are not doing any business and that avoids the open meeting requirement. Does it?

ANSWER: Not really. The Davis-Stirling Act is much broader in its definition of board meetings than one might imagine.

Meeting Defined. Board meetings are defined as a gathering of a majority of directors at the same time and place to "hear, discuss, or deliberate upon any item of business that is within the authority of the board." (Civ. Code §4090.)

Committee/Board Business. Normally, matters being discussed at committee meetings result in a recommendation to the board for action. That means a majority of directors attending a committee meeting will likely hear and discuss items of business that will be presented to the board, thereby transforming the committee meeting into a board meeting.

Exception. An example where this would not apply is a welcoming committee that does not make recommendations to the board but, rather, meets to coordinate the welcoming of new members into the community and scheduling times to meet them.

RECOMMENDATION: To avoid violating the statute, your board has two options: (i) post a notice and agenda for all committee meetings so members can attend or (ii) limit attendance by directors to less than a quorum.


I wasn't sure the fireplace article would spark much interest but it did. I received more feedback than I can print. Following is a sampling:

Fireplace #1. "As with all things one might enjoy, fireplaces are heavily regulated." Love your opening phrase. For once, Nevada may have been ahead of California. Our home is 19 years old and we could not have a wood burning fireplace when it was constructed. We’ve enjoyed the convenience of a gas fireplace since then. I hope electric is not made mandatory. In my opinion, that would be an overreach but that won’t stop some environmentalists. -Marilyn B.


Fireplace #2. They can watch a real wood burning fireplace on TV. I think Roku has a streaming video available. Love your newsletter! -Ti H.

Fireplace #3. I agree with the electric-only fireplaces. I have a wood burning/gas burning fireplace, but have not used either for years. I placed a number of Luminara battery operated, self-timed candles in there. They turn on for six hours and then go off all by themselves. It’s very convenient, and gives me the romantic mood I am looking for without having to pollute the air and I also don’t have to clean the fireplace. I sure wish they would completely ban wood burning fireplaces in California--not just in new homes. Thank you for your informative newsletters. -DeeDee G.

Fireplace #4. Shouldn't the board have the membership review and agree to any rules (new, amended or to be deleted)? -Ingrid K.

RESPONSE: Any rules adopted by the board must first be circulated to the membership for at least 30 days for comment. (Civ. Code §4360(a).) If adopted, the board must then notify members of the new or modified rule. If the board adopts the change and members are unhappy, 5% or more can call a special meeting to reverse the change. (Civ. Code §4365.) The petition must be delivered to the board within 30 days of the noticed rule change. (Civ. Code §4365(b).) The affirmative vote of a majority of the votes at which a quorum is present is sufficient to reverse the rule. (Civ. Code §4365(d).)

Fireplace #5. Love your newsletter! As a board member for over 10 years, I like this law. -Rick H.


Fireplace #6. The apartment complex in our neighborhood is removing all of the fireplaces. Yes, this is a lot of work, but that is their solution. -Cheryl V.

Fireplace #7. I converted to an electric fireplace insert. It fits nicely inside the fireplace and plugs into a regular outlet just outside the fireplace. The display looks realistic enough that several guests also bought one. I can use it with heat or without heat just for ambience. -Paul C.

Fireplace #8. Always enjoy your weekly column. Regarding the board that banned wood-burning fireplaces in favor of conversion to gas—that seems to be the sort of thing that prompts some disgruntled owners to run for the board just to fight for a rule change that suits themselves (swimming pool hours/rules/heating being yet another contentious issue). I’ve been in associations where various boards have flip-flopped on parking rules, collection enforcement, landscaping and other divisive issues—driving owners crazy about what was allowed/not allowed “this year.” -Frank D.


Manufactured Home. I've been enjoying your newsletter for some time and want to thank you for continuing to provide some good insight that helps many of us be more reasonable in our expectations and attitudes. I am purchasing a manufactured home (they don't call them trailers or mobile anymore) in a park for senior citizens where residents own the land and pay an HOA fee to maintain common areas like streets, pools, tennis courts, walking paths, and a club house. Each owner is responsible to maintain their own home and their lot. Are manufactured home communities with an HOA instead of a landlord subject to Davis-Stirling?

RESPONSE: Yes they are. We represent many parks with manufactured homes (some still refer to themselves as mobile home parks). While yours sounds like a planned unit development (PUD), some parks are configured as condominiums. On rare occasions I run across one set up as a stock cooperative. You can't tell by looking at them what kind of legal entity they are--you have to look at their governing documents. If they meet the definition of a common interest development, they are subject to the Davis-Stirling Act.

Abandonment of DS Act. Our new president claims our HOA is not a common interest development and is changing the rules doing whatever she wants to. We are a mobile home community of 335 lots individually owned. She canceled board meetings until October for owners to attend but will still have meetings just for board members. Is this allowed? FYI, they filed a CID Statement with the Secretary of State in 2004. -Kenneth C.

RESPONSE: It sounds like you are a common interest development and, therefore, subject to the Davis-Stirling Act. Your president does not have the power to suspend the DS Act. She (and your HOA) remains bound by all statutory requirements, including the Open Meeting Act. (Civ. Code §4925.) Violations of the Act by your president can result in fines against the association.

Officers. I enjoy and am informed by your Adams/Stirling Newsletters. Our bylaws state that “Officers other than the president need not be directors.” Our officers have always been chosen by the board of directors from persons who were already elected by the membership. But it seems from the bylaws that the board could legally choose someone outside of the community to be either vice-president, secretary or chief financial officer who was not already a director. Is that true? -Barry M.

RESPONSE: Yes, it's true. That means your board could appoint homeless people to be corporate officers. Without bylaws qualifications, nonmembers can run board meetings, take minutes, and handle the association's money. When I restate bylaws I routinely include a requirement that officers be directors. It may be time to amend your bylaws.
Adrian J. Adams, Esq.



Adrian J. Adams, Esq.

Founder and Managing Partner
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

Regulating Fireplaces

Jul 23, 2017 0 Views 0 Comments

QUESTION: Can a board add, change, or make up rules that are not in the CC&Rs? Our board decided that all condos with wood/gas burning fireplaces can ONLY use gas. I bought a condo with a wood fireplace. It was important to me. I do not like that they arbitrarily made this decision without the homeowners' input. In addition, the first offense will cost $1,000 and the second offense $2,000. Can they do this?

ANSWER: If you review your governing documents, you will find language authorizing your association to adopt rules. In addition, you will likely find broad language authorizing it to address health and safety issues. As with all things one might enjoy, fireplaces and stoves are now heavily regulated throughout California. The reasons involve health and safety.

Safety. Wood-burning fireplaces can produce large amounts of soot and creosote which coat the interior of a chimney. The buildup can create dangerous chimney fires. The danger can be avoided with regular cleaning of the chimney but most associations and condo owners seem unsure who is responsible for it and neither wants to pay the bill. Our firm has written legal opinions for many associations interpreting their CC&Rs on this issue. We've amended even more documents to make duties clear.

Pollution. Then there is the pollution problem. In most areas of the country, wood-burning stoves and fireplaces are the largest source of pollution generated by residences. In some areas, they create 80% of airborne particulates during the winter. According to the Environmental Protection Agency (EPA), "The fine particles in smoke...can get deep into the lungs, harming the lungs, blood vessels and heart. People with heart, vascular or lung disease, older adults and children are the most at risk." To address this problem, the EPA issued new regulations in 2015 restricting wood-burning devices.

Most counties in California now regulate or ban wood-burning fireplaces and stoves in all new construction. For example, beginning November 1, 2016, wood-burning devices are banned in all new construction in seven San Francisco Bay Area counties. Nine counties in the San Joaquin Valley not only limit them in new construction, they also require all existing wood stoves be replaced with an EPA certified wood stove when a home is sold.

Reasonable. Is it reasonable for a board to require owners to switch to gas? As provided in Civil Code §4350, to be enforceable rules must:

  1. Be in writing.
  2. Be within the authority of the board conferred by law or CC&Rs, articles, or bylaws.

  3. Not be in conflict with the law or governing documents.

  4. Have been adopted, amended, or repealed in good faith.

  5. Be reasonable.

I suspect a judge would find that the gas-only rule meets the above criteria since both state and federal regulations already restrict the wood-burning stoves and fireplaces.

RECOMMENDATION: I believe you would have difficulty persuading a judge to overturn the association's rule. You could spend a lot in legal fees fighting the rule and lose.

If you curl up with a glass of wine and a good book, you will hardly notice the difference between a gas fire and wood fire.

You should enjoy the gas flames while you can. This being California, the next round of regulations will probably limit you to an electric image of a fire--the kind you hang on a wall. It creates the illusion of flames without the danger of fire and is entirely pollution free. Even better, you can select the color of flame to suit your mood. I'm told the devices are quite realistic (as long as you have electricity to power them).

JOSHUA MENDELSOHN JOINS
ADAMS STIRLING


I am pleased to announce that attorney Joshua "Josh" Mendelsohn joined our firm.

State Bar. Josh comes to us with an interesting litigation background. He worked as a trial attorney in the Office of Chief Trial Counsel for the State Bar of California. Josh represented the State Bar in litigation. His responsibilities included
investigations of attorney misconduct, drafting and arguing contested motions; deposing witnesses, trial preparation; and conducting trials.

Commercial Litigation. Prior to his work for the State Bar, Josh represented multinational companies and high net worth individuals in business, employment, intellectual property and complex commercial litigation. He handled all stages of litigation from inception through trial and appeal.

Transactional Experience. Josh also has valuable transactional experience. He advised clients about, negotiated and drafted corporate agreements, operation agreements, employee stock option plans, non-compete agreements, non-disclosure agreements, employment contracts, service agreements, purchase and sale agreements, intellectual property issues, real estate contracts, finance, lease and other agreements.

Employment Law. Of particular interest for our larger HOA clients, Josh counseled employers on employment matters, including compliance with California and federal wage and hour, anti-harassment, and mandatory leave laws. He also defended clients in federal and state courts on employment matters.

Education. Joshua earned his Juris Doctorate from the UCLA School of Law where he was active on the Journal of Law and Technology. He is also a graduate of
California State University Northridge with a BS in Finance with Honors.

Josh works out of our office in the Inland Empire serving as legal counsel to associations throughout California. We are happy to welcome Josh to the Firm. If your association needs legal counsel, contact us for a proposal.


Self-Managed #1. Many good points made on the self-managed liability question. Another consideration is that Civil Code §5800 would appear to expose the husband and wife to personal liability above their Directors & Officers liability insurance limits. While the minimum for an 18-unit complex is $500,000 to limit personal liability, that limitation is not applicable if a director owns more than two units in the community. It would be wise to ensure that a strong umbrella is in place given the potential for personal exposure above limits of insurance. -Brian Kalmenson, CIRMS, Michael Abdou Insurance Agency

Self-Managed #2. Wow, voting yourself and your wife to the board is certainly a conflict of interest. Along with your suggestion of them stepping down maybe it’s time for them to buy all the units to avoid a costly court battle. -Gary S.

RESPONSE: Or sell most of their units.

Self-Managed #3. I enjoy your weekly update even though I sold my condo four years ago. It makes me remember the old story about a boat owner--he is happy when he buys it and happy again when he sells! Keep up your good messages. -Howard G.

*****


Secretary of State Forms. Regarding the Secretary of State CID information forms, can you work your magic to make this a form that can be submitted online? The Secretary of State continues to require CIDs to file the forms by mail. It's great their form is a pdf form-fill, but associations must still mail in the form(s) with a check. Our recent experience illustrates the division that handles this has some issues. We mailed in the exact forms as the previous time and they returned our form, with a note to complete the required CID 100, which is what their Post-It was attached to (yes, rolling eyes). We mailed it again and they returned with another Post-It stating we needed to check we were a CID, which we had. We finally called and the representative was very helpful and also rolled their eyes at the delay; had us send it to her directly. -Joseph L.

RESPONSE: I will see what I can do. However, dealing with bureaucrats is a lot harder than dealing with legislators.


Printing and Mailing Fees. Our condo complex has 100 units and all but 10% have agreed in writing to receive communications via email. The remaining 10% require information be printed and mailed to them. Can the association impose a fee on those owners who don’t sign up for email to cover the printing and mailings costs? Say $5 per month or $60 per year? -Tony G.

RESPONSE: Unfortunately, no. Associations have an existing obligation to deliver particular documents and disclosures to their members by "First-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service carrier." (Civ. Code §4040(a).) It only allows electronic delivery when the recipient has consented, in writing, to e-delivery.

Email Consent Forms. I am secretary of an HOA with 250 units. A few years ago, we asked our members to fill out and submit email consent forms. It took a while but we were persistent. Now, when a unit changes hands, along with the CC&Rs and other required documents, we provide the disclosures and consent forms and have them signed at the close of escrow. Buyers can refuse email delivery if they wish. We have a handful of members who prefer to receive financial disclosures by US mail but accept newsletters and other communications by email. This works well for us and may work for your readers too. -Judy W.
Adrian J. Adams, Esq.




Adrian J. Adams, Esq.
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

Self-Managed Liability

Jul 9, 2017 4 Views 0 Comments

QUESTION: My wife and I are the president and treasurer of our association. We have been holding these positions since 1988 because we own 13 of the 18 units.

We have not been providing the required annual documents to the other homeowners nor holding annual meetings. One of the owners is demanding we hire a management company. We have no budget for it because our expenses are greater than our income. Are we exposing ourselves to litigation?


RESPONSE: You and your wife may be doing a perfect job of managing the association but your violations of the Davis-Stirling Act expose you to potential litigation. Owners naturally become suspicious when someone has complete control for 29 years and fails to comply with the association's governing documents and applicable laws.

Management Company. Hiring a management company and following the law would reduce your exposure. Saying you can't afford a management company would likely not sway a judge. An increase in your HOA dues would easily pay for a management company. That company could then collect assessments, pay bills, and provide a monthly financial report. In addition, it would prepare your annual election materials and distribute your annual disclosure packages.

Tax Returns. If you have not already done so, you should also hire a CPA to file your association's tax returns and prepare an annual financial statement for distribution to the membership. You are also required to file statements of information with the Secretary of State--something your management company can handle for you. Failure to file tax returns or statements of information will result in suspension your association's corporate status.

New Blood. If any of your owners wants to serve as president and treasurer, you should let them do so. They may do a good job and relieve you of the burden. They may also discover they don't like it and hand it back to you and your wife.

Fiduciary Duties. If you are refusing to hire a management company because you own 13 of the 18 units and the expense will personally burden you and your wife, a court could conclude you were in breach of your fiduciary duties since you were acting in your own best interests rather than the association's.

Reserves. That also raises a question about reserves. If you are not properly funded, a court could also decide you purposely underfunded the account because of the personal expense it would cause you and your wife. You should consider stepping off the board for a period of time and allow others to make reserve decisions. If they keep the current funding policy in place, it reduces your exposure since they made that decision not you. If they decide to increase reserve funding, it may cost you more in dues but ultimately benefits everyone since it reduces the risk of one or more special assessments.

RECOMMENDATION: In addition to hiring a management company and stepping off the board for a few years, you should consider hiring a law firm to rewrite your CC&Rs. Given that your governing documents are from the 1980s, it's time to bring them current with all the new laws.

TARA HICKS JOINS
ADAMS STIRLING


I am pleased to announce that attorney Tara Hicks joined our Firm.

Real Property Law. Tara comes to us with a strong background in real estate law. She previously served as in-house counsel to a real estate firm where she was responsible for negotiating and drafting commercial contracts, resolving title disputes, addressing zoning issues, preparing real property agreements, and handling real estate legalities.

Litigation. Tara gained litigation experience with an firm where she prepared appellate briefs, drafted pleadings and motions, conducted discovery, and drafted settlement agreements.

Education. Tara has a BA in English with a minor in Spanish and was consistently on the Dean's List for academic achievement. She then earned her Juris Doctor degree from Southwestern Law School, externed with the Honorable Terry J. Hatter in U.S. District Court, Central District of California, and entered the practice of law.

Tara works out of our corporate office in Los Angeles serving as legal counsel to associations throughout California. We are happy to welcome Tara to the Firm. If your association needs legal counsel, contact us for a proposal.


 
To supplement my legal advice, it looks like I inadvertently started a medical advice column. This is our third week addressing phantom odors and sounds.

This will make my mother happy--she always wanted me to become a doctor. -Adrian


Phantom Odors #1. I am not sure if this is the culprit but someone, preferably a friend, could suggest that she tell her dentist and/or doctor that she smells tobacco smoke when there is none present. When teeth decay, they often produce a foul odor. Some people report smelling cigarette smoke. Sinus infections, nasal polyps, or frankly any ailment involving the olfactory nerve can produce foul odors of which many people don't realize that the odors they are detecting are being produced from their own body. -Sherry P.

Phantom Sounds #2. How about phantom sounds? A couple of times a week I hear a huffing puffing sound in the SW corner of my bedroom. It doesn't seem to be coming from the attic or from outside. No one is sleeping outside the slider. No small animal could make that much noise....Why don't I ask someone on the board to listen? Because it happens about 10:30 pm and they are all asleep. So I take out my hearing aids and go to sleep. When I wake up in the morning, it's gone. Any ideas? -Amy C.

RESPONSE: Check the Yellow Pages for "Ghostbusters." Or, call your local priest to expel whatever is in the SW corner of your bedroom.

Phantom Odors #3. I love your newsletter and read it every time it comes out. I am a board member in a mid-rise HOA that banned smoking several years ago. We still have one problem smoker. What can we do about a smoker who denies he is smoking? He seems to be smoking on his balcony hidden from view by a stand of bamboo so no one can see him. His upstairs neighbor reports her unit filling with smoke often. Do you know of any one (like the electrician who ran down the phantom noise) who can identify positively where cigarette smoke is coming from? What can the board do? I’m afraid this homeowner is going to get fed up and sue the HOA. -Marcy A.

RESPONSE: Yes, there are people who specialize in detecting and analyzing odors. I don't think you need them here. Based on the evidence you already have, your nicotine addict can be called to a hearing before the board. Smoke travels up and circumstantial evidence is enough for the board to sit down with your smoker and strongly suggest he switch to vaping. It allows him to get his nicotine fix without disrupting his neighbor's quiet enjoyment of her unit.


Phantom Odors #4. Phantom odors are not uncommon among women who have gone through menopause. No one seems to know why but in most cases it eventually goes away. I mention this because two of the complainants were characterized as "elderly" women--one over 60!! I have to tell you that I'm 78 and am not elderly yet. As always, an entertaining and informative column! -Nancy H.

RESPONSE: Thank goodness I didn't say "60" was elderly. My 84-year-old mother would have words with me.

Phantom Noise #5. I cleared a problem of phantom noise that a friend claimed was some sort of police agency action. The complaint was that each day when she took her bath at 9:30 she heard a sound. It turns out her husband had been to a convention and set his alarm for 9:30 on a small notebook. The alarm was buried in a drawer under the recently deceased husband's underwear and socks. -Eric D.

*****

Cellphone. Another great newsletter which addressed an issue we have had in the past with our board president attending meetings by cellphone. I understand this is allowed, but to have the president do this, fully aware of the dates of board meetings, and then using a cellphone that the entire audience could not hear, doesn't seem right. Is this me being a curmudgeon? How does this fit in with the law? I truly would appreciate your thoughts on this. -Candiece M.

RESPONSE: Unless he had a legitimate reason for phoning in his attendance, it's in poor taste. If it was legit, the law requires that everyone be able to hear him. The next reader has a solution.


Conference Cellphone. In addition to the landline version of the conference phone, there is one for cell phones. We use this where I live because the location of the meetings has no landline. It works pretty well. It is Bluetooth based. -Kingsley M.

*****


Contact Info #1. Absolutely terrific…LOVED the Rolodex visual! Thanks for adding a fun spot that had me laughing out loud. -Marilyn B.

Contact Info #2. Loved the Rolodex definition! -Marcy

Contact Info #3. Funny about the Rolodex, as I was trying to purchase one at the local Staples and Office Max and failed to find one. Fortunately the sales clerk, at least, had heard of a Rolodex (he was not a millennial). I wanted one for my computer passwords. I guess I must seek out Amazon for help! -Suellen E.

Contact Info #4. I appreciate your idea of monthly reminders to owners via billing statements to update contact information. However the majority of our owners pay their dues via automatic deductions--a practice we encourage. The downside is that no billing statements are sent. Do you have any additional thought on this subject? BTW, I still maintain a Rolodex. -Nancy K.

RESPONSE: Another possibility is putting it in your newsletter (if you send them via snail mail or everyone has consented to receive them electronically). You can include a notice in one or more editions. Absent that, your HOA will need to incur the expense of mailing a separate notice.


Contact Info #5. Our association has used email as a preferential contact point with members, except for legal and financial documents. Our new management company refuses to use our already approved email addresses until they receive owner approval to do so. Unfortunately our membership is often slow to respond and after seven months we are still using snail mail. Can we assume that email is acceptable unless the owner opts out? -Sheila C.

RESPONSE: I wish that were the case. Unfortunately, before an association can electronically distribute documents and disclosures it must receive the recipient's written consent. (Civ. Code §4040(a)(2).) In the old days (2010) when the legislature added this to the law, not everyone had email. Legislators were worried that the elderly (anyone over 60) didn't have access to or didn't know how to use email. Now everyone, especially retirees, send and receive emails and text messages. Some even tweet. There is a 71-year-old in the White House who tweets on a regular basis. Children begin almost at birth--certainly before walking or talking. Someday, the legislature will make it into the 21st Century.
Adrian J. Adams, Esq.




Adrian J. Adams, Esq.
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

Contact Information

Jun 25, 2017 3 Views 0 Comments
NOTICE REGARDING
CONTACT INFORMATION

 

QUESTION: I understand there is a new notice requirement we have to give the membership involving contact information. Our year-end disclosures get longer every year. What is the purpose of this new requirement? Do we include it in our year-end budget package? What if we forget to include it?

ANSWER: Good questions all.

Rolodex. Before answering your question, I should let my Millennial readers know that the mysterious image above is a Rolodex--an energy saving device that works without electricity. It keeps contact information such as names, addresses, and telephone numbers on cards. This rotating file sits on your desk so you can quickly find information for making phone calls or writing letters. Unlike other devices, it doesn't argue when you talk to it.

Contact Information. The notice requirement you're referring to went into effect January 1 of this year. It requires members to provide contact information to their associations. (Civ. Code §4041.) This is particularly important when you have absentee owners. If an owner fails to provide the information, their HOA property address can be used for notices (even if the unit is empty or occupied by a renter).

Annual Notice. The statute requires associations to annually solicit the information at least 30 days prior to sending out their annual budget report. The problem for associations is remembering to timely distribute the notice before the annual budget goes out. Even though there is no penalty for not sending the notice, it could deprive the association of contact information when an absentee owner moves or takes a lengthy vacation, or when the association needs to lien the unit for unpaid assessments.

RECOMMENDATION: The best way for associations to avoid missing the notice deadline is to print the notice each month in the billing statement. It satisfies the statute and reminds everyone to update their contact information.

ANNUAL MEETINGS
VIA TELECONFERENCE


QUESTION: If teleconferences are not provided for in our governing documents, can we use it for our annual meetings?

ANSWER: Yes, even if your documents are silent you can hold both board and membership meetings by teleconference where everyone calls into the same phone number to join the meeting.

Board Meetings. Directors are allowed to attend meetings by telephone provided all directors can hear and talk to one another. (Corp. Code §7211(a)(6).) For executive session meetings by telephone, boards must still give two days' notice to the membership. Because it is executive session, members cannot attend.

For open meetings of the board, the Davis-Stirling Act requires that notice of meeting identify at least one physical location where owners can attend. (Civ. Code §4090(b).) That means a conference phone must be at that location so members in the room can hear directors conduct the meeting. It must also give them the opportunity to be heard by the board during open forum.

Membership Meetings. Everything described above also applies to membership meetings. Small associations with members out of town or with absentee owners may find it convenient to hold their annual meeting via a conference call. The call-in number can be published so members can call into the meeting. Large associations may find it unwieldy to hold their annual meeting via a conference call-in number.

RECOMMENDATION: Invest in quality equipment at the meeting's physical location. Putting a cell phone on speaker is not the best way to meet the statute's requirements. I've attended meetings where that was done and it's almost impossible for everyone to hear the conversation. A good conference phone is not very expensive and can be ordered online from Amazon.com. If you squeeze your budget hard enough, you can find the money to buy one.


As one of my readers noted, "Thanks for your newsletters. They are almost always interesting and usually accurate." Here are some  feedback questions and responses that should be interesting and sometimes accurate.

Out of Town Director #1. You responded to a Canadian director about using a telephone device that all could hear and respond to satisfy the CA statute. I am a NY lawyer and part-time Palm Desert resident who serves as the president of our HOA board. A good phone connection will work but I strongly suggest Skype or Go To Meeting or some similar method. The visual element means greater involvement in the meeting which is to the benefit of all. Thanks again for your weekly report. -Jim L.

RESPONSE: I thoroughly agree. Board meetings where everyone can see each other are better than using telephones only. We use Business Skype for our monthly staff and partner meetings. With offices around the state and 30+ attorneys and staff, our meetings are much more effective when everyone can see and hear each other.

Out of Town Director #2. In our association, a prior president convinced directors that all board members had to be present in person for meetings and would not allow any telephonic participation. After he was removed, we have for the past four years successfully held all our meetings telephonically. We twice tried to amend our bylaws to require meetings to be held telephonically if the circumstances permit, but could not get enough votes. -Vince M.

RESPONSE: You don't need to amend your bylaws to require telephonic meetings. It would be unreasonable for fellow directors to refuse a phone call from an absent director, thereby preventing him/her from attending the meeting. I believe a judge would find the authorizing language in the Corporations Code to be sufficient to require telephonic participation if a director asked for it.

*****


Financial Health. Boards have a responsibility to be aware of the association's financial health (or lack of it). I'm a retired banker who served on a board that had not raised dues for many years because they did not want to upset people. I took some flack when we raised dues by $25.00 just to keep pace with rising costs. When I explained the dues had to keep pace with increasing costs, it calmed most people down but not everyone. When other board members grumbled, I reminded them they are not on the board to make people happy. -John A.

*****


My article on phantom smells generated more feedback than I can print. Following is a sampling:

Phantom #1. As a manager I have also dealt with smell issues and used a company to locate the smell. Turns out one of our residents had a cracked sewer line in his guest bathroom which is why the smell was there sometimes and not others. When someone experiences an odor and you can smell it too, there is a good chance it can be fixed. -Bill B.

Phantom #2. Another reason for phantom smells could be the under-laying wall coverings within the unit. Someone who owned the unit previously could have smoked and proper preparation to the wall before adding the new wall decor could result in the phantom smells coming through in areas where preparation was not the best. If there is a common air duct, maybe the ducts need to be cleaned. -Kelly M.

Phantom #3. I had a job for a major electrical company where I would investigate noise complaints from our customers. Typically, once a year we would respond to a complaint from an elderly woman, over 60 years of age. We would bring very sensitive noise measuring equipment and recorders. We were generally told that the noise sounded like the humming from a transformer. The location of the noise was invariably always in the quietest room of the home during the quietest hours of the day, evening and night time. My technician and I never heard the noises ourselves. At the end of the investigations after recording no noise on our equipment, we would tactfully suggest that the customer visit a ear, nose, and throat specialist for assessment if the customer had tinnitus, commonly known as ringing of the ear. Seldom were we called back for further assessment. Tinnitus is a very nasty ailment and their is no escaping it. The quieter the environment, the louder the noise is perceived. There are advertised solutions but I am not aware of one that works. The only real solution is to learn to live with the noise. -Sam A.

Phantom #4. Many years ago, when I was in law enforcement, we had an elderly member of our community who frequently reported a handsome young man who she sometimes found in her living room playing her piano and making obscene gestures toward her. No amount of investigation produced a shred of evidence to support her claim. -George H.

Phantom #5. What if the smoke comes into your unit through your open windows or patio door? -Derek W.

RESPONSE: If it's coming from a smoker in another unit, that would not be a phantom smell. It's quite real. If it's occasional and slight, the board might not classify it as a nuisance smell. If it's persistent and strong, the person below could be required to contain the smoke to their unit. To eliminate the problem, many associations have already amended their CC&Rs to prohibit smoking anywhere in the development (including inside units).
Adrian J. Adams, Esq.
 



Adrian J. Adams, Esq.
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

Phantom Smell Syndrome

May 28, 2017 2 Views 0 Comments
PHANTOM SMELL
SYNDROME


QUESTION: I am on the board of a retirement community. We have a resident complaining of cigarette smoke. We investigated and could not smell any smoke nor is there anyone around her who smokes. She is threatening to go to Fair Housing if we don't do something about it. What should we do?

ANSWER: Your resident may be suffering from a condition known as phantom smell syndrome. The medical term is phantosmia. She smells things that aren't there. Medical literature describes a long list of causes for this unfortunate olfactory hallucination--some serious and others benign.

Noise Complaints. I had a similar situation with an older woman in a luxury highrise who heard noises in her bedroom that kept her awake at night. Her lawyer daughter threatened to sue the association if the board didn't stop the "common area" noise.

Duty to Investigate. The board's obligation is the same whether a resident complains of odors or noises--it must investigate. I asked the board to have at least two individuals schedule a time to listen to the noise. Two directors volunteered and invited me to attend.

The three of us plus the manager went to the unit and exchanged pleasantries with the resident. She invited us into her living room and pointed out the noise to us. We all strained to listen and heard nothing. She was disappointed and told us it was much louder in the master bathroom and led us to the room. We all stood quiet as mice and listened. Again we heard nothing. She was insistent and informed us the noise made it impossible to sleep. She reminded us her daughter was a lawyer. We thanked her and headed for the door.

Decision. The board was more than willing to fix the noise but there was nothing to fix (at least not with the building). The resident was hearing phantom noises--a medical condition known as "musical ear syndrome" where a person suffers from auditory hallucinations. The malady got its name because people often hear music.

Paper Trail. I wrote a letter to her lawyer daughter about the investigation and the board's decision. I offered a renewed investigation if she hired a licensed acoustical engineer who could record the "loud noise" and offer an expert opinion that it was loud enough for a jury to deem it a nuisance. The daughter never filed suit and her mother stopped complaining.

Annoyance v. Nuisance.
We live with sounds and smells around us every day. They might be an annoyance but that doesn't mean the association is required to take action.

[E]very annoyance or disturbance of a landowner from the use made of property by a neighbor does not constitute a nuisance. The question is not whether the plaintiffs have been annoyed or disturbed ... but whether there has been an injury to their legal rights. People who live in organized communities must of necessity suffer some inconvenience and annoyance from their neighbors and must submit to annoyances consequent upon the reasonable use of property by others. (Schild v. Rubin (1991) 232 Cal.App.3d 755, 764.)

RECOMMENDATION We have a lot of aging baby boomers living in condominiums. I suspect boards will run into more complaints of noises/odors both real and imagined. When complaints are made, boards should decide if the noise/odor is a mere annoyance or an actionable nuisance.

Directors don't need to personally investigate. Managers, maintenance personnel, or experts can investigate and report their findings. If the board concludes the noise/odor is not a nuisance (or doesn't exist), the finding should be documented in a letter to the person. If the matter ends up in court, the board's investigation, deliberation, and decision should satisfy the the Business Judgment Rule and be deferred to by the judge.

JENNIE PARK
JOINS ADAMS STIRLING


I am pleased to announce that attorney Jennie Park joined the firm.

Education. Jennie's undergraduate degree is in Economics with a minor in Philosophy from UCLA. This was followed by a Juris Doctor from Loyola Law School.

Conflict Resolution. Early in her legal career, Jennie gained valuable experience in conflict resolution as a neutral conciliator at a high-volume public interest clinic. This was followed by a stint with the United States Army Judge Advocate General’s (JAG) Corps where she counseled civilians and military personnel at all levels in the chain of command.


Litigation. Jennie's litigation skills were developed defending healthcare providers in medical malpractice suits and administrative board proceedings. She is well-versed in all phases of litigation from discovery, to law and motion, to settlement or trial.

Business Counsel. Prior to joining our firm, Jennie served as general counsel to commercial real estate businesses, start-up companies and business owners. She developed expertise in cyber liability, federal privacy laws, and intellectual property issues.

If your association needs legal counsel, contact us for a proposal. We continue to
recruit attorneys for our Northern California, Inland Empire, Orange County and Los Angeles offices.


No Board Quorum. One of our board members recently resigned and there is no longer a quorum on the board. I was wondering how this affects parking enforcement in the complex. If the company was hired while there was a quorum of board members, can it continue to patrol? Or are they supposed to stop until another director is appointed?

RESPONSE: Your parking enforcement company, landscapers, management company, and other vendors should continue to perform the duties they were hired to perform. Losing your quorum on the board does not affect their contractual obligations. Even so, you should appoint directors at your earliest to fill all empty seats.

Surprise Audit? We have a group of homeowners who are concerned about our association's financial health. Our board puts a lot of confidence in our manager's ability to act on our behalf and don't supervise the manager. What steps can we take to initiate a surprise audit of our records?

RESPONSE: Members have the right to inspect the association's books and records. You also have the right to designate an agent to inspect the records. (Civ. Code §5205(b), Corp. Code §8311.) If you have concerns about your association's finances, you can hire a CPA to review financial records. You can schedule a time with the management company to review them or pay for copies of records which you can provide to a CPA for analysis.

Out of Town Director. We are Canadians who have property in Southern California. I was elected to the board and reside there for approximately five months and then back to Canada. I know I'm obligated to attend board meetings. Is the board obligated to ensure I can attend?

RESPONSE: We are quite fond of our neighbors to the north. Your fellow directors must give you notice of meetings and allow you to attend by telephone. Attending by phone is the same as physically attending the meeting. (Corp. Code §7211(a)(6); Civ. Code §4090(b).) Since the law requires that you have the ability to hear everyone and they all hear you, your association should invest in a good conference phone.
Adrian J. Adams, Esq.




Adrian J. Adams, Esq.
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

Failure to Pay Vendors

May 14, 2017 2 Views 0 Comments
FAILURE TO PAY
VENDORS

QUESTION: I have a board that is refusing to pay vendors, including the management company. Is there a Civil Code stating they have an obligation to pay vendors?

ANSWER: There is nothing in the Davis-Stirling Act stating "Boards must pay their vendors." However, there are plenty of other statutes and legal principals to address nonpayment. The primary one is contract law.

Contract Law. A “contract is an agreement to do or not to do a certain thing.” (Civ. Code §1549.) Assuming contracts (either direct or implied) exist between the association and unpaid vendors, Civil Code sections 1549-1701 apply. If a board refuses to pay vendors, they are in breach of contract.

To win in court, unpaid vendors must prove (i) they entered into a contract with the association, (ii) they performed their duties under the contract, (iii) the association breached the contract, and (iv) the vendor suffered damage. (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

Case Law. In a 2005 case, the association was required to levy a special assessment to satisfy a judgment in favor of a vendor after the board refused to pay for work he did for the association. (O’Toole v. Kingsbury Court.)

RECOMMENDATION: If your board does not have any money, they better plan on a special assessment, reducing expenses, and raising dues.

If it's not a matter of money but, rather, a dysfunctional board, your vendors should send a letter reminding directors of their contractual obligations and making it clear the matter will be put before a judge if they don't pay their bills.

Boards don't like to be sued, especially when know they will lose. Also, insurance carriers will not defend a breach of contract action. That means the board will be defending a losing case out of pocket.

Thank you to attorney Jennie Park for preparing a response to this question.

SECRETARY OF STATE
ONLINE


California's Secretary of State has been expanding available records on its website. You can now view Statements of Information, CID Statements, Articles of Incorporation (described as Registration), and Amendments to Articles online.

If you do a "business search" of your association's name, you will get results that shows the agent of process for your HOA and a link embedded in your association's name.

If you click on your association's name, it will take you to another screen with various documents in a pdf format.

Sometimes it says “Image unavailable. Please request paper copy.” but that may be temporary as they populate the site with documents. If California stays on track, you can view more of your records and print them as-needed.

HIRING LAWYERS


I need attorneys in our rapidly growing Northern California, Orange County, Riverside, and Los Angeles offices.

Candidates should have at least five years' transactional and/or litigation experience.

I value clear legal analysis, business writing, and people skills. To properly represent our wide range of clients, candidates must be service oriented.

We offer growth opportunities and excellent benefits. If you are interested, contact me at 800-464-2817 or  by email. -
Adrian Adams

 

http://newsletters.davis-stirling.com/Images/01/waterfall.gifDrought Over. If an HOA uses recycled water for front yards and common areas, can it forbid someone from planting drought tolerant plans and/or installing artificial turf in their front yards? The law is confusing. Please help clarify. -Roberta Z.

RESPONSE: You're right about the law being confusing. The legislative history of Civil Code §4735 states the intent is to reduce the use of potable water to irrigate landscape. This implies that associations using recycled water can prohibit owners from installing artificial turf or plants that don't fit with the association's landscape guidelines.

However, the better argument is that recycled water is only an issue when requiring people to water their lawns. With the lifting of the drought emergency, associations can now fine members who refuse to water their landscaping. Despite that concession, California wants everyone to continue water conservation efforts despite the lifting of the drought emergency. That means associations cannot prevent the installation of artificial turf and drought tolerant landscaping in landscaped areas under a member's control.

*****
 

http://newsletters.davis-stirling.com/Images/People/unhappy.gifHarassment & Discrimination. My understanding of this overreaching legislation is as follows: An HOA (legal counsel) should draft a policy that says, “if we receive an accusation of harassment by a protected class, we will proceed to investigate as follows: <listing the steps to be followed> After the board/management investigates and attempts resolution, as per the published policy, they should be “safe.”

I don’t appreciate this HUD legislation, but we need to remain calm, think about what it is asking us to do, then do it. Next step: write our legislators and tell them how absolutely onerous and overreaching this legislation is to our homeowner associations. -Victoria C

RESPONSE: You summed it up pretty well. If a homeowner reports discriminatory or harassing conduct by an employee or vendor of the association or another homeowner, associations may need to intervene. A derogatory comment by one owner against another does not mean boards must roll out the artillery. It depends on the nature and intensity of the behavior.

A written policy drafted by legal counsel will help boards know when and how to investigate complaints and intervene. That might mean warning letters, hearings and fines, suspension of privileges, suspension of voting rights, and legal action seeking restraining orders. Or, the investigation may conclude that no action is necessary. If boards have guidelines and follow them, they create a safe harbor for themselves and the association.

*****
 

Website Suggestion. Since you asked . . . I would LOVE an index for the newsletters! I know I read something there but can’t find it again and sometimes it isn’t just the first topic I’m looking for. This would be super helpful. Going w-a-y back would be great, but even starting now . . . Thanks! (can’t imagine how I did this job before your website!) -Trudy M.

RESPONSE: Thank you for the feedback. I only post the current and prior year's newsletters on the website because the laws keep changing. If I kept all of them posted (I started writing in 2004), a lot of them would no longer be accurate.

I do, however, move information from newsletters to website pages to keep everything current. Website pages are fully indexed and searchable. You can look up topics in the "Main Index." Doing so takes you to Menu pages with a wide range of topics related to the one you're interested in.

In addition to the Main Index, you can use "Google Search" (in the upper right-hand corner of the website) to find what you need.

Adrian J. Adams, Esq.



Adrian J. Adams, Esq.
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

Drought Emergency Over

Apr 30, 2017 1 Views 0 Comments
DROUGHT EMERGENCY
OVER (sort of)

 

As everyone is aware, this winter produced rivers of water in the sky. On April 7, Governor Brown issued Executive Order B-40-17 ending the drought emergency in all California counties except Fresno, Kings, Tulare, and Tuolumne where groundwater supplies are still at issue.

Permanent Changes.The Order leaves in place numerous conservation measures and additional measures are on the way as explained in “Making Water Conservation a California Way of Life.

Landscape Changes. Even though the drought is mostly over, elements of the emergency legislation will continue. For example, associations cannot prohibit low water-using plants or artificial turf in landscaping design. And, owners who installed water-efficient landscaping cannot be forced to return their landscaping to its original condition. That means owners who installed drip irrigation systems, built rain gardens, planted drought-tolerant plants, installed artificial turf, etc. get to keep what they installed. Associations cannot force owners to tear out everything and go back to grass lawns.

Hearings & Fines. Homeowners who let their grass die and did nothing to install drought-tolerant landscaping can now be required to water their lawns and replace dead turf. Owners who refuse can be called to disciplinary hearings where penalties may be imposed.

RECOMMENDATIONS:
Although things are back to normal, I don't recommend rushing out and fining everyone. That could trigger bad press and bad press generates bad legislation. Work with homeowners and give them time to get their landscaping back into shape. If you get a recalcitrant owner, create a paper trail. You may need to show a judge that you did everything possible to work with the owner before taking disciplinary and/or legal action.

Thank you to Nathan McGuire for providing background information for this article. Anyone wanting to adopt or update their landscape guidelines should contact us.
 

 

Harassment #1. In your latest newsletter, you discuss the new harassment rules. You state that boards should take steps to investigate and end harassment. I sit on the board of an HOA with 647 single-family residences in an 55+ community. The only control we have is our age restriction. We could make all the rules we want but we would have no authority to enforce them. -Mike S.

RESPONSE: If you are a 55+ community, you have rulemaking authority. Adopting harassment guidelines will help protect your association from potential liability. It gives you a road map for handling allegations of harassment.

Harassment #2. Your article on harassment was very informative, thank you for that. However, what if a board member is harassing a resident and other board members see it, know it and just won't get involved? What can be done? -Pam N.

RESPONSE: If it's harassment that does not fall into a protected category, you can go to court for injunctive relief. If it's harassment based on a protected category, you can file a complaint with the Department of Fair Employment and Housing.

Harassment #3. In no way, manner, shape, or form is an HOA a housing provider. This is just another ridiculous example of the federal government over-reaching its authority and redefining what a housing provider is to suit its own liberal agenda. An HOA is a governing body, period. The really sad part is there are plenty of liberals in Sacramento, and elsewhere, who will carry on with this kind of insane thinking pattern. -John A.

Harassment #4. This is why I want less government. Seldom does one size fit all. We have people in DC or Sacramento that have no idea what needs to be done and don't have to live with the laws they pass. Government is harassing the citizens. -Theresa S.

Harassment #5. This is a good example of unintended consequences. However, it will be costly to ALL residents. Which would not make the squabbling parties very popular in their neighborhood. I heard a long time ago of someone moving because of neighbor conflict. Boards should be proactive in informing the community about the cost involved to neighbors and friends when disagreements require outside intervention between the parties. -Betty M.

Harassment #6. The board also needs to raise assessments to cover the legal costs of defending themselves against such lawsuits, especially if you have the community whiner filing the actions. -William C.
Adrian J. Adams, Esq.




Adrian J. Adams, Esq.
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

HOA Harassment Law

Apr 16, 2017 2 Views 0 Comments

HARASSMENT
IN ASSOCIATIONS

Last year, federal regulations were changed to address harassment and discrimination claims. The changes affect community associations. Even though associations are not housing providers, they are deemed so for the purposes of this statute.

New Law. Effective October 14, 2016, boards of directors are required to address members' claims of harassment on the basis of race, color, religion, national origin, sex, familial status, and disability. This includes harassment by other residents, board members, managers, and vendors. The law requires that boards take prompt steps to investigate and end harassment. (Code of Fed. Reg. §100.7(a)(1)(iii).)

Harassment. To determine if harassment is taking place, boards can evaluate the nature of the unwelcome conduct, the context in which the incidents occur, the severity, scope, frequency, duration, and location of the conduct, and the relationships of the people involved. It does not require that the complaining party suffer psychological or physical harm, only that the alleged harassment occurred.

HUD Complaints. There may be legitimate circumstances where boards can intervene but there will also be unwarranted claims from hyper-sensitive individuals as well as false claims from vexatious individuals.

For example, a board member gives an owner a dirty look or tells them to be quiet while the board conducts its meeting. (In one of our associations the person claimed racial discrimination.) Or an owner is fined for violating the rules. (The person filed a claim of racial discrimination with the Department of Fair Employment and Housing.) Or two residents don't like each other and one seeks to harm the other by filing a claim. (Former boyfriend and girlfriend who lived in adjoining units had a falling out and claimed hostile environment.)

When harassment is alleged, boards must investigate. If the board determines a complaint is unfounded, unhappy parties can run to the Department of Housing and Urban Development (HUD) and complain against the board. Under new federal regulations, HUD will have authority to investigate the board.


Burden. Because there is no cost to claimants for filing such claims, some residents will use this as a tool to harass their associations. These claims will create an expensive administrative burden on HOAs since legal counsel will be tasked with responding to the complaints. This intrusion by the federal government into the affairs of homeowners associations is unprecedented.

The burden the new regulations create will likely outweigh any intended benefits regulators had in mind. Associations are not cities with paid city council members, police forces, and governmental immunities. They are nonprofits run by volunteers with no expertise and few resources for dealing with harassment (whether real or imagined). Civil remedies already exist. Making boards an arm of the federal government is going to make it harder to recruit and keep volunteers on boards.

RECOMMENDATIONS: Boards should work with legal counsel to adopt anti-harassment rules for their associations. The policies need to cover the reporting and investigation of alleged harassment. The policies need to include procedures for adopting findings and taking appropriate actions.
Thank you to my partner Jasmine Hale for the background information on the new regulations.

TRANSIENTS, TRASH
AND TROUBLE


I will join attorney Brian Moreno (Swedelson Gottlieb) to speak on the growing problem of short-term vacation rentals (STRs) in HOAs and what managers and boards can do to address the problem. We will cover:

• Pressure on boards to allow STRs
• Problems & legal risks
• How to restrict STRs
• Enforcement mechanisms

When & Where. The lunch seminar for boards and managers will be held this Wednesday, April 19 from 11:30 a.m. to 1:30 p.m. at the Skirball Cultural Center in Los Angeles.

RSVP. Register online at www.cai-glac.org.

 


Legislation. It seems unlikely I am the only Davis-Stirling fan who has left California but still have many friends there. Could you create a list by state of legislation directly impacting HOA homeowners? -Mel S.

RESPONSE: Every state has its own HOA legislation (as does Canada). The Community Associations Network has a list of the laws.

*****


Hackers #1. The hacking episode must have been highly stressful. Your upgrade lingo is so far over my head that I feel like you have been initiated into a secret cult. -Larry S.

Hackers #2. Oh my goodness. You’re a victim of your own popularity and relevance, Adrian! What a pity that today we’re all potential victims. -Marilyn B.

Hackers #3. I am horrified that you had to defend your website against a foreign country’s hacking. I truly appreciate the dedication and tremendous resources you dedicated to keep your website up and running and even better. Your efforts are greatly appreciated. Thanks so much. -Lisa E.

RESPONSE: Thank goodness the hackers weren't Russian. They could have derailed my presidential plans.

*****


Vexatious #1. Perhaps HOAs can do more in advance to steer vexatious persons away from becoming members. It might help to promulgate the message forthrightly (on websites, flyers, etc.) that “if you don’t like being subject to lots of rules, then you won’t be happy owning a condominium (and neither will your neighbors).” Would it be legal to pass a rule requiring that each HOA member include such a statement as part of the MLS listing when they put their unit up for sale? -David S.

RESPONSE: I like your idea. People who hate rules (or lack a sense of humor) should not live in associations. You could pass your rule but I don't know that anyone would comply.

Vexatious #2. Ten days ago we dealt with a malicious homeowner. She was taken kicking and screaming into a 72-hour psychiatric hold. The process involved the police and others. She's still at the rehab facility. -Michael O.

Vexatious #3. About the angry malicious homeowner creating legal expenses for the HOA, doesn’t the Davis-Stirling law provide that if the homeowner looses in court, the HOA can recover legal fees? -Arthur R.

RESPONSE: Yes, it gives the court discretion to award legal fees. In our most recent case, we received a large award for the association. It should stop our vexatious stream of lawsuits. She will likely move to another association and restart her criminal enterprise.

Vexatious #4.
Your newsletter has been positively inspirational to me on more than one occasion. I had some recommended passengers for the move to Barrow, but as it didn't work out and they are still here. At least for the time being they are much less "influential" due to a recent board election. Certainly, the pen is mightier than the sword, the disruptive persons exposed their own bullying tactics and unstable mentality as they posted to "Nextdoor." The recent election put them out to pasture. The ability to have good communication is absolutely vital to all homeowners' associations! -Elaine J.

Adrian J. Adams, Esq.





Adrian J. Adams, Esq.
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

Davis-Stirling Upgrades

Mar 26, 2017 1 Views 0 Comments
DAVIS-STIRLING.COM
UPGRADES


I am pleased to announce significant upgrades to the Davis-Stirling website that improves speed and enhances security against hackers.

Website Rating. Davis-Stirling.com is already the largest website of its kind in the industry. There are over 378 million websites in the United States. Each is rated by the volume of traffic it receives. Davis-Stirling.com ranks at 129,139--a remarkable statistic, especially for a statewide legal website. Currently, we have over 700,000 sessions per year with over 3 million page views.

Ukrainian Hackers. The downside to our exceptionally high ranking is that we become an attractive target. Late last year Ukrainian hackers hit Davis-Stirling.com. Because I do not keep client data on the website, there was nothing to steal so the hackers planted malware in an effort to corrupt the website and anyone using it. Alarms immediately went off and we stripped the malware before it could do any harm.

Hardened Against Attacks. Following the attack, I spent a lot of money hardening the website against hackers. My website team went through thousands of pages tweaking the code and moving everything to a service known as Cloudflare.


Cloudflare is one of the most comprehensive DNS services on the internet for making content lightning-fast and shielding it from web threats such as denial of service (DOS) attacks, malware, and spambots. It used cached content for massive scaling to allow our website to handle heavy traffic without slowing down service.

Better Monitoring. In addition, I upgraded our internal content management system to DNN Evoq. This powerful program allows me to better monitor content on our three websites (Davis-Stirling.com, AdamsStirling.com, and CIDlaw.com). In addition, it allows improved management and publication of digital data while optimizing it for mobile platforms to give fluid, responsive pages for those of you who access the website on smartphones and tablets.

More Features. This sophisticated program also gives me the ability to add more features to the websites--features I will announce later in the year. You can see the improvement in speed and scalability at www.AdamsStirling.com and www.Davis-Stirling.com.

NOTE: If you have ideas on features you would like to see on our websites, feel free to contact me. I will try to work them in.

ANGRY, MALICIOUS
HOMEOWNER


QUESTION: We have an owner who complains about everything our board and architectural committee either does or doesn’t do. On a weekly basis, we receive from 2 to 13 angry, vindictive and threatening letters or emails from him. In addition, he files small claims actions against various neighbors, members of the board, the ARC, and the association. He then dismisses them but only after defendants spend time and money preparing a defense. As a result, most homeowners will no longer volunteer for board or ARC positions. How do we protect ourselves from this angry, malicious person?

ANSWER: These kinds of owners are incredibly difficult to deal with. Your options are quite limited. Short of recruiting an angry-owner whisperer, you either go to court for relief or suffer until the person moves (or dies).

Restraining Order. On a few occasions we have successfully petitioned courts for orders that the person cease their daily barrage of emails and letters. We were able to show the court that the harassing communications were frequent, unrelenting and voluminous. It didn't hurt that the writings were also unhinged. 

Vexatious Litigant. Having the person labeled a vexatious litigant is another possibility. A homeowner in one of our associations had a history of filing lawsuits against her prior HOA. That association successfully had her declared a vexatious litigant. That meant she was barred from filing any new litigation in propria persona without first getting the court's permission.

She then moved into our client's association and started filing lawsuits. We discovered the earlier vexatious litigant ruling and filed a motion to have the complaint dismissed. She then hired a lawyer and refiled her complaint in an attempt to avoid dismissal.

The court ruled that obtaining representation after commencing litigation (in violation of the earlier court ruling) did not relieve her of the prefiling requirement and her complaint was dismissed. She appealed and earlier this week the court of appeal ruled in our favor.

Legal Expenses. The problem with going to court is the legal expense incurred by an association as well as the uncertainty. It costs money to try and stop malicious homeowners with no guarantee a court will restrain the person. Even when the court issues an order, there is no assurance the person will comply with the order. That means more legal fees going back to court.

NOTE: I wish I had a magic wand to fix broken people--whether angry, malicious, or mentally unstable ones. Unfortunately, I don't. As noted in the Feedback section below, sending them to Barrow, Alaska fell through as a solution. Maybe our readers can relate some approaches that worked for them.

I want to thank readers for all the feedback on shipping dysfunctional homeowners to Barrow. There were far more responses than I could reprint.

Barrow #1. I like your sense of humor, especially sending troublesome members to Borrow, Alaska. -Charanjit S.

Barrow #2. Quite witty today. -Tanya C.

Barrow #3. WOW! How refreshing and what a great sense of humor! -Andy H. & Millie T.

Barrow #4. Thank you for your information. I've been sick since last year and hope to feel better soon. Please keep writing to me; it lifts my spirits a lot. -J.H.

Barrow #5. Our association has four residents that need a one-way ticket to Barrow, Alaska. Is it possible to get a group discount on the quickest chartered flight for them? -Debbie D.

RESPONSE: So many readers signed up owners for the trip that my staff put together a group rate with FedEx. I called Barrow's town council to make sure they had enough housing since we were about to double their population. This was the first they had heard of the plan and they were horrified. The idea got them so heated, the town went through a climate change event. The plan had to be abandoned. They threatened to sue until I agreed to fund construction of a new building as a safe space for traumatized citizens to retreat to. My staff is diligently looking for an alternative site to send malicious owners.

*****

Iditarod. When visiting Fairbanks a few years ago, it was interesting to see the different locations of the Iditarod starts. I always thought they started from the same place each year only to find they start at different locations in and around Fairbanks. From your adventures, we find that there is life outside of HOAs. Thanks for sharing your fun vacation with us. -Tim S.
Adrian J. Adams, Esq.




Adrian J. Adams, Esq.
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

Attorney at Every Meeting

Mar 12, 2017 1 Views 0 Comments
ATTORNEY AT EVERY
BOARD MEETING


QUESTION: Our board does not have a law firm on a regular retainer. We are on a “pay as you go” basis. Our lawyer does not attend board meetings. This, in my opinion, results in less than desirable management of delinquencies and failures to seek legal advice as matters arise. Is the board in breach of its fiduciary duties?

ANSWER: First, let me say that I am grateful my clients do not require me to attend all their board meetings. I haven't asked my wife's opinion but I suspect she would want me to attend them all.

Small HOAs. Small HOAs do not have great demand for legal services so it is cheaper for them to pay as they go. There is nothing wrong with this arrangement and most follow this model.

Large HOAs. Large associations have ongoing legal issues. The increased demand is because they have more members. People, for some reason, have trouble getting along. When the late great Rodney King asked his association if they couldn't all get along, they rioted.

It has been my experience that associations with a lot of legal work often choose a retainer arrangement where they pay a nonrefundable annual fee in exchange for reduced hourly billings and other perks.


Attending All Meetings. Some associations run into issues where they need legal counsel at every meeting for a period of time until those issues are resolved. Where boards get into trouble is when they face a particular problem and decide not to call legal counsel so as to avoid the expense. It is not uncommon that the money they save on a phone call is swallowed up in legal fees when the issue explodes into litigation. A simple phone call or email to legal counsel is like a flu shot--it might hurt a little but it can save a lot of discomfort later.

RECOMMENDATION. The quickest way for an association to reduce its legal budget is to relocate troublesome members to Barrow, Alaska. This tiny, isolated town is located in the Arctic Circle where, from November through January, the sun never rises.

Problem homeowners can't get into trouble because they spend all their time shoveling snow. I've found this solution to be quite effective and offer it as part of our retainer program. To sign up, email my assistant Maureen.

MELINA TREANTOS
JOINS ADAMS STIRLING


I am pleased to announce that Melina Treantos joined our firm as Client Relations Director for Northern California.

Melina has over a decade of experience in multiple areas of the common interest development industry. Her expertise includes escrow processing, association accounting, new community forward planning and client relations.

As an active member of Community Associations Institute, Melina serves on multiple committees and earned the Certified Manager of Community Associations (CMCA) designation in 2015.

Contact Melina at (800) 464-2817 or by e-mail.


 

Recycled Water #1. There are specific regulations about recycled water. A site supervisor has to be certified by a local jurisdiction in the use of recycled water. You have to ensure that the recycled water doesn’t come into contact with people (particularly kids and dogs). There is a litany of other regulations that must be followed from cross connection prevention to spill notifications. Check the State Water Resources Control Board and your Regional Water Quality Control Boards for more information. In the Los Angeles area, the Sanitation Districts of Los Angeles County is an excellent resource. -Charles G.

Recycled Water #2. Everyone seems to be overlooking the warning signs about recycled water used at the parks. I once called my water district and a person there told me it’s possible to get hepatitis from the water. How many people bring their little babies to the park who crawl around on the grass? Who is going to start the conversation about this? -DeeDee G.

*****

Volunteers. With regard to getting people to serve on the board, I have always used the method of telling the membership it is their responsibility to serve and participate. If they do not step forward, the board can send the association into "receivership" for lack of a board.

Each owner can anticipate a special assessment (and increased dues) in amounts that can start at about $10,000 per owner. This will depend on the number of units in the property. I had one property (5 units) in receivership and each owner had to pay $25,000. Tell them to please check with their own attorney. Even better, have an attorney write the notice to the membership. -Nancy S.

*****

Safety #1. Regarding safety and security committees, I would agree with your position that it creates a greater liability to not create such a committee for fears of buying liability. Your statement is correct that arming that committee, or even a licensed and insured third-party contractor, creates an insurance nightmare. As far as Directors & Officers (“D&O”) insurance goes, we’ve never had a problem procuring that coverage for communities that have armed security; it’s the General Liability (“GL”) coverage that is the issue. This is because D&O policies all have exclusionary language for claims arising out of bodily injury, whereas bodily injury is right in the wheelhouse of the GL policy. Each time an association client of ours has brought on armed guards, we’ve had to place them with a specific insurance carrier that doesn’t take issue with that particular exposure. Typically the rates are higher and the association no longer qualifies for most umbrella programs. The ones they do qualify for will usually exclude claims from the discharge of any firearm; clearly not ideal. Due to these impacts, we always advise clients to think long and hard about the decision to arm any entities. -Brian Kalmenson, Commercial Insurance Specialist | Michael Abdou Insurance Agency, Inc.

Safety #2. As far as the increased crime in California I have a hunch (as you probably do) that it has to do with the fact that these smart progressive Californians voted to approve Proposition 47 in November 2015 that made many felonies misdemeanors. At the time I thought to myself, "Why would anyone vote for this since it is going to increase crime?" Some people think you can “love” everyone into doing the right thing. NOT so. Crime immediately went up in our neighborhood tenfold. In fact there are many more brazen daylight robberies and burglaries. A Marin County judge said his hands were tied. SF had over 26,000 car break-ins in 2015 (reported ones)--so many that the police could not follow-up or even take reports (you enter it online). -Janice C.

*****

Dog Sledding. It's great that you and Larry could enjoy the frozen tundra and see the sled dogs run. I think one of the reasons why your newsletter is so popular, besides great info, is your fearlessness about sharing what seems to be common sense. Someone beat us to the book title "The Death of Common Sense." -Tony V.

RESPONSE: Judge Stirling has a knack for planning delightful trips. In a lodge 130 miles outside Fairbanks in the Alaskan Mountains, we saw Northern Lights dance across a beautiful starlit sky. We could see thousands upon thousands of brilliant stars as bands of green swirled and shimmered. In Los Angeles, I see more stars sipping lattes than I see in the sky, so the wilderness light show was spectacular.

During the day, we went sledding across dazzling snow-covered terrain with giant moose crossing our trail. Our team of dogs was quick, smart and strong, and they loved to pull sleds. Steering the sled is not as easy as it looks--I have a newfound appreciation for racers of the 1,000-mile Iditarod.
Adrian J. Adams, Esq.




Adrian J. Adams, Esq.
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.

Quitters

Feb 21, 2017 1 Views 0 Comments
My newsletter is a little late because I am writing from the Lodge in Black Rapids located 130 miles outside of Fairbanks, Alaska.

Judge Stirling an I are dog sledding, watching the aurora borealis (northern lights) and enjoying balmy temperatures of 30 degrees below zero.

It's hard to type while wearing mittens so there will no newsletter next week. I will start writing again once I'm back in California and thaw out. -Adrian
QUITTERS


QUESTION: Are volunteers allowed to run for the 2017 board of directors if they "quit" by not attending 75% of the 2016 meetings? Also, we have trouble getting volunteers because most members don't want to be on the board, yet complain endlessly.

ANSWER: Complaining endlessly seems to be part of the human condition. Finding volunteers is also problematic and Sacramento makes it a little harder each year with excessive regulation.

Bylaws. Unless your bylaws have a provision disqualifying someone who was elected but refused to serve, your quitter can run, get elected, and refuse to serve endlessly. At some point, the membership will catch on and vote for someone else (assuming you can find someone else).

Amendments. In the meantime, your association should amend its bylaws to add director qualifications, eliminate cumulative voting, add election by acclamation, and eliminate quorum requirements for the election of directors. It will make your elections easier and help filter out problem members from getting on your boards.

RECOMMENDATION: If you can't find anyone to run for the board, announce that you are raising dues by 20% and imposing a 5% special assessment.

SAFETY AND SECURITY
COMMITTEE


QUESTION: Recently, we've seen an increase in vagrancies, home & car break-ins, and trespassing. I'm trying to organize a safety committee, one that would oversee risk concerns and advise the board. Unfortunately, our management company said that due to liabilities we could not form a safety committee. I realize this is a touchy subject, but would greatly appreciate any light you could shed on this matter.

ANSWER: I have great respect for mangers and management companies but legal advice is not a service they should be offering. Attorneys are generally better at that sort of thing.

Vagrants. More than 20% of the nation’s homeless live in California. Despite all the social spending from Sacramento (or because of it), the problem seems to be getting worse. In recent years, California has seen a dramatic increase in property crimes while Texas, Illinois, New York and Florida have seen decreases. As a result, many California cities have been adopting ordinances against sleeping in cars, camping in public places, panhandling, and urinating in public.


Safety Committee. The ordinances are only as good as the enforcement. In addition to appealing to the police for help, associations should tighten their security policies and procedures. Many think that forming a safety committee creates unacceptable levels of liability for the association--I disagree. An unsafe community where the board does nothing creates more liability than forming a committee that makes safe/security recommendations.

Insurance. Your association's D&O insurance typically covers committees of the board. A safety committee can inventory potential problems and make recommendations regarding lighting, security cameras, and so on. Provided the board acts on those recommendations, it makes the community safer and protects the association from potential litigation. Where HOAs run into problems is when they arm their committees. You may have trouble getting D&O insurance if you arm your volunteers with 45 caliber hand guns.

RECOMMENDATION: If your community is suffering from vagrancies, home and car break-ins, and trespassing, it's time for the board to step up and do something. They should either form a committee to survey the development and make recommendations. Or, hire a security consultant to do it. Then, implement the recommendations.

RECYCLED WATER


QUESTION: You've got a great website for reviewing the Davis-Stirling Act. However, I can't find anything about how Davis-Stirling applies to HOAs that use recycled water. Ours is responsible for maintaining front yards. We converted the irrigation to recycled water. Does this exempt us from the Davis-Stirling Act?

ANSWER: If you can't find what you need in the Main Index of the website, use the website's search feature. I added "Google Search" to the website. It costs me a little extra each year but it gives you a dedicated Google search engine exclusive to the Davis-Stirling website. You can find it in the upper right of the website.
 


Drought Emergency. Converting to recycled water does not exempt you from the Davis-Stirling Act. It does, however, exempts you from the "state of emergency" provision declared by the governor when it comes to watering lawns. It means you can impose fines against owners who fail to water their lawns. (Civ. Code §4735(c).)

Moot. In your case, the exemption is meaningless since your HOA waters the lawns. Even so, switching to recycled water is a smart move since you can keep up lawns without incurring significant water bills. Also, the way the Oroville dam is dumping water to avoid a collapse, it looks like the drought emergency may be over.


 

Children #1. My kids grew up surrounded by lakes, streams, and irrigation ditches in Wyoming. In an area where ponds and streams are common, parents learn to watch their kids around water and kids learn to be careful. In So. California, it seems like many feel the need to fence them off.  If you fence off a pond then fail to maintain the fence does it open you up to more liability? -Daren W.

RESPONSE: Many boards are so risk averse that fences seem to be the only way to reduce liability. Insurance companies have learned that little ones who drown in swimming pools can be very costly. Hence, fences around pools. I grew up in S. Dakota and Missouri and played in streams on my folks' property. I survived. Californians are so litigious that boards are naturally paranoid. There should be a happy medium where rules and signage should be sufficient. Can boards fence off an amenity? Yes. If they don't maintain the fence, can the association be liable? Yes. Boards should talk to legal counsel for a common sense way to deal with the problem.

Children #2. I am sure there are many associations out there that need to address the issue of young kids in the association's swimming pool. How specifically would you address this issue without using the word "adult supervision." Would you still be able to use an age requirement for these young kids? How would you word it? Would you be able to say, "Anyone 13 and under need the supervision of a competent swimmer?" Thanks. -Tim S.

RESPONSE: That works...at least until the DFEH says it doesn't.


Children #3. One Association I managed had a lake. The city required that a fence be put around it to keep ANYONE from going in the lake. It seems that a fence be put around the stream as a safety issue to prevent small tikes from drowning. -Joe G.

RESPONSE: Depending on the layout of your development, that could be costly and impractical (and unsightly). Rules and signage may be your only option.

Adrian J. Adams, Esq.




Adrian J. Adams, Esq.
ADAMS | STIRLING PLC

Boards can contact us for friendly and professional HOA legal advice.