HOA Beekeeping

Feb 18, 2018 0 Views 0 Comments

QUESTION. Do you have information on guidelines for beekeeping in homeowner associations? The board decided not to allow apiaries deeming them a nuisance but is now revisiting their decision.

RESPONSE: Honey bees are wonderful creatures. They are the world's most important pollinator of food crops. One third of the food we consume relies on bee pollination.

Need for Apiaries. Tragically, bee colonies are collapsing at an alarming rate due to pesticides, parasites, and disease. To offset that, there is a push to place more bee hives ("apiaries") in both rural and urban environments.

In HOAs. Because homeowner associations make up such a large portion of California's housing market (~50,000 associations with over 9 million residents), they are being asked to place apiaries in their developments.

Bee Stings. There is a lot of resistance to apiaries because most people are frightened by bees. They are afraid of being stung. In reality, honey bees are not inclined to sting people. Unlike other stinging insects that sting and fly away, honey bees die after stinging. Their sting, while painful, is relatively harmless. In most, the swelling and pain go away within a few hours. However, for those with sting allergies, it can trigger a reaction that is potentially deadly. Thus, the difficulty in establishing apiaries in urban developments--people fear being stung and associations fear potential liability.

Insurance. Because of potential claims, it is important that associations entering into arrangements with beekeepers have legal counsel review the company's insurance. Not all insurance is created equal. I recently reviewed a policy for an association and found so many exclusions it rendered the insurance meaningless. Proper insurance can minimize an association's potential exposure.

RECOMMENDATION: When it comes to apiaries, urban developments are more problematic than rural settings. The higher density of people and and structures put bees in closer contact with people. Depending on the the insurance, boards may wish to consider an apiary in their development.

PORTABLE
CAR CHARGER


QUESTION: The Civil Code applies to installing an electric charging station. It does not seem to explicitly prohibit the use of portable 120V electric vehicle chargers. Is that correct?

RESPONSE: Owners can use portable chargers (a modified extension cord) to charge their vehicles. What they can't do is plug them into a common area outlet. Doing so means your neighbors are paying to charge your car's batteries.

With proper approvals, you can install a dedicated outlet in your parking space to charge your vehicle at your expense rather than the association's. The cost will depend on where the electrical panels are located and what arrangements you make with the association for tracking your electricity usage.

An alternative to installing a charging station is to pay the association a flat rate to plug into a common area outlet. For more information, see "Electric Charging Stations."

CHANGES IN
MOBILEHOME RESIDENCY LAW


Effective January 1, 2018, changes in the mobilehome residency law clarify the distinction between guest and companions and change the verification process for live-in caregivers.

Additional Occupant. Senior mobilehome residents can now have a live-in companion without first requiring a Medical Needs Plan or without being charged additional fees. A resident can designate one person as a companion per calendar year, except in the case of the companion's death.

Live-in Care. Previously, a live-in caregiver over 18 could live in the mobilehome without a park fee provided it was pursuant to a physician's treatment plan submitted to the park. To avoid an invasion of medical privacy, the legislature changed the requirement from submission of a treatment plan to submission of a written confirmation of the need for a caregiver. Moreover, the park can ask for confirmation only if the need is not readily apparent.

Rules Violations. The change in the law also clarifies the companion or caregiver does not have tenancy rights and any violations of park rules by the person is deemed a violation by the owner. It makes clear that these provisions do not create a duty by park management to manage, supervise, or provide care for a guest, companion, or caregiver during that person’s stay in the park. (See Civil Code §798.34.)

RECOMMENDATION: Mobilehome park associations should update their rules to comply with these changes in the law.

Thank you to attorney Jason Savlov for this article. Those needing assistance updating their rules should contact us.


Incarcerated Director. Can the board declare the seat vacant if the director who killed someone in a bar fight is convicted? -James L.

RESPONSE: Yes, Corporations Code §7221(a) allows a board to declare vacant the seat of a director who is convicted of a felony, regardless of whether it is part of the association's governing documents. If the board is not inclined to suffer the optics of a director on trial for murder, obtaining a resignation may be prudent.

*****


Amending Docs. Our association was faced with the same situation of a super majority being necessary to amend our outdated CC&Rs. What we did was amend just the section on amendments so future amendments no longer required a super majority, only a simple majority. Once that was passed and recorded, we moved forward to amend the entire document. -Rick S.

RESPONSE: That same approach has been successful with associations we work with.

*****


Earthquake Insurance. Our HOA master policy does not cover earthquake damage but some members want that protection. Your newsletter mentions that condominium owners cannot purchase insurance on the structure since it is owned in common with other members of the association.

Our community looks exactly like a condo community but is actually a planned unit development. We each own the land on which our unit sits and the entire structure. The association provides a master insurance policy that covers fire damage but not earthquake. Most of us have a renter's policy or our own condo unit policy, and some of us have our own earthquake policies. -David P.

RESPONSE: I checked with Michael Berg of Berg Insurance about your situation. Put on your seat belt; his explanation illustrates the need for insurance professionals who specialize in community associations.

Mr. Berg responded that many communities are constructed with the characteristics of single family homes but are insured like condominiums. The key is to determine what the CC&Rs require the association to insure.

Governing Documents. If the HOA is required to insure structural elements of buildings and maybe property attached to the interior of the units, the agent writes a condominium style policy even if the buildings were built like townhomes, or brownstones, or row houses, or completely detached structures.

If the association is insuring the structure, the owner should purchase an HO-6 condominium owner’s policy. It is quite common, however, for owners to purchase a policy designed for a single family home. Oftentimes, real estate agents, lenders, and personal lines insurance professionals review the type of product being sold rather than consult with the insurance in place for a community.

Special Form Policy. If the association is required to insure the residential structures for typical property perils (once known as “all risk” coverage but now called “special form”), the policy will exclude earthquake damage. Without an additional stipulation in the governing documents, there could be some confusion on which party should insure the structure for earthquake loss.

If the association insures the structure for typical perils, then the cost to repair earthquake damage would be assessed to the membership (an earthquake loss assessment). Each member should have purchased an HO-6 policy and could then purchase a companion policy providing earthquake loss assessment insurance.

Loss Assessment Coverage. The important note on earthquake loss assessment insurance is that it is only available as a companion to an HO-6 policy and only applies to assessments to repair residential property. So, if an owner purchased a special form policy that protects his property as if it were a single family home, he cannot purchase a companion policy that provides him with loss assessment insurance. That is to say, an owner can’t buy single family home insurance and then an HO-6 earthquake companion policy.

Thank you to Michael Berg (MBA, CIRMS, CMCA) owner of the Berg Insurance Agency.

*****


Kudos #1. Today’s newsletter is outstanding, Adrian. Several critical subjects, especially cumulative voting. -Marilyn B.

Kudos #2. I so enjoy reading your newsletters. -Judy B.

Kudos #3. I enjoy the Davis-Stirling newsletter, and I very much appreciate the time it takes to create them and the great information/education they provide. Keep up the excellent, excellent work! -Elise H.

*****


Common Area Keys. A homeowner (who spends her nights on your website) told us utility rooms are common areas so she believes she has the right to a key to the electrical room. Can we refuse her request?

RESPONSE: I am flattered she spends her nights on my website--it's a clear sign of intelligence.

Although owners have an undivided ownership interest in the common areas, it does not give them unfettered access to them. Associations are created to manage the common areas. Member elect a board of directors to handle that duty. That means boards can restrict access to utility closets, roofs, elevator equipment rooms, etc. Most do so for safety and security reasons. Boards can also regulate the time and manner for member access to pools, clubhouses, tennis courts and other association amenities.

Adrian J. Adams, Esq.

Boards can contact us for friendly and professional legal advice.

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

Managers at Meetings

May 20, 2018 0 Views 0 Comments

QUESTION: Our manager attends our executive session meetings. We have a new board member who is challenging the legality of the manager's attendance. It appears to me that Davis-Stirling is silent on this issue. Are we doing anything improper? 

ANSWER: It is common (and legal) for managers to attend executive session meetings.

Executive Session. Executive sessions are private board meetings involving matters of a sensitive nature. They include legal issues, formation of contracts, disciplinary hearings, personnel issues, payment plans, and foreclosure decisions.

Who May Attend. Because of their confidential nature, members do not have a right to attend executive sessions, except for their own disciplinary hearings. However, that does not mean the meetings are limited to directors only. Boards can invite others to attend, as may be appropriate.

For example, a project manager may be invited to discuss the formation of contracts with potential contractors for an upcoming construction project. Managers are commonly invited to attend to take minutes and participate in the discussions. Managers often have valuable insight and historical knowledge to help the board make prudent decisions. Moreover, they are frequently tasked with carrying out decisions made in executive session.

Exceptions. It would be appropriate for the board to exclude a manager from participating in discussions of the manager’s performance or contract renewal.

RECOMMENDATION: Boards should utilize management effectively. Oftentimes, this means including managers in more meetings, not less. If the cost is sensible and the association benefits from the manager’s presence, including the manager in executive sessions is a good decision.

Thank you to attorney Nate McGuire for answering this question.

PROOF
OF OWNERSHIP

QUESTION: Can a member ask board members to show proof of ownership?

ANSWER: You can ask. However, sitting directors are not required to provide proof.

Records Requests. Members are entitled to inspect certain association records. If a record is not on the list of records subject to review, there is no right to inspect it. A director’s proof of ownership (i.e., property deed) is not on the list. Even if a record is subject to inspection, the request would need to be to the association for its records, not to directors for their records. However, a quick trip to the county recorder’s office should yield the proof you seek.

Director Qualifications. Most associations’ governing documents require a person to be an owner to serve on the board. Qualifications should be confirmed during the nomination process before ballots are mailed. Sometimes confirmation is difficult or circumstances change and a director’s lack of qualification comes to light later.

Politics. While a director is not required to provide proof of ownership, political pressure may do the trick. Or not. A certain POTUS declining to turnover taxes comes to mind.

RECOMMENDATION: If you believe a director is not qualified, you can ask the board to make a determination. If it turns out a director is not qualified, the board may declare vacant the seat of any director who ceases to meet qualifications that were in effect at the beginning of that director's term of office.

Thank you to attorney Nate McGuire for answering this question.

HIRING LAWYERS


We are looking for experienced HOA attorneys for our Palm Desert and for Riverside offices.

Candidates should have at least five years' experience working with community associations.

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

Kudos #1. So glad you and the newsletter were resurrected--you were both missed! -Trudy M.

Kudos #2. I am certain I join ALL of your readers in rejoicing that you are still with us!!! -FGL

Kudos #3. Oh goodness, please don’t die; we love you and need you around. -Elizabeth B.

Kudos #4. I always find your newsletter fascinating and informative--not only entertaining. Does anyone ever unsubscribe? -Nancy H.

RESPONSE: I once had someone unsubscribe because they were offended by my humor. They thought serving on the board was deadly serious and didn't appreciate me poking fun. I had a drill instructor like that. I didn't dare crack a smile the entire 13 weeks I was in boot camp. As soon as I graduated though...


Hiring Attorneys. It seems like every newsletter issue announces still another attorney joining your firm. If so many attorneys are needed to help manage associations, then something must be going wrong. -Joseph A.

RESPONSE: If all we we did was help manage associations, that wouldn't be so bad. It's all those messy legal issues that keep us awake at night. If the legislature would take a 5-year vacation and then renew it every five years, we wouldn't need so many lawyers. Do you know any good lawyers you can send my way? We are hiring.

*****


Realtors. If a member of the association is a Realtor and is on the board of directors, what then? What happens if board members allow the Realtor to press his business agenda and the board sits silent, what then? Replace the whole board? Or, as you have suggested in the past, we, the members of the association, should all move? -Paul S.

RESPONSE: I wouldn't move just yet. Not all real estate agents are bad and some make good board members. If a real estate agent misbehaves and fellow directors allow it, you have recourse. Here are ten options for dealing with bad boards.
If you decide to move, I bet your Realtor/director would be happy to help.

*****


Trucks #1. Most garages will likely not accommodate king cabs or crew cab pickups that are popular for personal transportation. A king cab has a half-door and a crew cab has a full-sized door. Beds are 6-foot and 8-foot. I'm not even going to discuss the dually pickups... -John A.

Trucks #2. Our CC&Rs prohibit trucks larger that 3/4 ton. Our CC&Rs were rewritten about 3 years ago. I made every attempt to educate our board that 1-ton trucks are daily driven in today's society. They voted to keep the restriction from 1983 intact. Does this current information about trucks allow our community to drive a 1-ton truck? -Tony M.

RESPONSE: If you challenged the reasonableness of prohibiting 1-ton pickups, crew cab pickups, or dually pickups, I suspect the courts would uphold the association's restrictions. Since the Bernardo Villas decision, the Supreme Court declared in Nahrstedt v. Lakeside Village that CC&Rs must be presumed reasonable and deferred to by courts. The burden is on the person challenging the restriction to persuade the court that the restriction is (i) arbitrary, (ii) imposes burdens on the use of lands it affects that substantially outweighs the restriction's benefits to the development's residents, or (iii) violates a fundamental public policy. That's not easy to do.

Trucks #3. Any rules/laws that you know of regarding how many vehicles you can park around your property? We have private streets and one house has two vehicles in the garage, 2 to 3 in the driveway, 2 to 3 more out front, and he often parks a couple around the neighborhood. I believe he has seven vehicles. He is the only one who drives them. -Michele G.

RESPONSE: You should check local ordinances to see if the city has any restrictions. In addition, check your CC&Rs and rules. I bet you already have restrictions in place. If not, your board can adopt rules limiting the number of vehicles and where they can be parked. Since your association owns the streets, it has the right to regulate them.


Trucks #4. My association started putting fairly big warning stickers on car windows when someone parks where they shouldn't. I understand they are very difficult to remove. Isn't it illegal to put a sticker like that on a car window? Or is it only prohibited if placed on the windshield? -Alice O.

RESPONSE: I could not find any laws prohibiting the stickers. I checked the internet and found a number of companies doing a brisk business in them.

Associations that use stickers find them quite effective in discouraging parking violations.

There are sufficient problems with towing that I favor the use of stickers. People tend to go ballistic and sue or threaten to sue when their car gets towed. A sticker costs only pennies and gets a violator's attention without triggering lawsuits.

If you slip a paper notice under a under windshield wiper, violators like to throw them away and claim no notice was ever placed on their car, or the notice blew away, or was removed by a passerby, or dissolved in the rain, or whatever. That does not happen when a large, bright-orange notice is stuck to the driver's window.

The stickers are effective deterrents because they are difficult to remove. You need a razor scraper and soapy water to remove them. Generally, that happens only once. Thereafter, people are careful not to park illegally.

RECOMMENDATION: I don't favor using stickers on a first violation if it can be avoided. If possible, they should be kept in reserve for repeat violators. This will depend on the size of the association and the logistics involved. The larger the development and the frequency of violations will impact the procedures followed.

Adrian J. Adams, Esq.

Boards should contact us for friendly and professional legal advice.

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

The Digital Elite

May 6, 2018 0 Views 0 Comments

QUESTION: The board has about 350 email addresses for our members. They also have access to a private social network that has 39% of the households as members. Would the board be required to send meeting notifications via postal mail to members not included in our "digital elite"?

ANSWER: I’m impressed you have so many signed up for email. Do you need to send snail mail notices to members who are still in the Dark Ages? Fortunately, "No."

Posting Meeting Notices. As long as the association posts meeting notices in a prominent location accessible to all members, there is no requirement to mail notices. (Civ. Code §4045(a)(3).) Posting notices is allowed so long as the association has designated the location in the annual policy statement prepared under Civil Code §5310. Associations that do not post meeting notices need to use another general delivery method (first-class mail, email to members who have consented in writing, billing statement, newsletter or in-house television broadcast).

Mailing Meeting Notices. The exception to posting is if a member asks for individual delivery. (Civ. Code §4045(b).)Members can ask their associations to have meeting notices sent to them by individual delivery which includes postal mail and email. (Civ. Code §4040.) If any of your members have requested meeting notices be mailed or emailed to them, then, in addition to posting in the common area, the association will need to mail or email notices to the members who have asked.

Content. In addition to the date, time, and location of the meeting, the notice must also contain the agenda. (Civ. Code §4920(c).)

RECOMMENDATION: Make sure you have designated a conspicuous location to post the meeting notices and agendas in your annual policy statement. Although you are not required to also email board meeting notices, your “digital elite” members will appreciate receiving notice by email.

WEEKLY LIST OF
WHO HASN’T VOTED

QUESTION: It is time for our annual election. The ballots are being returned to an independent election company. This company is providing a weekly list to the board of all members who have not yet voted. Board members plan to contact these individuals with a request to vote for certain candidates. Is this legal? Do the other candidates have a right to this list so they can do the same?

ANSWER: A strict reading of the Davis-Stirling Act indicates the list cannot be used by directors, candidates, management or anyone else to campaign for certain candidates.

Campaigning: By statute, association money cannot be used for campaign purposes (Civ. Code §5135(a)) Contacting members to urge them to vote for certain candidates qualifies as a campaign purpose (Civ. Code §4920(b)(1).) The association, in paying for the independent election company, has spent funds for the list of members who have not voted. Therefore, directors, candidates or any one else who uses the list to ask members to vote in a certain manner would be using association funds for campaign purposes. All members have a right to campaign for or against any candidate at their own expense.

Equal Access Required: If any member or candidate advocating a point of view related to an election is provided access to association media (such as newsletters, internet websites) the association must provide equal access to all candidates and members advocating a point of view. (Civ. Code §5105(a).) Associations must ensure access to any common area meeting space during a campaign at no cost to all candidates and members advocating a point of view. (Civ. Code §5105(a)(2).)

Early Ballot-Voter Count: The inspector of elections can provide an early ballot-voter count that includes the number of ballots that have been received. Providing a list of who voted is not one of the inspector’s duties (Civ. Code §5110(c)) but is within the inspector’s discretion.

RECOMMENDATION: Voter apathy is a common ailment in most associations and medical research has not yet developed a cure. Contacting members who haven’t voted and asking them to send in ballots may be helpful to meet the quorum of members requirement.

Using a "non-voter" list supplied by the inspector of elections to contact members is allowed, so long as it is not used to campaign for certain candidates. To ensure the list is being used just to encourage voter participation, contact should be made in writing (email or mail).

If non-voting members are to be contacted by phone, it is best to have man
agement make the calls and use a script that does not endorse any particular candidates, but only asks the members to vote.

Thank you to attorney Laurie Poole for this article.


Kudos #1. Was starting to find out where your funeral was held when I received your newsletter. Your newsletters are my second source for information, but now my main source after the death of the Times columnist. -Eric D.

Kudos #2. Great Issue ........Thanks for all your guidance. -Raye P.


Kudos #3. Really Excellent!!! -S.L.

JAMIE HANDRICK


Attorney #1. Congratulations on choosing Jamie Handrick to join your San Diego team. She is so knowledgeable and keeps my boards at ease when working with her. With Laurie Poole at the lead, it should be a winning combination! -Lynn R.

Attorney #2. I send digital salutations & appreciations to you over the mighty Sierra Nevada (Reno) regarding your illuminating missives. I have noticed a trend: nearly every newsletter introduces another lawyer to your firm. May I assume California HOA laws are not only multiplying in number but also growing in complexity? Or am I more accurate in observing how our species is moving away from kind, considerate, respectful, common-sense conversation with neighbors & association boards and moving swiftly & directly into the courtroom? I beseech you to keep “conversing” with your readership, offering kind, considerate, respectful, common-sense words through your engaging wit-n’-wisdom. -Donald M.

RESPONSE: You are right about the trend. There is a growing need for HOA lawyers in California and I've had the good fortune to attract talented ones to the firm. You are also right about California's laws multiplying in number and complexity. Our legislature has gone off the rails with excessive regulation. I don't know if lack of civility is on the rise but litigation seems to be. Despite our efforts to keep associations out of disputes, our litigation department is on overload.

TRUCK RESTRICTIONS


Trucks #1. You said pickup trucks could not be banned where cars are permitted but I wonder if there could be a size restriction, such as “vehicles longer or wider than xx feet or inches may not park in (certain areas)”? Large pick up trucks can be visually disruptive and lower the look of a condo complex. They are also wider than a car and can make passing them on a driveway difficult. Another large pickup might not be able to get through. -LL

RESPONSE: Yes, associations can impose reasonable restrictions on the size and types of vehicles. In my opinion, RVs, tow trucks, tractor-trailer rigs, monster trucks, etc. can all be restricted. Such vehicles are not normal and accepted means of personal transportation, and some are as unsightly as heck.


Trucks #2. Our CC&Rs say we cannot park non-standard vehicles in our driveways and lists campers, trailers and golf carts. The DMV defines carts as a vehicle, which makes them a cheap Tesla. Is the restriction reasonable? -Dave M.

RESPONSE: Yes, golf carts can be restricted. It depends on the community. Some retirement communities allow them and it makes perfect sense. In other communities, not only are they an eyesore, they could represent a safety hazard as a slow-moving vehicle on a fast, busy road. Each community can decide for itself what makes sense for their association.


Trucks #3. I thought the Nahrstedt case overturned the Bernardo case regarding trucks. -Anon

RESPONSE: I'm glad you asked. The California Supreme Court in Nahrstedt v. Lakeside Village criticized the Bernardo Villas decision for failing to apply a deferential standard to the association's CC&Rs. The Court did not overturn Bernardo Villas. Instead, it established a test for evaluating CC&R restrictions.

It held that CC&Rs are presumed reasonable and will be enforced uniformly against all residents of the common interest development unless the restriction is (i) arbitrary, (ii) imposes burdens on the use of lands it affects that substantially outweigh the restriction's benefits to the development's residents, or (iii) violates a fundamental public policy. Moreover, the restriction must be viewed not by reference to facts that are specific to the objecting homeowner, but by reference to the common interest development as a whole.

If the pickup truck prohibition had not previously been litigated and were tried today under the Nahrstedt standard, it might produce a different result. Until that happens, the Bernardo Villas decision stands and blanket pickup truck prohibitions are invalid.

Adrian J. Adams, Esq.

Boards should contact us for friendly and professional legal advice.

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

Realtors in Board Meetings

Apr 29, 2018 0 Views 0 Comments

QUESTION: The Davis-Stirling Act allows only members to attend board meetings. Tenants, property managers, real estate agents, spouses and family members (not on title) attorneys, and other representatives cannot, and should not, attend a board meeting on behalf of a member. Can we exclude a real estate agent who wants to represent owners of rental units?

ANSWER: I need to make a small correction to your question. The Davis-Stirling Act does not prohibit non-members from attending board meetings. Rather, it's an authorizing statute which states: "Any member may attend board meetings, except when the board adjourns to, or meets solely in, executive session." (Civ. Code §4925(a).) That means members have a right to attend meetings and boards cannot exclude them.

Boards can, however, exclude non-members. In my experience, most boards allow non-member spouses and tenants to attend meetings, provided they are not disruptive. It is entirely discretionary with boards.

Realtors. The same principle applies to non-member real estate agents. If an agent wants to speak to the board on behalf of his/her landlord clients, the board can allow the agent to attend if they so choose. If it turns out the agent is doing nothing more than pushing his/her business interests or is disruptive, the person can (and should) be excluded from meetings.

RECOMMENDATION: Boards should consider adopting meeting rules to address who may attend meetings, open forum policies, meeting decorum, recording meetings, etc. If you need assistance, contact us.

POWER OF ATTORNEY


QUESTION: Does the board have the right to request a notarized copy of a power of attorney so that it may be kept on file?

ANSWER: Yes, if someone has a "power of attorney" to make decisions on behalf of an owner, the association should have a copy of the authorizing document on file.

Otherwise, they could find themselves in hot water accepting direction from a stranger regarding the affairs of an owner.

BANNING TRUCKS


QUESTION: Our association bans pickups from parking overnight in driveways or in common areas. Parking in garages is permitted since the vehicles aren’t visible when they are in a garage. Our CC&Rs date back to the 70s and, as I understand it, things have changed in 40+ years. Can we still legally ban pickup trucks from parking in driveways and common areas overnight?

ANSWER: Yes, a lot has changed in the past 40 years--computers, cell phones, the internet, drones, recreational marijuana...and trucks. If you allow cars to park in driveways and common areas, you have to allow pickup trucks.

Case Law. This issue was addressed in a 1987 case, Bernardo Villas Management v. Black. The association had a CC&R provision that "No truck, camper, trailer, boat of any kind or other form of recreational vehicle may be parked in the development."
Such restrictions were quite common and boards were obligated to enforce them.

A resident in Bernardo Villas bought a pickup which he used solely for personal transportation and parked in his carport. The board did its duty and sued the resident for violating the CC&Rs. Much to everyone's surprise, the trial court found the restriction unreasonable. Convinced the court got it wrong, the association appealed.

The court of appeal also sided with truck owners and agreed the restriction was unreasonable. The court noted that, "As times change, cultural perceptions--including society's acceptance of certain types of vehicles--also change. The pickup truck no longer has a pejorative connotation. One person's Bronco II is another's Rolls-Royce." The court added that
beauty, even with cars, is in the eye of the beholder.

The next time you're on a freeway, look for pickup trucks. You will notice lots of them--Chevy Silverados, Dodge Rams, Toyota Tacomas, Ford F-150s, and scores of others of all shapes and sizes. The Ford F-150 has the distinction of being the most popular motor vehicle of all time. It has been the best-selling vehicle in the United States for over 30 years.

Pickups used as work trucks with signage, racks and tools can still be banned. Pickups used strictly for personal transportation cannot.

RECOMMENDATION: Your association is 30 years behind the times and should revise its rules. If someone mounts a legal challenge to your restriction, I have a good idea who will win that fight.

JAMIE L. HANDRICK
JOINS ADAMS|STIRLING


I am pleased to announce that attorney Jamie Handrick joined our firm.

HOA Law. Jamie brings years of solid CID-law experience to the firm. She has been in practice 17 years with the past 12 exclusively in community association law.

Jamie represents commercial, residential, and mixed-use associations throughout San Diego County.
She has extensive experience in construction litigation, enforcement of governing documents, civil litigation, collections, and fair housing compliance.

Industry Activities. Jamie is active in industry organizations such as the Community Associations Institute (CAI) and the California Association of Community Managers (CACM). In addition, she conducts boot camps for new association board members and speaks at educational events.


Litigation Counsel. Before specializing in community associations, Jamie practiced eminent domain litigation where she handled high profile cases for the City of San Diego and the Metropolitan Transit Development Board. She also litigated labor and employment issues as well as general civil matters. Jamie's experience has been valuable in her evaluation of potential litigation for associations and advising boards on how best to resolve disputes before they turn into litigation.

San Diego. Jamie joins our team of lawyers in San Diego under our newest partner, Laurie Poole. Jamie will work out of our San Diego office in Mission Valley. 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.


Some of you caught that I misspelled "unnecesary" two newsletters ago and appreciated my explanation that the second "s" failed to show up for work. In the next newsletter I brought more smiles by referring to "loose canons." This time, it was right spelling, wrong word.

Typo #1. Your recent newsletter, while quite informative (as usual) was a bit confusing when it referred to "loose canons." I would assume that you were not referring to questionable church teachings or misguided musical practices, but to the fear of rolling shipboard artillery in the days of wooden sailing ships when a loose cannon could be quite dangerous. Keep up the good work! -Steve T.

Typo #2. I especially laughed out loud at this: "Nut-Job? If the owner is a known nut-job (yes, they exist), it makes it difficult for boards to evaluate claims. Even loose canons occasionally hit a target." BTW, I have sent many of these newsletters to the BOD! -Cheech A


Typo #3. The "typo" tua culpa was hilarious! Well done, sir. -Erica G.

NOTE: Loosely translated from Latin, tua culpa means "it's not my fault." -Adrian

*****


Laurie Poole #1. Congratulations on choosing Laurie Poole to join your firm. She is a great attorney--very knowledgeable and conscientious. I have known Laurie for a number of years. She assisted with restating our governing documents a couple years ago, has been our association attorney and I served with her on the CAI board of the San Diego Chapter. She is a great addition to your staff. -Carol L.

RESPONSE: With attorneys Carrie Heieck and Jamie Handrick, Laurie is building a great team of lawyers for the San Diego region. We expect to add additional lawyers and staff to her office over the course of this year.

*****
 

Chinese Translations. My December newsletter regarding an association where most members spoke Chinese was published nationally by the Community Associations Institute. Following is a comment by a reader on the difference between translating and interpreting.

For your information, translation is done in writing. Interpretation is done orally. Despite that many people use translation as an action done orally, that is not correct. -Tia H.
Adrian J. Adams, Esq.
Boards should contact us for friendly and professional legal advice.

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

Confidential Letters

Mar 18, 2018 0 Views 0 Comments

QUESTION: A homeowner keeps sending letters to board members' homes and every letter says it is “confidential to the board” and the board can’t share it with our management company. Does this homeowner have a right to demand that her communications (which ought to go to the manager) be kept private?

ANSWER:
If the board decides the information in the letter needs to be shared with management, it can do so. When carrying out their duties, directors must balance the general welfare of the community against the interests of the individual. (Cohen v. Kite Hill.) That might mean disclosing the information.

Legal Counsel. The same is true with the association's legal counsel. If a director shares something with the attorney and tells him/her not to share it with the other directors, the attorney is not obligated to keep it confidential.

As corporate counsel to the association, an attorney does not represent individual directors or owners. An association's legal counsel represents the association as a corporate entity.

In representing an organization, a member [attorney] shall conform his or her representation to the concept that the client is the organization itself, acting through its highest authorized officer, employee, body, or constituent overseeing the particular engagement. (State Bar Rules of Professional Conduct; Rule 3-600(A).)

When a director starts a conversation with "I have something confidential to tell you that cannot be shared with the other directors," I have to stop them and explain my obligations to the corporation may require that I share it with other directors. At that point, the director can decide whether to proceed.

Misconduct. Similarly for boards, if the owner's letters allege misconduct by the management company, the board has an obligation to investigate the claims. The investigation may involve talking to the management company about the allegations.

Nut-Job? If the owner is a known nut-job (yes, they exist), it makes it difficult for boards to evaluate claims. Even loose canons occasionally hit a target. Boards need to review each letter to see if there is any substance buried in all the craziness. If it's nothing more than an obsession with a particular issue that has already been investigated but gets repeated endlessly, a letter from the association's legal counsel to the overwrought owner may be warranted.

RECOMMENDATION: The owner should be told (in writing) that the board will not keep her letters confidential if the directors feel the information and its source should be disclosed. You can tell her that all letters dealing with routine matters will automatically be sent to the management company.

THREATENED LAWSUIT
DISQUALIFIES CANDIDATE?


QUESTION: Our HOA is in the process of enacting election rules that disqualifies anyone who ever threatened to sue the association. I am going door to door to get petition signatures opposing the rule. I'm told if I do, I am subject to fines under the prohibition against soliciting.

ANSWER: Disqualifying anyone who ever threatened to sue the association is a bit much. I don't believe a court would find that reasonable. Besides, the association could end up with no one left to serve on the board.

Active Litigation. I am in favor of temporarily disqualifying anyone who is in active litigation against the association and/or its directors. It avoids conflicts of interest that inevitably arise when the plaintiff is simultaneously suing the association and voting on board issues. It also avoids the awkwardness of directors serving on the board with the plaintiff. Once the litigation is over, the person can once again be eligible to serve on the board.

Solicitation. As for penalizing you for circulating a petition, that would run afoul of the Davis-Stirling Act. A change in the Act that went into effect January 1 allows members to canvass and petition members. (Civ. Code §4515(b)(4).) In particular, the association cannot prohibit political activities.


Assessment #1. My association is the one in your column about the special assessment. The assessment of $11,500 was for a city mandated earthquake retrofit. -Anon

RESPONSE: The retrofit qualifies as an emergency special assessment. It is an extraordinary expense necessary to repair the common areas where a threat to personal safety is discovered. (Civ. Code §5610(b).) The monies would not have been in the budget or the reserves and must be raised via a special assessment.

This is not something where the board can say to the city, "We cannot comply with your order because the members refuse to fund it." The city will impose fines and take other actions that could be quite unpleasant. If the city red-tags the buildings, everyone will be forced to move out until the work is done.


Assessment #2. Regarding the $12,000 "unnecessary" assessment, I'd like to know why the person thought it was unnecessary. It is possible the HOA is not communicating as well as it could to owners. -Tony V.

RESPONSE: Poor communication is a possibility. Another explanation is that some people are contrary by nature. It does not matter how valid the assessment, they are against it.


Assessment #3. A membership vote on a special assessment must be done by secret ballot. How can this be done, when they need a quorum--which is a meeting with people in attendance? -Meri N.

RESPONSE: Ballots count toward quorum the same as if the person attended the meeting. (Civ. Code §5115(b).)

Spell Check. For the first time I can recall in the years I have been receiving your informative weekly newsletter I see a misspelling in the titled subject: "Unnecesary"! What happened? -Sharon M.

RESPONSE: The second "s" didn't show up for work. It turns out he doesn't work on Sundays.

*****

Laurie Poole. Congratulations to Adams Stirling and Laurie Poole on the addition of Laurie to your fine cast of attorneys. An excellent move on both your parts! Laurie is one of my favorite attorneys: good-natured, no-nonsense and knowledgeable. Well done! -Sharron B.

RESPONSE: Thank you! Yours is one of many congratulatory notes we received. Laurie is an exceptionally well-qualified HOA attorney and we are pleased to have her as a partner.

*****

Renting Rooms. One of my associations meets at the senior center close to the complex. The fee is $100 for 2 hours. Another association meets in the community room at a local church and the charitable donation of $40 for approx 2 hours. -Joe G.

Adrian J. Adams, Esq.

Boards should contact us for friendly and professional legal advice.

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

Unnecessary Assessment

Mar 4, 2018 0 Views 0 Comments

QUESTION: My HOA wants every household to pay $12,000 for an unnecessary special assessment. And, they didn't get 51% approval vote. Is that legal?

ANSWER: Special assessments do not require approval by 51% of the membership. By statute, approval is by a majority of voting members once a quorum has been established. (Civ. Code §5605(b).)

Emergency Assessment. If the assessment you describe is being imposed without a vote of the membership, it must be an emergency assessment. Although you called it unnecessary, the board must have determined the assessment was required. Very likely, they reviewed the situation with legal counsel and deemed it an emergency.

Fiduciary Duty. Directors are bound by fiduciary duties to act in the best interests of the association, even when it hurts them personally. Don't forget, each of the directors must also pay the $12,000. I'm sure they don't like it any more than you do. Something must have happened to force an assessment that requires them to reach into their own pockets.

Maintenance. It has been my experience that most emergency assessments are related to significant common area repairs without sufficient reserves. Common culprits are elevator equipment failures, deteriorating plumbing, unexpected roof failures, and widespread window leaks.
Most failures are water related, which damage common areas and create potential health issues from mold.

Too often, prior boards fail to adequately reserve for large-ticket items. They think they are doing everyone a favor keeping dues down by deferring maintenance and skimping on reserves. Doing so means subsequent boards are left holding the bag when big ticket items fail and special assessments must be imposed on unhappy homeowners.

Bank Loan. The negative impact of the assessment can be reduced by borrowing the monies needed from a bank so repairs can be made immediately. Repayment of the loan is then spread over a number of years. Instead of each member writing a check for $12,000, they pay a more manageable monthly assessment until the loan is repaid.

RECOMMENDATION: Failure to make needed repairs will likely lead to litigation and higher special assessments. You are better off accepting the assessment and dealing with the problem now.

RENTING ROOMS
FOR BOARD MEETINGS


QUESTION: The board president is insisting we rent a room at a Best Western Inn for our board meetings and have the HOA pay for it. Our management company has an office 20 minutes away and we have a common area park available as well. Can the president force the other board members to rent a room?

ANSWER: The board as a whole makes decisions about when and where regular meetings are held, e.g., the third Tuesday of the month at 6:30 p.m. in the clubhouse. In this case, it involves renting a room offsite and the president is prompting fellow directors for a decision. There is nothing wrong with that--it's a sign of leadership.

Park. The location of meetings, both for the convenience of the board and the membership, is an important consideration. The association's park has the advantage of being close. It also has the downsides of noise, wind, temperature swings, and rain.

Office. The other option you mentioned is the management company's office. It has the advantage of being free and avoiding all the problems of an open-air meeting. Unfortunately, it is a 20-minute drive from the association, which will discourage many members from attending.


Hotel. If the Best Western is close and the cost is reasonable, it makes sense to hold meetings there. That way, weather, noise and distance won't disrupt meetings and discourage members from attending. It is a business decision for the board to make.

OWNERS ON
PROPERTY WALKS


QUESTION: We have an owner who contends that not allowing owners to go on our monthly manager walk is a violation of the Open Meetings Act. Our manager does a visual inspection of the property for maintenance issues and owner violations. Up to two of our five board members go on the walk. Are we in violation by not allowing owners to join in?

ANSWER: No, you are not in violation. Your manager can inspect the property without having to announce it in advance and publishing an agenda to the membership.

Meeting Defined. Including two directors in the manager's inspection does not turn it into a board meeting. Board meetings are defined by the Davis-Stirling Act 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.) Two directors accompanying the manager on her property inspection does not constitute a board meeting.

RECOMMENDATION: If your homeowner wants to be involved in property inspections, he/she should run for a seat on the board.

LAURIE POOLE
JOINS ADAMS STIRLING
AS PARTNER


I am pleased to announce that attorney Laurie Poole joined our firm as our newest partner. Ms. Poole brings nearly 25 years of experience as an attorney in the HOA industry.

CCAL Fellow. Laurie is a fellow of the Community Association Institute’s prestigious College of Community Association Lawyers (CCAL) and was recently elected to its Board of Governors.

Case Law. Laurie is also a member of CCAL’s Amicus Review Committee and devotes time to shaping the laws governing California’s community associations. Laurie has already had a significant impact in our courts of appeal. Ms. Poole was appellate counsel in Quail Lakes v. Kozina (2012), trial and appellate counsel in Mission Shores v. Phiel (2008), and trial counsel in Fourth La Costa v. Seith (2008). Through her efforts, nine appellate decisions have become published case law in California.

Legal Practice. Laurie has extensive experience representing common interest developments, including master planned communities, large condominium projects, mixed-use, and highrise developments. The majority of her practice involves interpreting and amending governing documents, advising boards on compliance matters, addressing governance and insurance issues, and enforcement of governing documents.

Industry Activities. Laurie is an active volunteer for the Community Associations Institute (CAI) and the California Association of Community Managers (CACM). She is currently a member of the Board of Directors of the San Diego chapter of CAI, having served as its President. Laurie is a frequent speaker at industry events and has published numerous articles on common interest development law.

Education. Laurie graduated from the University of California, Santa Barbara with a double major in English and Sociology. She earned her Juris Doctorate from the University of San Diego, School of Law where she was a member of the Law Review.

We are proud to have Laurie Poole on our team. If your association needs legal services, please contact us for a proposal.

 
Beekeeping #1. You didn’t mention Africanized bees, a growing problem in the honey bee population. A lot of apiaries are being removed due to this problem. Putting them in HOA is ill-advised. -Jerry I.

RESPONSE: I don't think anyone is advocating using Africanized bees. The European variety (introduced into the Americas in the 1500s) are preferred because of their gentleness and robust honey production.

Beekeeping #2. Bees are everywhere. They have a hive somewhere, we just don’t know where. When we keep bee hives on top of garages we know exactly where the colonies are and can reduce the colony by giving away bees when the colony gets too large. With proper education of residents, bee keeping in urban communities is actually a safer way of dealing with bees. -Margaret V.
Adrian J. Adams, Esq.
Boards should contact us for friendly and professional legal advice.

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

Replacing an Incarcerated Director

Feb 11, 2018 0 Views 0 Comments

QUESTION: One of our board members got into an argument in a bar (far from our association with no connection to HOA business) and killed someone. He also shot a second person.

He was quickly incarcerated and will probably stay behind bars for a long time. The board immediately appointed a replacement director but the confined director never resigned. In such a terrible situation, is a written resignation still needed?


ANSWER: The Davis-Stirling Act does not address director resignations. For that, we must turn to the Corporations Code. It states that "Any director may resign effective upon giving written notice to the chairman of the board, the president, the secretary or the board of directors of the corporation..." (Corp. Code §7224(c).)

Still on the Board. If your incarcerated director has not resigned, he is still on the board. Replacing him without a resignation would be deemed an ultra vires act and invalid. An arrest is not sufficient reason to remove a director from the board. It is possible an investigation would exonerate the director and he could resume his duties on the board. From what you described, that seems unlikely, so let's look at your options.


Vacating a Seat. Sometimes, an association's bylaws will authorize the board to vacate a director's seat under certain circumstances. For example, a director fails to attend a specific number of meetings. We routinely add such provisions when we restate an association's bylaws. Without them, a board cannot remove a fellow director, only the membership can.

Removing a Director. For members to recall a director, the association must hold a recall election. Once can be called by the board or by the membership. If the bylaws or CC&Rs provide for cumulative voting, the membership may have difficulty recalling a director. A small minority of supporters can block his removal. That means resignation is your best option.

Resignation. One of your directors should visit your confined director and bring a simple "I resign from the board of directors effective immediately" for him to sign. If, for some reason, that is not possible, an oral resignation should be sufficient, either during the visit or by phone. I suspect your director will readily resign. If an oral resignation is all you can get, record that in the minutes. Doing so creates a written record of the resignation. It is unlikely anyone will challenge the resignation and equally unlikely a court would reject the resignation under the circumstances.

RECOMMENDATION. You should amend your bylaws to add director qualifications and remove cumulative voting. I also recommend eliminating quorum requirements for electing directors. Each of these changes will make your elections run more smoothly and give you the tools you need to remove directors.

EARTHQUAKE
INSURANCE

QUESTION: If my association does not carry earthquake insurance, can I?

ANSWER: Condominium owners cannot purchase insurance on the structure since it is owned in common with other members of the association. Owners can, however, purchase other coverage.

Property. Coverage is available for property improvements such as cabinets and equipment, personal property, and breakables.

Loss of Use. Loss of use coverage is available to pay for living expenses if you need to move out while repairs are being made after an earthquake.


Loss Assessment Coverage. You can also purchase loss assessment coverage which pays special assessments imposed by the association to repair structures in the community. Even if your association has earthquake insurance, a special assessment may be imposed to pay the deductible. Loss assessment coverage is available in amounts from $25,000 to $100,000, and deductible options are available as well.

RECOMMENDATION: Recently, the California Earthquake Authority made significant changes to earthquake policies available to homeowners, including more limit and deductible options. All homeowners should contact their insurance brokers and purchase the coverage described above. We are overdue for a large seismic event.

Thank you to Terri Guest, CIRMS, Berg Insurance Agency for her input on this question.

AMENDING
GOVERNING DOCUMENTS

QUESTION: Our governing documents are pathetically out of date. We tried to do a full restatement but the super-majority requirement was unattainable. We are now advised that even updating Civil Code sections requires a membership vote.

We have items in the documents that are severely non-compliant with the law and require a significant rewrite. It seems absurd that a member vote would be required to bring such clear violations of statutes into compliance. What is your take on this mess?

ANSWER: You are not alone, a lot of associations face the same situation. I have a bit of good news for you--if you want to change outdated references to the Civil Code, you can do so with a simple board resolution, update the numbers, and re-record your CC&Rs. (Civ. Code §4235(a).)

Substantive Changes. More substantive changes require approval by the membership, even if you are bringing your documents into compliance with the law. That means making a big push to get at least 50% of your members to vote for the changes and then petitioning the court to lower the approval from a super majority to a simple majority. We have successfully done this with a large number of associations over the years.

Hierarchy. If you cannot get enough members to vote and miss the 50% threshold, the legislature created a hierarchy which states that any conflicts between your documents and the law, the law controls. See Hierarchy of Documents.

REGINALD SCHUBERT
JOINS ADAMS STIRLING

I am pleased to announce that attorney Reginald "Reggie" Schubert joined our firm.

Developer Experience. Reggie brings to ADAMS|STIRLING a detailed knowledge of business and real estate law. He has more than 13 years' experience representing developer and corporate clients with an emphasis on real estate, finance, strategic planning and execution of business transactions.

Reggie worked as in-house counsel to a developer of multi-family housing and master planned communities. His duties included subdivision planning, condominium development, commercial center development and leasing, finance and defeasance transactions, multi-family construction, land acquisition, entitlement processing, and project dispositions.

Environmental Law. Before going in-house with a developer, Reggie worked in a law firm that handled environmental litigation where he gained extensive experience representing defendants and plaintiffs in lawsuits arising under CERCLA, RCRA, as well as state environmental and nuisance statutes. Reggie handled issues involving soil and groundwater contamination and remediation, insurance coverage disputes, bad faith claims, and declarative relief actions in state and federal courts.

Education. Reggie earned a Juris Doctorate from the University of California, Davis and a bachelors in Economics from California State University, Sacramento.

Contact Us. 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.

My article on aggressive assistance animals struck a chord. Following is some or 5h3 feedback. -Adrian


Emotional #1. I am on the board of a 360-unit condominium complex situated in a 25-acre park-like environment. At one of our meetings we had a discussion about the cost of repairs for damage done by dogs and their owners (we have a lot of dogs). I suggest that perhaps we could charge dog owners an extra fee per month to help defray these costs. I am wondering if any other condos do this and/or what you think of this idea. Thanks. -Dolores B.

RESPONSE: Theoretically, pet owners could be charged a fee under the Watts v. Oak Shores decision. You would need credible evidence of the costs to establish a reasonable fee. I am not aware of any associations who are currently charging a pet fee. Maybe our readers know of some.

Emotional #2. I was reading the newsletter and agree with the article on the Aggressive Assistance Animals, especially how the law has been abused. I am wondering if the owner of an assistance animal can be required to provide proof of insurance for both liability and property damage that might be caused by the animal? -Steve D.

RESPONSE: I know associations can require vaccinations and insurance for pets. I will have to do some research on service animals.

Emotional #3.“While the ruling in Vermont is not binding in California, it seems likely our courts would render a similar verdict.” California courts? Are you kidding? Ha! I enjoy your newsletter. Keep it up, especially the humor. -Bob C

Emotional #4. Boards should require a letter from a licensed physician or psychiatrist, not an internet psychic. The owner should be required to submit written proof that the dog has passed beginning and intermediate obedience training at a legitimate training facility such as PetSmart (our dog was trained there). The board should observe the dog obeying basic commands such as sit or down or off without a treat. A dog that exhibits the level of aggression in the article is not an emotional support dog. It is a ticking time bomb. -John A

RESPONSE: Those are all good suggestions but unenforceable. People with disabilities have the right to train the dog themselves and are not required to use a professional service dog training program. You can only ask two questions: (1) is the dog a service animal? and (2) what task has the dog been trained to perform? You are not allowed to request any documentation for the dog, require that the dog demonstrate its task, or inquire about the nature of the person’s disability. A bill was introduced last year (AB 1569) to require verification
from a reliable third-party source of a disability and the owner's need for a service animal. That alone would have brought things under control. As with all good bills, it died.

Emotional #5. In Zatopa v. Lowe, the United States District Court for the Northern District of California came to essentially the same conclusion as it pertains to Aggressive Assistance Animals: so long as reasonable alternative pets are acceptable to the landlord, as here, then the disabled tenant has no right under the disability laws to insist on a pit bull. -Craig C.

RESPONSE: Even though the court ruled that pit bulls do not qualify as emotional support animals, HUD has taken the position that “breed, size, and weight limitations may not be applied to an assistance animal.” A housing provider may deny a request for an assistance animal only where “(1) the specific assistance animal in question poses a direct threat to the health or safety of others that cannot be reduced or eliminated by another reasonable accommodation or (2) the specific assistance animal in question would cause substantial physical damage to the property of others that cannot be reduced or eliminated by another reasonable accommodation.”

Emotional #6. Did you see the news earlier this week about the person who flushed her emotional support hamster down the toilet because the airline would not allow her to take it on the plane? -M.W.

RESPONSE: I do not recommend this solution when boards are faced with aggressive emotional support animals. (The hamster could not have offered much in the way of emotional support if the owner so readily flushed it down the toilet.)

*****

Political Activities. Thanks for your interesting articles, very informative. When can a resident be charged a deposit for using common area club house? We charged a security deposit until this new law came out. -Jacqueline W.

RESPONSE: You can charge for birthday parties, weddings, Super Bowl parties, etc. You cannot charge if someone reserves the room for purposes relating to common interest development living, association elections, legislation, election to public office, or the initiative, referendum, or recall processes. A member or resident shall not be required to pay a fee, make a deposit, obtain liability insurance, or pay the premium or deductible on the association’s insurance policy, in order to use a common area for these activities. (Civ. Code §4515.)

What if the political event leaves the room in shambles and you have to pay someone to clean it up? You can charge the person who reserved the room, following a properly noticed reimbursement hearing. What if the clean-up is done by staff already on payroll so it does not cost the association anything extra? I don't think anybody knows the answer to that.

What if folding chairs are kept in a locked storeroom? Can the association charge the person to have staff setup the chairs? Yes. What if the staff are on payroll so it does not cost the association anything extra? Good question.

I don't like this statute. It is very intrusive and has a lot of unknowns that may require judicial intervention.

*****

Director's Term. My question arises from the “Reconvened Term” question in your January 28 Newsletter. If the board member’s term starts on the date when the person is elected, when does it end? If a director’s term is one year, does the term end a year after it began or when the next annual meeting is held? In other words, does the annual meeting date have to be pushed back so the director gets a full one-year term?

I think you would agree that a delay in holding the election does not change when annual meetings are held or when board terms end. Thus, for example, if a reconvened meeting delays an election from its usual annual meeting date in May to sometime in June or even later, that director’s term will still end the following May, assuming the association is able to meet the quorum and holds an election. -Jay H.

RESPONSE: You nailed it.

*****

Rentals. I read your website regarding the percentage of renters and its impact on the association. Once a complex is near 50% renters because original docs have no restrictions, is there anyway to reverse that percentage when we restate our governing docs? Can we set a limit at 10% in the restatement which would then apply to/restrict any new owners once implemented? -Steven S.

RESPONSE: When you have a high population of renters in a development, I've found caps hard to pass and to enforce. I think the only real chance you have is to adopt an amendment that requires new owners to live in their unit as their primary residence for at least two years before they can rent out their unit. Over time, the population will change from renters to owner occupants and you will see an increase in property values.

*****

Forcing Legislators to live in HOAs. I love reading your Newsletters--they bring common sense to readers. With all the new laws, how can managers manage anymore? Lawmakers should be forced to lived in a homeowners' association.

Who is going to check if a resident has diarrhea before going into the pool? We are not allowed to ask residents to stop dangerous activities such as riding bikes on sidewalks, climbing trees, driving too fast, and so on or Fair Housing will sue the association.

Yesterday, a lady in her fifties was at the pool with the top of her bathing undone and bottom two sizes too small showing her backside--not a good look for her. I nicely asked that she please tie the top and pull up the bottom of the suit. She said I was harassing her. -Karen E.

RESPONSE: Requiring all politicians be subject to the laws they create would drastically reduce the number of new laws and make them more reasonable. If you are circulating a petition, I will sign it.

Adrian J. Adams, Esq.

Boards can contact us for friendly and professional legal advice.

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

Aggressive Assistance Animals

Jan 28, 2018 0 Views 0 Comments

Allowing homeowners to have an emotional support animal is not only compassionate but often necessary for the well-being of some residents.

Abused. It is also one of the most abused exceptions to pet restrictions in practice today. All anyone needs is a letter from a medical professional to overcome restrictions. It doesn't matter the "medical professional" is an internet psychic who passes out form letters like candy (for a modest fee).

Weird. The abuse is not limited to the size and number of dogs, it extends to the weird. Some are claiming squirrels, bearded dragons, miniature horses, turkeys, goats, and pigs as necessary to their emotional well-being. The proliferation of animals has created problems for condominium associations, apartment complexes, restaurants, and airlines. Commercial carriers have already put the brakes on what they will allow on their planes. The courts are now injecting some common sense into the issue as well.

Aggressive Animals. Gill Terrace is a no-pet apartment complex in Vermont. Despite their "no-pets" policy, the landlord grants reasonable accommodation to residents with disabilities. However, he drew the line when a resident (Ms. Johnson) asked for reasonable accommodation for aggressive guard dog named Dutchess.


Dog's Behavior. Dutchess is a large mixed breed pit bull that reared up on her back legs, lunged at people and other dogs, and bared her teeth at them. She has a distinct angry bark and growl. Even indoors, Dutchess goes crazy when other dogs walk by the window. Ms. Johnson was not able to control Dutchess and some residents were fearful and stayed indoors whenever the dog was outside.

Lower Court Ruling. The landlord told Ms. Johnson she could have an emotional support animal--just not Dutchess. When Ms. Johnson failed to get rid of Dutchess, the landlord began eviction proceedings. (Gill Terrace Retirement Apts v. Marie Johnson). Even though the dog had not yet bitten anyone, the lower court found sufficient evidence the dog was a threat that it ruled for the landlord. The court concluded that reasonable accommodation does not extend to aggressive assistance animals.

Supreme Court Ruling.
Ms. Johnson appealed. Fortunately, the Vermont Supreme Court upheld the lower court's ruling. It concluded the landlord was justified in denying a reasonable accommodation request for a specific dog on the grounds it posed a threat to others.

RECOMMENDATION: While the ruling in Vermont is not binding in California, it seems likely our courts would render a similar verdict. That means boards of directors can (and should) investigate complaints about aggressive animals and take action when the behavior of a specific animal adversely affects the safety and well-being of residents. If a board knows a specific animal is a threat, failing to take action could have unpleasant consequences if the animal were to attack residents or their pets.

POLITICAL ACTIVITIES
AND FLYERS


In September, I reported on SB 451--the bill that eliminates an association's ability to control its common areas when it comes to political activities and flyers. Effective January 1, HOAs must now allow a wide range of activities in the common areas without charging a fee or requiring insurance.

Assemblies. Associations must now allow residents to reserve common areas (clubhouses, parks, etc.) so public officials, candidates for public office, and representatives for homeowner organizations can meet with members, residents, and their guests to speak about any matter of public interest.

For Free. Previously, associations could charge a fee whenever someone reserved facilities for an event. Now, associations are prohibited from requiring fees, deposits, or insurance when facilities are used for any matter of public interest or matters involving common interest development living (whatever that means).  

Canvassing & Flyers. Members and residents are also allowed, without prior approval, to canvass and petition members and residents and distribute flyers about elections, legislation, referendums, recalls, and other issues of concern to members and residents.

Penalties. Any violation by an association is subject to injunctive relief and/or a penalty up to $500 per violation in civil or small claims court.

RECOMMENDATION: Associations should adopt rules regarding reasonable hours for common area meetings, priority of overlapping events, requirements that common area facilities be left clean and undamaged, when a fee can be charged, when and how flyers may be distributed, etc.

For a more complete description of the statute, see "Political Activities and Flyers" by senior attorney Wayne Louvier.

*****

Board Member Arrested. It has come to my attention that our treasurer was arrested for felony burglary and misdemeanor false financial statements. He was found not guilty due to lack of evidence. As a homeowner I am concerned who has access to the HOA's bank accounts. Would it be prudent to bring this to the board's attention? -GG

RESPONSE: Homeowners always have the right to bring concerns to the board. Directors can then evaluate whether the concerns have merit. An arrest is not proof of guilt. It could be the treasurer was going through a nasty divorce where the spouse brought unfounded charges to gain financial advantage.

Speaking Chinese. Although no longer a California resident, as past president of an HOA I have read and enjoyed you newsletter for many years. I was somewhat taken aback when I read in your December 17 Newsletter that a state as liberal as California has a clause in its constitution making English the official language of the state. Keep up the good work and I hope to enjoy your weekly Newsletter for many more years to come. -James H.

*****

Reconvened Term. If there is a reconvened annual meeting due to lack of quorum, does the elected board member term start with the month of the reconvened meeting or the original? Thank you. -Kathleen M.

RESPONSE: It starts from the date the person is elected.

*****

Water Damage. [Commenting on my article on "Liability for Water Damage and Mold"] We HATE water. It causes 90% of our troubles. The other 10% of our troubles are caused by people. -Esme G.

RESPONSE: Water is an amazing substance. It makes up 71% of the Earth's surface but, unlike other substances, water expands when it freezes causing it to float.
Because ice floats--it serves as an insulator for lakes, streams and oceans keeping the water and all living organisms underneath from freezing. If ice behaved like all other substances, it would sink to the bottom and all bodies of water would become perpetually frozen blocks of ice. At that point, most life on the planet would cease to exist. 

Another remarkable fact is that we can drink water and swim in it without harm even though water is a universal solvent. Almost every known chemical compound will dissolve in water, making it one of the most corrosive chemicals on the planet. That's why water is the enemy of property managers--it destroys almost everything it touches when it leaks into buildings through roofs, windows and pipes.

As Esme pointed out, water causes 90% of the maintenance problems for associations. When it comes to non-maintenance trouble, I've found that 90% of the problems are caused by 10% of the residents. When that happens, call me--I know a guy who knows a guy. He's good at alternative dispute resolutions.

Adrian J. Adams, Esq.

Boards can contact us for friendly and professional legal advice.

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

Speaking Chinese

Dec 17, 2017 0 Views 0 Comments

QUESTION: The majority of our members speak Chinese. Can our board meetings be conducted and minutes taken in Chinese? If not, are we required to provide a translator?

ANSWER: Good question. There is nothing in statutes or case law that requires your meetings be conducted in a particular language. Nor is there anything on point regarding translation of meetings and records. Even so, there is enough in the law to adopt a reasonable policy.

California Law. Article III, Section 6 of the California Constitution provides that “English is the official language of the State of California.” The Davis-Stirling Act (which governs community associations) and the Corporations Code (which governs corporate entities) are both written in English. That indicates that, at a minimum, all association records must be kept in English.

Conducting Meetings. As a practical matter, if everyone on the board and everyone attending a meeting speaks Chinese, then Chinese should be spoken. If even one person speaks English-only, the meeting should be conducted in English or a Chinese-to-English translator provided at no cost to the attendee. The minutes, as the official records of the association, must be in English. They can be taken in Chinese but must be translated into English whether or not English speakers reside in the association.

Translators. If meetings are conducted in English, HOAs are not required to provide translation into other languages since English is the official language of California. If there are attendees who speak other languages and want to bring a translator to board meetings, they may do so at their own expense. Boards should not exclude a translator just because the person is not a member of the association. If the translator happens to be the member's attorney, you should show the lawyer to the door.

NOTE: Language issues are not unusual. We have a large number of immigrants in California and they often seek out fellow immigrants. I was once legal counsel to an association made up entirely of Spanish speaking members. When I attended meetings, they supplied a translator so I could understand their questions and they could translate my answers. Their management company kept all their records in English.

Thank you to attorney Jennie Park for her research on this issue.

FINDER'S FEES TO
HIRE MANAGERS


QUESTION: The board is paying $45,000 in finders fees to an agency to find another general manager. In 5 years our HOA has had 4 managers. In 3 months, 5 administration employees left. Should the $45,000 be voted on by the membership?

ANSWER: Four managers in five years and the loss of five administration employees?? Something is amiss.

High Turnover. Employees often leave for the following reasons: (i) they are underpaid, (ii) they are badly treated, or (iii) they cannot meet expectations and are let go. It seems unlikely you had four managers and five admin employees who were unqualified to do their jobs. That means working conditions are a problem.

Bad Reputation. Word gets around when an association burns through four managers in five years. That means paying a recruiter to find a manager may be necessary. Can boards pay a finder's fee? Yes. Does it require membership approval? No.

RECOMMENDATION: It sounds like one or more board members and/or homeowners are out of control and need to be medicated (or tasered). Otherwise, the problem of staff turnover will continue. High turnover means membership services decline, costs climb and projects end up on the back burner. Members should demand an explanation.

DOG PREVENTING
MAIL DELIVERY


QUESTION: I own a condo and cannot receive mail due to a neighbor's aggressive dog (deemed so by the USPS). Because of the dog, our mail has been suspended. We have to go to the post office to retrieve our mail. I have been hounding the board but they refuse to deal with the dog's owner.

ANSWER: I'm surprised the board is refusing to act. The loss of mail service is more than enough reason to take action against the owner and his renter. In addition, there is the potential liability the association is exposed to.

Potential Liability. A dog known to the board to be aggressive and deemed so by the U.S. Postal Service creates potential liability for the association. If the dog were to maul a child, can you imagine the lawsuit that would follow? If the damages exceed the association's insurance policy, you will be paying an emergency special assessment. There is also the prospect of punitive damages which are not covered by insurance. That means an even larger special assessment.

Director Liability. If the membership gets hit with a large special assessment because directors sat on their hands rather than deal with a known safety threat to the membership, they could be sued personally.
I am baffled by the board's inaction.

Lawyer Letter. Legal counsel for the association should make a written demand on the owner to immediately evict his tenant or face a lawsuit. It has been my experience that landlords are averse to litigation. The goal of an investor is to make money on rental property, not lose money on legal expenses. Landlords tend to do the right thing when facing litigation over a problem tenant.

RECOMMENDATION. If the board continues to put the community at risk by their inaction, it may be time to recall the board or run candidates against them in the next election. The loss of mail service should be sufficient to motivate members to elect a new board.

YEAR-END
THANK YOU!


A sincere thank you to our readers and clients. Many of your newsletter questions have been added to the Davis-Stirling website to form an ever-expanding database of information free to board members, homeowners and managers alike.

I want to welcome the over 300 new clients who joined the firm this year. Because of your support we have grown to 10 offices around the state with 22 lawyers providing corporate counsel and litigation services to commercial, residential and mixed-use associations.

BEST WISHES. May you enjoy the holidays and have a New Year filled with peace, prosperity and happiness. From all of us at ADAMS | STIRLING, Merry Christmas and Happy New Year. See you in 2018!


Mold #1. Great coverage of the mold issue, mold can be a nothing or it can kill you. Your point of having proof of mold is spot on. -Finn M.

Mold #2. Something to clarify on the insurance aspect of the water intrusion is that most policies provide at least some coverage for mold removal resulting from a covered water loss. Associations can also protect themselves from third-party mold liability allegations with environmental impairment liability (“EIL”) policies with specific extensions for mold. EIL is more common for businesses with significant pollution exposures (gas stations, etc.) but the policies are also available for community associations, though inclusion of third-party mold coverage significantly increases the premiums. -Brian Kalmenson, Abdou Insurance Agency

*****


Appointing Directors. I thought your answer to the board vacancy question was excellent. -T.J.

Appointing Directors. Does a director appointed by the board have the same protection of only being removed by the membership? -Victoria C.

RESPONSE: Only under limited circumstances can directors, whether appointed or elected, be removed by fellow directors.

Boards may declare vacant the office of any director who ceases to meet qualifications that were in effect at the beginning of that director's term of office. (Corp. Code §7221(b).) In addition, the board may declare vacant the seat of a director who has been declared of unsound mind by a final order of court, or convicted of a felony or, if at the time a director is elected, the bylaws provide that a director may be removed for missing board meetings. (Corp. Code §7221(a).)

Adrian J. Adams, Esq.

Boards can 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

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

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

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